Thank you for standing by, and welcome to the iQIYI second quarter 2023 Earnings Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key, followed by the number one on your telephone keypad. I would now like to hand the conference over to Ms. Chang You, IR Director of the company. Please go ahead. Thank you, Operator. Hello, everyone, thank you for joining iQIYI second quarter 2023 earnings conference call. The company's results were released earlier today and are available on the company's investor relations website at ir.iqiyi.com. On the call today are Mr. Yu Gong, our Founder, Director, and CEO, Mr. Jun Wang, our CFO, Mr. Xiaohui Wang, our CCO, Chief Content Officer, Mr. Wenfeng Liu, our CTO, Chief Technology Officer, Mr. Youqiao Duan, Senior Vice President of our Membership Business, and Mr. Gang Wu, Senior Vice President of Brand Advertising Business. Mr. Gong will give a brief overview of the company's business operations and highlights, followed by Jun, who will go through the financials. After the prepared remarks, the management team will participate in the Q&A session. Before we proceed, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC. iQIYI does not undertake any obligation to update any forward-looking statements, except as required under applicable law. I will now pass on the floor to Mr. Gong. Please go ahead. Hello, everyone. Thank you for joining us today. Our focus of the quarter remained firmly on generating high-quality growth. Our original content strategy continues to deliver top-notch titles, which in turn brought the strongest second quarter performance in our history in terms of key metrics, such as total revenues, profits, free cash flow, and average daily subscribers during the quarter. Also, we maintain our industry leading position across various key aspects. The exceptional quarterly results clearly demonstrate the resilience and immense long-term growth potential of our business. Now, let me walk you through the key developments in the second quarter. Firstly, we maintain our industry leading position in drama market share for six consecutive quarters. According to Enlightent, our original dramas continue to play a major role in terms of content supply and the revenue contribution. Notably, the series "Destined" broke iQIYI's popularity index record by exceeding the 10,000 score in the shortest time. In addition, titles such as "Thirteen Years of Dust, 尺 三 载 ", and "The Ingenious One, 云 襄 传 ", generated highly positive word of mouth reviews, reinforcing our brand image as a diversified and high-quality premium content powerhouse. Second, from a financial perspective, we have the best second quarter revenue performance in our history. At 17% year-over-year, we recorded double-digit annual revenue growth across all key business lines. Membership services revenue grew 15% annually, and advertising revenue grew 25% annually. Meanwhile, non-GAAP operating income hit RMB 786 million, grew by 129% annually, marking the sixth consecutive quarter of profitability. Furthermore, our ability to generate cash further strengthened, with free cash flow reaching RMB 872 million, positive for all consecutive quarters. Our performance in the second quarter represents another solid step in our pursuit of high-quality growth. As we previously mentioned, iQIYI and the entire industry have been completely transformed. With recent rationalized competition, we have seen improving return on investment for the intel streaming industry. As an industry leader, iQIYI largely enhanced original content ability to financial performance, set a new market standard that drives the overall industry advancements. In light of this, we aim to enhance the long-term health of our content production and operation, so that we can consistently outperform the industry. Now, let's dive deeper into the performance of our core business segment, starting with membership services. During the quarter, both membership revenue and the number of subscribers hit all-time high for a second quarter. Membership revenue exceeded RMB 4.9 billion, up 15% year-over-year. Look at the key drivers behind. Monthly ARM for the quarter reached RMB 14.82, increasing both annually and sequentially. This was driven by our refined operating strategy. For example, we optimized our pricing strategy, which effectively narrowed the gap between listing and actual rates. Average daily number of total subscribers in Q2 reached 111.2 million, up 13% year-over-year, primarily driven by our stable supply of content that continues to attract and retain members. Our subscriber base declined on sequential basis, primarily due to, one, the