Good day, and welcome to the Bilibili 2022 first quarter financial results and business update conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Juliet Yang, Executive Director of Investor Relations. Please go ahead. Thank you, operator. During this call, we'll discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially from those mentioned in today's news release and in this discussion due to a number of risks and uncertainties, including those mentioned in our most recent filing with SEC and Hong Kong Stock Exchange. The non-GAAP financial measures we provide are for comparison purpose only. Definition of these measures and a reconciliation table are available in the news release we issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on the Bilibili IR website at ir.bilibili.com. Joining us today from Bilibili senior management are Mr. Rui Chen, Chairman of the Board and Chief Executive Officer, Ms. Carly Li, Vice Chairwoman of the Board and Chief Operating Officer, and Mr. Sam Fan, Chief Financial Officer. I'll now turn the call over to Mr. Fan, who will read the prepared remarks on behalf of Rui Chen. Thank you, Juliet, and thank you everyone for participating in our 2022 first quarter results conference call. I'm pleased to deliver today's opening remarks on behalf of Mr. Chen. In the first quarter, the unexpected outbreak of COVID-19 struck China nationwide, impacting people's everyday lives. Shanghai, where our headquarters are based, were particularly impacted by the strict lockdowns. During this challenging time, our top priority is the health and safety of our employees. Over 8,000 of our staff members have been working from home since mid-March, and we arranged essentials to be delivered to our employees in Shanghai when it was the most difficult to get supplies. In addition, we opened our documentary library to the public free of charge during the May holidays, and donated 2 million premium Bilibili memberships to Shanghai citizens. We are glad to see that the lockdown just ended last week, and hope everyone's life and our daily business can return to normal order soon. Confronting the challenges, our business foundation remains strong and resilient. In the first quarter, our vibrant community continued to grow at a fast pace. Total MAUs grew by 31% year-over-year to 294 million, and the DAUs grew even faster at 32% year-over-year, reaching 79 million. Total user traffic, which we calculate as DAUs multiplied by daily time spent per user, grew 52% year-over-year. During this period, each user spent an average of 95 minutes on Bilibili per day, the longest we have seen in our operating history. This strong user metrics represent our solid business fundamentals, and we are seeing the momentum continue as we move through the second quarter. Despite the short-term impact from the COVID lockdowns, our total net revenue for the first quarter came in at RMB 5.05 billion, up 30% year-over-year. In the first quarter, both our paying ratio and MPUs reached record highs of 9.3% and 27.2 million respectively. Live broadcasting was a major driver during the period, with paying user numbers growing 60% year-over-year. Despite softer industry demand, we continue to gain market share in advertising and grow our ad revenue by 46% year-over-year in Q1. Improving our ad efficiency and exploring new products such as ads in Story Mode are a few of the initiatives we expected to leverage as we work our way through the challenging macroenvironment in the coming quarters. User growth, effective spending control, and improving our operating efficiency, our top goals. We have made some progresses on each of these fronts in Q1. Sales and marketing expenses decreased by 29% quarter over quarter, accounting for 25% of total revenue, down from 31% in the previous quarter. Server and bandwidth costs decreased by 2% quarter over quarter, which is no small feat given our daily video views increased by 36% sequentially. We continue to invest in R&D in Q1, which we believe is essential for our long-term and sustainable growth. Regardless of the pandemic's impact to our short-term financial metrics, we remain committed to our mid and long-term growth of narrowing our loss ratio and reaching break even. Moving forward, we will further strengthen our commercialization capabilities, control costs, and improve human capital efficiency. With that overview, I'd like to go through some details of our first quarter operations across our content, community, and commercialization. Bilibili's unique content and community offerings provide our users an irreplaceable experience in the online video space. Since 2021, we have successfully expanded to a multi-format video community by launching our Story Mode and the smart TV app. These have effectively brought our rich content to users in more formats that resonate with them across different viewing preferences. User response to our short-form video Story Mode has been very inspiring. This short-form video with Bilibili features provides a unique watching experience to satisfy users on-the-go entertainment needs. Story Mode brought an incremental increase in total video consumption, contributing more than 20% of our total video views in the first quarter, and these numbers have continued to grow in Q2. In addition to more views and creating deeper community bonds, Story Mode has also opened up a new avenue for commercialization opportunities with advertisers as well as our live broadcasting services. During the period, users primarily engaged with content in the lifestyles, games, entertainment, ACG, and the knowledge categories. Across these top verticals and others, content