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spk12: Hello, ladies and gentlemen. Thank you for standing by for Leachee Inc's first quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. After speak management's remarks, there will be a question and answer session. Today's conference call is being recorded. I'll now turn the call over to your host, Effie Kang, head of capital market for the company. Please go ahead.
spk08: Thank you very much. Hello, everyone, and welcome to Li Zhi Inc's first quarter 2023 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. Ze Long Li, and our acting CFO, Ms. Chen Fang 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, our 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 provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements technically contain words such as may, will, expect, target, estimate, intend, believe, potential, continue, or other similar expressions. Forward-looking statements involving heavy 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 be prematurely from those projected or anticipated, many of which factors are beyond our control. The company is affiliated with 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 press release and this conference call include discussions of unaudited gap financial measures as well as unaudited non-gap financial measures. These refer to Li Zhi's earnings press release for reconciliation of unaudited non-gap measures to unaudited gap measures. I will now turn the call over to our COO, Mr. Zilong Li. Please go ahead.
spk13: Hello, everyone. I would like to thank everyone for attending the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of and continue to address the global strategic layout. In this quarter, the company's revenue has increased by 22% to RMB63.1 billion. The total number of monthly active users on the platform is 49.6 million. The monthly paid users are 47.15 million. While the first quarter of 2023 marked a fresh start,
spk08: we remain committed to building a more competitive audio-based ecosystem, enriching our diversified product matrix, further unleashing our business commercialization potential, and propelling our global business expansion. In the first quarter, the company's revenue increased by 22% year-over-year to RMB 631 million. Our total average mobile MAUs amounted to 49.6 million, and our average monthly paying users totaled 471.5 thousand. Powered by our core technologies and the versatile technology platforms and supported by our effective operational strategies, our net income surged by 54% sequentially and 194% year-over-year to RMB 48.33 million.
spk13: We continued to upgrade the form and function of the audio and video entertainment group, further improving the commercialization efficiency of the audio and video entertainment business. We have newly launched a series of interactive online activity models, encouraging users and content creators to participate together, promoting the close connection between content creators and users, and increasing users' participation and activity. In the first quarter, we continued innovating and upgrading our audio entertainment product features and functions.
spk08: boosting our audio entertainment's commercialization efficiency. By launching an array of highly interactive online modules, we encourage the users and the content creators to interact, aiming to strengthen connections between them, as well as drive up user participation and engagement. Meanwhile, we continue expanding our core content categories, bringing differentiated audio entertainment experiences to our users. through innovative features. Leveraging dynamic adjustments to our operations and marketing strategies, we also effectively improved the core users' willingness to pay.
spk13: In terms of the growth of the producer, we focused on the producer's growth system construction, enhanced the sophisticated application, and continued to improve the creative tools to help creators grow quickly within the platform. We have built a co-creating mechanism for high-quality content creators, adapted more creators to participate in platform content construction, and improved the creativity of creators, and inspired their creative potential. Through mechanized management and diversified theme activities, we continue to use the creativity of high-quality content creators. For example, we launched a special event for high-quality anchors. to combine the themes and hot topics, to enhance the atmosphere of community interaction, to help content creators attract more listeners, and to achieve their creativity.
spk08: With regard to our content creator ecosystem, we remain focused on cultivating the creator experience, refining operations, and continuously improving the creation tools available to them to help them grow and flourish on our platform. By implementing a creator partnership mechanism, For quality content creators, we have attracted more creators to generate content while boosting their engagement and creative output. Furthermore, through our refined operations management and diversified themed activities, we succeeded in giving full play to the value creativity of our quality content creators. For example, we launched the themed activities such as special sessions featuring quality hosts, and link them to trending topics in order to enhance interaction in the audio-centric community, helping our content creators attract more followers and generate income.
