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spk04: Hello, ladies and gentlemen. Thank you for standing by for Leisure Inc's fourth quarter and fiscal year 2022 earnings conference call. At this time, all participants are in the listen-only mode. After management's remarks, there will be a question and answer session. Today's conference call is being recorded. And I'd like to turn the call over to your host, Effie Kang, head of capital markets for the company. Please go ahead. Thank you very much. Hello everyone and welcome to Li Zhi Inc's fourth quarter and fiscal year 2022 earnings conference call. We released our financial and operating results via Newswire services earlier today and they are available online. Participants on today's call will include our founder and CEO Mr. Marco Lai, our COO Mr. Zilong Li, and our Acting CFO Ms. Chengfang Lu. Mr. Li and Ms. Lu will begin with prepared remarks. and the call will conclude with a Q&A session. As a reminder, this conference has been recorded. In addition, an earnings highlights presentation and a webcast replay of this conference call will be available on the IR section of our website at ir.leach.fm. Before we continue, please note that today's discussions will contain forward-looking statements made under the Safe Harbor Prohibition of the U.S. Private Securities Litigation Reform Act of 1995. These statements technically contain words such as may, will, expect, target, estimate, intent, believe, potential, continue, or other similar expressions. Forward-looking statements involve inherent risks and uncertainties. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, many of which factors are beyond our control. The company's affiliates, advisors, representatives, and underwriters do not undertake any obligation to update this forward-looking information, except as required under the applicable law. Please also note that Li Zhi's earnings class release and this conference call include discussions of unaudited gap financial measures as well as unaudited non-gap financial measures. Please refer to Li Zhi's earnings class release for reconciliation of unaudited non-gap measures to unaudited gap measures. I will now turn the call over to our COO, Mr. Zaloni. Please go ahead.
spk08: Hello. I would like to thank everyone for attending LIS's 2022 fourth quarter and all-year-end conference. First of all, I would like to express my sincere gratitude to LIS's team for supporting our shareholders and investors. In the past year, despite the complex global red-light environment, there have been many challenges. We have been steadily promoting globalized business, and continuously expanding our domestic and international products. Through technological innovation, we have been helping business development. We have done our best to promote the application of advanced technology in business. At present, we have used AI voice technology in many products, and we have also launched innovative features such as chat technology. Next, we will continue to upgrade relevant technologies and functions to fully promote the application of AI chat robots in business. Through the creation of an AI chat robot platform, we will expand the interaction scene of AI chat robots with emotional and fun, and provide our users with innovative online experience.
spk04: Hello everyone, thank you for joining our fourth quarter and full year 2022 earnings conference call. First of all, on behalf of the Li Zhiqin, I would like to express our deep gratitude to all our shareholders and investors for your continued support. In the past year, despite the challenges posed by headwinds in the global macro environment, we remain committed to steadily promoting our global business development and expanding our diversified product matrix at home and abroad. We also strive to harness the power of technology innovation and integrate the latest advancements of cutting edge technology into our business. At present, we have applied voice AI technology in various existing products and launched an array of innovative AI features, including chatbots. Going forward, we will continue to upgrade our technologies and product features and advance the application of AI chatbots in our products. We aim to provide users with innovative online social companionship experiences by building our AI chatbot platform and creating more engaging, fun, and interactive AI chatbot usage scenarios. that foster emotional connections, ultimately promoting our global business development.
spk08: Through the development and application of core support technology, as well as the optimization of the organizational structure, we have improved the business efficiency. While maintaining a steady growth of annual income, we have also achieved a significant increase in profit and loss. In the fourth quarter, the total number of monthly active users on our platform is 50.8 million. The monthly fee for non-paying users is NT$49.18 million. The rapid revenue has created a new trend in history, reaching NT$5.88 billion. The increase in operating efficiency has also led to a drop in the balance sheet of our three major operating expenses and a drop in the rate of income, including cash and yellow coins. The net profit growth rate increased by 58% to RMB3,140 million, which is more than 2.5 times that of the previous year. In 2022, the annual revenue of interest increased to RMB21.5 billion. The annual interest rate increased by 400 points, which is 33%, We can easily see that in 2022, the level of profit has achieved a long-term growth, reaching 86.5 million yuan in net profit in the previous year. This further demonstrates our sustainability in the business model, and established a solid foundation for the long-term development of the business.
spk04: In 2022, we proactively implemented refined operational strategies and consistently enhanced operating efficiency through our development of core proprietary technologies and optimization of our organizational structure. Notably, while maintaining stable four-year revenue growth, we also achieved a significant increase in profitability. In the fourth quarter, our total average mobile MAUs amounted to $50.8 million, Average monthly paying users totaled 491.8 thousand, and revenue reached a new high of RMB 588 million. As a result of our operational efficiency optimization, both the amount of our operating expenses and their proportion of the total revenues decreased quarter over quarter and year over year. More excitingly, our net income surged 58% sequentially. and more than 250% year-over-year to RMB 31.4 million. In 2022, our full-year revenue increased to RMB 2.185 billion, while our full-year gross margin grew by 400 basis points to 33%. We are delighted by our robust profit growth in 2022, with full-year net income reaching RMB 86.5 million further demonstrating the sustainability of our business model and laying a solid foundation for our long-term growth.
spk08: In 2022, we continuously developed and launched multi-purpose audio and video entertainment products, covering more water-based users. And through product innovation, we brought more interactive entertainment experiences to users. For example, we have newly launched innovative social functions such as new virtual images. By enriching the core gameplay of the product, we enhance the interactive and entertaining of the product. We have combined the following hot points to collaborate with content creators to launch a diversified double-level content and combine live broadcasts, broadcasts, and other forms. to provide users with a unique product interaction experience. At the same time, through a series of IP-level annual contests and rich online activities, we have further improved user activity and strengthened the community atmosphere. During this period, the products of Leeds have also received multiple Apple App Store product application recommendations.
spk04: In terms of our audio entertainment business, we incubated and launched an array of audio entertainment products in 2022, covering users from broader verticals and bringing them a larger variety of interactive entertainment experiences. To that end, we integrated inventive social features such as advertising to enrich product functions and enhance our products' interactivity and their entertainment value. We also spawned in on top trending topics and cooperated with content creators to launch a variety of specialized audio programs throughout the year. Leveraging various audio formats, including audio live streaming and broadcast, we provided users with unique and compelling interactive audio experiences. Meanwhile, we held a series of IT-based annual competitions and various different online campaigns to further enhance our user interaction and community atmosphere. During this period, the LiZhi app was spotlighted numerous times as a featured app in Apple's App Store.