creation remained robust. Monthly average content submission was 12.6 million, increasing by 63% compared with the same period last year. Monthly active creators during the quarter was 3.8 million, up 75% year-over-year. The deep value we place on our creators is one of the reasons we are able to maintain our robust content and healthy community. The key to motivate their continuous creation is to help them gain recognition and provide monetary rewards. We are providing them with both. Content creators with more than 10,000 followers increased by 44% in the first quarter. Beyond our cash incentive program, content creators are encouraged to realize their commercial value more fully through multiple avenues, including live broadcasting, our Sparkle ad platform, creator recommended ads, and direct tips from users. In the first quarter, a total of 1.1 million content creators had received monetary compensation for their work, up 90% year-over-year. As for our community, we continue to foster an active environment for our users to get closer to the content and interact with creators and each other. We can see this not only with the record average daily time spent on our platform of 95 minutes in the first quarter, but also in the increased average daily video views, which grow by impressive 84% year-over-year to nearly 3 billion. The number of monthly interactions in Q1 reached 12.3 billion, up an impressive 87% year-over-year. The bonds between our users and the community have continued to grow. By the end of March, we had 158 million official members, up 41% with a stable 12-month retention rate of 83%. Both our Story Mode and the smart TV have played positive roles in driving engagement levels. Now, let's take a look at our commercialization efforts. Accelerating our commercialization efforts is our most important target this year. Despite the macro headwinds, our business is resilient. With advertising and e-commerce businesses having been and will be particularly impacted in the near term, we are paying more attention to the quality of our revenue growth, particularly the margin contribution of each business segment. For our game business in the first quarter, net revenues from our game business increased 16% year-over-year to RMB 1.36 billion. We continue to invest in in-house game development by acquiring a new studio in the first quarter. At the same time, we are closely monitoring our existing projects and conducting agile testing to keep our pipeline ahead of the fast-evolving industry. We are also working to improve our industrialized development capabilities, which is equally important in landing an idea that works. Turning to our pipeline. Three games have already been approved, and some others are in the late approval stage. As for our game operation in the overseas market, we have three titles slated for launch in the second quarter. More for the second half of this year. Turning to our VAS business. Net revenues for VAS were RMB 2.05 billion, an increase of 37% year-over-year. Beyond the pandemic, with a lot of monetization opportunity in this segment, particularly in live broadcasting and other innovative community related value-added services. Our powerful PUGV video library and a pool of talented creators give us a unique advantage to leverage and reinforce our live broadcasting business. In the first quarter, the number of active live broadcasters on Bilibili increased by 88% year-over-year. We continue to roll out more tools and functions to let creators showcase their talent and introduce new forms of interactive virtual gifting programs. Meanwhile, the popularity of Story Mode opened a new gateway for users to discover interesting live broadcasting content. With these initiatives, a seamless and natural conversion to a paid user arises. In the first quarter, MPU in live broadcasting increased by 60% year-over-year. As for our premium memberships, by the end of the first quarter, we had 20.1 million premium members, a 25% increase year-over-year. Nearly 80% of these were annual or auto-renew package subscribers, representing their strong trust in us. In 2022, we will continue to add exciting content to attract members, including a series of Bilibili-produced Chinese anime, variety shows, and documentaries. Looking at our advertising services, revenues from this segment were RMB 1.0 billion, an increase of 46% year-over-year. In the first quarter, our top five advertising industry verticals were games, skincare and cosmetics, 3C products, automobiles, and food and beverage. In March, the unexpected COVID lockdown caused travel restrictions and logistics difficulties in major cities in China. Some advertising dollars were delayed or placed on hold. Confronting the headwinds, we are pressing forward to expand our content-advertising scenarios with more innovative ad products and increase our ad efficiency with a better conversion toolkit. We launched our Story Mode ad in April, and the initial feedback is encouraging. Compared with the text or picture-based ads, adding the Story Mode has higher ROI to add customers and bring an incremental increase to our ad inventory as well as our eCPM. We plan to allocate more resources to improve its performance, including algorithms and product abilities. E-commerce is another area deeply impacted by the logistics disruption caused by the pandemic. As we believe our customer trust is our most valuable asset, we offered our customers a free delivery and delay services and automated refund option. As recovery begins, our May GMV sales were again on the rise. Going forward, we will continue to explore new innovative models to maximize our IP value and