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iQIYI, Inc.
5/21/2025
Thank you, operator. Hello, everyone, and thank you for joining ITE's first quarter 2025 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. Rizal, our founder, director, and CEO, Mr. Jun Wang, our CFO, Mr. Xiaohui Wang, our CCO, chief content officer, Mr. Youchao Dun, senior vice president of our membership business, and Mr. Shangpa Yang, Senior Vice President of Movies and Overseas Business, and Mr. Kang 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 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 included are now limited to the outlined in our public filing with the FTC. 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. Gong. Please go ahead.
Hello, everyone, and thank you for joining us today. We delivered a solid first quarter, gaining sequential growth in both total revenues and profits. This was built on a strong rebound in our long-form premium content and strategic investments in vertical formats, macro dramas. HEE is actively cementing its position as a go-to platform for users seeking a seamless blend of long-form and short-form entertainment. creating exciting opportunities for future commercialization. This was stressing our confidence and commitment to drive even deeper upgrades across our business model and the content ecosystem in response to involving market and user demand. For the core long-form video content, we are committed to delivering engaging and soft, utter stories as we reflect in our strong line-up of top-tier drummers. Notably, drifting away from our flagship metal and filter brand surpassed the 10,000 IT popularity index score, while the Demon Hunter's romance Wu Youdu and Moonlight Mystic Baiyue Fanxing both achieved a score of over 9,600. Looking ahead, we are dedicated to focusing on streaming content with a strong commercial value while also upholding artist excellence additionally. we will further enhance our certain production mechanism to deliver shorter, faster-paced, and more captivating storytelling that resonates strongly with audiences. Through this user-centric approach, we are confident in our ability to unleash our full creative potential and foster a work tools content ecosystem. For microgrammers, we made notable programs on HE life. Microgrammers now rank second in terms of daily time spent and first in the number of daily unique visitors. This clearly shows their growing appear in captivating audiences, reinforcing our confidence in further unlocking their full potential. Moving forward, we are committed to expanding our microgrammar portfolio, placing a strong emphasis on premium microgrammars by enhancing original production and acquisition capabilities. At the same time, we aim to effectively monetize their growing traffic through advertising and e-commerce. Beyond our content ecosystem, we are leveraging technical innovation to improve user experience. A standout example is launch of our AI-powered iJump feature , which transformed how users engage with long-form videos. With a simple swipe up or down on their mobile screen, users can effortlessly escape between key highlights in each episode without missing any exciting moments. delivering a user-centric microgrammar-like experience tailored to today's fast-paced viewing habits. Highlight points are generated by AI-based videos and personalized behaviors of each user. As all investors are aware, the market is becoming increasingly unpredictable as it continues to evolve. However, in such a volatile environment, the ability to create sustainable value is emerging as a real and valuable asset. With this in mind, we are racking up our investments in strategic areas such as increasing our ecosystem and enhancing the user experience. While these investments may lead to short-term costs, they are designed to deliver long-term benefits. Now, let's move on to the details of our core business segments. Starting with long-form videos, which serve as the foundation of our content ecosystem, we maintain leadership in the score genre category, securing the top spot in terms of total viewership market share during the quarter, according to enlightened data. Our strong performance was highlighted by Brookstone in our general specific sales mode, as we have now established five distinct signature brands. each featuring unique content genres. In the suspense genre, our Lighthouse Delta brand achieved a remarkable milestone with the release of Drifting Away , its first title to surpass the 10,000 IT popularity index score. It also generated the third-highest single episode revenue in our history. just behind the mega-heat, the snow-caught Kong Miu, and my heroic husband, Fei Xu. In the romance genre of Laban Theatre, Mian Mian Juchang's brand made notable progress in this quarter, expanding her portfolio of content for female audiences with the release of four captivating titles, notably our in-house produced fantasy drama, Modern Life Mystic by Yue