iQIYI, Inc.

Thank you for standing by and welcome to the ITE fourth quarter and fiscal year 2024 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 Yu, IR Director of the company. Please go ahead.

Thank you, Operator. Hello, everyone, and thank you for joining ITE's fourth quarter and fiscal year 2024 earnings conference call. The company's results were released earlier today and available on the company's investor relations website at ir.ite.com. On the call today are Mr. Yu Gong, a founder, director, and CEO, Mr. Jun Wang, our CFO, Mr. Xiaobui Wang, our CCO, Chief Content Officer, Mr. Youqiao Duan, Senior Vice President of our Membership Business, and Mr. Xianghua Yang, Senior Vice President of Movies and Overseas Business. Mr. Gong will give a brief overview of the company's business operations and highlights, followed by Jun, who will go through the financials. After the prepared remarks, the management team will participate in the Q&A 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. Credit Security 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 now limited to, those outlined in our public filings with the SEC. ITE does not undertake any obligation to update any forward-looking statement except as required under applicable law. I will now pass on to Mr. Ghosn. Please go ahead.

Hello, everyone, and thank you for joining us today. Starting from late November, we have observed a significant rebound in business performance across multiple metrics, including net additions of subscribing members and user time spent. Along with a reinforced leading position in the total drama, we will shift market share according to enlightened data. This was boosted by the robust comeback of our top-tier content. In just three months, two of our highly popular dramas, We Are Criminal Police, and Drifting Away, the past 10,000 in the IT popularity index, further solidifying IT's unrivaled leadership in the suspense genre. We also enhanced our supply of premium female-oriented content, which is also one of our key content categories, with Moon, Embracer, Baiyue Fanxing, exceeding 9,500, and last summer in winter, Dongzhi, exceeding 9,000 in IT popularity index. Alongside the strong return of our premium long-term video content, we have made breakthroughs in the mini driver space. Portfolio carries a selection of over 10,000 titles. We have also revamped our products to improve user experiences. On top of that, we have upgraded our ad placement system to more effectively monetize the growing traffic of mini drummers. All these efforts have led to swift growth in our user base and a look forward to what the future holds. In addition to operational improvements, we are encouraged by the healthy recovery in consumer sentiment towards quality long-form videos as evidenced by historical high theoretical movie box office performance during the Chinese New Year. This trend reinforces our confidence in the quality of long-form video content, and we are optimistic for the long-form video industry in the coming year. As we step into 2025, we aim to boost membership revenue by boosting the quality and the share of streaming content. We also aim to expand the advertising revenue by enlarging our ad inventory, which will benefit from the growth of many driver businesses. Together, these two elements will serve as the go-engine driving our revenue growth. Now let's move on to the details of our core business segments, starting with long-form videos. which is the cornerstone of our content ecosystem. We have sustained our leadership in the core general category, capturing the highest total view shape market share in Q4 and for the full year, 2024, according to enlightened data. This was underpinned the exceptional performance of our highly acclaimed titles across multiple genres, In Q4, our dominance in the real world of suspense narrows the main unchallenged, notably where criminal police become the 15th drama to break the IT popularity index score of 10,000 and recorded the highest score of our platform in 2024. Additionally, new releases like light beam go by from our light-on-shelter brand and another skin-saving tool gives it to us and gathers high acclaim from viewers. Our exciting slate of offerings goes beyond Q4. Notably, 15 of them from our flagship light-on-shelter brand surpassed a popularity index of 10,000. within just six days of its release. It was also the first drama with fewer episodes to reach such highs. In Q4, for premium female-oriented content, we made great progress in stabilizing our content release schedule and captivating audiences with love stories soon or love on shelter. Notable among this is the Asian custom drama, Fount of Fortune, which successfully attracts new members such as in addition, Golden Drawer, love song in winter, was praised for its innovative blend of suspense and romance, hitting a peak ITE popularity index score of over 9,000. Looking ahead, we are committed to further refining our production line-up and release timing for both Asian customers' dramas and modern tales that resonate with all female audiences Turning to movies in Q4, we have maintained our leading position in viewership for 12 consecutive quarters. According to enlightened data, the performance was highlighted by our original production, Frozen