achieve synergy with our leading content verticals. Confronting the macro challenges, our action plan is clear for the rest of the year. First, we aim to take all necessary steps to resume normal business operations. Second, we will be focusing on the quality of our users and our revenue growth, particularly DAU metrics and our business segments margins. Lastly, we will take essential action to further control our cost and expenses. This concludes Mr. Chen's remarks. I will now provide a brief overview of our financial results for the first quarter of 2022 and outlook for the second quarter of 2022. Total net revenue for the first quarter was RMB 5.05 billion, up 30% from the same period of 2021. Cost of revenues increased by 43% year-over-year to RMB 4.2 billion. Server and bandwidth costs as part of the related fixed cost component decreased 2% quarter-over-quarter. Server and bandwidth costs per video views decreased 27% quarter-over-quarter, showing our ongoing efforts and progress in cost savings. Our gross profit in the first quarter was RMB 807.2 million, and gross margin was 16%. Total operating expenses was RMB 2.8 billion, up 42% from the same period in 2021, which represents a 9% quarter-over-quarter decrease from Q4 2021. Sales and marketing expenses were RMB 1.3 billion, representing a 25% increase year-over-year, and RMB 507.7 million decrease quarter-over-quarter. Sales and marketing expenses as a percentage of total revenue were 25%, down from 30% in previous quarter. G&A expenses were RMB 535.3 million, representing a 38% increase year-over-year and kept flattish quarter-over-quarter. R&D expenses was RMB 1.0 billion, representing a 74% increase year-over-year. The increase was primarily due to increased headcount in research and development and share-based compensation expenses. We will closely monitor the progress and ROIs of our investments and make ongoing adjustments when necessary. Net loss was RMB 2.3 billion for the first quarter of 2022, compared with a net loss of RMB 904.9 million in the same period of 2021. Adjusted net loss, which is a non-GAAP measure, was RMB 1.65 billion, compared with RMB 891.0 million in the same period of 2021. Basic and diluted net loss per share for the first quarter was RMB 5.80, compared with RMB 2.54 in the same period of 2021. Adjusted basic diluted net loss per share was RMB 4.20, compared with RMB 2.50 in Q1 2021. Turning to our capital allocation and the liability management. We announced our $500 million share repurchase program in early March. As of March 31, 2022, approximately 1.4 million ADS had been purchased under this program, for a total cost of $30 million. We are also optimizing our liability level. In Q1, the company repurchased and canceled an aggregate principal amount of $204 million of convertible senior notes with a total cash consideration of $147.9 million, and a recorded cash saving of RMB 338.8 million. As of March 31, 2022, we had cash and cash equivalents, term deposits, and short-term investments of RMB 24.7 billion. As for our intent to convert to dual primary listing on the main board of Hong Kong Stock Exchange and the Nasdaq, the Hong Kong Exchange has acknowledged our application, setting October 3, 2022 as the proposed effective date for our conversion to primary listing. It will expand our access to a wider investor base while we expect to maintain our listing status on Nasdaq. With that in mind, we are currently projecting net revenues for the second quarter of 2022 to be between RMB 4.85 billion and RMB 4.95 billion. Thank you for your attention. We would like now to open the call to your questions. Operator, please go ahead. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Please limit your questions to one at a time. If you wish to have a follow-up question, please rejoin the queue. Our first question comes from Lei Zhang with Bank of America. Your line is open. Hi. [Foreign language]. Well, I believe, the pandemic is one of the questions that most people cared about for this first half of this year, and it indeed has brought severe impact to macro economy and people's everyday life, especially in Shanghai, as one of the cities was particularly impacted. Taking Bilibili for example, over 8,000 of our Shanghai employee have been working from home since 14th of March, and we are just now starting to gradually returning back to office this week. Until 13th of June, all the employee will be fully back to work. This is a total three full months. You can imagine how it does to people's everyday life in Shanghai. How do we see this impact, COVID impact, to Bilibili? Indeed, it has brought short-term impact to our business, particularly for advertising and e-commerce. However, we do not think. We don't think there's any impact to Bilibili's long-term growth. 对，疫情给短期业务带来的影响，其实都是一些临时的。比如说像广告业务，因为今年上半年，包括上海，还有其他的一些地方，它都处在这种居家或者是静态的状态。在这种情况下，广告主投广告的需求肯定就减弱了，甚至有的地方可能它就推迟了。所以的话，我认为整个广告行业在Q1，尤其是Q2，都应该会受到很大的影响，但是这个就是一个阶段性的影响。 For example, for our advertising business, there are some short-term impact. For example, in many cities in China, in the first half of this year, people are in some sort of lockdown or staying-at-home mode, making a lot of the advertisers putting their advertising plan on hold or delaying their advertising dollars. That's the facts. 对，比如说B站的电商业务，就是我们这个受影响的原因，主要是物流。因为大家都知道，从三月份开始，尤其是四五月份，由于防疫的这个静态管理，各地的物流都会受到限制，然后这个就会造成，比如说它会影响用户下单，它也会影响用户收到我们的产品。所以的话就是我们的电商业务肯定是在疫情期间，尤其是我觉得可能会延续到Q2，因为它那个四五月份更严重，就是它会有阶段性的影响。 As for Bilibili's e-commerce business, because starting from March and especially in April and May, a lot of the logistics disruption due to the lockdowns or stay-at-home measures across different cities in China, and that's impacting people's willingness to purchase as well as the delivery services. We do expect this impact will continue in second quarter. 