Fanxing, garnered an impressive popularity in that score of over 9,600. Our modern romance drama, The Best of Things, Ai Ni was not only a success in the domestic market, but also the best performing modern Chinese drama. Our masterpiece theater, Da Jia Ju Chang, specializing in literary adaption Realistic Stories debuted its first title, North World. This drama adapted from a modern literature class-winning novel as further stressing on repetition for top-notch drama. Lastly, our microcosm shelter, Weicheng Juchang, and the locked-on shelter, Xiaozhou Juchang, focused on innovative drama genres with few episodes and comedy respectively. Building on the success of past hits such as To the Wanderer, Without a Time, and The Great Novelist, I want people to know this brand is set to release an exciting line-up this year. Turning to movies, we continued to dominate the category during the quarter with the highest view-shape magic shell, according to Invited. Creamy content felt a strong long-tail effect. Exemplified by the success of Nezha 2 during Chinese New Year, the firm boosted view-shape of the original Nezha Snake King is the most watched movie on our platform this quarter. In addition, our original production, Bleed Full Path Logo, achieved strong granular and viewship, especially among male users drawn to action and crime genres. For various shows during the first quarter, our flagship multi-thousand IP become a farmer season three made a strong comeback, sustaining strong traffic and a positive word of mouth. Our brand new IP, the Blooming Journey, excelled with a peak popularity index score of over 8,000 attracting audiences in lower tier cities, and among other assets beyond commercial variety show viewers. In terms of animations during the first quarter, we continue to improve our production capabilities. Key titles such as Super Cube, and the Rufu Season 2, Rufu Shuiwei generated positive user feedback during the quarter. Moving on to our content strategy and pipeline. In our core drama category, our focus is on creating a well-balanced content mix that aligns commercial success with artistic excellence while committed to three key genres, realistic, suspense, and female-focused drama to cater to past-paced viewing habits, we are enhancing our content creation strategies. This includes reducing the episode count for long-form dramas and increasing the number of high-quality short dramas with each episode lasting 5 to 20 minutes. This changes the value and the value of diversity of our offering enrich the user experience and drive deeper audience engagement. Our drama pipeline features an exceptional line-up of top tier content that already relieves the demand hunters' longness and longing Pazili, Huichui, Zhuying gathered widespread acclaim. Adding to that excitement, the highly anticipated film, Pingjiangxian, A Dream Within a Dream, Shuyuan Yimo, will be released soon. In the sense general, a renowned lifestyle program recently debuted Breaking the Shadow and Alive for Life that can also look forward to upcoming release including Just Fireball Defense and Born with Luck adapted from the renowned novel Low IQ Crime. Additionally, the new science fiction suspense drama What a Wonderful World will be released shortly as well. Our line-up of realistic dramas includes highly anticipated titles such as The Flying Slam, Sheng Manwu, and Gao Xin, among others. For movies, We are increasing investments in original productions focusing on geological releases with strong box office potential. Notably, our original production, MoMo, has already achieved a box office revenue of over RMB 140 million. We have six more titles scheduled for geological release soon after the end of the year. including the Shadows Age Bufeng Zhuo Ying. Additionally, we are boosting support for online movies with revenue-sharing models. Our diverse lineups include eight original online movies, such as Ultimate Mission, Fengji Zhengjiong, Modern, Ning Chaochuan Dajia, Northeast Brothers Season 3, Dongbei Yangguo, covering popular genre such as martial arts, comedy, and action. For licensed theatrical movies, we launched several pieces, including Legends of the Cold War, Pharaohs, Sheyao Lingxuan, and Detective Chinatown, , both of which have successfully during the Chinese New Year and are now performing well on our platform. For variety shows, we will maintain our focus on producing top-quality programs while introducing exciting new content. This includes sequels to a beloved classic like Ha Ha Ha Ha Ha and The Wreck of China 2025. Alongside, fresh IPs such as Sing Asia, Ya Zhou Xing Sheng, and the reality show, Smell as You. Wei Xiao Yi Hao Rian, building on the successful Building on the success of the blooming journey, we also plan to launch a second season sticker in this year. For animation, we are dedicated to increasing revenue contribution from original productions, especially high-quality Chinese animation. We also aim to broaden our collection of enduring