spk08: In terms of innovative business layout, we have been conducting a lot of research and exploration around AI voice technology for a long time. Now, voice recognition, ASR, TTS, AI transformation, AIGC, and many other aspects have made some breakthroughs, and have established a solid technology for the commercialization of business applications. We are very happy to see that the leading technological innovation capabilities and the strong comprehensive strength of enterprises It has been selected as one of the top 100 companies in China's Internet of Things comprehensive strength for four consecutive years in 2022. Currently, we have a group of members with AI technology capabilities and software language processing NLP technology. We have launched AI chat machines and innovative games. In the recent period, we have introduced a large-scale language development In the globalized social product, TIA App, we launched the TIA Board module, which provides online AI dialogue functions for users. In addition to the application of the open source model, we also rely on comprehensive experience in the audio and video field to process NLP technology and language recognition, ASR, In terms of business innovation,
spk04: We have been researching and exploring voice AI and related technologies for years, and have made breakthroughs in automatic speech recognition, ASR, text-to-speech TTS, AI voice changer, and AIGC, among others, laying the technical groundwork for commercial application of these technologies across our business. We are pleased to share that thanks to our advanced technological innovation capabilities, as well as our comprehensive business strength. LiZhi has been named among China's top 100 internet companies for the fourth consecutive year at the end of 2022. At present, we have combined our existing AI technology capabilities with natural language processing NLP and other cutting-edge technologies to launch innovative entertainment features including AI chatbots. For example, we recently utilized the API of a large language model developed by OpenAI to launch the TIAbot module in our TIA app, providing users with an online AI conversational function. In addition to the application of open source models, in February, we developed an online audio chatbot demo integrating NLP technology with voice AI technology including ASR and TTS. And just last week, we launched the audio chatbot Xiaozhi in our audio products, providing users with a novel intelligent audio chat experience.
spk08: In the future, we will use AIGC, NLT, AI audio and audio technology, and open source model learning, In the field of audio and video entertainment, Xiehe Group has accumulated rich material and operational experience. Through monitoring learning and strengthening learning, continuous training and optimization of AI models, we have launched a voice-to-speech robot with a richer emotional and learning experience. At the same time, we have further expanded our application scene to provide users with a new social interaction experience. We will also continue to introduce more diversified social media formats and functions, build a comprehensive AI interactive robot platform, and promote the development of globalized business.
spk04: Moving forward, we will continue to leverage pioneering technologies such as AIGC, NLP, and voice AI, and the integration of our in-house self-developed technology and open-source models. Utilizing the rich resources and operating experience LiZhi has accumulated in the online audio field, we will continuously fine-tune and optimize our AI models through supervised learning and reinforcement learning, enabling us to design interactive chatbots with more engaging and fun features. We will also further expand their usage scenarios, providing users with a brand new social interactive experience. Meanwhile, we will continue to upgrade our social products with more diverse features and functions, build a comprehensive interactive AI chatbot platform, and promote the development of our global business.
spk08: To sum up, in 2022, the results and experience we have gained will be a solid foundation for the group's long-term stable growth. In the year 2023, we will continue to implement the strategy of globalization development and establish an efficient global management system. Through the development of pre-technology, we can innovate business, fully promote AI machine, AI speech technology, and AI communication in business applications, and accelerate globalization.
spk04: Overall, our achievements and the experience we accumulated in 2022 have laid a solid foundation for the company's long-term sustainable development. Stepping into 2023, we will unwillingly execute our globalization strategy, establish an efficient global management system, empower business innovation through the advancement of frontier technologies, and promote the application of technologies such as AIGC, voice AI, and AI chatbots in our business, and accelerate global business expansion. We are confident in the coming year's prospects and look forward to creating greater value for our shareholders and society at large. Thank you all. With that, I will now turn the call over to our Acting CFO, Ms. Chen Fanglu, who will discuss our financial results in more detail.
spk14: Okay. Thank you, Zilong. Hello, everyone. We are delighted to report a set of solid financial results for the fourth quarter and full year 2022. Thanks to our ongoing cost structure optimization and operational efficiency enhancements, our late income in the fourth quarter surged 252% year-over-year and 58% sequentially to an all-time high of RMB 31.4 million. More exciting, for full year 2022, our gross margin was 33%, up 400 basis points year-over-year. Our late income increased to RMB 86.5 million, compared with the land loss of RMB 127.3 million in the previous year. We are encouraged by the robust growth in the profitability driven by our efficient operations and strong execution. Entering 2023, we are committed to unleashing greater commercialization potential and delivering sustainable growth. Now, I'd like to provide a brief overview of our financial results for the fourth quarter of 2022. In the fourth quarter, our total net revenues were RMB 587.6 million, representing an increase of 5% year-over-year, primarily due to the growth in the average user spending on our audio entertainment products. Cost of revenue was RMB 404.1 million in the fourth quarter of 2022, representing an increase of 7% year-over-year, primarily due to an increase in revenue sharing fees to our content creators and the company's revenue growth, partially offset by decreases in salary and welfare benefits related to decrease in our operational headcount, as well as the decline in other miscellaneous costs and share-based compensation expenses. Gross profit was RMB 183.6 million in the fourth quarter of 2022, compared to RMB 181.9 million in the fourth quarter of 2021. Long-gap gross profit was RMB 185.1 million in the fourth quarter of 2022, compared to RMB 184.4 million in the fourth quarter of 2021. Gross margin for the fourth quarter of 2022 was 31%, compared to 32% in the fourth quarter of 2021. Long-gap gross margin for the fourth quarter of 2022 was 31%, compared to 33% in the fourth quarter of last year. Operating expenses were RMB 158.1 million in the fall quarter of 2022, compared to RMB 176.6 million in the fall quarter of 2021. Research and development expenses were RMB 63.7 million in the fall quarter of 2022, compared to RMB 73.5 million in the fall quarter of 2021, primarily due to the decrease of expenses related to research and development services provided by third parties. and share-based compensation expenses, as well as decreased salary and welfare benefits related to a decrease in the number of our research and development staff. Selling and marketing expenses were RMB 67.7 million in the fourth quarter of 2022, compared to RMB 17.9 million in the fourth quarter of 2021, primarily attributable to a decrease in branding and marketing expenses as well as decreased sanitary and welfare benefits expenses related to a decrease in the number of our marketing staff. The company will evaluate and adjust its marketing strategy and budget based on the company's performance, operational needs, and market conditions. General and administrative expenses were RMB 26.7 million in the fourth quarter of 2022, compared to RMB 32.2 million in the fourth quarter of 2021. many driven by decreases in professional service fees, share-based compensation expenses, and other miscellaneous expenses, partially offset by the increased salary and welfare benefits related to an increase in the average salary. Operating income was RMB 25.5 million in the fourth quarter of 2022, compared to RMB 5.4 million in the fourth quarter of 2021. Long-gap operating income was RMB 31.1 million in the fall quarter of 2022, compared to RMB 14.7 million in the fall quarter of last year. Net income was RMB 31.4 million in the fall quarter of 2022, compared to RMB 8.9 million in the fall quarter of 2021. And long-gap net income was RMB 37.1 million compared to RMB 18.3 million in the fall quarter of 2021. Basic and diluted land income per ADF were RMB $0.30 in the fourth quarter of 2022, compared to RMB $0.70 in the fourth quarter of 2021. Long-gap basic and diluted land income per ADF were RMB $0.71 in the fourth quarter of 2022, compared to RMB $0.36 in the fourth quarter of 2021. As of December 31, 2022, we had cash and cash equivalents, shortened investments, unrestricted cash, of RMB 689.9 million. Okay, this concludes all of our prepared remarks today. I will now open the call to questions. Operator, please go ahead.