Wind , which was the best performing comedy movie on our platform this quarter. There are actual releases like Upstream, 逆行人生, and the volunteers, The Battle of Life and Death, 志愿军, 存亡之战, also secured top positions on the HG Popularity Chest during Q4. For animations in Q4, our production capabilities for Chinese animations continue to improve. The Legend of Skylock, Shenwu Tianzun remains its popularity among audiences. We also further boosted our offerings with exclusive new IPs such as Urban Miracle Doctor, Doushi Gu Xianyi, and Limitless Brick Zoom. For Japanese animations, we exclusively released Dragon Ball Daima, Longzhu Damo on our platform receiving positive feedback. Looking forward to 2025, we are dedicated to enhancing the production and management of our long-form videos. Our primary goal is creating exceptional content, elevating its commercial potential, while optimizing the production and distribution process for increased efficiency. For drummers, we will focus on improving the pipeline, stability, and the show of our top-tier premium content. We aim to strengthen our leadership in realistic and suspenseful themes while enhancing our premium content that appeals to female audiences. which has shown strong momentum. Other than the titles previously discussed, such as Drifting Away, we are also going to release titles from Light on the Altar, including Breaking the Shadow, Wu Yun Zhi Shang, Justifiable Defense, Zheng Yang Huang Wei, A Life for a Life, Jie Ming Er Sheng, and Low IQ Crime, A strong line-up also features highly anticipated female-oriented dramas Moon, Embracer, Bai Yue, Fan Xing, The Fellas Season 2, Wu Suo Wei Ju, and Love of the Divided Tree, Xian Tan You Shu, have already been released and have gained strong traction among female audiences while more compelling releases to come. For variety shows, our strategy is centered on profitability. We are committed to maximizing the commercial value of our classic IPs while exploring innovative new shows. For flagship multi-season IPs, our strong lineup includes Become a Farmer, Fungiba, Five Heart, Season 5, The Wreck of China 2025, and The King of Stand-up Comedy 2, 喜剧之王搬口记, we are also introducing several fresh new artists, including the blooming journey, 一路繁花, Sing Asia, 夏周新生, and the greatest showman, 大娱乐家. Notably, the blooming journey was released in in January and quickly received a peak IT popularity index of above 8,000, while topping the enlightened rankings. For the comedy Gyros, building up the success of the King of Sanda comedy last year, we launched a spin-off show, Happy Off Work, during the Chinese New Year holiday. further strengthening the IP's influence. For movies, premium content is our top focus, especially original theatrical releases that can generate the top box of its value. In 2025, our original movie, Winter to Summer, Yilu Chaokiman and Mumu Bushuhada Ai will hit the theaters. Audiences can also enjoy the theatrical hits from our movie channels, including Her Story, Haozongji, Burning Stars, Wuxing Jihua, Hot Pot Artist Huoguo, Yishu Jia, and Octopus with Broken Arms, Wusha. We also plan to increase our production capability for online films. In the field of animation, we are trying to broaden our collection of enduring, serious, and devoted resources specifically to our high-quality Chinese animation. Our objective is to raise both the quality and the financial performance of our original work. Major titles to be launched include Supercube, Chongli Fang, all the divine realms, Shen Guo Zhi Shang, The Fated, Magical Princess, Mo Fa Gong Zhu De Xiao Fan Nao, and the sequels to beloved children's animations, including the Rufus, Rufu Shui Lui, and Princess Doremi Season 4, Yin Yue Gong Zhu Ai Mei Li. Moving on to mini dramas, We achieved an exciting milestone in just three months. Firstly, we have successfully rewrapped our apps. Now the mini-drama in the IT main app focuses primarily on subscription-based models, while the IT Lite app provides quality-wise free mini-drama supported by advertising models. Secondly, we have largely completed the construction of backend systems especially for content recommendations and advertising capabilities. This not only elevates the viewing experience but also allows fresh monetization opportunities. Furthermore, our mini driver portfolio has quickly expanded to over 10,000 titles now, capturing 95% of the leading mini driver content providers in the market. This expansive and diversified content portfolio has paved for our next stage of development. The recent program has likely increased our user base and the real time spent on mini-dramas in the fourth quarter, with this positive trend expected to continue. Notably, in December, our platform had its first mini-drama generating mostly revenue sharing in Kong, exceeding 1 million RMB. As we enter the next phase, we are aiming to refine our products and service offerings with personalized recommendations, fine-tune our advertising system to appeal a broader base of new advertisers, broaden our content catalog with fresh and elaborate titles, and cultivate IT's original mini-driver ecosystem to provide a steady stream of high-quality content. Moving on to membership services. Membership revenue in the first quarter was RMB 4.1 billion, done annually and