cereals and optimize our operations to maximize IP value. Major titles to be launched include animation of the Divine Realms, Shen Guo Zhi Shang, Embers, Yu Jin Xing Zhe. Moreover, we are excited to announce that the highly acclaimed Japanese animation One Piece has resumed airing for its dedicated fan base. For children's content, we will concentrate on IP commercialization and develop a comprehensive IP ecosystem that spans the NTL lifecycle, offering all services tailored to parent-child audiences. Anticipated titles include Princess Dorian Yi Season 4, Bell Squad Season 4, Wu Jilu Duan Duan, Hamlet and the First Food Truck, Xiao Tu Miao and Troy. Moving on to micro dramas which have demonstrated promising potential within our content ecosystem, harnessing this powerful momentum. We are poised to amplify our investments in micro-drama content and strengthening user acquisition efforts. We have three key objectives, starting with strengthening our user base and boosting business resilience. by increasing micro drummers into our content ecosystem. Secondly, we perceive micro drummers as a catalyst for attracting new users and driving membership revenue growth, especially in under-taxed lower-tier cities and among older audiences. Lastly, we are actively exploring monetization opportunities for all. My program assumes initiatives such as advertising and commerce. We have successfully achieved the first objective by revamping our apps and rapidly expanding our micro-genre of downloads to over 15,000 titles now. We have available for free and the other half exclusive to members. Our revamped apps are positioned differently in terms of design and targeted audiences. The main ITE app focuses primarily on long-form videos and mainly uses a subscription model with microgrammers serving as a complimentary value add. The ITE Lite app primarily focuses on free micro-dramas and monetize them, soon advertising and e-commerce. These meaningful programs have driven impressive growth in both daily viewing time and unique visitors for micro-dramas with substantial increases of over 300% and 110% respectively. when comparing the first week of April to December. In the future, ITE-LAT will be reprinted as ITE Microdramas, and we are confident that this transformation will tap into its full potential. We pioneered the concept of dedicated Chinese New Year Slaves for Microdramas, released in 28 pre-made titles. It's like my sweet home, and the place comes into my heart. By consistently delivering premium, we are reinforcing our position as the go-to platform for micro-dramas. As a micro-drama industry continues to evolve, The growing user demand for creaming titles aligns perfectly with our core strengths. With export types in creaming companies, trusted brands, and a lawyer user base, we are uniquely position to capitalize on this trend. Coupled with our extensive resources, talent, teams, and advanced technologies, we deliver unique value to the microgrammar industry. To that end, we are continuously enhancing our ability to produce original microgrammar while exploring in movie type genres to broaden our content offering. Recent initiatives include notable projects such as adapting around 100 classic Hong Kong movies and producing an extensive series of legal educational content, all to be developed as micro-programmers. Additionally, we are integrating technologies like AI and virtual production to improve both efficiency and quality. Building on these initiatives, we are collaborating with partners to foster a thriving industry ecosystem. In March, we hosted the first microgrammar, Deletering Light, ceremony brings together hundreds of prominent actors, creators, and industry professionals. The event sparked meaningful interest from attendees eager for future collaborations. As the first-ever ceremony dedicated to the microgrammar industry, It not only enhanced our profile, but also reinforced our role as a key industry player. Moving on to membership services, revenue regained growth momentum during the quarter, increasing 70% sequentially to RMB 4.4 billion, with healthy growth in subscriber base in Q1, supported by the strong performance of key titles such as Drifting Away, Moonlight, Mystic, and Northward. Average revenue per member remains healthy thanks to our improved operating initiatives. Our strategy is focused on developing a membership business that caters to a broad audience. expense of subscriber base delivers enhanced value and ultimately accelerate revenue growth. As the core of membership business is exceptional content, we strive to boost both member acquisition and retention by maintaining consistent flow of premium long-form content and engaging micro-firmers. We continue strengthening our membership plans, delivering greater value to our members via refining product positions and positioning to connect with our broader user base. The family-oriented premium S-Diamond plan saw excellent growth after we introduced free, unlimited express