spk13: In terms of the innovation of globalization, we have worked hard to integrate core technology applications, carry out continuous innovation, build AI chat bot platforms, and promote the development of international business. In February this year, We integrated the GPT model into the globalized voice-to-speech tool TIA app and launched the chat robot module. At the end of March, we also further optimized the module and released the new application version of My AI Flame chat robot, which further enriches the experience of online accompaniment. The new My AI Flame chat robot can help users create ideal online friends. to provide users with a more personalized AI experience. Users can create their own AI friends through the custom function of MyAISland, including the personalized image of AI friends. After the upgrade version is launched, we are concerned that more users are willing to share MyAISland with their friends, which enhances the network effect between products. The user experience of My AF Lens has also been significantly improved. For example, in the field of audio technology, we have recently started to test the voice-related functions of My AF Lens. We also hope to provide users with an experience of AI-based audio communication with machines. Next, we will continue to optimize and upgrade the function of My AI Plan and its product form, expand the interaction scene of AI chat robots, realize the effective integration of AI robots with the existing social ecosystem, and provide users with more emotional and emotional values.
spk08: Regarding our global business, we remain committed to relentlessly approach our innovation by applying our core technologies We aim to build an AI chatbot platform and ultimately promote further development of our global business. This February, we launched a chatbot module in our global audio-based social networking product, TIA app, leveraging the GPT model. By the end of March, we further optimized the module and rolled out an upgraded version of the MyAIS brand chatbot to better enrich the app's online companionship experience. The newly unveiled My AI Friend chatbot is designed for users to create their ideal online friends and have a more tailored AI-enabled chat experience. Users may create dedicated AI friends and generate tailored profiles by leveraging the customization functions of My AI Friend. With the launch of the upgraded version, we are pleased to see that more users are willing to share My AI Friend with their peers. enhancing in-app engagement and significantly improving the usage time. Building upon the company's strong technical capabilities in the audio field, we recently tested My AI Friends voice functions, aiming to provide users with a more differentiated AI voice chat experience. Going forward, we will further optimize and upgrade My AI Friends features as well as enrich our AI chatbot usage scenarios. I mean to effectively integrate our AI chatbot into our original social networking protocols and provide users with more valuable emotional support and companionship.
spk13: In terms of globalization capability construction, we carry out business localization to organize globalized management ideas. Through localization management, we have achieved more effective localization business operations. In terms of technological development, We continue to promote core technology resources and fully drive product innovation. The machine has achieved breakthroughs in the field of social marketing and online accompaniment, as well as many years of operating experience, combined with AI cloud technology such as SR, TPS, etc. We plan to continue to explore the applications of AI cloud chat robots,
spk08: As we pursue the development of our global capabilities, we always follow the principle of establishing localized operations across our globalized organization. As such, we have effectively enhanced our underground business operations by establishing localized operational management teams. Technology-wise, we have made progress with the R&D of self-developed core technologies to fully power our product innovation, building upon the company's technology capabilities, strong expertise in the fields of voice-based social networking and online companionship, and years of operational experience, coupled with technological breakthroughs in ASR, TTS, and other voice AI areas. We intend to further explore the application of audio-based AI chatbots. We also remain committed to bringing a more differentiated online companionship experience to our users.
spk13: Overall, in the first record, LIS's various businesses are steadily advancing. Next, we will continue to advance the global strategic layout through technological advancements.
spk08: In summary, Li Zhi achieved a solid growth in the first quarter of 2023 across all business segments. Looking ahead, we will continue to power product innovations through technology development while actively advancing our global positioning.
spk13: Thank you all. With that, I will now turn the call over to our Acting CFO, Ms. Chen Fanglu.
spk08: who will discuss our financial results in more detail.