spk04: Thank you. We will now begin the question and answer session. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. For the sake of clarity and order, please ask one question at a time. Management will respond and then feel free to follow up with your next question. So once again, that's star 114 questions. Our first question comes from the line of Vicky Wei from CT. Please ask your question, Vicky.
spk15: Good evening. Thank you for accepting my question. I have two questions. In 2023, what is our latest strategy after the pandemic? In the past three months after the COVID-19 pandemic, have we noticed any changes in the behavior of users? My second question is, will we invest more in 2023 to promote business growth? 我自己翻譯一下。 Thanks management for taking my question. My question is, what is company strategy in the post-pandemic era in 2023? Does management notice any changes in user behavior in the past three months post-COVID? And any step-up investment to drive business growth in this year? Thank you.
spk09: 好,謝謝Vicky。 我是Marco,我來回答你的問題。
spk10: The first question is about the strategic direction.
spk12: For the overall strategic direction, in 2023, we will continue to promote a global development strategy, and fully promote the application of AI chat robots in globalized businesses, and cover more user groups through multi-product-oriented strategies.
spk04: This question is answered by Marco, and I will translate for Marco. Thank you, Vicky. In terms of our overall strategic plan, we will further propel our global expansion strategy forward in 2023, promote the applications of AI chatbots in our global business, and target more user groups through our diverse product metrics to ultimately achieve a steady growth of our global business.
spk12: In the past few years, we have been studying some core underlying technologies related to AI voice. Recently, we have combined some of the potential technical results in the market, and have been using AI voice NLP technology in our products. For example, we recently launched TIA Box, and, for example, the new features such as voice-to-speech, and so on. Weibo has brought us a new online social experience. Next, we will continue to innovate with technology to help us develop our business. Based on AIDC, AI language, and AI voice technology, In the past few years, we've been exploring and developing fundamental core technologies pertaining to voice AI and other assets.
spk04: And recently, leveraging the Cartoon Edge technologies, we have utilized the Waze AI and the NLP among other technologies in our products. And for instance, we've launched the innovative functions in our products, including the TIA board and the Waze chatbot Xiaozhi on LiZhi app, providing users with new online social interaction experiences. And we are also leveraging the technology to empower our business development. Using AIGC and voice AI technology, we plan to launch customized social chatbot products that convey emotions and connect with users, as well as innovate more product features to enrich our product matrix while continuing to expand our commercialization models.
spk12: Regarding the change in user behavior, we see that the pandemic has made many users more accustomed to online entertainment and online communication, and it has also strengthened the needs of users for online companionship. At the same time, AI technology is also developing. We have recently seen the release of TTP 4.0, It also brings more possibilities for our product innovation. From the recent reactions of the entire market, we can see that the user's acceptance of new products is very high. In the future, we will use the development of AI Chatbot and the improvement of product status in the direction of emotional companionship to bring innovative online companionship experiences to more users. Our product positioning is more in line with the needs of users in the post-pandemic era. I believe this will also bring greater space for our company's business.
spk04: For the changes in user behaviors, in my opinion, the pandemic has made more people accustomed to online entertainment and communication, and it also increased the user demand for online companionship and emotional connection. Additionally, we can see the technology is continuously developing, and recently the GPT-4.0 model is published. The new development of technology also brings more possibilities for product innovation. And the recent reaction of the whole market also shows that users are very receptive and enthusiastic about new things. Next, we will further develop our AI chatbot and upgrade product features for companionship, fostering emotional connections to bring innovative online companionship experiences to more users. And our product positioning is in line with the needs of users in the post-pandemic era. And I believe it will also bring greater growth potential for our business.
spk12: As for whether we will increase the number of customers, in fact, in 2023, our business strategy will be the core of AI signature, to promote global business development through diversified products. We have been investing in AI technology for a long time, not only this year, but also every year. In addition, we will use the corresponding commercialized model to increase our revenue scale.
spk04: In terms of investment, our business strategy in 2023 is to promote the global business expansion through our diverse product matrix with a focus on AI chatbot. We have been exploring and investing in AI chatbot technology for years. and make investments every single year. In addition, we expect to increase the revenue scale by launching monetization models in this space. And we expect new revenue streams in 2023, but we expect the overall investment is under our management and control.
spk12: By strengthening the general platform and some basic operating system construction, as well as the application of our own technology, we continue to increase the efficiency of operation and reduce the cost of scale-up growth. We can see this in 2021. In terms of the market, we will increase the network effect of products and promote user self-growth to reduce our overall cost of customer service. In addition, we are improving our operational efficiency and reducing the cost of scale expansion through the enhancement of our versatile technology platforms and operational system infrastructure.
spk04: as well as the application of self-developed technologies, and we can see it from our performance in 2022. On the marketing front, we aim to reduce the overall user acquisition cost by enhancing the network effects of our products and promoting the organic growth. In general, we expect the investment in 2023 to increase in line with our business growth. but the overall proportion will remain at a reasonable level.
spk11: Thank you. Next question, please.
spk04: Thank you. Our next question comes from the line of Serena Li from China Securities. Please ask your question, Serena.
spk02: Thank you, Guan Yu, for accepting my question.
spk03: I have a small question to ask. Thank you for taking my question. And recently we have seen that company has some progress in chatbot and AI area like publishing Xiaozhi and TiaBot, et cetera. So could management share more specific plans and strategy regarding to the chatbot area? Thank you.