对，但像我刚才所说的，广告的影响也好，电商的影响也好，它都是临时性的。我认为六月份以后，随着国内的抗疫到达了一个阶段，这些影响都会降低，或者说是没有。 All this impact to our app business and e-commerce business, we do think it's temporary, especially after June, when we reach certain milestone to combating the COVID-19 situation. A lot of the impact is start to mitigate and disappear. 对，其实我们看B站的话，我们会发现就是疫情它对于B站的基本面它是不会有任何影响的。比如说视频化仍然会是一个不可阻挡的趋势。比如说我们可以看到，就是年轻人的各种对于文化跟娱乐的需求也在产生。然后我们也可以看到，就是文化消费，它很明显的会成为大家越来越需要的一个需求。所以的话，就是我认为对于B站的基本面来说的话，疫情是没有任何影响的。 As for Bilibili's fundamental, we don't think there's any impact brought by the pandemic. For example, the videoization is an unstoppable trend, and we see the young generations, their needs towards entertainment and cultural product is still very, very strong, and their consumption towards cultural related product is become even stronger. That's why we do think that there's no impact to our fundamentals. 其实我们从数据也可以看得出来，我们看第一季度的数据，我们Q1的MAU的同比增长是31%，我们的Q1的DAU的同比增长是32%，这个增长的幅度它是大于我们去年Q1的同比增长的一个幅度。 Looking at the specific user metrics, for example, in Q1, our MAU grew 31% year-on-year, DAU grew 32% year-on-year. Both of these metrics are accelerating compared to Q1 last year. 而且这个增长它还是建立在我们并没有去增加这个，就是我们用户增长的这个营销这些的那个预算的一个情况下。而且我们可以看到，就是我们用户增长的质量其实跟过去相比是更高了。我们的DAU的一个增长幅度是超过MAU的，而且的话就是我们付费用户的增长幅度又超过了DAU的增长幅度。我们付费用户的付费率是创下了新高，达到9.3%。这个其实是充分说明了不仅我们的用户增长在速度上比过去要快，而且我们在质量上还比过去要好。 As for the quality of our user growth, for this quarter, our DAU's growth rate outpaced the MAU growth rate. For our paying user growth rate outpaced the DAU's growth rate, and we achieved a record high paying ratio of 9.3%. We are not only experience a very fast user growth rate, the quality of those user is also very strong. This is all done under the scenario that we have not increased any of our sales and marketing budgets. B站是一个非常典型的互联网的平台型的一个商业模式。所以的话，我刚才提到的无论是DAU，还是我们的这个付费率，包括我们第一季度的日均用户的使用时长达到95分钟，它也是历史新高，包括我们的这个互动率的同比增长是87%。所以就是这些数据，事实上它都是能够转化成未来的商业化的数据的。所以呢，就是为什么我就说从长期来看，我认为疫情对B站是没有影响的，因为这些数据的增长都非常的快，而且非常的健康。 Bilibili has the business model of a typical platform, Internet platform business model, whether it's DAU or paying ratio or this record high time spent of 95 minutes and the engagement level grew 87% year-over-year. All those metrics can be translated to commercialization, and that's why we think the COVID-19 for Bilibili has no long-term impact. 至于今后的展望，像我刚才所说的，我认为Q2仍然是受疫情影响的一个季度，而且我们预测Q2在受疫情的影响甚至会超过Q1。但是，我们可以看到，就是从六月份开始，很明显的，全国都从疫情的这个阶段里面走出来了。所以我认为就是今年下半年整个的形势都会有很明显的好转。 As for the outlook for the second half of this year, for Q2, there's still impact lingering, and perhaps the impact to Q2 is even greater than Q1. But since June this year, we can see there's a sudden change of the environment, different cities in the country starting to recover from the lockdowns. That's why we do think for the second half of this year, things will start to recover. 在用户增长方面，我们觉得现在其实我们是一步一步地按照过去的一个计划，在完成我们之前提过的用户增长的一个目标的。而且，我们现在在完成数字目标的情况下，我们还更重视用户增长的质量，以及我们会更重视用更少的投入来达到我们用户增长的目标。 As for the user growth, we have delivered step by step on our user growth target. At the same time, we're placing more, we're paying more attention to the quality of the user. At the same time, we closely monitor the expense we spend on sales and marketing. 在业务端的话，就像我刚才的，就是我预测从六月份开始，那个中国会从疫情的这个阶段走出来，到了那个时候，我们的各项营收业务也会恢复过去的一个增长速度。 As for the business side, as I mentioned, June is the month we're starting to walk out of the COVID impact, and we also believe this is the time we're starting to pick up our growth rate for each of our business lines. Our next question comes from Yiwen Zhang with China Renaissance. Your line is open. 好的，晚上好，管理层。谢谢接受我的提问。我这边有个关于Story Mode的问题，因为在咱们prepared remarks也提到Story Mode在咱们整体VV的渗透在提升，然后同时也在一些广告直播这些机会，就想要请教一下那边的一些具体的进展，比如说咱们怎么看待Story Mode在整个内容生产里面的角色，然后包括在商业化那边能不能分享多一些的细节？ Thanks for taking my question. My question is regarding Story Mode. Can you mention more color on its latest update, such as what role it plays in our broader content ecosystem, and what's the progress on the commercialization evolution around that? Thank you. 对，确实，这次财报发布了以后，挺多朋友都在关注Story，因为那个Story Mode现在的这个VV数已经占了我们整个大盘VV数的超过20%，然后它明显已经是一个大家能够看得到的一个新品类了。 Indeed, since we released the earnings, a lot of people are asking about the progress of Story Mode, because the Story Mode total video views has now contributing more than 20% of our total video views. This is a very tangible new format of content that's playing a bigger role. 对，所以我在这里也讲我对于Story Mode的三点看法吧。我的第一点看法的话，就是我认为B站的Story Mode是一个纯粹的增量，就是它并不是，我们的用户过去看PUGV视频，然后现在看Story Mode，而是他们在看着那个PUGV的同时，他又多看了很多的这种副品的短视频。 First of all, I have three points I wanted to emphasize on Story Mode. First of all, it is a pure incremental traffic for Bilibili. It's not like the Story Mode traffic is replacing some of the old PUGV traffic, but while users are watching more PUGVs, they are watching even more Story Mode. 对，我们看数据可以看得出来，就是我们整个的播放数，就是VV的同比增长是84%。然后Story的话，现在是占这个大盘的20%。也就是说除掉Story之外的话，我们的PUGV的增长也是一个很大的数，也是一个50%~60%的这么一个增长。就这个增长跟过去我们的PUGV的增长速度是差不多的。所以呢，就是Story Mode，它完全是在过去增长的基础上，我们创造的一个新的增量。 From a statistic perspective, our video views has grown 84% year-over-year, and Story Mode is contributing over 20% of the total traffic. If we are excluding the Story Mode contribution, the PUGV growth rate is still around 50%-60%, which is the similar rate we have kept in the past. That means this Story Mode is a pure incremental addition to our Bilibili ecosystem. 其实这个竖屏的这种短视频的表现形式，它早都不是一个新东西了。那个B站也是在比较早，我记得我们是在两三年前，我们就有挺多的这种竖屏视频了。但是呢，就是我们在运营的过程中，如何让这个竖屏的视频它成为我们的一个增量，而不是说是替换掉我们原来生态中的这个PUGV，这个是我们在运营的过程中非常非常重视的问题。