iQIYI, Inc.

Good day, and thank you for standing by. Welcome to ICV second quarter 2021 earnings conference call. At this time, all participants are in the listen mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. This is to advise that today's conference is being recorded. I would now like to hand the conference over to Ms. Fan Liu, Head of Capital Market of ITE, to read the opening remarks and the safe harbor statement. Please go ahead.

Thank you, Operator. Hello, everyone, and thank you for joining ITE's second quarter 2021 earnings conference call. The company's results were released today and are available on the company's investor relations website at ir.ite.com. On the call today are Mr. Yu Gong, our founder, director, and CEO, Mr. Xiaodong Wang, our CFO, Mr. Xiaohui Wang, our CCO, Trade Content Officer, and Mr. Wenfeng Liu, our CTO, Trade Technology Officer. Mr. Gong will give a brief overview of the company's business operations and highlights, followed by Xiaodong, who will go through the financials and the guidance. After their prepared remarks, Xiaohui and Wenfeng will join Mr. Gong and Xiaodong 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 US 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 ICC. ITE doesn't undertake any obligation to update any forward-looking statements except as required under applicable law. With that, I will now turn the call over to Mr. Gong. Please go ahead.

Hello, everyone. For the second quarter, we maintained favorable momentum from the first quarter. with total revenue approaching the high end of our previous guidance. Our operating law narrowed for the five consecutive quarters on a year-over-year basis due to our effective cost and expense control. During the quarter, we continued to lead the market in multiple operating metrics. According to the third-party data, we ranked at the top of the long need for video industry in terms of mobile MAUs, mobile DAUs, and a total user time span. First, let's start with our membership business. As of June 30, our total number of subscribers reached 106.2 million. This represented 0.9 million net ad sequentially, despite the heightened uncertainty of content launch during the second quarter. Our membership growth was mainly due to three factors. One, our premium content, especially dramas, performed well, which helped to drive the number of subscribers to increase. For example, dramas launched in June including My Dear Garden, Ansheng Kedongbing, The Rainbow, Pan Yizhe, well received by audience. In addition, films such as Defective Chinatown 3 and the book soon The Darkness, also did well. Second, we saw strong membership growth on TV devices as they approach summer vacation. three, we further depended on overseas expansion. Driven by our premium content and efficient operation, we continuously improved the conversion of our subscribers. The number of our overseas subscribers at the end of quarter exceeded one million. Apart from bringing our domestic producer content to the overseas users. We also made books soon in the local original content. For example, we launched our first original career drama serial, My Roommate is a Coming Home, in May, which was remarkable success. In addition, The Sweet Aunt Delta was launched for the first time in overseas market. keeping pace with the domestic success of Delta Scouting Mode and improving the retention of specific user cohorts with a sequence of Jira specific content. The slightly sequential decline of membership services revenue was mainly due to the volatility of subscriber numbers during the quarter. which was mainly attributable to, one, lack of blockbusters to continue the popularity from Q1, which causes the volatility of subscriber numbers, particularly in the first half of Q2. Two, delayed launch of streaming content to the end of Q2. Despite the volatility of our membership services business, our ARP grew nicely. Average monthly ARP saw a high single-digit growth year over year during the quarter, mainly due to the price adjustment we launched in November last year. With more premium and diversified content portfolio to be launched since the second half of the year, We remain confident in our need on the long-term subscribers and our growth. Furthermore, we also expanded new market space for paid online videos. During the quarter, we launched our own cloud cinema brand. The brand includes three major categories. The article movies launched under a pivot mode. isolated online movies and our original movies. The revenue sharing ratio of key world movies to content partners increased to 42%, which is higher than their actual release. By doing this, we hope to explore a new area for growth and establish a new online distribution ecosystem for movies. Moving over to our advertising business, our total advertising revenue increased by 15% year-over-year but declined slightly quarter-of-quarter. The year-over-year growth was mainly attributable to the peak reason for food and beverage advertising partially offset by a decline in revenue due to our content delay. We expect both brand and performance ads to increase in the third quarter due to our ad inventory increase during the summer vacation. Brand ads recorded significant growth year-over-year during the quarter, mainly due to an improvement in our major drummers during the quarter such as A Lot of Dilemmas, Xiao Shu De, The Rainbow, My Dear Garden, and The Sweet Aunt Theater performed well in terms of popularity, word of mouth, and busy views, which helped to drive our client up to the peak level over the past few years. Performance ads. We gained year-over-year growth during the quarter, mainly driven by the contribution of key industries such as internet movies, e-commerce platforms, and internet service apps. We also enhanced our monetization capabilities with our products and technology, which helped to significantly improve our effective CPM. Meanwhile, new resources from Connected TVs and ads alike both performed well. Moving over to content. Although we experienced certain challenges in content scheduling during the second quarter, we maintained our leading position in terms of the total number and review views of top content across categories from drummers and variety shows. to animations and children's content. According to third-party data, video views of our dramas and variety shows accounted for nearly 