spk12: Thank you. It's about the specific progress of chatbots. In fact, since 2018, we have been working on and the layout of voice-to-speech robots. We have accumulated a lot of information on related technologies, and we have also conducted some technical experiments through product-oriented applications. Now, we have achieved breakthroughs in AI voice technology in ASR and TTS. Our data is very close to the global leading companies. In recent years, we have also combined some NLP algorithm models and started to implement some of the AI checkpoints in existing products. In addition, we have long-term mobilization in the field of language and social media and audio and video entertainment, which also allows us to have a greater advantage in training and promoting more emotional and innovative chat engineers. This question is answered by Marco. In terms of the chatbot development,
spk04: We actually started working on voice chatbot technology as early as 2018. And during the years, we have accumulated valuable experience in these technologies and have utilized this technical expertise in our products. And recently, we have made breakthroughs in voice AI technologies such as ASR and TTF. In addition, our years of experience in social audio and audio entertainment also give us a great advantage in training and launching innovative chatbots that can convey emotions. So we will further leverage our years of experience and technological strengths to promote the application of chatbots in our business and build AI chatbot platforms, providing users with a new online and more personal companionship experience, and ultimately enhancing our differentiated competitive strengths.
spk12: In the future, we will also combine our existing product positioning and localized user needs to present check-out functions in different products. At the same time, we will make more innovations and adapt different usage scenarios. For example, we will combine virtual images, voice chat, functional robots, etc. to make more expansions. Moving forward, we will also launch chatbot functions and features in various products based on our product positioning,
spk04: and the unique demands of local users in various markets globally. In the meantime, we plan to develop more innovative features to adapt to different user scenarios. For example, we may expand on the product functions by combining the avatar, voice chat, and functional bots while also introducing corresponding monetization models. In addition, we may launch a wider array of independent product lines focused on the AI chatbot, which would upgrade products and enrich our product matrix and bring in greater business growth potential.
spk11: Thank you. Next question, please.
spk04: Thank you. Next question comes from the line of xin yun wang from huatai please ask your question xin yun uh
spk01: and how we should look at the long-term trend of growth. My second question is to ask whether LIS's profitability is continuing to improve. In the future, will the company have a certain expectation of the revenue and how to achieve this goal? Let me translate it. With LIS's monthly upward shift and solid growth in the past few quarters, could management share some color on measures we take And how should we think about the growth trend in the non-raw? The second question is that this profitability continues to improve. And looking ahead, do you have any outlook for the profit margin? And how can we achieve that? Thanks a lot.
spk12: Okay, thank you. Regarding APCO, our main source of income is the audiovisual business. At this stage, There are mainly two ways to upgrade ARP. In terms of operation strategy, we mainly use innovative product styles and diversified activities to strengthen users' activity and promote the transfer of payment to users. For example, we have introduced some personalized gift functions, as well as the latest innovative virtual box function to expand the payment scene. By lowering the threshold of participation in activities, we can increase the participation of users, promote the relationship between users and creators, and enhance the feedback of users. Another point is that in the investment strategy, we use optimized product promotion models and promoted investment materials to combine our automated advertising investment system. to carry out accurate cross-examination. By attracting a group of users who have a strong desire to pay back, to promote the transformation of the payment, mainly these two points.
spk04: The first question is about the ARPU. So far, our revenue is actually primarily generated from the order entertainment business, and we mainly focus on two aspects to improve the ARPU. In terms of operational strategies, we continue to refine our innovative product functions and features, and we also diversify our operating activities. which enhanced our user engagement and promoted the user payment conversion rate. For example, we launched the customized virtual gifting options and avatars to expand the paying scenario. And we also lowered the threshold to participate in these activities so we can improve the user engagement and promote connections between users and the content creators, start enhancing users' willingness to pay, So in terms of marketing strategies, through optimizing promotional models and promotional materials with an intelligent advertising system, we implemented precise user acquisition to reach the core user group with stronger spending power and willingness to pay and to promote a payment conversion rate.
spk12: As for the long-term growth trend, we hope to use the new business model of AI chat robots to increase the source of income such as subscription, promotion service, etc., to make our revenue structure more diversified. In terms of the long-term growth trend, we hope to diversify our revenue streams
spk04: through new business models such as the AI chatbot, which may bring additional revenue sources such as subscriptions and value added services. Overall, we are confident that we can achieve more diversification of our revenue streams, as well as steady growth of our overall revenue scale in the future. And we do expect to see some changes in 2023.
spk12: In 2021, we have achieved comprehensive integration. In the future, I believe that the long-term profit scale and profit rate will have room for further improvement. First of all, our domestic business has good growth potential. With the gradual increase in the online audio and video penetration rate, The scale of the market is also expanding further. We will continue to expand the core user community through product governance in the audio and video entertainment business. With diversified operating activities, innovative play methods to increase the user's desire to pay, to promote the increase and growth of the user's payment conversion rate. In terms of cost structure, we will continue to use a more detailed market and operation strategy to combine the optimization of the general platform and the operating system, as well as some applications of our own technology to further enhance the overall efficiency and achieve continuous profit.
spk04: We achieved overall profitability in 2022. In the future, we believe that our profitability and profit margin will further improve in the long term. First of all, our domestic business still has a huge growth potential. With the increase in online audio user penetration rate, the market scale is also expanding further. We will continue to expand the core user groups in the audio entertainment sector and increase users' willingness to pay through a diverse range of operational activities and the innovative functions, promoting the growth of the user payment conversion rate and revenue. And in terms of the cost structure, through refined user acquisition and operational strategies, along with the empowerment of our versatile technology platform, operational systems, and our self-developed technologies, we will continue to improve our overall operating efficiency and achieving sustainable profitability.
spk12: In terms of globalization, as we continue to expand the application of AI TrackBot, we will continue to enrich our financial system and promote a diversified business model. We hope to bring more income contributions to the Group. As for the global business, we hope to bring more revenue contribution by enriching our product matrix and also diversifying our business models along with the application of AI chatbot.
spk04: we will also make dynamic adjustments in resource allocation based on different stages of business development in the long term we are confident in the continuously improving our overall profitability all right thank you that's all all right thank you there are no further questions now so i'd like to turn the call back to the company for closing remarks Well, thank you once again for joining us today. If you have further questions, please feel free to contact Li Zhi's Investor Relations through the contact information provided on our website at ir.liji.fm or the Pianti Group Investor Relations. Thank you. This concludes the conference call. You may now disconnect your line. Thank you.