spk07: Hello everyone. We are delighted to see that in the first quarter of 2023, our revenue increased by 22% year-over-year to new high of RMB $631 million. In addition, we achieved ongoing profitability with net income of RMB $48.3 million. up 54% sequentially and 194% year-over-year. Looking ahead, we'll continue to improve our operating efficiency. Now, I'd like to provide a brief overview of our financial results for the first quarter of 2023. In the first quarter, our total net revenues were RMB $631 million, representing an increase of 22% year-over-year. primarily due to the growth in the average user spending on our audio entertainment products, driven by diversified themed activities and optimization of marketing strategy. Cost of revenue was armed with $434.6 million in the first quarter, representing an increase of 25% year-over-year, mainly attributable to an increase in revenue-sharing fees to account creators, payment-handling costs, and bandwidth costs. as we expanded our business, partially obviously by a decline in other miscellaneous costs. Gross profit was RMB196.4 million in the first quarter of 2023, compared with RMB168.1 million in the same period of last year. Long-gap gross profit was RMB198.2 million in the first quarter of this year. compared with RMB 170.7 million in the first quarter of last year. Gross margin for the first quarter of 2023 was 31%, compared with 32% in same period of last year. Long-gap gross margin for the first quarter of 2023 was 31%, compared with 33% in the same period of last year. Operating expenses were RMB 153.7 million in the first quarter of 2023, compared with RMB 153.5 million in the same period of last year. Research and development expenses were RMB 71.9 million in the first quarter of 2023, compared with RMB 71.1 million in the first quarter of last year. Primarily due to the increasing salary and welfare benefits expenses, and share-based compensation expenses, partially offset by decline expenses related to research and development services provided by third parties. Selling and marketing expenses were RMB 58.8 million in the first quarter of 2023, compared with RMB 60 million in the first quarter of last year. Primarily attributable to the decrease in branding and marketing expenses partially offset by increased salary and welfare benefits expenses. The company will monitor our discretionary advertising and promotion expenses and adjust accordingly depending on market conditions. General and administrative expenses were RMB 23 million in the first quarter of 2023, compared with RMB 22.4 million in the same period of last year. many driven by the increasing probation, politicization contingencies, and professional service fees, partially offset by a decrease in other miscellaneous expenses. Operating income was RMB 42.7 million in the first quarter, compared with RMB 14.6 million in the first quarter of last year. Long-gap operating income was RMB 52.9 million in the first quarter of 2023. compared with RMB 23.4 million in the same period of last year. Net income was RMB 48.3 million in the first quarter of 2023, compared with RMB 16.4 million in the same period of last year. And non-GAAP net income was RMB 58.5 million in the first quarter of 2023, compared with RMB 25.2 million in the same period of last year. Basic and diluted land income per ADS were RMB $0.93 and $0.92 respectively in the first quarter of 2023, compared with RMB $0.32 in the same period of last year. Long-gap basic and diluted land income per ADS were RMB $1.12 and $1.11 respectively in the first quarter of 2023, compared with RMB $0.49 in the first quarter of last year. As of March 31st, 2023, we have cash and cash equivalents, short-term investments, and restricted cash of RMB 731.3 million. Okay, this concludes all of our prepared remarks today, and I will now open the call for questions. Operator, please go ahead.
spk12: We will now begin the question and answer session. If you would like to ask a question on the phone, please press star 1-1. and with her name to be announced. For the benefit of all participants on today's call, if you wish to ask your questions 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. One moment for the first question. Now the first question comes from the line of Vicky Wei from Citi. Please go ahead.
spk06: Good evening, management. Thanks for taking my question. I have two small questions. One is, how should we think of the monetization scale of overseas products in this year and the investment stage? And my second question is, does management notice any change of regulatory environment on the audio live streaming sector? Thank you.
spk11: Thank you, Vicky. Hi, I'm Marco. Let me answer Vicky's question. The first question is, how do you view the commercialization and investment of overseas business this year? First of all, regarding the commercialization of overseas business, we have already launched some tough borderline models in overseas products. We are still in the exploration stage. Currently, we mainly focus on subscription. Users can get promotion services through subscription. Currently, we are still in the initial stage of commercialization testing. Based on user feedback and market research, we will continuously adjust and optimize the subscription content transformation mode for revenue functions or in the process of adjustment.
spk08: Thank you, Vicky. The first question is answered by Marco, and I will translate for him. The first question of Vicky is about the monetization scale of the overseas products. Regarding the monetization of the overseas products, we have actually launched certain monetization models in some of those products, and mostly subscription models for now. and users can access the value added services with the subscription. And currently we are still in the early stage of the monetization testing. So based on user feedback and market research, we will continue optimizing the monetization models and including the revenue generating functions and the subscription services.
spk11: We expect that the scale of overseas business this year will be relatively small. There are still some uncertainties. Overall, overseas business is still in its early stages. We also expect that in terms of market sales and localization operations, we still need to make continuous investments. At the same time, we will continue to adjust to the product and quickly verify our business model.