40% and over 30%, respectively of the overall market view shape. Our animation content, including children's cartoons, has had over 40% market share. During the quarter, we launched a series of classic titles. The content perfectly caters to user demand and further serialized the development and innovation of top IPs. To give you some examples, one, for drummers, we launched an inclusive title, The Rainbow, which was a hit among a wide range of users. The drummers topped a number of writing lists since its launch, and will reach 8.3 on average by over 220,000 accounts on Zobar, a widely used user-reading platform. Other inclusive dramas, such as A Love for Dilemmas, My Dear Garden, My Treasure, and others will be received on our platform. A Love for Dilemma also aired on CCTV8 and Dragon TV, which helps to attract a lot of TV audience back to the IT platform. Following the success of the Mixed Shelter, we continue to broaden our content offering via Shelter mode. We are working to meet the diversified needs of users through this new mode, enhancing their user experience while attracting the fans in the niche segment. In May, we launched a three-time theater in which Moonlight, Yuehuang Bianzouqu, and The Day of Becoming You successfully gained popularity and the World of Moth. For variety shows, we continue to innovate new original content across various original title such as The Effective Adventure Mr. Housework Season 3 and Walking Mark for Shangban La Mama were especially hot shows during the quarter 3 for animation a self-produced animation Immortal Demon Species Wanjue Qi Yuan maintained its popularity throughout the culture. Other titles launched include No Time But To Betray Earth, and a self-produced cartoon, The Tales of Boundary Keepers, Bingxue Shouhuzhou. For online movies, in April, we exclusively released the great Yuxue Wumingchun, which up to now is boxed box office is about to break RMB 30 million and well received by audience. For original film, Pretty Soon the Darkness , which was produced by IT Pictures, was released in shelters during the quarter. The cumulative box office has surpassed RMB 400 million so far. It has received great reviews and commercial returns. At the same time, another two movies produced by IT Pictures started shopping in the second quarter, and another four are in post-production and expected to be released soon. In addition, IT Original Films has 14 films under development. For the second half of the year, We have a better pipeline than either the first half of the year or the second half last year in terms of numbers of titles, quality, and genres. Meanwhile, we will continue to push to launch our scheduled content on time. For the second half, key drummers include traditional drummers with regular numbers of episodes, such as Ace Troops, One Heart Will Dream, the Idea City, ,, and the ,, as well as vertical shelter brands, such as Who is the Murderer, Go Panning, ,, and the pavilion in the shelter. For variety shows, we are focusing on developing innovative new content across a number of things, such as the already launched Game of Shark, and new generation hip-hop projects, upgraded version of the rap of China, as well as What's Your Name? and Born to Dance. For animation and children's content, we are expanding our content library. We are also exploring the area of in-house production A couple of exciting titles include the already-released self-produced 3D animation Immortal of the Godless Age, Princess Doremi, and Two-Tank Man 5. In addition, on sports content, after successfully broadcasting the Euro 2020, we will present full competitions of premium leagues for the next four seasons, 2022 FIFA World Cup qualification games in Asia, as well as La Liga and other top spot events. Moving over to technology, advanced technology is the cornerstone of our business. Among the other things, it allows us to continuously develop innovative content, enhance the user experience, and improve operating efficiency. During the quarter, we were pleased to see that IT Slack that targets users in low tier cities has ramped up. The peak AU exceeded 1.3 million, and the average user time span exceeded same metrics on our IT mobile app. The number is at the end of last quarter. In terms of demographics, users on ITLite consist mainly of elder and young people, groups that tend to have more spare time, mainly in low-care cities. In June, the average AU overlap between ITLite and and our main app is around 7%. In addition, we consistently work hard to improve the technology of our recommendation engine so that users are effectively matched with the most appreciated content from our website library. We believe nearly 30% of all VA use while driven by our content library during the second quarter. Recently, we also made progress in industrialization of video production by utilizing our Intelligent Production Toolset. For example, we currently launched the production business Intelligent System PBIF internally. PBIF is a professional a data system for our content production team. As a BI, business intelligence product, designed and developed centering content producers, BI offers producers one-stop data inquiry, acquisition, analysis, and evaluation to support their decision-making. On the first day of our launch, thousands of our producers tried out the system. In the future, BI will widely promoted internally and cover all in-house videos within a year, promoting the industrialization of video production within IT as well as in our partner ecosystem. In general, we are still in the early stage of industrialization of video production. The supply of high quality content, especially of heat vertical content, needs to be amplified. Our core content strategy is to focus on high quality content across selected verticals and providing more premium mass market hits so that we can optimize subscribers penetration and the convention. We admit that there is still a gap between us and our global peers. In the future, leveraging our deep understanding of users, our highly innovative in-house production team, as well as our advanced technologies for industrialization production We believe we are well-positioned to address the company's challenges, narrow the gap with our global peers, and capture the future market opportunities. With that, I'll turn it over to Xiaodong to talk about our financials.