sequentially, primarily due to a lighter content slip during the first two months of the quarter. However, starting from late November, we have observed a strong comeback in streaming content offerings as previously discussed, driving a significant turn-around in our membership business. To be specific, we have improved our long-form video content and introduced inclusive mini-driver for members, aiming to improve member retention and attracting new subscribers. Additionally, we have maintained a standard supply of premium content and stepped up our promotional efforts so subscribers can eagerly anticipate new releases, thereby driving their loyalty to our platform. Beyond content enhancement, we have classified our membership offering into two primary categories. One category tailored for individuals, the other for families. Both categories include and supported basic service tier as well as a standard service tier. Moreover, the family category also features a premium service level. which is the SDEMN plane. This plane grants additional privileges, including unlimited access to express packages that provide early access to finals of all premium content, the ability to log in on up to eight supported devices, and the opportunities to participate in major offline events. This week's classification benefits our membership units in multiple ways. One, it simplifies the structure of our membership plan, making their positioning clear. Two, it captures broader user needs and the user group, from value-seeking individuals to those desiring more premium perks. it effectively addresses the issue of unauthorized password sharing. In the first quarter, to offer an improved solution to account sharing, we introduced the extra member feature. Additionally, our supported basic plan has seen consistent uptake in subscriptions, especially among users in low-tier CTSS and within the young demographic throughout the quarter. In a move to further elevate the value we offer, we also introduced more joint membership options which gained traction with our members. Looking into 2025, our strategy focuses on building a membership business that better caters to mass audiences. We also intend to optimize member offerings, streamline operations, and improve distribution channels. Moreover, we aim to elevate the IT member brand and service standards ultimately boosting the value experience by our members. Moving on to the advertising business, revenue during the quarter came in at RMB 1.4 billion, growing 7% sequentially and showing a reduced rate of annual decline when compared to the prior period. For brand ads, revenue showed double-digit sequential growth. This was primarily driven by the double-digit brand and revenue growth generated by our premium drummers. In 2025, we aim to evolve our brand advertising business by diversifying our revenue streams and exploring new innovative advertising opportunities, we plan to refine client service, which will help retain our current advertisers and attract newcomers from sectors like food and beverage, cosmetics, and toy trees, and communications. We will also keep an eye on emerging sectors such as health care, home furnishings, and tourism. Additionally, we aim to increase the art of top-tier clients and explore alternatives in mini-drivers and advertiser customized shows. Performance ads continue to grow both annually and sequentially. This was largely driven by operational improvements and major e-commerce campaigns. and the robust service provided to clients from the internet services sector. Notably, revenue contribution from the e-commerce sector during the W11 shopping festival increased by over 40% annually, and the revenue from the internet services during the quarter increased by over 30% year-over-year. To extend this moment, momentum going forward we are enhancing our technical and platform capabilities to secure a large a larger share of budgets from top tier clients in sectors such as the e-commerce internet services and video game sectors we will continue leveraging ai for video and production and expand our classes to improve monetization efficiency. We are also excited about the incremental and inventory that MiniDriver could bring in 2025. Moving on to technology and the products, we continue to advance the industrialization of the video business. thereby improving our operational efficiency. Our intelligence production management system has become essential for production crews managing various tasks onsite, providing them with advanced production tools and management capabilities. In the first quarter, we further enhanced the system to incorporate highly efficient production supplies management capability. With regard to virtual production, we have increased the technology to push the boundary of content creation. We are proud that our project, Fonts of Fortune and My Journey to You have both won multiple prestigious industry awards for their excellent use of virtual production. Meanwhile, we have made impressive progress with our digital asset collection. Throughout the year, we have assembled an in-map digital asset library from hundreds of dramas, variety shows, movies, and animations. It is recognized as one of the leading collections in China. We are now leveraging their assets in new video projects and