impact of seasonality, and two, the high base effect after the release of the The Knockout, Kuang Biao. The natural attrition of members. Despite that, we are encouraged by the continuous optimization of membership structure. The absolute number and the proportion of annual subscribers both had meaningful growth year-over-year. I would like to reiterate that the goal of our membership business is to maximize user experience, which in turn, which in return driving our membership service revenue. Going forward, we are more focused on the overall economics, not just the pure subscriber growth. We dynamically adjust and carefully balance the number of subscribers on the ARM basis, based on multiple factors, including content supply, user demand, and the market conditions. More importantly, we strive to enhance the overall healthiness and the revenue growth, the sustainability of our membership business. Providing exceptional user experience is key. To do so, we established a loyalty program that includes diversified privilege and benefits. The long-term loyal members can enjoy more favorable pricing and private privileges, reinforcing user perception that earlier in enrollment and long-term subscription offer greater benefits. Just recently, we rolled out the Express Package program, which grants early access to the finale of our hit drama, The Lotus Casebook, Lian Hua Lou. Within the event, over 6 million subscribers have used their membership points to access the private package. Our first Express Package event received very positive feedback among members. As membership points are linked to the duration and the continuous subscription, members with longer subscription periods are entitled to higher reward points and also accumulate points at a faster speed. We expect this initiative will further strengthen subscriber loyalty and drive member retention rate. Moving on to content. We continue to execute our original content strategy and reinforce our brand image as a diversified and high-quality premium content powerhouse. In the first half of 2023, we have, we have already released two dramas that broke the 10,000 popularity index score. As I mentioned earlier, we maintained the top position in the drama market share for six quarters in a row. Original content remained the primary driver to our content supply and revenue. Among all major dramas released during the second quarter, original content accounted for 67%, and we think their share of revenue contribution remaining high. We kick off our summer 2023 line up with the release of Destined, which was the fast, fastest drama in our history to break 10,000 popularity index score. This was the ninth show that broke such score in our history, and the second title that did so this year. In addition, Thirteen Years of Dust, under our Mist Theater brand, and The Beauty of Resilience, Huarong also received critical acclaim for their appealing stories. At the same time, our original variety shows means they are strongly termed, and their popularity remain as strong as ever. Our market share for total variety shows was the highest in the industry, according to Enlightent. Even more impressive was the market share for our exclusive variety shows, which doubled sequentially. The highly anticipated show launched in Q2 included our flagship, The Detectives' Adventures Season 3, 蒙 古 探 案, The Rap of China 2023. "HAHAHAHAHA Season 3, Wuha", and innovative new shows such as "Become a Farmer, 中 介 大 少 年". This season of "The Rap of China 2023" was a true hit, scored the highest popularity index score for variety shows. Moreover, we completed a holistic commercialization of the show, which expanded its cultural influence, influence into other verticals, including concerts, artist agency, and merchandise. Songs from the show were also released on leading streaming music platforms, such as Tencent Music and NetEase Cloud Music, driving record high music revenue for this IP. The third season of "The Detectives' Adventures Season 3" generated the highest popularity index score of any season. Additionally, "Become a Farmer", wrapped up in the second quarter, gained critical acclaim with a, a nomination for the best variety show, at the well-known 28th Shanghai Television Festival, Magnolia Awards. We are also excited to see original content is widely recognized across TV stations in China. In Q2, we distributed 30 dramas to broad TV networks, including CCTV and the provincial centralized channels, with whom we have built a long-term partnership. This partnership, we are able to expand our content reach and grow its influence among different demographics. Heading into