Good evening, everyone. Let me reveal our key financial highlights for the second quarter. Our total revenue reached RMB 7.6 billion. Membership business continued to be our largest business pillar, accounting for 52% of our total revenues. Our advising business continued to rebound with a 15% increase on a year-over-year basis. Our other revenues achieved a 20% growth on a year-over-year basis as we continued to diversify our monetization channels. Our cost of revenues was flat compared with the same period last year, among which content cost would also remain stable. Our operating loss margin on gap basis narrowed down to 15% from 17% in the same period last year, and our net loss narrowed for the fifth consecutive quarters on a year-over-year basis, driven by our disciplined investment strategy. As of June 30, 2021, the company had cash equivalents with fixed cash and short-term investments of RMB $12.3 billion. For detailed financial data, please refer to our press release on our PAR website. For the third quarter of 2021, we expect the total revenue to be between RMB $7.62 billion and RMB $8.05 billion, a 6% to 12% increase year-over-year. This forecast reflects IG's current and preliminary view, subject to change. I will now open the floor for Q&A. Thank you.

As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the power or hash key. Please ask your questions in Chinese first and then translate your questions into English. Participants are requested to restrict to one question at each time. Please stand by while we compile the Q&A roster. Your first question comes from LRG from China Renaissance. Please ask your question.

Thank you. Thank you for taking my question. So my first question is actually I would love to hear... 我先用中文讲一下吧,不好意思。 我想首先还是请管理层就现在最近一些监管的形式 So my first question is if management could elaborate on the latest regulatory environment, especially in the overall direction regarding their content. Thank you. Thank you.

In terms of supervision, there are two aspects to IT. One aspect is the regular business, mainly the supervision of content. The principle of supervision has not changed much for a while. However, at the end of the second quarter, due to the issue of Q1, it is relatively strict. Now it has entered the normal environment of supervision, or let's call it stagnation. The second one is about monitoring. In recent months, we have been monitoring the entire Chinese Internet. The first one is anti-monitoring. The long-term video industry of IT is a competitive industry. So the monitoring of anti-monitoring, for IT, and even for IT's industry, has not had much impact or change. The second is about data security. IT has always respected the laws and regulations of the country. Recently, the government-related departments have strengthened the management of this area. Under the requirements of this management, we will continue to ensure the security of the technical and management areas. Thirdly, based on the supervision of the education industry, education is not the main business of IT, but we also realize that because of the external education, whether it is online or offline education, maybe the student community will have more time to do more other things, including online entertainment. That's all. Thank you.