expanding into offline experiences. Looking forward, we are setting our sights on wider applications, including content creation, IP value-added services, and immersive virtual reality experiences. Moreover, we have been expanding AI applications across content production and operations AI's influence has been transformative, notably in refining our project assessment process, providing valuable insights for appraising nearly 5,000 screenplays and novels. Additionally, AI has in character design and custom selection as the project approval stage based on the character description from screenplays that streamlining the creative process. Lastly, for our business performance in regions outside of mainland China, we maintain solid performance in the first quarter with both total revenues and membership services revenue gained annual and sequentially growth. Notably, membership revenue from Hong Kong, UK, Thailand, and Australia grew by over 30% year-over-year. The average daily number of subscribing members also increased both annually and sequentially with Hong Kong and Thailand growing over 40% year-over-year, 50% year-over-year. The popularity of our original content continues to strengthen. Songs of Fortune was the best-performing China drama. on our overseas platform in 2024, with a high-dot version topping the viewership rankings in Thailand. Additionally, our first original overseas variety show, Starlight Voice, extended its success beyond our platform, achieving top position in local Google rankings for variety shows across numerous Southeast Asian countries. Furthermore, Thai drummers have emerged as a popular content category on our international platform, recognizing only 2C drummers. Encouraged by this trend, we are planning to increase our investments in operational Thai productions. We have been focusing on expanding our international brand recognition soon region-specific events. Last quarter, we launched our first-ever iCHUI conference overseas, which set a new benchmark as the most comprehensive and best-attempted press conference ever hosted by our Chinese video platform in Thailand, with exceptional artist participation. As we set our eyes on 2025, our main focus abroad will be to drive revenue expansion. We plan to enhance our sea drama offerings and improve the monetization ability of region content. Having established our presence in Asia, especially the Southeast Asia, We are set to expand our footprint into Middle East, Latin America, and Brazil. Our approach includes reinforcing ties with telecom partners, seeking innovative collaborative opportunities, and marketing initiatives to boost our brand and content impact. In summary, We closed the year by embracing a series of reinventions and innovations that successfully propelled our business forward, setting a strong start to 2025. We are confident that the strong comeback of premium long-form videos coupled with our continuous innovation in mini-dramas will serve as fuel engines during September growth for 2025. Now, let me pass it on to Jun, who will go through our financial performance. Thanks, Mr. Gong, and hello, everyone. As Mr. Gong mentioned earlier, driven by the premium content, we have experienced a significant rebound in main operating performance in comparison to November, 2024. Now, let's take a look at Q4 key numbers. In Q4, the total revenues were RMB 6.6 billion, down 14% annually. Membership services revenue reached RMB 4.1 billion, down 15% annually, primarily due to a lighter content slate. However, as Mr. Gontes mentioned, premium content had a strong rebound from late November 2024 to now. For online advertising, revenue decreased by 13% year-over-year to RMB 1.4 billion. This was primarily due to the decrease in brand advertisement business, partially offset by the growth in performance ad business. Content distribution revenue reached RMB $406.6 million, down 20% annually, primarily due to a lower revenue from distribution of theatrical movies invested by HEE and a decrease in other transactions partially offset by increased revenue from cash transactions. Other revenues decreased by 10% annually to RMB $670.2 million. Moving on to cost and expenses, common cost was RMB $3.4 billion, down 9% annually, primarily driven by our improvement in the common strategy, as well as a lighter common slate in the quarter. Total operating expenses were RMB $1.3 billion, down 5% annually, primarily due to disciplined marketing spending. turning to profits and cash flows. Non-GAAP operating income was RMB $405.9 million, and its corresponding margin was 6%. Net cash provided by operating activities totaled RMB $519 million, positive for 11 consecutive quarters. As of the end of Q4, we had cash, cash equivalent Short-term investments and long-term restricted cash included in the prepayments and other assets of RMB, $4.5 billion. For detailed financial data, please refer to our press release on our IR website. Now I will open the floor for Q&A.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Please ask questions in Chinese first and then translate the questions into English. Please also limit yourself to one question at a time. If you wish to ask further questions, please rejoin the queue. Your first question comes from Su King Zhang with CICC. Please go ahead.