spk08: We expected to see a smaller proportion of the overseas revenue scale this year, and there are still some uncertainties. Generally, our overseas business is still in its early stage, and we plan to make further investments in marketing and localized operations, and we will continue to optimize our products and validate the business model.
spk11: The second question is about supervision. We have noticed that some of our colleagues in the video live broadcast industry have received some supervision. As for the supervision of the industry, we are aware that the current supervision rate has been strengthened. The corresponding standards and regulations are also stricter. For example, we will strengthen the overall regulatory management, including the security of content and internal system management. We will make content security our first priority. We will carry out timely self-inspection and meet regulatory requirements based on the latest policy.
spk08: The second question is about the regulatory environment in the live streaming sector. Regarding the industry regulations, we have noticed that some live streaming peers were facing some regulatory monitoring recently. And we have noticed that the regulatory efforts have been strengthened with stricter standards and regulations. So for Li Zhi, we will reinforce the overall compliance management, including the content safety and security, and the management of internal systems, etc. Ensuring the content safety and security is actually our top priority. So we will conduct regular self-examinations in accordance with the latest policies to meet the overall compliance requirements.
spk03: Next question, please.
spk12: Once again, to ask question, please press star 11 and wait for a name to be announced. As a reminder, to ask a question, please press star 11. If there are no further questions, now I'd like to turn the call back, I beg your pardon, one moment for the next question. We have the questions from the line of Serena Li from China Securities. Please ask your question.
spk01: Thank you, Director, for accepting my question. Thanks for taking my question. And shall the management share more about the progress of the overseas business? including operational level and the sum of the user matrix, and as well as the outlook for the overseas business for the full year. Thanks.
spk11: Thank you. Our overseas business is in steady progress. We are mainly in contact with product experts to optimize functional upgrades. Since we launched My AI Friend on TIA for the first time, we have noticed that our users' activity has significantly improved. At this stage, we are also optimizing related functions. We have recently launched a variety of predetermined AI roles to provide users with a richer online companion experience. The related functions of the cloud
spk08: Our overseas business is steadily developing. And on the product side, we have been focused on user experience optimization and the functional upgrades and interactions. And since the launch of my AI friend chatbot in the TI app in the first quarter of this year, we have noted the increase in user engagement. And currently, we are continuously enhancing the relevant functions, including the recent launch of the multiple preset AI characters to provide users with an enriched online companionship experience. We are also working on iterations of the voice-based functions, and users can now experience the latest upgrades on the TI app.
spk11: In terms of commercialization, we have already launched our transformation model, but this still needs some time to continue to optimize. We hope to do a good job of verifying this transformation model and then put it on scale. In addition, in the construction of global capabilities, we are also continuing to improve the construction of our entire international team. We have launched the monetization models for commercialization. We will keep optimizing these models for effective validation.
spk08: And additionally, we are focusing on building our global capabilities by improving our international teams to support more localized product operations and marketing and other aspects. So we will also step up investment in our overseas business, but it will be in line with the business growth. And in general, it will remain within a well-managed range.
spk05: Okay, thank you.
spk12: Thank you. If there are no further questions now, I'd like to turn the call back to the company for closing remarks.
spk08: Well, thank you once again for joining us today. If you have any further questions, please feel free to contact Leeds' investor relations through the contact information provided on our website at ir.leeds.fm or the Piantry Group investor relations. Thank you.
spk12: Thank you. This concludes the conference call. You may now disconnect your lines. Thank you. Bye. Thank you. Bye. Hello, ladies and gentlemen. Thank you for standing by for Leachee Inc's first quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. After speak management's remarks, there will be a question and answer session. Today's conference call is being recorded. I'll now turn the call over to your host, Effie Kang, head of capital market for the company. Please go ahead.
spk08: Thank you very much. Hello, everyone, and welcome to Li Zhi Inc's first quarter 2023 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. Ze Long Li, and our acting CFO, Ms. Chen Fang 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, our 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 provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements technically contain words such as may, will, expect, target, estimate, intend, believe, potential, continue, or other similar expressions. Forward-looking statements involving heavy 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 press release and this conference call include discussions of unaudited gap financial measures as well as unaudited non-gap financial measures. These refer to Li Zhi's earnings press release for reconciliation of unaudited non-gap measures to unaudited gap measures. I will now turn the call over to our COO, Mr. Zilong Li. Please go ahead.