从目前的一个结果来看，我们是做到了这一点。 As for the Story Mode, the vertical short form, short video format, this is not something new. As a matter of fact, we have this type of content starting from two to three years ago. To our daily operation, the most important thing is to make sure for this type of content is adding an incremental traffic instead of replacing old traffic. From the results, we have done a very good job. 好，第二点我就要讲，就是为什么我们能够把这个Story Mode就做成一个纯粹的增量。其实的话，我们如果看我们的这个Story的视频，我们会发现，就是它的创作者很多就是我们已经存在的UP主，然后它的消费者其实也是很多我们现在B站的用户，只不过呢，是因为它的这个消费的场景很碎片化，很轻。所以的话，就是我们现在的很多用户，他就是用一些短的空闲的时间，就是他的一些日常空闲的时间去消费这些视频。所以的话就是我们可以认为，就是现有的这个Story Mode，它在生态方面，它和我们原来的PUGV它是一体的，只不过呢，它扩展了用户的新的消费时间和新的消费场景。 Why we can build an incremental user traffic growth from Story Mode? Because we have built the Story Mode a very Bilibili unique flavor type of content. If we look at the Story Mode's video creator, many of those are our content creator. For the consumer of the Story Mode, are Bilibili existing users. Those users are consuming this type of content during their fragmented time on a more light scenario. We believe for the Story Mode, actually it is complementary as a whole product supplement to our original PUGV content, and it is actually expanding a new consumption scenario for our users. 其实对于我们过去很多去做这个中长视频的UP主来说，他去做一个竖屏的短视频是更容易的，就相当于是你让余华去发一个微博，他是更容易的，但是你要让一个微博的博主去写一部长篇小说是很难的。 For our content creator who's very good at making long-form videos, it's actually very easy for them to create a short vertical format of content. It's like asking Yu Hua to post a Weibo, but it's very difficult to as a Weibo user to write a long article. 这当然就是我们让这些现有的UP主，让他们去做这个竖屏的短视频，也增加了他们这个投稿的量，而且的话它也增加了我们原来的用户他使用B站的频度，以及扩展了他的使用场景，我觉得是个多赢的事情。 Asking our content creator to make more short, shorter vertical format of content, it actually help us to increase the video submission, and also is helping our user to expand their video consumption scenario, making them become more active and engaged on our platform. It's a win-win situation for us. 对，第三点的话，我还是要讲，就是大家对于B站的理解，不应该是一个工具。我们其实很容易把一个互联网的产品理解成一个工具，比如说这个产品就是播短视频的，那个产品就是放长视频的，然后或者说是某个产品是做直播的。但是我们会发现，就对于B站来说的话，它上面既有中长视频，也有短视频，也有直播。因为B站它不是一个工具属性的产品，它其实是一个内容和社区属性的产品。 Thirdly, I want to emphasize for Bilibili, we are not a tool type of product. It's very easy for people to see some of the Internet platform or product as a tool. This particular product is for a player for long form video. This is a product for a short video player. This is a platform for live broadcasting. But for Bilibili, we have it all because instead of it being a tool, Bilibili is actually a content, a community platform that gathers people. 我们其实做产业的，我们习惯于就是按产业端的概念来划分用户。但是如果你作为一个真正的用户，你会发现你选择一个产品，你不是按产业的眼光来看的，它是按照什么呢？它是按照品类来看的，就是我感兴趣的一个品类。就比如说一个喜欢看——喜欢游戏的人，他会既在B站上面看游戏视频，又在B站上面看游戏直播，还去玩B站发行的游戏。比如说一个对于知识感兴趣的用户，他既会看B站的知识的UP主做的视频，他也会看B站上的纪录片。 For the industry player, we are used to separate users by the product means. However, from a user perspective, they choose product by the content verticals, not by their industry categories. For example, a game lover will not only watch the PUGV game, they will watch the game related live broadcasting. He or she might also play Bilibili produced or licensed games. As for a knowledge sector users, he or she might both consume the knowledge related PUGV and also watch the documentary on Bilibili. 对，所以的话这对于Story Mode也一样，就是我们Story Mode里面大量的内容是生活类的、美食类的、宠物类的，而这些内容它其实跟B站原来的PUGV的生态和B站原来的用户，它就是重叠的。 As for Story, there are massive content supply on Story is related to lifestyle, foodie, pet, and those content category are actually mirroring the PUGV categories on Bilibili. 对，最早B站做直播的时候，大家都好奇你们为什么做直播？你们是不是想跟某某某竞争？然后我回答说不是的，就可能是在四五年前，我也是这样的一个回答。现在我们做Story Mode，其实也是，就是我们做Story Mode，我们并不是为了跟某某某某产品竞争，而是我为了在B站满足我现有的用户需求。 Many years ago, when Bilibili started to do live broadcasting business, people would ask if we want to compete with certain live broadcasting platforms. My answer has been no, because this is expanding our users need and expanding our content offerings. As for Story Mode, we're not competing with the short form, video platforms out there. We're actually satisfying our users existing need and expand their content consumption scenario given what they need. 最后我说一下，关于Story Mode的商业化。Story Mode在商业化方面的好处，就是它的模式比较成熟。其实已经有很多行业案例证明，就是它在广告的变现效率，以及它在直播的转化率方面，都是可以做到一个很好的数字。从我们这里，我们的实践其实也证明了这一点。所以的话就是我们认为，Story Mode它也会带来我们在商业收入上的新的增量。 Lastly, on commercialization, the beauty of the short form videos are its model has been very, very mature, and there are so many very successful precedents in the industry. It has been proven to have very high efficiency of ad conversion rate, and its conversion for live broadcasting is also very good. From our practice, it's also been proven this model works and this will bring incremental commercialization opportunity to Bilibili. 我们从去年开始做的Story Mode的这个试点到现在，从结果来看是符合我们的预期的。我推测吧，就是我认为Story Mode会持续作为我们原来PUGV生态的一个增量，继续增长下去。我甚至认为在未来，Story Mode带来的增量会超过现在PUGV的这个播放数。 We started to make a lot of trial runs with Story Mode product. Until now, so far, the progress has met with our expectations, and we'll continue to allocate more resource to develop Story Mode, and we believe it will bring incremental traffic to our Bilibili ecosystem. Essentially, it could be even bigger than the incremental PUGV traffic that has brought to Bilibili. 对，而且的话，我也请大家不用担心，就是那个我认为Story Mode它不会改变B站原有的PUGV的生态，它会变成我们生态之上的一个新的亮点。几年前我们做直播的时候，也有用户会担心我们变成一个直播产品。大家应该现在知道了，就B站并没有变成一个直播的产品，而直播它只是融合进了我们PUGV当中。我认为对于Story Mode也是一样。B站不会变成一个短视频产品，而是短视频会变成B站生态的一部分。 