Thank you, Manager Chen, for accepting my question. We have noticed that since the beginning of the year, iQiyi has launched a lot of fund-raising projects. I would like to ask Manager Chen, if you look at 2025, how is our content prepared? How is their quality? And how much is the fund-raising potential? Thank you. Thanks, management, for taking my question. We have noticed that HEE has launched many hit drama series since the beginning of this year. Looking ahead to 2025, what's your content pipeline? What about the quality of these titles? How many of them have the potential to become blockbusters? Thank you.

Thank you, Xueqin. I will invite our Chief Content Officer, Mr. Xiaohui Wang, to answer this question.

Go ahead.

Thank you. Hello, everyone. Let me answer this question. In 2025, our content will be popular. In January, the works of the new season of The Mermaid Theater will be released. In the next six days, the popularity will be 10,000. It is our first 10,000 play this year. More importantly, this is also the IT Mermaid Theater. We had a good start of the year for 2025, with the new season of the Bidong Theater drama Drifting Away launched in January.

reaching ITE popularity index of over 10,000 in just six days. It is a milestone for us because it is not only the first drama of the year to break the 10,000 in popularity, but it also is ITE's light on theaters and our first drama with limited number of episodes to achieve this milestone. Our main goal for this year, 2025, is to enhance both the quality and the share of our premium long-form video content, also ensuring a greater stability and a continued strong start to the year.

In terms of the core of the drama, compared to last year, we plan to increase the number of dramas at the top of the line. In terms of the presentation, we will focus on making the rhythm of the content more concise, more in line with the current social mood,

In the most critical areas, such as the drama genre, the number of premium top tier dramas planned for release this year will significantly increase compared to last year. We will also focus on creating a tighter narrative pace that better aligns with the current social sentiment and the user's aesthetic changes.

Um,

And then for suspense and crime dramas and female-oriented content that are our two main programming pillars, for this year, we will continue to maintain our absolute leading advantage in the suspense and crime genre. And for this year, the Lighthouse Theater has several works planned. In addition to the already-launched Drifting Away, there will be more releases, such as Creaking Shadows, Justifiable Descents, a life for a life, low crime, low end crime, dead end, and beneath the undertow.

女性上内容以及续剧作品方面, 我们也会进一步增强供给,持续排播。 将上线爱你,还有胡瑶小红杨IT系列的 怀水雏平片,王泉片, 以及书卷一梦,林江仙, 唐朝鬼之路第三季等。

In terms of the female-oriented content and multi-season titles, we will further strengthen our offering and continued programming with plans to launch titles such as The Best Thing, Love in Pavilion, Fox Spirit Matchmaker, Sword and Blood, A Dream Within a Dream, Field, and The Strange Tale of Tang Dynasty, Season 3.

In addition, we will continue to maintain the advantages in terms of realistic themes, Additionally, we will continue to maintain our advantage in the realm of realistic strong rest.

The pipeline includes Northport, what a wonderful world, 8,000 miles of clouds and moon, Thank you. Thank you.

Your next question comes from Li Zhang with Bank of America Securities. Please go ahead.

Thank you, Madison, for taking my question. I want to know for the update on your mini-drama release, area, and do we have any strategic plan on Minigrama in 2025? Thank you. 这问题我回答一下,我先明确一下这个定义,就是我们现在重点的这个,我们叫微距,这个行业有的叫微软距,主要指的是竖平的,每级大概一到三分钟的,这种的,因为横平的

Our CEO is actually taking this question. He, first of all, would like to clear the definition of mini dramas that we've been talking about in his opening remarks.

So for mini-dramas, we identified them as the vertical format, one to three minutes long, and then this is the main area that we're focusing on. For the horizontal mini-dramas, which is quite similar to the long form video content that we have the edge on, so this is something different.

We need to focus on the main reasons for the crisis. First, we need to adapt to the changes in the behavior of the users. Because the pace of life is getting slower, it is harder to concentrate for a long time, and people's demand for entertainment is getting more and more fragmented. Second, the changes in the market. The market size of the crisis last year, although the third-party institutions have different predictions, but it will definitely exceed the market size of China's telecoms. This year continues, although this year's Spring Festival Party is good for China's telecoms, but the year-round estimated crisis will also exceed the market size of China's telecoms.