package Jiamuli benefits. Meanwhile, our ad-supported basic membership plan designed to offer exceptional value at a lower price than the historic adoption price. younger generation and users from low tier cities listed third in new members, with many joining as first-time subscribers. We focused on enhancing member value through initiatives that boost loyalty and drive upgrades. Long-term members now enjoy greater discounts while premium and standard members receive free express packages to drive conversions with expanded auctions like Express Package. Counting the experience programs in Voucher, who purchases gift cards and abundant membership plans with added benefits, this step makes all membership services more attractive and valuable, supporting better revenue growth and a strong membership community. Moving on to advertising business. Advertising revenue in the first quarter decreased sequentially to 1.3 billion. Other than the micro-pressure, Q1 is typically low season compared to Q4. For Brand S, our top tier drummers and variety shows remain a strong draw for advertisers. With company driven ads contributed over half of the revenue. the sequel to our classic IP become a father-sweet lead advertising sales, while the new IP, a blooming journey and a fantasy glamour, moonlight mystic, generated widespread positive feedback. Looking ahead, Brand S are showing encouraging sign of a potential rebound given by premium content. We plan to drive ourselves by leveraging premium drummers and the general specific shelter brands. For what he shows, we will focus on delivering high-impact projects and expanding vehicle opportunities for classic IPs. Additionally, we aim to launch a mining pipe, meaning a variety of shows, micro-plumbers, and customized advertising products, providing innovative and tailored advertising solutions. On the performance side, we captured badges from new high-potential customers in the internet services and the education sector. Further, diversifying our advertising service, in addition, incorporating AI into advertising content creation has boosted our own app by over 20% compared to apps developed without AI. The future focus is on continuously enhancing our technologies and applicable capabilities to drive new growth across internet services, e-commerce, gaming, and education. Furthermore, we plan to seize growth opportunities in micro-genres and deepen the integration of API to maximize monetization efficiency. Our commitment to enhancing ad efficiency is further demonstrated by the recent launch of our AI-driven QiJu ad placement platform by integrating resources from both our long-form and micro-genre ecosystem. This platform empowers both brands and performance apps with sophisticated smart marketing solutions. Moving on to technology and products, we continue to advance video production through industrialization, enhancing cost efficiency and creativity. For example, by scaling up the reuse of digital assets in major original genres like design and exhaust. Number one, we have largely reduced production time and cost with our compromising quality. Moreover, our cutting-edge text-to-speech TTS, dubbing, solutions designed to confirm emotions of the same city have already been applied to English documents for both long-form and macro dramas. On the user front, we are hiring AI who will define the entertainment experience. In addition to newly launched iJump future we mentioned earlier, we also introduced other AI-powered products to enhance user engagement. Our AI-powered chatbot platform, Puzzle War, launched last April, features around 1,000 AI characters from our popular IPs and has engaged with users over 100 million times recently. We introduced the Personal AI Assistant puzzle within the platform, which users can use to discover content, discuss plots, and control playback. Additionally, we launched a Senior Mode feature tailored for mature users. complementing our earlier key modes designed for younger audiences. Moving on to our business performance in regions outside of mainland China, we maintained strong growth momentum in the first quarter, with total revenues increasing by over 30% year-over-year the average daily number of subscribing members reaching a new high. Moreover, we are thrilled to see C-Dramas gaining traction with our wider global audiences. According to Google Trends data, worldwide search for C-Dramas recently reached a five-year high, even surpassing the first four Korean dramas. Our original production has played a key role in this growing international appeal, with four of the top ten overseas drama in the past six months coming from IT. Our modern romance drama, The Best Thing, set records on our international platform is publishing a new revenue benchmark for this general. Additionally, our original Chinese animation SuperCube also achieved the highest single-day revenue for Chinese animation within the first week of its overseas release. The influence of our premium content