Rest assured, the launch of Story Mode will not change how the Bilibili ecosystem works. It will actually become a new highlight of the Bilibili ecosystem. It's like many years ago, we started to do live broadcasting and some of the user expressed concern whether we're going to change to a live broadcasting platform. As a matter of fact, now live broadcasting has become an essential element embedding within our ecosystem. I believe the same thing will happen with the Story Mode. Bilibili will not become a short video platform. However, this will be part of our ecosystem, serving users different needs and expanding our content offerings, bringing incremental traffic. B站未来一定会有越来越多的精品的中长视频，但同时也会有越来越多的竖屏的精彩的短视频。对，就是这样。 We believe in the near future, we'll have more and more high quality mid to longer form videos being born on Bilibili. It will be even more high quality short form videos, born and spread on Bilibili. That concludes Rui Chen's answer. Next question, please. Our next question comes from Alex Yao with JP Morgan. Your line is open. 谢谢管理层。我想问一些关于广告的问题，当然我对广告的看法，我非常认可瑞总的这个讲法，就是B站的长期基本面，其实和疫情没有什么关系。我觉得决定长期广告变现的因素主要第一个是平台的这个日均总时长，第二个是用户的属性以及消费力，第三个呢是平台的这个广告科技或者广告技术。这三个因素应该说跟疫情是没有什么关系的。但是回到我们投资圈，这个模型还是一个季度一个季度做，也是通过这个公司一个季度一个季度的业绩来追踪我们的进展和这个发展的近况。那么还是想再请教一些关于广告短期的一些这个趋势，就比如说我们在疫情当中看到哪些类型的广告主，他的这个撤预算的动作是比较快，哪些是相对会慢一点，或者说我们的这个哪些类型的广告产品相对来说会比较抗跌一点，哪些类型的广告产品会更容易受到疫情的影响。然后接下去看下半年，特别是考虑到上海现在已经解封了，咱们怎么看接下来这个广告收入线的增长趋势。那我自己翻译一下。 I would like to ask some questions on advertising. Fundamentally, we agree with Rui Chen that the long-term determinators to advertising monetization include, number one, the total platform usage, number two, user demographic, and number three, the ad tech. None of which has anything to do with the short-term COVID impact. But we at the investment community follow the company and track the company on a quarterly basis. So we would like to understand the near-term trend of our advertising. For example, what are the advertiser categories that are more vulnerable to the COVID impact? What are the categories of who are more resilient? Similarly, what are the advertising formats that are more resilient and what are the more vulnerable advertising formats? Now that the Shanghai has reopened, how do we see the advertising revenue growth rate into the next couple of quarters? Thank you. 谢谢 Alex。我觉得 Alex 已经把我们广告的一些核心关键，包括我们的核心点都很熟悉了。Q1 的话，B 站的广告收入是 10.4 亿嘛，同比增长有 46%。而确实由于刚才提到的，由于疫情跟经济环境的影响，还是让很多的广告主推迟甚至暂停了这个投放，我觉得整个业界都是一样的。我觉得这个其实反倒是加速了市场去思考广告投放的本质是什么。其实 B 站的话有一个特性，就是用户价值比较高。接着呢，能够长期影响用户心智，我们也持续地通过技术跟产品的改进，让转化效率越来越高。所以我们还是比较认为未来的话，广告主会更青睐于这种用户价值高、转化效率高，能影响用户心智的平台。 Thank you, Alex. I think you mastered the very essential advantage of Bilibili. Advertising business. Like you said, due to macro economy slowdown and the pandemic impact, many advertisers' budget were delayed or placed on hold in the first half. At the same time, this is also making the advertising market, reflecting the various reasons to invest for advertising. We believe the platform has high user value and the ability to influence users' mindset. We've also continued to invest in technology that improve our conversion rate. We believe in the longer term, Bilibili will be more favored by advertisers. The average age of Bilibili users is 23.5 years old, and 86% of our users are below 35 years old. More than half of our users are from first- and second-tier cities, all of which our matrix represents the main cohort that's driving all kinds of consumption in China. By mastering this population, we have become the platform that all the advertisers crave. If you look at past two to three years, our ad load has stayed 5%. We haven't increased any of our ad load. Our advertising has maintained relatively higher growth rate throughout the last two to three years. This is evidence that the advertisers really value Bilibili's users as well as the Bilibili brand. Even though that the ad dollar in the market might reduce in the short term, but we remain optimistic about Bilibili's advertising long-term growth. As for the industry vertical that's especially resilient in the first quarter, game 3C, food and beverage, skincare and cosmetics has been pretty strong and resilient, especially for games and automotive. In first quarter, without any game approval being issued, we have delivered, better than expected game advertising dollar increase. As for automotive, because Bilibili's user is growing with the platform, their consumption power is also growing. This has been captured by a lot of the automotive advertisers. They are willing to spend more advertising dollars to attract and influence Bilibili users. Confronting the macro uncertainties and short-term fluctuations, we will be focusing on doing the right things, the right thing that serves for long-term. We will be focusing on developing more standardized and industrialized integrated marketing ability. This will be our long-term growth engine, and relying on the rapid iteration of our product capabilities and data capabilities, we'll continue to strengthen the construction of our middle platform for commercialization. Among the ad customers who invested in Q1, 74% of them brought across different ad products. Our customer who brought integrated marketing campaign, namely brand performance and native ads, also grew significantly year-over-year. 第二点的话，我们还是会除了擅长的领域，我们还是会持续拓展广告的场景，实现多端多场景的融合。其实去年已经初步地把PC、手机、iPad、TV等端已经实现打通了，也实现了我们从PUGV、直播、OGV、动态等不同场景原生广告的融合。基本上用户在哪里，我们的广告其实就可以出现在哪里。在TV端，Q1我们的MAU其实已经超过了五千万，TV端覆盖了更多的这个家庭的消费场景。就很多人也会说，那你TV端的用户是不是app端的用户的偏移？其实我们发现TV端的用户画像主要分布在三四五线城市，和app端的用户人群是形成一种强互补的。人群消费时长也比较高，所以我们会进一步尝试打通多端、多端连投的一种效果。刚才其实瑞雄也反复提到了我们重点的拓展Story Mode的视频场景，我觉得这个场景的eCPM也显著高于原来的所有视频场景的，所以转化效率也很高。所以往后从我们擅长的场景跟多场景多端，都会进一步地让我们的广告的这个场景丰富，而我们的收入进行增收。 