the second half of the year, we have a wide range of exciting and diversified premium content in the pipeline. Our summer 2023 lineup have been bolstered by highly anticipated Asian custom dramas, including "Mysterious Lotus Casebook", which was the latest under the 10th drama that broke the 10,000 popularity index. "Love You Seven Times, 七 时 吉 祥 ", also was launched, and the "Demon Hunter's Romance, Wu You Du", will follow. Moreover, we are broadening our presence in the crime drama genre with popular titles such as "The Lost 11th Floor, 消 失 的 十 一 层 ", and "Imperfect Victim, 不 完 美 受 害 人 ". Both of which will generated a significant user traction and exceeded a popularity index of 9,000. Our offering will be further increased by the "Bright Eyes in the Dark, 卡 通 或 双 重 so eye". For this summer season, we have been abundant, high quality new releases in both online drama, series, and offline, the article movie. As media companies fiercely compete for users' attention, our top-notch content offering have allowed us to maintain our leading position in the drama category. This once again proves our strength in the content business. For variety shows, our pipeline in the second half will consist of both sequels. Two classic and innovative new IPs. "Season 3 of The Big Five, 语 帅 的 小 天 ", makes a strong comeback, and other key programs include "Let's BBQ, 一 起 撸 串 吧 ", "House of Talent, 叫 我 优 点 生 ", and "As You Wish, 一 百 万 个 约 定", which integrates crossovers from our key dramas. Our pipeline also includes other numerous exciting releases, including films such as "Fight Against Evil 2, 没 有 警 察 故 事 二 ", and "Looking Up, 银 河 微 商 ", children's cartoon, such as new seasons of "Ori-Princess Season 3", and "The Girl's World Season 3", as well as original animation, including "The Great Ruler, 大 主 宰 ", "War Arrow", "The Red Planet, 风 火 战 纪 ", and "The Land of Miracles, 神 澜 奇 域 无 双 州 ". Moving on to advertising business. We are delighted to see an accelerated recovery. Our total ad revenue recovered to RMB 1.5 billion, up 25% annually and 7% sequentially. Both brand ads and the performance ads recovered annual and sequential growth in Q2. Performance ad revenue doubled year-over-year and reached a historical high, and its growth accelerated on a sequential basis. This solid performance was driven by a combination of factors. One, the current higher share of ad budgets during the 618 Shopping Festival. Two, targeted and efficient operations brought higher budget from key sectors such as internet services, e-commerce, and games. Three, optimizing algorithm for better ad performance and monetization efficiency, and four, applying generative AI to enhance ad creation and ROI. Brand ad revenue also grew annually and sequentially, benefiting from several factors. One, Q2 being the high season for food and beverage sectors. Two, increased ad budgets during the 618 Shopping Festival compared with last year. Three, more robust pipeline of variety shows contributing to an expanded ad inventory. Four, and a low base effect when compared to the same period last year. We also observed increasing demand for ads related to key dramas. With the improving quality of iQIYI originals, the number of advertisers signing annual contracts and the contract rate both increased meaningfully as compared to the same period last year. Key dramas, "Destined", attracted over 4K brand advertisers, generated highest ad revenue among all dramas launched this year. Heading into the second half, we remain cautiously optimistic about the outlook of overall advertising market. While we noticed a steady rebound in consumption sentiment, we do aware that the macroeconomic recovery will have a lagging effect on the brand advertising business. In that sense, we still hold positive view of the long-term growth of brand advertising market in China. We expect, expect certain counter cyclical cyclical factors, including food and beverage, as well as those that benefit from reopening policies and recovering on a relative faster pace. Moving on to technology and products. Technical innovation is one of our core values. We keep, we keep improving content production and operation efficiency by driving technology innovation, such as generative AI. We have been applying generative AI in content production, marketing, user interaction, and receive encouraging initial results. For example, through large language model, scripts can directly be processed to extract key information effectively, accelerating the assessment process and improving budgeting and resource management. Our internal data shows that the accuracy rate of scene and the character breakdown, and