spk15: The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 1 1. Thank you. music music Thank you.
spk04: Hello, ladies and gentlemen. Thank you for standing by for Leisure Inc's fourth quarter and fiscal year 2022 earnings conference call. At this time, all participants are in the listen-only mode. After management's remarks, there will be a question and answer session. Today's conference call is being recorded. And I'd like to turn the call over to your host, Effie Kang, head of capital markets for the company. Please go ahead. Thank you very much. Hello everyone and welcome to Li Zhi Inc's fourth quarter and fiscal year 2022 earnings conference call. We released our financial and operating results via Newswire services earlier today and they are available online. Participants on today's call will include our founder and CEO Mr. Marco Lai, our COO Mr. Zilong Li, and our acting CFO Ms. Chengfang Lu. Mr. Li and Ms. Lu will begin with prepared remarks. and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, an earnest highlight presentation and a webcast replay of this conference call will be available on the IR section of our website at ir.leach.fm. Before we continue, please note that today's discussions will contain forward-looking statements made under the Safe Harbor Prohibition of the U.S. Private Securities Litigation Reform Act of 1995. These statements technically contain words such as may, will, expect, target, estimate, intent, believe, potential, continue, or other similar expressions. Forward-looking statements involve inherent risks and uncertainties. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, many of which factors are beyond our control. The company's affiliates, advisors, representatives, and underwriters do not undertake any obligation to update this forward-looking information, except as required under the applicable law. Please also note that Li Zhi's earnings class release and this conference call include discussions of unaudited gap financial measures as well as unaudited non-gap financial measures. Please refer to Li Zhi's earnings class release for reconciliation of unaudited non-gap measures to unaudited gap measures. I will now turn the call over to our COO, Mr. Zaloni. Please go ahead.
spk08: Hello, everyone. Thank you for attending LIS 2022's fourth quarter and all-year-end conference. First of all, on behalf of LIS's team, I would like to thank our shareholders and investors for their faithful support. In the past year, despite the complex global red-light environment, there have been various challenges. LiZi is still steadily advancing its globalized business and continuously expanding its diversification of domestic and foreign products. Through the innovation of technology and the development of energy-saving business, LiZi has made an effort to promote the ground-breaking application of advanced technology in business. Currently, we have used AI voice technology in many products, and we have also uploaded innovative features such as chat, communication, and so on. Next, we will continue to upgrade relevant technologies and functions to fully promote the application of AI chat robots in business. Through the creation of an AI chat robot platform, we will expand the interaction scene of AI chat robots with growth and fun. Hello everyone, thank you for joining our fourth quarter and full year 2022 earnings conference call.
spk04: First of all, on behalf of Li Zhijing, I would like to express our deep gratitude to all our shareholders and investors for your continued support. In the past year, despite the challenges posed by halvings in the global macro environment, we remain committed to steadily promoting our global business development and expanding our diversified product matrix at home and abroad. We also strive to harness the power of technology innovation and integrate the latest advancements of cutting edge technology into our business. At present, we have applied voice AI technology in various existing products and launched an array of innovative AI features, including chatbots. Going forward, we will continue to upgrade our technologies and product features and advance the application of AI chatbots in our products. We aim to provide users with innovative online social companionship experiences by building our AI chatbot platform and creating more engaging, fun, and interactive AI chatbot usage scenarios. that foster emotional connections, ultimately promoting our global business development.
spk08: Through the development and application of core support technology, and the optimization of the organizational structure, we have improved the business efficiency. While maintaining a steady growth in annual income, we have also achieved a significant increase in profit. In the fourth quarter, the total number of monthly active users on our platform is 50.8 million. The monthly fee for non-paying users is NT$49.18 million. The rapid revenue has created a new high in history, reaching NT$5.88 billion. The increase in operating efficiency has also led to a drop in the balance sheet of our three major operating expenses, as well as a drop in the rate of income, including real-time cash and yellow coins. The net profit growth rate increased by 58% to RMB3,140 million, which is more than 2.5 times that of the previous year. In 2022, the net profit growth rate increased to RMB21.5 billion. The net profit growth rate increased by 400 points to 33%, We are very happy to see that in 2022, the profit level has achieved a long-term growth, reaching 86.5 million yuan in net profit last year. This further demonstrates our sustainability in the business model, and has established a solid foundation for the long-term development of business.
spk04: In 2022, we proactively implemented refined operational strategies and consistently enhanced operating efficiency through our development of core proprietary technologies and optimization of our organizational structure. Notably, while maintaining stable four-year revenue growth, we also achieved a significant increase in profitability. In the fourth quarter, our total average mobile MAUs amounted to $50.8 million, Average monthly paying users totaled 491.8 thousand, and revenue reached a new high of RMB 588 million. As a result of our operational efficiency optimization, both the amount of our operating expenses and their proportion of the total revenues decreased quarter over quarter and year over year. More excitingly, our net income surged 58% sequentially. and more than 250% year-over-year to RMB 31.4 million. In 2022, our full-year revenue increased to RMB 2.185 billion, while our full-year gross margin grew by 400 basis points to 33%. We are delighted by our robust profit growth in 2022, with full-year net income reaching RMB 86.5 million further demonstrating the sustainability of our business model and laying a solid foundation for our long-term growth.
spk08: In 2022, we continuously developed and launched a multi-purpose audio and video entertainment product, covering more water-based users, and through product innovation, bringing more interactive entertainment experiences to users. For example, we have newly launched innovative social functions such as new virtual images, to enrich the core gameplay of the product and enhance the interactive and entertainment of the product. We have combined the following hot points to collaborate with content creators to launch a diversified album content, and to combine live broadcasts, broadcasts and other forms. to provide users with a unique hardware interaction experience. At the same time, through a series of IP-level annual contests and rich online activities, we have further improved user activity and strengthened the community atmosphere. During this period, the products of Leeds have also received multiple Apple App Store hardware application recommendations.
spk04: In terms of our audio entertainment business, we incubated and launched an array of audio entertainment products in 2022, covering users from broader verticals and bringing them a larger variety of interactive entertainment experiences. To that end, we integrated inventive social features such as advertising to enrich product functions and enhance our products' interactivity and their entertainment value. We also spawned in on top trending topics and cooperated with content creators to launch a variety of specialized audio programs throughout the year. Leveraging various audio formats, including audio live streaming and broadcast, we provided users with unique and compelling interactive audio experiences. Meanwhile, we held a series of IT-based annual competitions and various different online campaigns to further enhance our user interaction and community atmosphere. During this period, the LiZhi app was spotlighted numerous times as a featured app in Apple's App Store.