On top of what we are good at the area, we're also extending our ad scenario, integrate multiple products and multiple scenario including PC, mobile apps, iPad, smart TV, as well as PUGV, OGV, live broadcasting, and moment pages, making sure whenever the users are, our advertiser can reach them. For the smart TV devices, in Q1, the total MAU has reached over 60 million. For those TV users, it serves a nice addition to our existing user base. It's a supplement to our existing user cohort. A lot of them are from third- and fourth-tier cities, and their time spent has been very good. We'll continue to invest in those smart TVs and help to convert more living room and family scenarios. We aim to further enhance this multi-terminal integration to optimize our marketing solutions. On top of all that, we will further extend and invest in the Story Mode commercialization initiatives. From our initial data for the Story Mode advertising, its eCPM has been quite significantly higher compared to our traditional advertising scenarios, and its conversion rate is also improving. On top of that, we will first do what we are good at and add more scenarios and continue to invest in the Story Mode commercialization. 其实第三点的话也是B站很独特的一点，就是我们还是会持续发挥UP主的创意，推出跟生态更融合的一种广告模式。现在已经有2.4万的UP主加入了我们的花火系统，入驻的品牌超过6,500个。我们预估今年入驻的UP主跟品牌数都会加速翻倍。花火对B站的很大的优势，它既储备了广告主成为蓄水池，同时UP主的创意也是把广告主留在了这个生态里。我们会加速让原生广告跟各类标准的广告进行打通。就举个简单的例子，我们已经实现了花火中超过40%的商单会主动投放我们标准的信息流广告。 Further leveraging our content creators' creativity will launch more ad products that fit with the Bilibili ecosystem. Now more than 24,000 content creator and more than 6,500 advertisers has joined our Sparkle ad platform. We believe this number will double this year. The Sparkle ad platform is one of the advantages Bilibili advertising has. It essentially is a reservoir for advertisers. Content creators creative ideas will help us to retain advertisers to stay in our ecosystem. For the second half of this year, we will aim to expedite the process of connecting native ads with more standardized ad products. For example, in the first quarter, more than 40% of our ad customer purchased other standardized ad products to pair with their Sparkle orders. 最后的话，我们还是会发挥行业的趋势，包括生态的优势吧。就是B站生态本身拥有视频化红利的这个趋势，实现了我们健康高速的用户增长。那同时我们发现视频广告效率也显著高于传统的形态的广告，所以B站的整个效果广告中视频化的收入占比已经超过65%了，而eCPM的同比增长也特别明显。包括Story Mode的模式的VV占比持续攀升，预计2022年也会带给我们可观的新增的收入。我觉得以上就是我们应对下半年的一些趋势的一些想法，就坚持做正确的事情，让时间去证明一个模式，包括我们的广告业务是否能健康持续的增长。谢谢。 Lastly, we aim to combine the industry trends with our ecosystem advantages, riding on the waves of visualization trends and leveraging the power of our content ecosystem. We have achieved healthy and quality growth of users. We've also discovered the video-based ads has much better conversion rate than the traditional ads. Over 65% of our performance ads revenue came from video-based ads, and our eCPM has grown significantly year-over-year in the quarter. The Story Mode, on the other hand, also serves a very incremental traffic and a revenue growth for advertising business. As we look for the second half of the year, we'll continue to do the right thing and to invest for the future, and the result will speak for itself. Our next question comes from Alex Poon with Morgan Stanley. Your line is open. 谢谢管理层接受我的提问。我的问题是关于直播业务的，想问一下近期出台的新的政策对我们业务的影响和我们未来的展望。谢谢。 Thanks management for taking my question. My question is related to live streaming business. Regarding the recent new regulation, can management share with us the impact of this regulation and what our expectation for development of this in future? Thank you. 好，近期的直播监管政策，对于我们的直播业务应该是没有什么影响。我们今年的直播业务的目标，是不会有变化的。 For the recent regulation update, actually has no impact to Bilibili's live broadcasting business. The full year target for our live broadcasting business remain unchanged. 我之前一直说，B站的直播是B站生态的一部分，是我们视频生态的一个自然的延伸。其实我们也一直是照着这样的一个方式来做的，就是我们并不是以外面引入主播为主，也不是外面引入新用户，而是我们的UP主和主播其实是高度重叠的，而我们的视频的用户和直播的这个观众也是高度重叠的。我之前也一直说，就是我是有信心，我们的直播未来几年都是一个健康的、持续的高增长，我的这个判断是不会变的。 We've always mentioned that live broadcasting serves a very important part of our ecosystem. It's a natural extension of our video platform. Our growth will not be relying on attracting outside live broadcaster to the platform, attracting outside user to Bilibili's live broadcasting. As a matter of fact, there's a very strong overlap between the live broadcasters and content creators. A lot of the overlap with the video users and live broadcasting users. My confidence in live broadcasting long term and sustainable growth remain unchanged. Our next question comes from Xueqing Zhang with CICC. Your line is open. 谢谢管理层接受我这边提问。主要想请教一下，在当前疫情的宏观环境下，公司利润率和成本控制相关的问题。首先还是想看一下我们最新的战略重点是什么，会不会把毛利率的提升和费用的控制放在更高的重要度上。然后上个季度的业绩会上，我们是提出了2024年实现non-GAAP口径下盈亏平衡的目标，那这个目标目前是不是会有一些变化？然后我们怎么来平衡这个目标跟用户增长的关系。最后也想请管理层就基于这些帮我们展望一下二季度和下半年那个毛利率趋势，包括各条业务线的毛利率变化。Thanks for taking my question. I would like to ask questions related to gross margin and cost control under the ongoing COVID-19 pandemic. Firstly, with the latest strategic focus, will you place higher priority on gross margin improvement and cost control? We propose the target to achieve the break-even point on non-GAAP basis by 2024 in last quarter's earnings call. Is there any change? How do you balance the target with user growth? Last, what's the gross margin trend for the second quarter and the second half of the year? Appreciate a lot if you could share more color on the segment gross margin trend. Thank you. 我们过去提出的2024年breakeven的这个目标不会有变化。因为我刚才也提到了，就是疫情给我们的这个业绩带来的影响，它都是短期的，这个临时性的一个影响。从长期来看，我认为不会有影响。所以的话，就是我们这个实现盈利的这个时间目标也不会有变化。 The target of achieving non-GAAP operating breakeven by 2024 remain unchanged. As I mentioned, the COVID impact for Bilibili is short term and temporary. It doesn't hurt our fundamentals or nor our long-term target. 