by generative AI, has exceeded 90% so far. Generative AI can quickly assess intricate story plots to enhance the user experience by improving search, search results, recommendation, and playback interactive experience. The generative AI has also been helping us in creating advertising ideas and boosting monetization performance. To give you an example, performance ads using generative AI to produce ad content increased ROI by 20 percentage points. I'd like to give you some updates on our growth and early-stage business. I'll start with iQIYI Lite, which continues to generate high quality and healthy growth. This is being driven by our improving monetization capabilities. iQIYI Lite has already been profitable at the operating level for three consecutive quarters. Our total revenue reached a historical high in Q2, up 35% year-over-year, with membership revenue increased by 87% annually, primarily driven by the ad-supported basic membership packages. Next, let's talk about business performance in regions outside of mainland China. Our premium content continues to grow in popularity, we saw solid membership revenue growth. In particular, Hong Kong, the U.S., and Canada had annual growth of more than 50%. The cultural influence of high-quality original Chinese drama is growing rapidly. Revenue generated by original production increased by 160% year-over-year. Original Chinese drama, "Oh No, Here Comes Trouble, Bu Liang Zhi Nian Qing Chu Shi ", became the top revenue title in Taiwan. Ancient and costume dramas, "Destined", and "The Beauty of Resilience", topped the broadcasting list in various markets, including Southeast Asia, East Asia, and North America. With plenty of premium titles in pipeline for the third quarter, we will continue to fortify our competitive edge for developing premium Chinese video content. We will also continue to develop a closed loop in terms of content marketing and promotion, user growth, and subscriber acquisition, promoting Chinese content to a wider range of audience in the overseas market. In summary, we are pleased with the solid progress in our pursuit of high-quality growth. Looking forward to the second half of the year, looking forward to the second half this year, we will keep focusing on the long-term sustainability and health of business, strengthening our competitive position in the long run. Our robust premium content pipeline will continue to create the flywheel effect, reinforcing the online improvement of our business fundamentals. On top of exceptional results, we will also closely monitor the right opportunities and make selective strategic investments to further fuel the next wave of growth. We appreciate all your support and look forward to building great value together. Now, let me pass to Jun to go through our financial performance. Thanks, Mr. Gong. Hello, everyone. As Mr. Gong mentioned earlier, we recorded our best-ever second quarter results across multiple key financial metrics, such as total revenues and core membership or services revenue, while the profits and the free cash flow remained robust. In addition, our balance sheet healthiness was further improved. Now, let me walk you through key numbers. Total revenues increased by 17% annually to RMB 7.8 billion, setting an all-time high for second quarter performance. We secured double-digit annual revenue growth across all business segments. Membership services revenue continued to serve as the most powerful growth engine, with revenue exceeding RMB 4.9 billion, up 15% annually. Online advertising sped up its growth as revenues reached RMB 1.5 billion, with an accelerated annual growth rate of 25%, which was fueled by the growth in both brand and performance ads, with performance ads being the key driver and to a lesser extent, from brand advertisement. The company distribution revenue and other revenues rose by 15% and 16% respectively on annual basis as well. Moving on to costs and expenses. Our cost of revenues increased by 10% annually, among which content costs increased by 7% annually. This was primarily driven by an increase in number of original drama and variety shows launched during the quarter. Total operating expenses grew by 11% annually, largely due to the increase in SG&A expenses. We devoted more resources in marketing, as we believe this could amplify our content influence, increase subscriber attraction, and enhance the strong momentum generated by our original content offerings. Turning to profits and cash flows. Non-GAAP operating income reached RMB 786 million, up 129% annually, positive for six consecutive quarters. Free cash flow reached RMB 872 million, positive