spk08: In terms of innovative business layout, we have been conducting a lot of research and exploration around AI voice technology for a long time. Now, voice recognition, ASR, TTS, AI transformation, AIGC, and many other aspects have made certain breakthroughs, and have developed solid technology for the use of commercialization applications. We are very happy to see that the leading technological innovation capabilities and the comprehensive strength of advanced enterprises It has been selected as one of the top 100 companies in China's Internet of Things comprehensive strength for four consecutive years in 2022. Currently, we have a group of members with AI technology capabilities and natural language processing NLP technology. We have launched AI chat machines and innovative games. In the recent period, we have introduced a large-scale language development In the globalized social product, TIA App, we have launched the TIA Board module, which provides online AI dialogue functions for users. In addition to the application of the open source model, we also rely on comprehensive experience in the audio and video field to process NLP technology and language recognition, ASR, In terms of business innovation,
spk04: We have been researching and exploring voice AI and related technologies for years, and have made breakthroughs in automatic speech recognition, ASR, text-to-speech TTS, AI voice changer, and AIGC, among others, laying the technical groundwork for commercial application of these technologies across our business. We are pleased to share that thanks to our advanced technological innovation capabilities, as well as our comprehensive business strength. LiZhi has been named among China's top 100 internet companies for the fourth consecutive year at the end of 2022. At present, we have combined our existing AI technology capabilities with natural language processing NLP and other cutting-edge technologies to launch innovative entertainment features including AI chatbots. For example, we recently utilized the API of a large language model developed by OpenAI to launch the TIAbot module in our TIA app, providing users with an online AI conversational function. In addition to the application of open source models, in February, we developed an online audio chatbot demo integrating NLP technology with voice AI technology including ASR and TTS. And just last week, we launched the audio chatbot Xiaozhi in our audio products, providing users with a novel intelligent audio chat experience.
spk08: In the future, we will use AIGC, NLT, AI audio and audio technology, and open source model learning, In the field of audio and video entertainment, Xiehe Group has accumulated rich material and operational experience. Through monitoring learning and strengthening learning, continuous training and optimization of AI models, we can promote more emotional and learning-intensive audio and video chat robots. At the same time, we further expand our application scene to provide users with a new social interaction experience. We will also continue to promote a more diversified social product form and function, build a comprehensive AI interactive robot platform, and promote the development of globalized business.
spk04: Moving forward, we will continue to leverage pioneering technologies such as AIGC, NLP, and voice AI, and the integration of our in-house self-developed technology and open-source models. Utilizing the rich resources and operating experience LiZhi has accumulated in the online audio field, we will continuously fine-tune and optimize our AI models through supervised learning and reinforcement learning, enabling us to design interactive chatbots with more engaging and fun features. We will also further extend their usage scenarios, providing users with a brand new social interactive experience. Meanwhile, we will continue to upgrade our social products with more diverse features and functions, build a comprehensive interactive AI chatbot platform, and promote the development of our global business.
spk08: To sum up, in 2022, the results and experience we have gained will be a solid foundation for the company's long-term stable growth. In the year 2023, we will continue to implement the strategy of globalization development and establish an efficient global management system. Through the development of pre-technology, we can innovate our business, fully promote AI machine, AI voice technology, and AI communication in business applications, and accelerate globalization.
spk04: Overall, our achievements and the experience we accumulated in 2022 have laid a solid foundation for the company's long-term sustainable development. Stepping into 2023, we will unwillingly execute our globalization strategy, establish an efficient global management system, empower business innovation through the advancement of frontier technologies, and promote the application of technologies such as AIGC, voice AI, and AI chatbots in our business, and accelerate global business expansion. We are confident in the coming year's prospects and look forward to creating greater value for our shareholders and society at large. Thank you all. With that, I will now turn the call over to our Acting CFO, Ms. Chen Fanglu, who will discuss our financial results in more detail.
spk14: Okay. Thank you, Zilong. Hello, everyone. We are delighted to report a set of solid financial results for the fourth quarter and full year 2022. Thanks to our ongoing cost structure optimization and operational efficiency enhancements, our late income in the fourth quarter surged 252% year-over-year and 58% sequentially to an all-time high of RMB 31.4 million. More excitingly, for full year 2022, our gross margin was 33% of 400 basis points year-over-year. Our late income increased to RMB 86.5 million compared with the land loss of RMB 127.3 million in the previous year. We are encouraged by the robust growth in the profitability driven by our efficient operations and strong execution. Entering 2023, we are committed to unleashing greater commercialization potential and delivering sustainable growth. Now, I'd like to provide a brief overview of our financial results for the fourth quarter of 2022. In the fourth quarter, our total net revenues were RMB 587.6 million, representing an increase of 5% year-over-year, primarily due to the growth in the average user spending on our audio entertainment products. Cost of revenue was RMB 404.1 million in the fourth quarter of 2022, representing an increase of 7% year-over-year, primarily due to an increase in revenue sharing fees to our content creators and the company's revenue growth, partially offset by decreases in sanitary and welfare benefits related to decrease in our operational headcount, as well as the decline in other miscellaneous costs and share-based compensation expenses. Gross profit was RMB 183.6 million in the fourth quarter of 2022, compared to RMB 181.9 million in the fourth quarter of 2021. Long-gap gross profit was RMB 185.1 million in the fourth quarter of 2022, compared to RMB 184.4 million in the fourth quarter of 2021. Gross margin for the fourth quarter of 2022 was 31%, compared to 32% in the fourth quarter of 2021. Long-gap gross margin for the fourth quarter of 2022 was 31%, compared to 33% in the fourth quarter of last year. Operating expenses were RMB 158.1 million in the fall quarter of 2022, compared to RMB 176.6 million in the fall quarter of 2021. Research and development expenses were RMB 63.7 million in the fall quarter of 2022, compared to RMB 73.5 million in the fall quarter of 2021, primarily due to the decrease of expenses related to research and development services provided by third parties. and share-based compensation expenses, as well as decreased salary and welfare benefits related to a decrease in the number of our research and development staff. Selling and marketing expenses were RMB 67.7 million in the fourth quarter of 2022, compared to RMB 17.9 million in the fourth quarter of 2021, primarily attributable to a decrease in branding and marketing expenses as well as decreased sanitary and welfare benefits expenses related to a decrease in the number of our marketing staff. The company will evaluate and adjust its marketing strategy and budget based on the company's performance, operational needs, and market conditions. General and administrative expenses were RMB 26.7 million in the fourth quarter of 2022, compared to RMB 32.2 million in the fourth quarter of 2021. many driven by decreases in professional service fees, share-based compensation expenses, and other miscellaneous expenses, partially offset by the increased salary and welfare benefits related to an increase in the average salary. Operating income was RMB 25.5 million in the fourth quarter of 2022, compared to RMB 5.4 million in the fourth quarter of 2021. Long-gap operating income was RMB 31.1 million in the fall quarter of 2022, compared to RMB 14.7 million in the fall quarter of last year. Net income was RMB 31.4 million in the fall quarter of 2022, compared to RMB 8.9 million in the fall quarter of 2021. And long-gap net income was RMB 37.1 million compared to RMB 18.3 million in the fall quarter of 2021. Basic and diluted land income per ADF were RMB 30 cents in the fourth quarter of 2022, compared to RMB 70 cents in the fourth quarter of 2021. Long-gap basic and diluted land income per ADF were RMB 71 cents in the fourth quarter of 2022, compared to RMB 36 cents in the fourth quarter of 2021. As of December 31st, 2022, we had cash at cash equivalents, shortened investments, unrestricted cash of RMB 689.9 million. Okay, this concludes all of our prepared remarks today. I will now open the call to questions. Operator, please go ahead.