Hello, Ella. So it contains four major parts. So firstly, because we are a visual platform, so the content censorship is the main area we look at. So actually, the basic principle for content censorship hasn't been changed over the past several years. So for this year, because the key event, the July 1st key event there is a tightened censorship environment in the second quarter. After that, it will actually return to the normalized regulation pace. And the second area is for actually we see the tightened regulation for the overall Internet industry, not only for us. So this area mainly focuses on the two parts. One is the anti-monopoly regulation. But for us, the video industry, particularly for the long-form video industry, is actually a fully competitive industry. So we actually see a limited impact from the anti-monopoly regulation. And the second part is on the data security. So we observed that the government has implemented more tightened and specific guidelines for this part. Internally, we already enhanced our management and also the technology part to formulate and implement the more specific approach on this area. And the last one for the education industry, because this is an area people ask frequently. Education is not our main area, business area we are looking at, but just because of the tightened regulation on this area, we foresee that the students or the kids might have more time to spend on other apart from the study. So the entertainment is one of the key areas that they might spend more time on.

Thank you. Thank you. Thank you. Thank you. I'd like to quickly follow up on this. I'd like to talk about the content. Whether it's our style or our variety, So just a quick follow-up regarding the content, because we have seen some regulatory directions regarding the short video industry that they are promoting more positive content. So I just wonder if that could also affect the long form video content in both the drama as well as the variety shows. Thank you.

This question is like this. The film and television content is a very mainstream content. Whether it's children or the elderly, everyone can understand it. Everyone is watching it. It also includes government leaders and leaders from various departments related to the content. So for a long time, the film and television content

I think probably you mentioned the like recently released regulation regarding the enhanced censorship on the short form videos. I think Dr. Hong just said for long form videos, we have always been through this kind of process. I think if anything will have like team director or director impact, our opinion should be positive because those short-form videos, they haven't gone through all this kind of process before. Now I think kind of we are on the same track right now. We have more experience on how to handle this, and we have, let's say, already go through all these kind of things for past decades. Thank you.

OK. OK. Thank you. Thank you. Yeah. Thank you for addressing my question. So if I may, I have a question regarding the Lite version. . So could management elaborate on the recent progress of ITE-Lite because we see that ITE-Lite app had a quite impressive user growth in the recent months. Thank you.

I'd like to add one more thing. The ITE accelerated version has been running for more than half a year. The original goal was mainly aimed at users who are not the main users of ITE now. After analyzing the goals of ITE's main development in the past decade or so, we can now sum up that the main goals are the 80s and 90s in mainland China. Of course, children are also included, and some elderly people are also included. hard core users are concentrated in the 80s and 90s. But over the past few years, the Internet has become more popular. So the new users for iQIYI are in short supply, because there are other online entertainment methods, even offline entertainment methods, that are fighting for their user market. So after we found this problem, we made the iQIYI speed version for their user images and user behavior habits. Okay, Ella, I will introduce IGE Light APP briefly, and then I will turn over to our CTO, Wenfeng, to elaborate.

So we have developed Light IT, Light APP for around half a year. So behind this project, we are actually trying to target the non-major users we are targeting right now. So our core users right now, actually the users aging between 25 to 35 years old users And we covered some young generation and other people, but that is not enough. So over the past one or two years recently, we observed that more and more new users may actually not have a formulaic habit to use ITE-APP. So we tried to develop a new project that can target this kind of new users and incentivize this kind of new users to use our product and watch our content. Right now, up to now, the app satisfies our expectations. So I will turn over to our CTO, Wenfeng, to elaborate more.

Okay, let me introduce it. iQIYI Extreme Edition is a personalized video content distribution product that is mainly provided to users in the down-to-earth market. We have seen that since it was launched, the speed of user growth has been very good. The weekly DAO of QRMORE has exceeded 1 million. The daily peak DAO has exceeded 1.3 million. Then the number of users in the fast version and the users in the main page is very low, and we also see that it is constantly decreasing. Users on the fast version are more inclined to consumer biased content, and the consumer market performance in Nanjing is very good. The fast version is mainly used in low-end cities and areas where the number of users is relatively high. Advertising on the channel and acquiring new users through user sharing, listing, etc. IT like APP is a personalized product targeting the lower tier safety users. Since the launch, we observed a very solid user growth.

As of the end of the second quarter, the weekly DAU has surpassed 1 million milestones, and the user overlap between IT Light App and IT Main App is extremely low. So as we just mentioned, and the single prepaid remarks, it's only 7%, and this ratio continues to go down. And we observed that the users for our ITLite app preferred to consume more content library rather than new content, and in terms of the user time spent, performed also very well. And we tried to acquire the new users through spend advertising on the channel with relatively high penetration into a lower tier cities and also through the user sharing approach. And also we try to improve the user retention through the personalized recommendation and also the easy and convenient interaction and also improving the adaption capability to the low functional smartphones. So right now, the user retention for our IT Light APP is also very good.