for four consecutive quarters. During the quarter, as part of our liability management initiatives, we repurchased a total principal amount of $133.6 million of our convertible senior notes due 2026. In addition, the total interest-bearing debt decreased significantly quarter-over-quarter. As of the annual second quarter, the company has cash, cash equivalents, restricted cash, short-term investments and long-term restricted cash included in the prepayment and other assets, a totaling of RMB 6.1 billion. To conclude, the second quarter results once again demonstrated that we are making solid progress in delivering high quality growth, and we are well positioned to generate greater value for our stakeholders in the long run. For detailed financial data for the second quarter, please refer to our press release on our IR website. Now we will open the floor for Q&A. Thank you. If you wish to ask a question, please press star, then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. Please ask your question in Chinese first, then repeat in English. We ask that questions are limited to one per person. Please rejoin the queue to ask any follow-up questions. Your first question comes from Xueqing Zhang of CICC. Please go ahead. Hey, [Foreign language] Good evening, management. Thanks for taking my question. My question is related to the membership business. The ARM have maintained a stable growth in the past two quarters. What's the longer-term target for ARM? Also, how should we think about the outlook for the membership service in the second half of this year and the longer term? Thank you. Thank you. We will invite Mr. Duan, who's responsible for the membership business, to answer the question. Uh, [Foreign language] Okay. Our membership business development have different focuses and strategies at different stages. In the initial establishment and rapid growth phase, the primary goal was to maximize the number of subscribers, which was focusing on growing the subbase. When the subbase reached a significant size, for example, when our subbase was first in the market, that exceeded RMB 100 million in 2019, our objective shifted to membership revenue base on the re-revenue based on the market condition and our own strategy adjustment, so no longer purely just focused on the sub number. Our membership revenue is determined by this phase, subscriber lifetime and ARM. Our goal is not only to focus on the current quarter revenue, but to achieve long-term and substantial growth in membership revenue, taking a more long-term perspective in business planning and improving the overall health of our membership business. 呃 ， 未 来 呢 ， 我 们 会 继 续 坚 持 这 个 策 略 。 呃 ， 首 先 我 们 会 继 续 引 导 用 户 做 长 期 订 阅 ， 呃 ， 提 高 长 周 期 卡 的 用 户 占 比 。 我 们 已 经 看 到 年 卡 的 规 模 和 年 卡 的 占 比 ， 呃 ， 一 直 在 持 续 ， 呃 ， 同 比 一 直 在 持 续 提 升 。 呃 ， 我 们 希 望 未 来 这 个 趋 势 能 够 继 续 保 持 。 其 次 ， 我 们 会 继 续 推 进 会 员 忠 诚 度 建 设 ， 呃 ， 特 别 是 提 升 长 期 会 员 的 价 值 感 知 。 呃 ， 目 前 呢 ， 已 经 推 出 一 系 列 的 举 措 。 In the future, we will continue to adhere to the strategy we mentioned earlier. First, we will continue to encourage, encourage subscribers to subscribe for a long period, increasing the proportion of long-term subscribers. We have already seen continuous annual growth in the scale and also the percentage of annual subscribers, and we hope this trend will continue. Secondly, we will continue to systematically promote membership loyalty, particularly by enhancing the value perception of long-term subscribers. We have already implemented a series of measures, for example. 呃 ， 第 一 点 呢 ， 是 给 予 长 期 订 阅 的 会 员 价 格 和 权 益 的 倾 斜 ， 呃 ， 强 调 强 化 用 户 买 得 越 早 越 好 ， 买 得 越 长 越 好 的 认 知 。 First, we provided a discounted price and privileges for long-term subscribers, reinforcing, members understanding that the long, the earlier and longer you subscribe, the better. 呃 ， 第 二 点 呢 ， 我 们 通 过 会 员 积 分 体 系 ， 呃 ， 让 长 期 订 阅 的 老 用 户 受 益 ， 呃 ， 提 高 会 员 的 留 存 率 ， 让 平 台 能 够 从 更 长 的 会 员 生 命 周 期 中 获 得 中 长 期 的 收 益 。 呃 ， 比 如 近 期 的 莲 花 楼 嘉 庚 里 ， 就 是 会 员 积 分 应 用 的 一 个 好 的 场 景 案 例 。 呃 ， 八 天 嘉 庚 里 活 动 吸 引 了 超 过 六 百 万 会 员 ， 通 过 积 分 呢 来 兑 换 嘉 庚 里 。 We introduced a membership loyalty program that contains membership point system, which favors long-term loyal subscribers. We believe this will improve user retention rates and enable the platform to generate mid to long term revenue from extended subscribing life cycles. For example, we rolled out the recent, the Lotus K-book Express Package program, which was a meaningful application upgrade of our membership point. During the eight-day event, over 6 million subscribers have used their membership points to access the Express Package. 