spk13: Hello, everyone. I would like to thank everyone for attending the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of the first quarter of and continue to address global strategic issues. In this quarter, the company's revenue has increased by 22% to RMB63.1 billion. The total number of monthly active users on the platform is 49.6 million. The monthly paid users are 47.15 million. While the first quarter of 2023 marked a fresh start,
spk08: we remain committed to building a more competitive audio-based ecosystem, enriching our diversified product matrix, further unleashing our business commercialization potential, and propelling our global business expansion. In the first quarter, the company's revenue increased by 22% year-over-year to RMB 631 million. Our total average mobile MAUs amounted to 49.6 million, and our average monthly paying users totaled 471.5 thousand. Powered by our core technologies and versatile technology platforms and supported by our effective operational strategies, our net income surged by 54% sequentially and 194% year-over-year to RMB 48.33 million.
spk13: We continued to upgrade the form and function of the audio and video entertainment industry, further improving the commercialization efficiency of the audio and video entertainment industry. We have recently launched a series of interactive online activities, encouraging users and content creators to participate together, promoting the close connection between content creators and users, and increasing users' participation and activity. In the first quarter, we continued innovating and upgrading our audio entertainment product features and functions.
spk08: boosting our audio entertainment's commercialization efficiency. By launching an array of highly interactive online modules, we encourage the users and content creators to interact, aiming to strengthen connections between them as well as drive up user participation and engagement. Meanwhile, we continued expanding our core content categories, bringing differentiated audio entertainment experiences to our users. through innovative features. Leveraging dynamic adjustments to our operations and marketing strategies, we also effectively improve the core users' willingness to pay.
spk13: In terms of the growth of the producer, we focus on the growth system construction of the producer, strengthen the precision of the application, and continue to improve the creative tools to help creators grow quickly within the platform. We have established a co-creating mechanism for high-quality content creators, adapted more creators to participate in platform content construction, and increased the creativity of the creators, and accelerated their creative potential. Through mechanized operation management and diversified theme activities, we continue to use the creativity of high-quality content creators. For example, we launched a special event for high-quality anchors. to combine themes and themes, to enhance the atmosphere of community interaction, to help content creators attract more listeners, and to achieve their creation.
spk08: With regard to our content creator ecosystem, we remain focused on cultivating the creator experience, refining operations, and continuously improving the creation tools available to them to help them grow and flourish on our platform. By implementing a creator partnership mechanism, For quality content creators, we have attracted more creators to generate content while boosting their engagement and creative output. Furthermore, through our refined operations management and diversified themed activities, we succeeded in giving full play to the value creativity of our quality content creators. For example, we launched themed activities such as special sessions featuring quality hosts and link them to trending topics in order to enhance interaction in the audio-centric community, helping our content creators attract more followers and generate income.
spk13: In terms of globalized innovation, we have worked hard to integrate core technology applications to carry on the ongoing innovation, build AI chat bot platforms, and promote international business development. In February this year, We integrated the GPT model into the global voice-to-speech tool TIA app and launched the chat robot module. At the end of March, we further optimized the module and launched the new application version of My AI Flame chat robot, which further enriches the experience of online accompaniment. The newly upgraded My AI Flame chat robot can help users create their ideal friends online. to provide users with a more personalized AI chat experience. Users can create their own AI friends through the custom function of MyAirline, including the personalized image of AI friends. After the upgrade version is launched, we are concerned that more users are willing to share MyAirline to their friends, enhancing the network effect between products. The user experience of MyLFLand has also been significantly improved. In addition to the technical accumulation in the audio field, we have recently started to internalize the voice-related functions of MyLFLand, and hope to provide users with a more diverse experience of AI, audio, speech, and machine learning. Next, we will continue to optimize and upgrade My AI Plan's function and its product form, expand the interaction scene of AI chat robots, realize the effective integration of AI robots with the existing social ecology, and provide users with more emotional and emotional value.