Let me add one more thing. At the beginning, we had an idea about the problem of content consumption upgrade. We hoped that the users who didn't watch the video content would often watch the short video content. When they saw that the quality was higher, Because film content is made by professional people, professional directors, screenwriters, actors, and performers. They see that after higher quality film content, they can put more market on film content. At that time, there was such an idea. From the initial data, this idea was realized. That is, users will have a natural tendency in terms of content.

So our CEO has something to add. So this kind of initiative, IT like ATP is also consistent with our idea that we believe there would be a consumption upgrade in terms of the content for the Chinese users. So basically we expect Those kind of users, previously they don't watch the TV dramas or the films and this kind of entertainment content. When they have a chance to access to the high quality entertainment content, they will spend more time on this kind of entertainment content. So from our initial data set, it seems that our thesis got demonstrated. through this kind of user retention rate and also the user growth.

Thank you.

Thank you.

Thank you.

Thank you.

Your next question comes from Eddie Leung from Bank of America, Merrill Lynch. Please go ahead.

Good evening. So my question is about content cost. We have seen a pretty good cost control in the past several orders, while the company has always been pretty conservative in guiding the current costs going forward. So I'm wondering when we look at the cost control in content, for example, in the past one or two orders, how much was due to the delay of some of the hot content and how much was coming from the benefits of NOAA production and licensing costs? Thank you.

This is Xiaodong. I think if you're talking about like one or two quarters content cost, it could be caused by the delay of certain content. But if you look at the past few quarters numbers, you see the collective optimize of content cost, which actually is more driven by the efficiency improvement on content investment. We see the price stabilize since year 2018, and given the facts, we have more original content launched in the past few quarters. So basically, we have more control on the quality and the efficiency of the content investment. But of course, I don't think conservative is the right word here, because given the facts, we are going to expand the category of our content investment, including original movies and overseas content. That's why we see the potential slightly increase on the dollar amount of content cost. But the percentage of revenue, definitely, I think you will continue to see the optimized trend in the next few quarters. Thank you.

As a reminder, please restrict to one question at each time. Your next question comes from Alicia Yap from Citigroup. Please go ahead.

Hi, thank you. What are the changes? Will there be any changes in the membership and advertisement mode? And Guan Yicheng also mentioned that in the content industry, the content video industry comments, so I also want to understand about this new mode. My question is, can management give us the longer-term prospect of the long-form video industry in China? Will the current model between the membership subscriptions and the advertising model remain in place? Any breakthroughs in terms of content production or monetization model? especially I think management talking about the industrialization in the video production. So how would that actually transform future monetization model for the video industry? Thank you.

Thank you. I will answer this question first. I am very optimistic about the long-term development of the video industry in China. Why? Because China has a large population. From a consumption perspective, only a few people to the state of consumer film and television, which is more professional and high-end video. There are a lot of people, but only a small part of them are willing to pay to watch professional videos. Most people are willing to watch it for free, but the free film and television content in this industry, the free business model is definitely a relatively low cost. This is a small income business model. So more and more people love and like to see this kind of food content. Their user base will be bigger and bigger. There is a lot of room for development in this consumption section. Then let's talk about this currency section. The currency section, as I just said, is 80 and 90. It is our hard core user group. They are partly converted into consumer users. It's about 20 to 40 years old. It's about 20 years old. Some of them have turned into consumer users. But according to the results of China's seventh population survey in the past few months, China has become an aging society. There are more than 40 users on the Internet, which is a large number of users. In this regard, we still have a very low penetration rate. Those who are new and those who are trying to grow up, students in middle and high schools and college students, They have their own hobbies. Our traditional film and television content needs to be combined to meet their needs. There is still a certain gap. So, as old as we are now, the success rate is still a problem. So, these new users join the consumer section. So, I believe their market space and income space will be larger. Then, from the advertising perspective, usually new users At least in China, this is the case. At the beginning, it was a free user. So from the perspective of advertising storage, it provides a new supply of storage. Of course, because the business model is different, so after becoming a paid user, there are no ad ads anymore. There are some other ads, but ad ads are the main source of income now. It may be affected. OK. So Alicia, I actually have a very positive view for this industry, personally. My positive view is based on these two parts. One is that in terms of the penetration,