呃 ， 总 体 来 说 呢 ， 随 着 会 员 价 值 感 知 的 提 升 ， 呃 ， 我 们 相 信 爱 奇 艺 会 员 的 忠 诚 度 和 留 存 率 呢 会 自 然 的 提 升 ， 从 而 推 动 呃 ， 长 期 会 员 的 ARM 和 会 员 收 入 的 增 长 。 谢 谢 。 Overall, we believe with the improvement in membership value perception, we believe that the membership loyalty and retention will naturally increase, driving the long-term growth in ARM and also membership revenue. Thank you. Our next question will come from Lei Zhang of Bank of America Securities. Please go ahead. 啊 ， 嗨 ， 管 理 层 ， 呃 ， 你 们 好 ， 谢 谢 接 受 我 的 提 问 。 呃 ， 我 的 问 题 主 要 是 关 于 内 容 方 面 的 ， 就 是 有 看 到 今 年 暑 期 档 的 话 ， 各 家 都 上 了 不 错 的 内 容 ， 然 后 表 现 也 还 可 以 ， 所 以 想 看 一 下 公 司 怎 么 看 我 们 今 年 暑 期 的 这 些 变 化 ， 还 有 呃 ， 爱 奇 艺 我 们 怎 么 样 可 以 保 持 在 内 容 方 面 的 一 个 竞 争 优 势 ， 呃 。 还 有 就 是 今 年 线 下 的 娱 乐 的 情 况 ， 呃 ， 复 苏 得 比 较 强 劲 ， 尤 其 是 电 影 ， 然 后 不 知 道 ， 呃 ， 这 个 对 我 们 的 呃 ，business 有 没 有 一 些 影 响 ？ 呃 ， 我 自 己 翻 译 一 下 ， Uh, thanks management for taking my question. We have seen that key long form video player launched several content this summer with good performance. Want to see how should we look at the change, changing environment, and how should IQ keep the competitive ad-advantage in content perspective? On the same time, we have noticed that the offline entertainment actually saw strong recovery, especially in movie. Do we see an impact or benefit to our business? Thank you. Thank you, Lei. We will invite our CCO, Mr. Xiaohui Wang, to answer this question. 嗯 ， 大 家 好 ， 我 是 王 晓 辉 ， 呃 ， 我 来 回 答 这 个 问 题 。 呃 ， 确 实 ， 今 年 那 个 暑 假 行 业 内 的 优 质 内 容 呢 供 给 还 是 非 常 充 足 。 我 们 看 到 了 ， 其 实 无 论 是 线 上 的 戏 剧 或 者 是 线 下 的 电 影 ， 都 在 竞 争 用 户 的 注 意 力 。 呃 ， 这 一 方 面 呢 ， 我 们 是 非 常 高 兴 看 到 我 们 长 视 频 行 业 百 花 齐 放 ， 内 容 品 质 提 升 ， 行 业 生 命 力 也 被 再 次 激 活 。 其 实 市 场 繁 荣 对 大 家 都 是 一 个 好 事 情 。 For this summer, we've seen the industry has a better supply of high-quality content, whether it's online dramas or offline theatrical movies. All of these are actually competing for users' attention. We are also pleased to see the flourishing of the long, long form video industry. We believe with the improved content quality, the industry vitality has been activated, and we believe the market prosperity is beneficial for everyone. 在 这 个 背 景 下 ， iQIYI 还 是 凭 借 着 高 质 量 的 原 创 内 容 ， 保 持 了 我 们 线 上 戏 剧 的 领 先 地 位 。 这 已 经 是 连 续 six 个 季 度 ， 我 们 在 戏 剧 的 总 市 占 率 和 独 播 戏 剧 的 市 占 率 方 面 保 持 了 行 业 的 1st 。 Q2 我 们 再 次 经 受 住 了 考 验 ， 这 也 显 示 了 我 们 在 内 容 方 面 的 优 势 和 可 持 续 性 。 Under this backdrop, we have maintain our leading position in online drama driven by our high quality original content. We have been leading the industry for six consecutive quarters in terms of the overall drama market share and also the exclusive market share. Once again, we have withstood the test in Q2, which demonstrated our advantage and sustainability in the content business. 大 家 知 道 内 容 行 业 呢 ， 是 个 长 周 期 的 业 务 ， 长 期 取 胜 的 关 键 在 于 能 否 持 续 地 生 产 和 供 应 高 品 质 的 内 容 。 在 核 心 的 戏 剧 品 类 ， 由 于 戏 剧 具 有 更 长 的 制 作 周 期 ， 我 们 在 这 个 领 域 的 竞 争 优 势 在 短 期 之 内 是 难 以 超 越 的 。 As everyone know, the content industry is a long-term business. The key to long-term success lies in the ability to continuously produce and supply high-quality content. In the core drama category, due to the nature of longer production cycle for dramas, our competitive advantage in this area is difficult to surpass in the short term. 呃 ， 另 外 ， 目 前 呢 ， 我 们 看 到 行 业 内 的 各 核 心 的 玩 家 呀 ， 都 在 建 立 独 播 内 容 的 差 异 化 优 势 ， 以 原 创 的 内 容 和 独 播 内 容 为 主 ， 内 容 差 异 化 大 幅 提 升 ， 这 种 竞 争 态 势 是 更 加 良 性 的 。 Additionally, poor market players are establishing different, differentiated advantages, focusing on original content and exclusive content. As such, the content differentiation has been greatly improved, and the competition environment has been more benign and rational. 我 们 相 信 在 爱 奇 艺 成 熟 而 且 仍 然 在 不 断 完 善 加 强 的 内 容 生 产 机 制, 强 大 的 运 营 能 力, 领 先 的 技 术 能 力 和 行 业 优 质 人 才 的 加 持 下, 我 们 的 优 势 是 可 预 见 和 可 保 持 的. We believe that our advantages in the content business are foreseeable and sustainable, supported by four strong pillars: a mature and continuously improving content production mechanism, strong operating capabilities, leading technology capabilities, and our top industry talent. 未 来 我 们 会 继 续 坚 定 ， 创 新 策 略 、 精 品 策 略 、 多 元 化 策 略 ， 并 持 续 不 断 地 坚 持 从 创 新 研 发 中 寻 求 新 突 破 。 同 时 我 们 还 在 保 证 项 目 质 量 的 前 提 下 ， 会 精 心 、 精 细 地 做 好 开 机 和 生 产 规 划 ， 确 保 长 期 可 持 续 的 多 元 精 品 内 容 供 给 。 In the future, we will continuously firmly adhere to innovation, premium content, diversification, and continuously seeking new breakthroughs through innovations and research. While ensuring the quality of projects, we will carefully plan our productions to ensure a long-term and sustainable supply of diverse premium content. 另 外 ， 针 对 线 下 娱 乐 的 复 苏 ， 我 们 一 方 面 还 是 要 更 加 专 注 自 己 的 特 长 ， 专 注 线 上 内 容 的 制 作 和 运 营 。 