travel advertising revenues by 40% year-over-year. Our original Thai drummer, Gil Boy, gained substantial traction from brand advertisers, while our Chinese variety show, Become a Farmer, also drew interest from overseas clients looking ahead. We are focused on expanding our investment in original production to create high-quality content tailored to international audiences while integrating micro-programmers into our global portfolio. At the same time, we aim to deepen collaborations with local partners and further enhance our brand influence across the market. Last but not least, IT consistently pushes the boundaries of business innovation as evidenced by our pursuit of new opportunities and exploration of intact horizons. We are leveraging cutting-edge digital technologies to seamlessly integrate all IPs, extending their lifecycle and unlocking a greater commercial potential. We recently expanded our footprint to offline experience park. The first ITU land is set to open in Yangzhou this year with a second project underway in Kaifeng. In addition, our VR immersive shelters are expanding rapidly, featuring popular IPs such as Luoyang, Strange Tales of Tang Dynasty, and Love Between Fair and Devil, Tang Jun. These VR experiences are now available in over 50 stores across nearly 30 cities. We believe these immersive entertainment experiences will and deepen user engagement with all content and IPs. On the e-commerce front, the breadth of new content formats, such as microgrammars, combined with consumption scenarios driven by critical content has unleashed significant opportunities in the sector to capitalize On these opportunities, we have launched trail operations on IT e-commerce by leveraging our robust IP portfolio, extensive artist resources, and high-quality member base. We hold distinct advantages in this space. This year, we are concentrating on building a solid foundation for content-driven e-commerce with the goal of driving accelerated growth in the year ahead. In summary, as the video entertainment industry continues to evolve, we remain committed to investing in our content ecosystem and elevating the user experience This strategic effort will enable us to accelerate our content flywheel, strengthening resilience, laying a solid foundation for sustainable growth and deliver long-term value to all stakeholders. Now, let me pass on to Jun to go through the financial performance. Thanks, Mr. Ong, and hello, everyone. Now, let's take a look at the Q1 key numbers. In the first quarter, total revenues were RMB 7.2 billion, up 9% sequentially. Membership services revenue reached RMB 4.4 billion, up 7% sequentially. The increase was primarily driven by the strong performance of the long-form dramas. The online advertising revenue decreased by 7% sequentially to RMB 1.3 billion, primarily due to macro headwinds and seasonality. The accounting distribution revenue reached RMB 628.7 million, up 55% sequentially, driven by more common titles distributed during the quarter. Other revenues increased by 24% sequentially to RMB $830.9 million, primarily driven by the growth of certain business lines. Moving on to costs and expenses. Common cost was RMB $3.8 billion, up 10% sequentially, driven by higher number of premium dramas launched during the quarter. Total operating expenses were RMB $1.4 billion, up 8% sequentially, primarily driven by higher marketing spending. Turning to profits and cash flows, our non-GAAP operating income was RMB $458.5 million, up 13% on a sequential basis. The non-GAAP operating margin was 6%. The net cash provided by operating activities totaled RMB $339 million, positive for 12 consecutive quarters. As of the end of the first quarter, we had a cash, cash equivalent, restricted cash, short-term investment, and a long-term restricted cash included in the prepayments and other assets, the total of RMB $5.7 billion. In addition, the company had a loan of $522.5 million to PAG recorded under a month's due from earlier parties. When reviewing our financial performance, the results of our efforts to optimize the capital structure are very clear. Over the past two years, we have prioritized this goal through a series of initiatives to lower our debt levels, optimize repayment schedules, and make our debt restructure more manageable. Notably, the outstanding principal balance of our convertible bonds have sharply declined, dropping from $2.9 billion at the end of first quarter back in 2023 to $1.17 billion this year. And of the current outstanding balance, there is $522.5 million, as we mentioned earlier, were resolved through equivalent loan arrangements with a predator. As we continue to optimize this debt structure, we have also achieved a substantial reduction in net interest expense. which has declined from 230 million RMB to 155 million RMB in the first quarter of this year, decreased by over 30% year-over-year. For detailed financial performance and data, please refer to our press release on our IR website.