we still have a very low penetration in terms of the paying users. So our paying ratio is also low. So in China, there is only a small percentage of people that they are willing to pay for the professional and high-end entertainment content. And we expect that more and more people will actually join this kind of target users with the trend of the consumption upgrade of the content we just mentioned before. And in terms of the monetization, right now our core users are the people aged between 20 to 40. But we don't have sufficient content for the people aging higher than 40 years old, and also for the younger generation, we also don't have sufficiently good content for them. So right now, we are trying to amplify our content supply to satisfy this kind of user's needs. So based on that, we expect the penetration ratio and also the pain ratio will continue to improve. And in terms of the monetization model, in China, for most of the Internet verticals, when the new users join the platform, there is an open time of free users, so they will consume the advertising. With the more and more enjoying our content, they will start to pay for our content and there will be no advertising for them. But this kind of users will turn into, will convert into the high output users through our membership package and also the P-Vault methods.

The second question is about the publicization of video content production. This is related to some of our expected head content being delayed. The direct reason is the review, that is, our expected review time is not enough. This leads to a delay in the actual production time. But the deeper reason is that the pipeline of our work is not rich enough, and there are not enough continuous good works to accumulate. Video content production and publicization is one of the key measures to solve this problem. The main purpose is to A work from the beginning of the plan to the end of the broadcast is more predictable, less risky or unexpected, less of this kind of thing. At the same time, it also reduces the cost and eliminates the unnecessary loophole and waste. This is a long-term work. Historically, we have done some work in this area, including development of technology, adjustment of industry rules, and so on. So from the last few years to now, we have invested in this matter to a greater extent. Now we have the initial result. For example, the production of intelligent tools we just mentioned can better help our producers predict a piece of work in the future,

As you have observed, we went through some kind of volatility or the uncertainty in terms of the content launch. I think that the more fundamental reason behind that is that we haven't been able to offer sufficient supply, content supply, and more diversified content supply. So as we mentioned in the shareholder letter in the last quarter, we believe the industrialization of video content production is the key to solve this issue. The key thing is that we try to enhance the forecast, enhance the certainty improve the forecast accuracy for the full cycle of the cotton production so that we can lower risk and lower the cost accordingly. So from the first quarter, we have enhanced our investment in this kind of industrialization of video content production. As we have mentioned previously, in this quarter we start to load out the production business intelligence system, PBIS. This kind of tool can enable our producers to forecast the traffic and the monetization of the revenue for the project. Thank you.

Thank you. Your last question comes from from Goldman Sachs. Please ask your question.

Thank you for taking my question. When I look at your content cost as an indication of how you are industrializing content production, your content spend was about at its peak, 84% of revenue, and it's come down gradually, and it's looking like it is about 67% of revenue. With the industrialization, where does that content spend come down to, and how long do you think it will come down to that truck level that you think it can get to? That's my first question. And related to that, if I may, you've moved into IT sports in a major way with the EPL, and a price point that looks like it's 19 or 20 renminbi per month. on the headline basis based on the price I've seen. What has been the initial indication of demand for EPL on your platform? Thank you.

This is Xiaodong. I will comment on the first question. I think the industrialization of the content production is mainly to increase the supply and the quality of the content. Definitely, the percentage of learning it will continue to contribute is positive. In fact, because of the, let's say, better monetization ability of this content. But I think in the past few years, the main driver of the content is more like the slightly increase of the hit ratio and the quality of the content. And the more diversified content strategies, like the Mr. Theaters and so on, But I think within the next three to five years, definitely you will see significant improvement on the efficiency of the content production, given the progress we expect to achieve for the industrialization of the content production. And for the sports, I'm not quite following your question regarding the CDM, because sports is not like we charge the user directly for the for the nominal price you saw on the website. Actually, it's more like the revenue share between IG and our JV, who actually run a sports business. So it has very little impact on our pool of the membership business or the revenue of IG, because they only have, I think, a very, very low percentage of the total membership or subscription business. Thank you.

This concludes the question and answer session. I will now pass the line to the management for closing remarks.

Thank you, everyone, for joining our call today. So please feel free, if you have any questions, please feel free to reach us. So let's speak next quarter. Thank you.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.