So we decided to invest in the mini drama business about one quarter ago. The reason there are two aspects. First of all, right now because the users are more prone to the fast paced content and they have a shorter attention span and then they also enjoy content in a more fragmented time as well. So that's the first reason. And also from the industry perspective and the market perspective, for 2024, the market price for mini dramas, although there are different data that's estimated by third parties, but we believe it should be greater than the Chinese box office for 2024. For 2025, we are glad to see a strong rebound of the theoretical box office during the Chinese New Year. However, we still think the mini-drama market should still exceed the Chinese box office in 2025. In the past quarter, we have completed the goal setting.

This goal is mainly about The first is the transformation of user products. The second is to build a content library to enrich the content. The third is the construction of a background system. Now we have completed these stages. Especially the content has reached more than 10,000. This number is the number of companies that have invested in this industry.

Our mini drama business actually has successfully completed the key tasks that we set for the first phase, achieving significant results in three areas for user product transformation, content portfolio, and also building a system development. Currently, actually, our mini drama content library has over 10,000 titles, and it has reached a scale that's comparable to the leading mini drama platforms in the industry.

There are two main reasons why we can achieve these goals so quickly. The first is that iQIYI's team, whether it is from technical products or operating capabilities, has been building for more than ten years. Now it has only changed to a new product category. The original capabilities can be reused. The second is the personal resources built into the industry. Actually, most of these content providers in these crises are cooperating with IT or are cooperating.

There are two reasons about how we achieved such a significant improvement in a very short amount of time. First of all, for our team, actually, we have a very mature, whether it's an IT team, a technology team, product team, also the operational team, all these have over 10 years Although mini-drama is a new genre, there are a lot of know-how that we can replicate from the long-form video experience. That's the first reason. The second reason is we have a very deep connection with the industry and also the industry resources. IT group ADP is mainly focused on long-term video and member income. For our main idea, the position is still focusing on the long-term video content and then focusing on the subscriber-based revenue model. For IG-Lite, we have quickly revamped this app and then now it's prioritized in three minigrammars and then supported by the advertising model.

So the current situation is that according to the time frame, in the main app, the time frame of VG has been equivalent to the level of the animation children's variety show.

In terms of the user time span for the main IDE app, the mini-drama timeshare now is actually close to the scale of animation, cartoon, and also variety shows. For IDE Lite, the mini-drama timeshare is the second largest content genre, only second behind long-form video content.

I'll quickly introduce the next stage of key tasks.

The first one is we'll focus on introducing the leading mini-drama titles for ITE. Second is to build the ITE original mini-drama ecosystem. For the Chinese New Year period, actually, we have already launched quite a few titles.

The third one is to increase the storage of microdrama-related networks and to discover new Next two tasks are focusing on to hopefully we can increase the inventory of mini drama advertising.

Also to enhance the monetization capabilities of mini-dramas, we would like to actually explore more advertising budget and also the new format of advertising budget from this app space. Last but not least, we will try to increase more investment in terms of user growth. Hopefully, we can attract more users to bring them to IT to watch mini dramas.

Thank you. That's it. Thank you.

Your next question comes from Lincoln Kong with Goldman Sachs. Please go ahead.

So thank you, Benjamin, for taking my questions. My question is about the membership business. So regarding the recent content performance and how is the impact from those measures like Family Card or Star Diamond member extra content gifts on those, the impact on the membership business, as well as the strategy for full year 2025. Thank you. Thank you, Linjie.

And I will invite Mr. Youqiao Duan, the Senior Vice President of Membership Systems, to take this question. Go ahead.

Hello, everyone. I will answer this question. Since late November 2024, the continuous programming of premium titles has actually driven the membership business to a turning point.

regarding a significant increase in subscribing members. We actually wrote out several key initiatives for 2024.

The first one is to optimize the overall member product system. Currently, we have two face-to-face individuals, three face-to-face families, and a total of five member products. And based on the differences in member rights, we have divided them into three levels of basic, standard, and high-end. This new member system allows us to pursue new prices,

We have reclassified our membership offerings into two primary categories, one for individuals and for families. For individuals, there are actually two plans with no large screen access. And for families, there are three plans with large screen access. The membership rights and benefits are divided into three tiers. basic, standard, and premium. The new reclassified membership system actually allows users seeking either high cost effectiveness or premium benefits experience to find products that suit their needs.