Now we will open and close our 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 your question in Chinese first and then translate your questions into English. Please limit to one question at a time and rejoin the queue if you have additional questions. Your first question is from Shiqing Zhang from CICC. Please go ahead.
Thanks management for taking my question, my question about microdramas. Gongbo mentioned some operational updates on microdramas in the prepared remarks. Can management elaborate a little more on the latest developments of microdramas and outline the key focus points for its future development? Thank you.
I'm Guangyu. Let me answer your question. Thank you for your question. First of all, the user's habit of watching microdramas has been formed. Now there are 15,000 microdramas. The free and the paid ones, which are half of the members, and 200 APs each form a clear platform location. The i7 APP is focused on the member-free viewing mode, which is led by the fee crisis. The fast version is led by the free crisis. Users can watch it for free on the fast version, but they have to watch the ads.
Our CEO, Mr. Ghosn, is answering this question. First of all, the users have gradually developed the habit of watching microdramas on ITE. We now have over 15,000 microdrama titles with free content and a member-exclusive content each attended for about half. Our two mobile apps have also developed very distinct brand positioning. The main IT app focuses on members watch for free model, primarily featuring paid micro dramas, while the IT Lite app primarily focuses on free micro dramas supported by advertising.
The result is that on the one hand, the size of the number of users watching VG is increasing. At the same time, the number of users watching the market every day is also increasing, which means that the number of users is increasing year by year. Comparing the data from April and December last year, ITE's VG has a lot of users. The number of users is more than 80% of the time watching VG, which has increased by 300%.
This development, as I mentioned earlier, has driven rapid growth in both user time spent and user base for microdramas, while significantly enhancing the user's stickiness. So when we compare the April to December of last year, the number of heavy microdrama users on IT, which are users who spend 80% of their time watching microdrama, have increased about three times.
Although the time is not long, IT has just started to produce original, self-produced VG. It has been on the headlines. For example, it has been on the headlines. It has been on the headlines. It has been on the headlines. It has been on the headlines. It has been on the headlines. It has been on the headlines. We just stepped into the micro drama field for not so long, and then I just started our original production.
and seen some impressive progress. For example, a recently released original microdrama called Zhai Nan Tao in S-Capable Sporting Gloves ranked first in IT's microdrama viewing time for several consecutive weeks, and then also successfully entered the ADX Top 10 list, which is a well-renowned list in the microdrama field. So among the acquired top tier titles, for example, like My Sweet Home, and Please Come Into My Heart, each achieved revenue sharing milestone of over 1 million RMB within a week. And these are programs reflecting the high user recognition and appreciation of high quality micro-dramas.
There's some background that I would like to share with everyone.
For example, the content cost for each micro drama title on average costs less than 1 million RMB. And the top tier titles usually will be less than two million RMB per title. So as such, within the week, the revenue share dollar RMB reached one million is actually a very sizable and a nice income.
Going forward, there are two areas we're focusing on.
First is to have more and better quality micrograms. and second, to invest more on user acquisition, user growth. In addition, we'll try more ways to monetize the growing traffic, for example, advertising and also e-commerce. Thank you.
Thank you. The next question is from Vicky Wei from Citi. Please go ahead.
谢谢管理层接受我的提问。 我有一个小问题想请教公司。 能不能请管理层给我们分享一下 从视频内容策略的具体的变化以及背后的思考。 Thanks management for taking my question. Will management share some color about the change of long video content strategy and the rationale behind it? Thank you.
Thank you. I will invite our chief content officer, Mr. Xiaohui, to answer this question.
First of all, non-form videos are the cornerstone of IT's content ecosystem, and our commitment to this remains unwavering.