另 一 方 面 呢 ， 线 下 院 线 电 影 的 恢 复 ， 也 有 助 于 作 为 播 出 第 二 窗 口 的 线 上 视 频 平 台 ， 电 影 的 供 给 恢 复 增 长 。 谢 谢 。 Regarding the recovery of offline entertainment, on one hand, we will continue to focus on our strengths, concentrating on the production and operation of our content online. On the other hand, the recovery of offline theatrical movies will benefit online video platforms as the second window movie supply will recover and increase. Thank you. Our next question today will come from Alicia Yap of Citigroup. Please go ahead. Hello, thank you. 管 理 层 晚 上 好 ， 谢 谢 接 受 我 的 提 问 。 我 是 想 ， 请 教 管 理 层 ， 跟 我 们 分 享 一 下 ， 咱 们 对 今 年 下 半 年 整 体 品 牌 广 告 市 场 的 一 个 前 进 的 看 法 ， 不 知 道 我 们 有 没 有 观 察 到 ， 比 如 说 广 告 主 的 预 算 发 生 一 些 ， 变 化 ， 然 后 我 们 iQIYI ， 对 于 广 告 的 一 些 策 略 有 什 么 改 变 吗 ？ 我 自 己 翻 译 一 下 。 Good evening, management, thanks for taking my question. Wonder if management could share with us what's your view on the overall brand advertising market outlook for the second half this year? Have you observed any major shift of budget sentiment from advertiser? Will iQIYI modify any of your advertising strategy? Thank you. Thank you, Alicia. We'll invite our Senior VP of Brand Ad Business, Wu Gang, to answer the question. 呃 ， 大 家 好 ， 我 是 吴 刚 ， 呃 ， 我 来 回 答 这 个 问 题 。 呃 ， 公 司 的 品 牌 广 告 业 务 在 持 续 地 复 苏 中 ， 呃 ，Q2 已 经 止 跌 反 弹 ， 同 环 比 都 有 所 增 长 。 iQIYI's overall advertising business has been in a continuous, continuous recovery phase, with brand advertising rebounded in Q2, growing both year-over-year and also quarter-over-quarter. 呃 ， 由 于 经 济 恢 复 ， 呃 ， 传 导 到 品 牌 广 告 市 场 会 有 一 些 滞 后 性 ， 所 以 我 们 对 下 半 年 品 牌 广 告 市 场 还 是 持 谨 慎 乐 观 的 态 度 。 As the economy recovery takes time to reflect in the brand advertising market, we hold a cautiously optimistic attitude towards the brand advertising market for the second half of this year. 呃 ， 爱 奇 艺 是 中 国 互 联 网 行 业 中 拥 有 ， 呃 ， 用 户 质 量 最 高 、 付 费 能 力 和 付 费 ， 呃 ， 意 愿 最 强 的 平 台 之 一 ， 所 以 我 们 ， 呃 ， 是 广 告 主 提 升 品 牌 影 响 力 不 可 或 缺 的 一 个 选 择 。 We think iQIYI is one of the platforms in the in the Chinese Internet industry that have the highest user quality as well as strong consumption power and a user's willingness to pay. We are an indispensable choice for advertisers in enhancing their brand influence. 我们 也 看到 广告主 对于 我们的 内容 和 创新 产品的 认可 程度 也 越来越 高. 头部 剧 和 综艺 载重 的 内容 营销 广告 的 承担 收入 强劲 增长. 同时 重点 硬广 创新 产品 也 受到 了 广告主 的 青睐. We have been seeing increasing recognition from advertisers for our content and also innovative products. The finding amount of content marketing advertisement has been driven by top-notch drama and variety shows, and there have been a strong preference and a acceptance for advertising from advertisers for our innovative ad products. 在 当 前 的 宏 观 环 境 下 ， 不 同 行 业 的 品 牌 广 告 主 依 据 其 战 略 的 眼 光 ， 以 及 对 市 场 的 长 远 判 断 ， 制 定 相 应 的 投 放 策 略 ， 其 中 有 些 具 有 前 瞻 战 略 眼 光 的 品 牌 广 告 主 会 增 加 投 放 ， 抓 住 市 场 的 先 机 。 Under the current macro environment, brand advertisers from different sectors are formulating corresponding advertising strategies based on their strategic vision, and also the long term market view, among which, certain brand advertisers with forward-looking strategic vision may increase their ad spending, seizing marketing opportunities by occupying the market. 从 细 分 的 行 业 来 看 ， 我 们 看 好 食 品 饮 料 行 业 、 化 妆 卫 浴 行 业 以 及 ， 交 通 ， 包 括 新 能 源 这 样 的 行 业 。 谢 谢 。 Looking at the specific sectors, we are optimistic for the food and beverage industry, cosmetic and personal care industry, as well as the transportation industry, which also includes new energy vehicles. Thank you. Our next question today will come from Lincoln Kong of Goldman Sachs. Please go ahead. 哎 よ ， 好 ， 谢 谢 ， 感 谢 你 接 受 我 的 提 问 。 那 我 的 问 题 可 能 更 多 的 是 关 于 效 果 广 告 这 边 。 我 们 当 然 也 看 到 这 边 持 续 的 有 一 个 ， 上 半 年 有 持 续 的 一 个 恢 复 ， 可 不 可 以 请 各 位 分 享 一 下 我 们 对 效 果 广 告 往 下 半 年 的 一 个 展 望 是 怎 么 样 的 。 Thank you, management for taking my question. My question is about the performance advertising here. We've been seeing a continued recovery of our performance ads in the first half. How do we think about the second half outlook for this set of business? Thank you. Thank you, Lincoln. We'll invite our CTO Wenfeng to answer this question. 谢 谢 ， 我 是 刘 温 峰 ， 我 来 回 答 一 下 这 个 问 题 。 的 确 ， 效 果 广 告 收 入 已 经 连 续 5 个 季 度 保 持 了 同 比 的 增 长 ， 而 且 目 前 看 来 ， 同 比 增 速 还 处 于 持 续 加 速 的 渠 道 中 。 我 们 也 看 到 效 果 广 告 收 入 占 整 体 广 告 收 入 的 占 比 的 比 例 也 在 持 续 地 提 升 。 在 过 去 这 个 Q2， 我 们 创 造 了 一 个 历 史 的 新 高 。 The performance ad revenue has maintained its annual growth for five consecutive quarters, with the growth rate continuous, with actually the growth rate continues continuously accelerating, and its contribution in total ad revenue has continued to increase, reaching a historical high in Q2. 