spk08: Regarding our global business, we remain committed to relentlessly approach our innovation by applying our core technologies We aim to build an AI chatbot platform and ultimately promote further development of our global business. This February, we launched a chatbot module in our global audio-based social networking product, TIA app, leveraging the GPT model. By the end of March, we further optimized the module and rolled out an upgraded version of the MyAIS brand chatbot to better enrich the app's online companionship experience. The newly unveiled My AI Friend chatbot is designed for users to create their ideal online friends and have a more tailored AI-enabled chat experience. Users may create dedicated AI friends and generate tailored profiles by leveraging the customization functions of My AI Friend. With the launch of the upgraded version, we are pleased to see that more users are willing to share My AI Friend with their peers. enhancing in-app engagement, and significantly improving the usage time. Building upon the company's strong technical capabilities in the audio field, we recently tested My AI Friends voice functions, aiming to provide users with a more differentiated AI voice chat experience. Going forward, we will further optimize and upgrade My AI Friends features, as well as enrich our AI chatbot usage scenarios. aiming to effectively integrate our AI chatbot into our original social networking protocols and provide users with more valuable emotional support and companionship.
spk13: In terms of globalization capability construction, we carry out business localization to organize globalization management concepts. Through localization management, we have achieved more effective localization business operations. In terms of technological development, We continue to promote core technology resources, fully drive product innovation. The machine is often in the social and online support field of technology reserves and years of operating experience. Combined with SR, TPS and other AI technology, it has made a breakthrough. We plan to continue to explore the application of AI-based chat machines,
spk08: As we pursue the development of our global capabilities, we always follow the principle of establishing localized operations across our globalized organization. As such, we have effectively enhanced our underground business operations by establishing localized operational management teams. Technology-wise, we have made progress with the R&D of self-developed core technologies to fully power our product innovation, building upon the company's technology capabilities, strong expertise in the fields of voice-based social networking and online companionship, and years of operational experience, coupled with technological breakthroughs in ASR, TTS, and other voice AI areas. We intend to further explore the application of audio-based AI chatbots. We also remain committed to bringing a more differentiated online companionship experience to our users.
spk13: Overall, in the first record, LIS's various businesses are steadily advancing. Next, we will continue to advance the global strategic layout through technological advancements
spk08: In summary, Li Zhi achieved a solid growth in the first quarter of 2023 across all business segments. Looking ahead, we will continue to power product innovations through technology development while actively advancing our global positioning.
spk13: Thank you all. With that, I will now turn the call over to our Acting CFO, Ms. Chen Fanglu.
spk08: who will discuss our financial results in more detail.
spk07: Hello everyone. We are delighted to see that in the first quarter of 2023, our revenue increased by 22% year-over-year to new high of RMB $631 million. In addition, we achieved ongoing profitability with net income of RMB $48.3 million. up 54% sequentially and 194% year-over-year. Looking ahead, we'll continue to improve our operating efficiency. Now, I'd like to provide a brief overview of our financial results for the first quarter of 2023. In the first quarter, our total net revenues were RMB $631 million, representing an increase of 22% year-over-year. primarily due to the growth in the average user spending on our audio entertainment products, driven by diversified themed activities and optimization of marketing strategy. Cost of revenue was armed with $434.6 million in the first quarter, representing an increase of 25% year-over-year, mainly attributable to an increase in revenue-sharing fees to account creators, payment handling costs, and bandwidth costs as we expanded our business, partially obviously by a decline in other miscellaneous costs. Gross profit was RMB196.4 million in the first quarter of 2023, compared with RMB168.1 million in the same period of last year. Slump gap gross profit was RMB198.2 million in the first quarter of this year. compared with RMB 170.7 million in the first quarter of last year. Gross margin for the first quarter of 2023 was 31%, compared with 32% in same period of last year. Long-gap gross margin for the first quarter of 2023 was 31%, compared with 33% in the same period of last year. Operating expenses were RMB 153.7 million in the first quarter of 2023, compared with RMB 153.5 million in the same period of last year. Research and development expenses were RMB 71.9 million in the first quarter of 2023, compared with RMB 71.1 million in the first quarter of last year. Primarily due to increasing salary and welfare benefits expenses, and share-based compensation expenses, partially offset