spk04: Thank you. We will now begin the question and answer session. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. For the sake of clarity and order, please ask one question at a time. Management will respond and then feel free to follow up with your next question. So once again, that's star 114 questions. Our first question comes from the line of Vicky Wei from CT. Please ask your question, Vicky.
spk15: Good evening. Thank you for answering my question. I have two questions. In 2023, after the pandemic, what is our latest strategy? In the past three months after the COVID-19 pandemic, have we noticed any changes in the behavior of users? My second question is, will we invest more in 2023 to promote business growth? 我自己翻譯一下。 Thanks management for taking my question. My question is, what is company strategy in the post-pandemic era in 2023? Does management notice any changes in user behavior in the past three months post-COVID? And any step-up investment to drive business growth in this year? Thank you.
spk09: 好,謝謝Vicky。 我是Marco,我來回答你的問題。
spk10: The first question is about the strategic direction.
spk12: For the overall strategic direction, in 2023, we will continue to promote a globalized development strategy, and fully promote the application of AI chat robots in globalized businesses, and cover more user groups through multi-product-oriented strategies.
spk04: This question is answered by Marco, and I will translate for Marco. Thank you, Vicky. In terms of our overall strategic plan, we will further propel our global expansion strategy forward in 2023, promote the applications of AI chatbots in our global business, and target more user groups through our diverse product metrics to ultimately achieve a steady growth of our global business.
spk12: In the past few years, we have been researching some core engineering technologies related to AI voice. Recently, we have combined some of the potential technical results in the market, and have been continuously applying AI voice NLP technology to our products. For example, we recently launched TIA Box, as well as new features such as voice-to-speech, and voice-to-speech-to-speech-to-speech-to-speech-to-speech-to-speech-to-speech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to-spech-to- spech-to-spech-to- spech-to- spech-to- spech-to- spech-to- spech-to- spech-to- spech-to- spech-to- spech-to- In the past few years, we've been following and developing fundamental core technologies pertaining to voice AI and other assets.
spk04: And recently, leveraging the Cartoon Edge technologies, we have utilized the Waze AI and the NLP among other technologies in our products. And for instance, we've launched the innovative functions in our products, including the TIA board and the Waze chatbot Xiaozhi on LiZhi app, providing users with new online social interaction experiences. And we are also leveraging the technology to empower our business development. Using AIGC and voice AI technology, we plan to launch customized social chatbot products that convey emotions and connect with users, as well as innovate more product features to enrich our product matrix while continuing to expand our commercialization models.
spk12: Regarding the change in user behavior, we see that the pandemic has made many users more accustomed to online entertainment and online communication. It has also strengthened the needs of users for online companionship. At the same time, AI technology is also developing. We have recently seen the release of TTP 4.0. It also brings more possibilities for our product innovation. From the response of the entire market in the recent period, we can see that the user's acceptance and interest in new products is very high. In the future, we will use the development of AI Chatbot and the improvement of product status in the direction of emotional companionship to bring innovative online companionship experiences to more users. The positioning of our products is more in line with the needs of users in the post-pandemic era. I believe this will also bring greater development space to our company's business.
spk04: For the changes in user behaviors, in my opinion, the pandemic has made more people accustomed to online entertainment and communication, and it also increased the user demand for online companionship and emotional connection. Additionally, we can see the technology is continuously developing, and recently the GPT-4.0 model is published. The new development of technology also brings more possibilities for product innovation. And the recent reaction of the whole market also shows that users are very receptive and enthusiastic about new things. Next, we will further develop our AI chatbot and upgrade product features for companionship, fostering emotional connections to bring innovative online companionship experiences to more users. And our product positioning is in line with the needs of users in the post-pandemic era. And I believe it will also bring greater growth potential for our business.
spk12: As for whether we will expand our supply chain, in fact, in 2023, our business strategy will be the core of AI signature, to promote global business development through diversified products. We have been investing in AI technology for a long time, not only this year, but also every year. In addition, we will use the corresponding commercialized model to increase our revenue scale.
spk04: In terms of investment, our business strategy in 2023 is to promote the global business expansion through our diverse product matrix with a focus on AI chatbot. We have been exploring and investing in AI chatbot technology for years. and make investments every single year. In addition, we expect to increase the revenue scale by launching monetization models in this space. And we expect new revenue streams in 2023, so we expect the overall investment is under our management and control.
spk12: by strengthening the general platform and some basic operating system construction, as well as the application of our own technology, we continue to increase the efficiency of operation, and reduce the cost of scale-up growth. We can see this in 2022. In terms of the market, we will increase the network effect of products and promote user self-growth to reduce our overall cost of customer service. In addition, we are improving our operational efficiency and reducing the cost of scale expansion through the enhancement of our versatile technology platforms and operational system infrastructure
spk04: as well as the application of self-developed technologies, and we can see it from our performance in 2022. On the marketing front, we aim to reduce the overall user acquisition cost by enhancing the network effects of our products and promoting the organic growth. In general, we expect the investment in 2023 to increase in line with our business growth. but the overall proportion will remain at a reasonable level.
spk11: Thank you. Next question, please.
spk04: Thank you. Our next question comes from the line of Serena Li from China Securities. Please ask your question, Serena.
spk02: Thank you, Guan Yu, for accepting my question.