好 ， 根 据 目 前 的 预 期 呢 ， 我 们 ， 呃 ， 判 断 今 年 下 半 年 效 果 广 告 业 务 还 会 保 持 强 劲 的 增 长 ， 主 要 是 受 益 于 我 们 营 销 能 力 的 提 升 ， 对 网 服 、 电 商 、 游 戏 等 重 点 行 业 广 告 预 算 的 挖 掘 ， 以 及 我 们 在 广 告 算 法 的 优 化 和 生 成 式 AI 的 助 力 等 方 面 。 这 些 手 段 我 们 认 为 会 有 效 提 升 ， 呃 ， 投 放 的 效 果 和 变 现 的 效 率 。 It is expected that the performance ad sector will continue to experience strong growth in second half this year, benefiting from our improved market capability, attracting more advertising budget from key industries such as Internet services, e-commerce, and gaming. Now also, we believe with the algorithm optimization and the support of generative AI as performance ads, results, will bring the ad performance and also monetization efficiency to improve. 好 ， 我 们 认 为 效 果 广 告 主 的 创 意 的... 呃 ， 效 果 广 告 主 的 投 放 的 意 向 呢 ， 会 ， 呃 ， 将 来 会 更 加 注 重 在 性 价 比 啊 ， 以 及 投 放 效 果 方 面 ， 力 求 实 现 高 效 转 化 和 投 资 回 报 的 最 大 化 。 所 以 基 于 这 个 判 断 ， 我 们 会 将 持 续 优 化 ， 持 续 强 化 我 们 的 广 告 创 意 、 内 容 个 性 化 和 互 动 性 等 方 面 的 工 作 。... 比 如 通 过 甚 至 是 AI 等 新 的 技 术 ， 我 们 可 以 降 低 广 告 物 料 生 产 成 本 ， 提 升 投 放 效 率 ， 啊 还 能 适 应 不 断 变 化 的 市 场 和 用 户 的 需 求 。 然 后 从 行 业 来 看 的 话 ， 我 们 比 较 看 好 传 统 平 台 电 商 、 直 播 电 商 、 文 化 娱 乐 与 呃 ， 旅 游 出 行 、 生 活 工 具 类 等 这 些 行 业 在 下 半 年 的 这 个 增 长 给 我 们 带 来 的 机 会 。 谢 谢 。 In the future, we think the performance ad advertiser will pay more attention to cost effectiveness and also the advertising performance, striving to achieve efficient conversion and also to maximize returns on investment. We will, going forward, we will continue to strengthen ad creativity, content, personalization, and interactively. We will also leverage new technologies like generative AI to lower ad production costs and also enhance ad delivery efficiency, adapting to the ever-changing market and user demands. From the ad sector's perspective, for the second half of this year, we think we have a positive outlook on different sectors. For example, the traditional e-commerce platform, live streaming, e-commerce, culture and entertainment, travel and tourism, and also the lifestyle food industry. Thank you! Our next question will come from Maggie Ye of CLSA. Please go ahead. 哎，晚上好，感谢管理层给我提问的机会。我这边注意到咱们在这个季度也取得了非常好的运营现金流，自由现金流，并且也回购了$100+ million的可转债。可否请管理层和我们分享一下，我们对未来几个季度在债务管理方面的想法，以及未来对资金使用的规划？谢谢。 Thank you management for taking my question. Noted that the company has generated very strong operating cash flow and free cash flow this quarter and has also repurchased convertible notes. Please could you share with us more about your thoughts on the company's debt level management and plans for financial resources in the coming quarters? Thank you. Thank you, Maggie. We will invite Mr. Jun, our CFO, to answer this question. Sure. Hey, thanks, Maggie, for the question. I think for the interest of time, I will just answer the question in English directly. I think this is a question that we constantly receive, an inquiry that we constantly receive from the investor community as well, and our answer is very straightforward. First and foremost, we are in a process of continuously improving our capital structure. We are still trying every effort to make our balance sheet more healthy, healthier and more robust, and this is what we do. Secondly, I think when within our framework of doing that, there are two things that really matters. The first and the most important thing is actually to continuously generate sizable free cash flow. Just remember, generating sizable cash flow means naturally leverage, regardless of whether we will conduct the debt buyback or not. This is really a key, and this is what we have been very proud to see our progress in the past couple quarters. The second thing is to develop a serious and comprehensive set of the choices to see what we can do to benefit our shareholders best. This set of choices will include, for example, the debt buyback, but it will also include to explore the opportunity to invest for safe returns. As we all know, the external environment has been extremely dynamic, with a rising interest rate and actually provide return opportunities for the company with a free cash flow. With that being said, I think our overall principle remains the same. We explore every opportunity to create value for our stakeholders, including our shareholders and our supporting debt holders, but without compromising the safety of our business for sure. Thank you. This will conclude our question and answer session. At this time, I'd like to hand back to management for closing remarks. Thank you everyone for participating in the call today, and please do not hesitate to ask us if you have any further questions. Thank you, and we will see you next quarter. Thank you.