Um, the play is the core of our long screen in order to better meet the changes in the number of views of the current users The future play planning will focus more on two aspects. The first is to introduce a higher quality, shorter speed, and longer head length The second is to introduce more high quality, single time length for five to twenty minutes, five to twenty minutes of short content
Dramas are at the core of long-form videos, so to better cater to involving user preferences, our future drama strategy will focus on two key areas. First of all, releasing high-quality, shorter-episode premium dramas, and second, producing more high-quality short dramas, with each episode lasting 5 to 20 minutes.
未来系列项目的总量会增加,内容的品质也会更加优质和多样化。 Going forward, the total number of drama titles will increase, accompanied by enhanced content quality and greater diversity.
This approach will not only improve the flexibility and stability of content scheduling, but will also reduce reliance on individual titles and affect it effectively mitigate risk.
Thank you.
Thank you. The next question is from Maggie Yee from CLSA. Please go ahead.
Good evening, Ms. Yee. Can you please tell us more about the latest progress? For example, from the perspective of members and content distribution, 那在财务方面,现在海外业务对收入和利润有怎样的贡献? 我们未来一到三年内应该对海外业务有怎样的预期? 我翻译一下, would you please share more details on the latest of our overseas business, such as membership and content distribution as well? From financial perspective, what is current situation of the overseas business in terms of revenue and profit contribution and How shall we expect from the overseas business in the next one to three years?
海外业务是2019年下半年开始做体了, 但是很不幸,因为疫情三年, 然后各种插口,各种人不太方便, 导致前三年发展比较慢。 We started our overseas business in second half of 2019.
And after that, we experienced three years of COVID. So there were some difficulties in terms of getting accounts and also travel plans between mainland China and overseas. So the developments were actually quite slower than expectations. After COVID, in the recent two years, the business has been going through a very rapid development phase. However, we do have some restrictions in terms of the financial resources, so there's some limitations to the development.
In addition to the rapid increase in the number of coins recently, we also have a relatively large gain, which is to figure out which areas and what kind of content can increase users, can increase revenue, and to know how to use these contents.
In addition to what I mentioned in the opening remarks that we experienced very rapid growth in terms of the annual revenue growth and also subscriber count, et cetera, there is some very important progress we made. Very importantly that we kind of figured out the right content mix for each region overseas and also what can we do from the content mix to drive user growth and also to drive revenue performance.
On the other hand, we also understand the high-efficiency way of doing market in each area, including the way of promoting content and the way of growing UT.
And more importantly, in addition to that, we also figure out how we can really operate in each region. For example, how we can promote content to acquire better user growth, and also in terms of the user growth, how we can improve that as well.
To sum up, China's content in overseas business
In terms of the content mix for our overseas business, the Chinese content actually accounts for about half of the content and the other half are the local content. The value of China's video content is increasing in the global market, which is very beneficial to our overseas business growth.
The value of China's video content is increasing in the global market, uh uh
Right now, currently, the revenue contribution from the overseas market is still at a relatively low percentage, but it also depends on the future investment into the overseas business, limited to, for example, the scale of our financial support and also the financing sources. So these are the areas where we look out for, for the overseas business.
In the past few years, we have been doing a lot of things in a very disciplined way. The CFO just added to our CEO's comments.
So what we took from the past few years are a really valuable revenue growth as well as the right content mix as well as the operating takeaways from each market. And these are the key takeaways in the past few years. Of course, these are under a very disciplined investment cycle that we did over the past few years as well. And from the management accountant's perspective, that overseas businesses are profitable in the past couple of years and in the future going forward, of course, maintaining profitability is important. However, it doesn't have to be a meaningful amount. What we want is to invest, take that profit and invest into the business. Hopefully, it will drive greater growth opportunities in the future.
Thank you.
Thank you. There are no further questions at this time. I'll now hand back to management for closing remarks.
Thank you, everyone, for participating in the call today.
And if you have any questions, don't hesitate to contact us. Thank you, and see you next quarter.
Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.