spk03: I have a small question to ask. Thanks for taking my question. And recently we have seen that company has some progress in chatbot and AI area. like publishing Xiaozhi and TiaBot, et cetera. So could management share more specific plans and strategy regarding to the chatbot area? Thank you.
spk12: Thank you. It's about the specific progress of chatbots. In fact, since 2018, we have been working on and the layout of voice chat robots. We have accumulated a lot in terms of relevant technologies, and have also conducted some technical experiments through product-oriented applications. Now, we have achieved breakthroughs in AI voice technology such as ASR and TTS. Our data is very close to the level of some of the world's leading companies. In recent years, we have also combined some NLP algorithms and started to implement AI checkbox landing in existing products. In addition, we have long-term mobilization in the field of language and social media and audio and video entertainment, which also allows us to have a greater advantage in training and promoting more emotional and innovative chat engineers. This question is answered by Marco. In terms of the chatbot development,
spk04: We actually started working on voice chatbot technology as early as 2018. And during the years, we have accumulated valuable experience in these technologies and have utilized this technical expertise in our products. And recently, we have made breakthroughs in voice AI technologies such as ASR and TTF. In addition, our years of experience in social audio and audio entertainment also give us a great advantage in training and launching innovative chatbots that can convey emotions. So we will further leverage our years of experience and technological strengths to promote the application of chatbots in our business and build AI chatbot platforms, providing users with a new online and more personal companionship experience, and ultimately enhancing our differentiated competitive strengths.
spk12: In the future, we will also combine our existing product positioning and localization requirements to present check-out functions in different products. At the same time, we will make more innovations and adapt different usage scenarios. For example, we will combine virtual images, voice chat, functional robots, etc. to make more expansions. Moving forward, we will also launch chatbot functions and features in various products
spk04: based on our product positioning and the unique demands of local users in various markets globally. In the meantime, we plan to develop more innovative features to adapt to different user scenarios. For example, we may expand on the product functions by combining the advertising, voice chat, and functional bots while also introducing corresponding monetization models. In addition, we may launch a wider array of independent product lines focused on the AI chatbot, which would upgrade products and enrich our product matrix and bring in greater business growth potential.
spk11: Thank you. Next question, please.
spk04: Thank you. Next question comes from the line of xin yun wang from huatai please ask your question xin yun uh
spk01: and how we should look at the long-term trend of growth. My second question is to ask whether LIS's profitability is continuing to improve. In the future, will the company have a certain expectation of revenue and how to achieve this goal? Let me translate it. We see LIS's monthly output achieved a solid growth in the past two quarters. Could management share some color on measures we take And how should we think about the growth trend in the non-raw? The second question is that this profitability continues to improve. And looking ahead, do you have any outlook for the profit margin? And how can we achieve that? Thanks a lot.
spk12: Okay, thank you. Regarding APCO, our main source of income is the audiovisual business. At this stage, There are mainly two ways to upgrade ARP. In terms of operation strategy, we mainly use innovative product models and diversified activities to enhance user activity and promote user payment transformation. For example, we have introduced some personalized gift functions, as well as the latest innovative virtual box function to expand the payment scene. By lowering the threshold of participation in activities, we can increase the participation of users, promote the relationship between users and creators, and enhance the feedback of users. Another point is that in the investment strategy, we use optimized product promotion models and promoted investment materials to combine our automated advertising investment system to carry out accurate expansion, The first question is about the R pool. So far, our revenue is actually primarily generated from the order and retainer business.
spk04: And we mainly focus on two aspects to improve the R pool. In terms of operational strategies, we continue to refine our innovative product functions and features, and we also diversify our operating activities. We enhanced our user engagement and promoted the user payment conversion rate. For example, we launched the customized virtual gifting options and avatars to expand the paying scenario. We also lowered the threshold to participate in these activities. so we can improve the user engagement and promote connections between users and content creators, thus enhancing users' willingness to pay. So in terms of marketing strategies, through optimizing promotional models and promotional materials with an intelligent advertising system, we implemented precise user acquisition to reach the core user group with stronger spending power and willingness to pay. and to promote the payment conversion rate.
spk12: As for the long-term growth trend, we hope to use the new business model of AI chat robots to increase the source of income such as subscription, promotion service, etc. to make our revenue structure more diversified. In terms of the long-term growth trend, we hope to diversify our revenue streams
spk04: through new business models, such as AI chatbots, which may bring additional revenue sources, such as subscriptions and value-added services. Overall, we are confident that we can achieve more diversification of our revenue streams, as well as steady growth of our overall revenue scale in the future. And we do expect to see some changes in 2023.
spk12: In 2021, we have achieved comprehensive integration. In the future, I believe the long-term profit scale and profit rate will have room for further improvement. First of all, our domestic business has good growth potential. With the gradual increase in the online audio and video penetration rate, The scale of the market is also expanding further. We will continue to expand the core user community through product governance in the audio and video entertainment business. With diversified operating activities, innovative play methods to increase the user's desire to pay, to promote the increase and growth of the user's payment conversion rate. In terms of cost structure, we will continue to use a more detailed market and operation strategy to combine the optimization of the general platform and the operating system, as well as some applications of our own technology to further enhance the overall efficiency and achieve continuous profit.
spk04: We achieved the overall profitability in 2022 and in the future we believe that our profitability and profit margin will further improve in the long term. First of all, our domestic business still has a huge growth potential. With the increase in online audio user penetration rate, the market scale is also expanding further and we will continue to expand the core user groups in the audio entertainment sector and increase users' willingness to pay through a diverse range of operational activities and the innovative functions, promoting the growth of the user payment conversion rate and revenue. And in terms of the cost structure, through refined user acquisition and operational strategies, along with the empowerment of our versatile technology platform, operational systems, and our self-developed technologies, we will continue to improve our overall operating efficiency and achieving sustainable profitability.
spk12: In terms of globalization, as we continue to expand the application of AI TrackBot, we will continue to enrich our financial system and promote a diversified business model. We hope to bring more income contributions to the Group. As for the global business, we hope to bring more revenue contribution by enriching our product matrix and also diversifying our business models along with the application of AI chatbot.
spk04: We will also make dynamic adjustments in resource allocation based on different stages of business development. In the long term, we are confident in continuously improving our overall profitability.
spk13: Thank you. That's all.
spk04: All right. Thank you. There are no further questions now, so I'd like to turn the call back to the company for closing remarks. Well, thank you once again for joining us today. If you have further questions, please feel free to contact Li Zhi's Investor Relations through the contact information provided on our website at ir.liji.fm or the Pianti Group Investor Relations. Thank you. This concludes the conference call. You may now disconnect your line. Thank you.
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