其实我们看这个季度的毛利，它的压力主要是因为疫情的原因，我们的收入增长放缓了，所以它就凸显出了毛利的一个压力。但是如果我们看数据，我们会发现，就是我们在这个季度，我们并不是花的比以前多了。 The margin pressure you see in first quarter is mainly due to COVID that resulted in slow down of our revenue growth. If you look at the expense side, we're actually not spending more money. 就刚才你提到就是用户增长和节约费用之间的关系。其实我认为这点还好，因为B站的用户增长它本来就不是靠投放和靠营销去驱动的，就是我们的用户增长它是一个生态驱动，它最主要还是我们内生地产生更多的好内容。我们所有的营销和对外投放只是让用户希望用户能够更快地进来看到这些内容。但是的话，它并不是说因为有了这些投放，然后用户才留在B站。事实上的话就是我们的留存率，我们的活跃度一直是不错的。所以呢，就是在未来的话，我们会更加地优化用户增长方面的一个ROI，但是这个优化不会影响到我们用户增长的大趋势，更不会影响到我们的留存率。 You ask about the relationship between user growth and expense control. As a matter of fact, Bilibili's user growth model was never purely driven by the sales and marketing expense. It's actually driven by our content ecosystem, by this innate in-nature growth good content. Those good content is essentially attracting user growth. The expense we spend on sales and marketing is only helping people to quickly realize there's a very good platform called Bilibili. It's never about just spending sales and marketing to drive user growth. As a matter of fact, our users' engagement level and retention level has remained a very healthy nature, and in the future, we'll be paying more attention on the sales and marketing ROI. But for this effort, it will not impact our user growth trend as well as the retention rate. 对，刚才你问到我们会不会把费用控制然后放在一个更高的重要度上。其实在上个季度的财报的时候，我也提过，就是从今年年初开始，我认为整个国际和国内的形势，它都跟过去是有一个变化。我觉得这次的疫情虽然是个突发事件，但是呢，很多事，就是很多我们看到的、面临的，就是行业的一些困难，它也并不都是因为疫情的原因，我觉得还是因为整个的国际和国内的形势也发生变化。在这种情况下，我觉得对于B站也好，甚至于对于整个行业也好，就降本增效，它本身就应该变成一个更重要的工作，而不是说是我们针对疫情要去做的一件事情。而且不仅是在具体形势上，某些形势上的降本增效，我认为在战略上也应该更聚焦核心业务，首先要选择把自己的核心业务做深，而不是把自己的这些所有的业务都做广。所以我觉得降本增效肯定是，我认为不仅是对于B站，还是对于整个行业，未来几年我认为都还是会是一个重要的工作，但它不是说是为了应对疫情才做的，它是行业到了这个阶段。 As the question whether we're gonna put expense control on top of everything else. Like I mentioned in last earnings call, starting from 2022, there's a lot of macro changes domestically and internationally, even though there's an additional COVID impact. A lot of the difficulties we're facing is not just brought because of the COVID. In nature, to control cost and improve efficiency is the most important job for Bilibili and also for the industry as well. For the specific action points, we wanted to be very, very focused strategically to go deep with our business, not go broad. This has come to a stage for Bilibili as well as the industry player to be all focused on cost control and efficiency improvement. 对，刚才说到这个毛利，就是我也提到，就是我觉得第一季度我们毛利，现在在数字上的这个下降主要的原因是因为就是上半年受疫情的影响的这个收入下降。所以的话，那个我们认为就是下半年，随着这个疫情的一个结束，然后我们的收入的一个增长，就会回到原来的一个轨道上去，然后这样的话就是毛利也会有一个明显的一个改善。就Sam，你可以说一下我们接下来的一个预测。 As for the gross margin, the margin pressure that we're facing first quarter is mainly because the COVID impact resulted in the revenue growth slowdown. As I mentioned, as the COVID starting to ease in the second half of this year, our revenue growth rate will return to a normal trajectory, and also the gross margin level will come along with it. Yeah. I just want to add some points. First of all, you know, when we are talking about the breakeven, everyone is prioritizing the cost control, efficiency improvement. We think for Bilibili animation by Mr. Chen, it's equally important to expand our top line. First of all, we still believe there are plenty of room for us to improve our monetization efficiency. We aim to improve our paying ratio and expand our ad market share, you know, to improve our segment margin throughout the second half of this year. Even in the first quarter, we still saw the gross profit margin for live broadcasting and our ad business improved quarter-over-quarter. That trend will continue in the remainder of this year. For the cost control side, we also made some progress in the first quarter. You know, in the second quarter, there are some pandemic, so the result of the cost control action will be more reflected in the second half of this year. There are some highlights to the numbers. First of all, you saw the selling marketing expenses decreased by 29% quarter-over-quarter. Now it's just reflect to 25% of total revenues. Last quarter was, you know, 30%. For the server bandwidth cost, it's down like 2% quarter-over-quarter, while our total user traffic grow like 28% quarter-over-quarter. For R&D expenses, we primarily invest in game development, data, ad efficiency, and product-related abilities. We still believe it's essential to improve our productivity and to improve our monetization efficiency, but we thought it's also important to invest in the future, and then also look at the ROI of those investments. This year we plan to continue and selectively invest in this area, but we will closely monitor the progress of each product, project and make adjustment if necessary, and to improve our, you know, total capital efficiency. We expect the sales and marketing, G&A and R&D as a percentage of total revenue will gradually decline from Q3, as our top line expands and the loss margin will be naturally narrowed. For Q2- And that- Yeah, the overall spending will be flat quarter-over-quarter, so that will be, you know, the outlook for the margin side. Yeah, that's all. That concludes the question and answer session. I would like to turn the conference call back over to management for any additional or closing comments. Well, thank you once again for joining us today. If you have further questions, please contact me, Juliet Yang, Executive Director of Investor Relations, or TPG Investor Relations. Our contact information for IR in both China and U.S. can be found on today's press release. Have a great day. Bye-bye. This concludes the program. You may now disconnect.