Second, we strengthen the track down on password sharing

while introducing the extra account service as an authorized sharing solution, effectively expanding the membership base and improving member retention.

Third, we have increased the power of high-end members. We have added the power of free and unlimited processing for new members. This has improved the value and sense of all new members. After the new power of new members is on the line, the number of members clearly increases.

The third point that we did was we enhanced the benefits for premium members. The newly added benefits for S-Diamond members, the limited complimentary early access to the express packages that provide early access to finales of our premium content, increased the value and perception of premium membership. After the launch of the new benefits, the number of S-Diamond members have largely increased, with most of the new members attracted by the Express Package benefits. And the existing S-Diamond members have also been noted for more active on the platform.

In 2025, our core focus points include the following four points. First, continuous strengthening the stability and connectivity of the head content supply. We have a few areas that we're focusing on for 2025.

First, we'll continuously enhance the stability and continuity of our top-tier premium content programming and strengthen the pre-release promotion for upcoming content, establish mindshare among users to improve their loyalty to ITE,

Second, we'll build, focusing on building a mass market membership service to increase membership scale and revenue. While focusing on attracting new members, we'll prioritize

improving member retention and user engagement, and also will increase the revenue scale and revenue share from external channels.

Third, we systematically continue to optimize member's products and operations, including member's product system, as well as additional facilities to strengthen member's rights and benefits, and also improve the user experience of the entire member, including continuing to build up the crisis member management system.

Third, we will systematically continue to optimize the membership products and operations, including further refining the membership product system and pricing strategy, also enriching membership benefits and perks, including the member user experience, and also crafting a membership model tailored for many jobs. The fourth, we will strengthen the quality of membership services and the ITE grant, enhance the perception of membership benefits and privileges, and also improve the overall net promoter score for ITE amount members. Thank you. Thank you.

Your next question comes from Maggie Yee with CLSA. Please go ahead.

Just now we heard about some encouraging performance in overseas markets in terms of both membership revenue and subscribing members. Would you please provide an update on the core strategy for our overseas business in 2025? Thank you.

Thank you, Maggie. We'll invite Mr. Xiangca, the Senior Vice President of our Overseas Business, to take this question. Go ahead.

The overall strategy for business outside of mainland China in 2025 is to pursue rapid revenue growth while retaining profitability. In the past few years, we have focused on several markets, including Southeast Asia, Hong Kong, Macau, and North America, and have achieved satisfactory development. And for 2025, we have set different strategies for different markets. For the markets where we entered since the early days, such as Thailand, Malaysia, and North America, our goal is to achieve both profit and revenue growth. For the new markets such as Indonesia and South Korea, the focus is on revenue growth for 2025.

At the same time, we're also planning and preparing for the long-term growth of our business, hoping to break into new markets in 2025, such as the Middle East, the Spanish-speaking Latin American region, and also Brazil.

For content-wide, we'll strengthen the programming for three dramas in 2025, and the content plate is actually more suitable for the preferences of our overseas viewers in 2025 compared to the content we launched last year.

In terms of local dramas, local content, after years of effort, we have actually assimilated some experience that will continue to invest in markets such as Thailand and Malaysia, which will serve an important support for our user growth in the future.

For content promotion, advertising placement, and also the collaboration with telecom carriers and other channels,

our core methods of unleashing the content value. So in 2025, we will increase our investment in these areas in the market.

In general, the number of members and income of overseas businesses in 2024 has increased significantly. Since December of 2024, with the continuous development of high-quality content, the overall growth of overseas businesses has increased faster than in 2024. This also makes us more confident in the growth of revenue in 2025.

So overall, speaking for 2024, overseas business, in terms of the membership growth and also revenue, also maintained a relatively high speed of growth. And since December 2024, with the ongoing amount of high quality content, the overall growth rate of our business has been even faster than 2024, so which gives us more confidence in the revenue growth for 2025. Thank you.

That concludes our question and answer session. I'll now hand back to management for closing remarks.

Thank you everyone for participating in the call today. If you have any questions, don't hesitate to contact us. Thank you and see you next quarter.

That does conclude our conference for today. Thank you for participating. You may now disconnect.