by decline expenses related to research and development services provided by third parties. Selling and marketing expenses were RMB 58.8 million in the first quarter of 2023, compared with RMB 60 million in the first quarter of last year. Primarily attributable to the decrease in branding and marketing expenses partially opposite by increased salary and welfare benefits expenses. The company will monitor our discretionary advertising and promotion expenses and adjust accordingly depending on market conditions. General and administrative expenses were RMB 23 million in the first quarter of 2023, compared with RMB 22.4 million in the same period of last year. many driven by the increase in probation, political contingencies, and professional service fees, partially offset by a decrease in other miscellaneous expenses. Operating income was RMB 42.7 million in the first quarter, compared with RMB 14.6 million in the first quarter of last year. Long-gap operating income was RMB 52.9 million in the first quarter of 2023. compared with RMB 23.4 million in the same period of last year. Net income was RMB 48.3 million in the first quarter of 2023, compared with RMB 16.4 million in the same period of last year. And non-GAAP net income was RMB 58.5 million in the first quarter of 2023, compared with RMB 25.2 million in the same period of last year. Basic and diluted income per ADS were RMB $0.93 and $0.92 respectively in the first quarter of 2023, compared with RMB $0.32 in the same period of last year. Long-gap basic and diluted income per ADS were RMB $1.12 and $1.11 respectively in the first quarter of 2023, compared with RMB $0.49 in the first quarter of last year. As of March 31st, 2023, we have cash and cash equivalents, short-term investments, and restricted cash of RMB 731.3 million. Okay, this concludes all of our prepared remarks today, and I will now open the call for questions. Operator, please go ahead.
spk12: We will now begin the question and answer session. If you would like to ask a question on the phone, please press star 1-1. and wait for a name to be announced. For the benefit of all participants on today's call, if you wish to ask your questions 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. One moment for the first question. Now the first question comes from the line of Vicky Wei from Citi. Please go ahead.
spk06: Good evening, management. Thanks for taking my question. I have two small questions. One is, how should we think of the monetization scale of overseas products in this year and the investment stage? And my second question is, does management notice any change of regulatory environment on the audio live streaming sector? Thank you.
spk11: Thank you, Vicky. Hi, I'm Marco. Let me answer Vicky's question. The first question is, how do you view the commercialization and investment of overseas business this year? First of all, regarding the commercialization of overseas business, we have already launched some tough borderline models in overseas products. We are still in the exploration stage. Currently, we mainly focus on subscription. Users can get promotion services through subscription. Currently, we are still in the initial stage of commercialization testing. Based on users' specific feedback and market research, we will continuously adjust and optimize the subscription content transformation mode for revenue functions.
spk08: Thank you, Vicky. The first question is answered by Marco, and I will translate for him. The first question of Vicky is about the monetization scale of the overseas products. Regarding the monetization of the overseas products, we have actually launched certain monetization models in some of those products, and mostly subscription models for now. and users can access the value-added services with the subscription. And currently, we are still in the early stage of the monetization testing. So based on user feedback and market research, we will continue optimizing the monetization models and including the revenue generating functions and the subscription services.
spk11: We expect that the scale of overseas business this year will be relatively small, and there are still some uncertainties. Overall, overseas business is still in its early stages. We also expect that in terms of market sales and localization operations, we will need to continue to invest. At the same time, we will continue to adjust our products and quickly verify our business model.
spk08: We expected to see a smaller proportion of the overseas revenue scale this year, and there are still some uncertainties. Generally, our overseas business is still in its early stage, and we plan to make further investments in marketing and localized operations, and we will continue to optimize our products and validate our business model.
spk11: The second question is about supervision. We noticed that some of our colleagues in the video streaming industry have received some supervision. As for the supervision of the industry, we are aware that the current supervision intensity has been strengthened. The corresponding standards and regulations are also stricter. For example, we will strengthen the overall regulatory management, including the security of content and internal system management. We will make content security our first priority. We will carry out timely self-examination based on the latest policy to meet the regulatory requirements.
spk08: The second question is about the regulatory environment in the live streaming sector. Regarding the industry regulations, we have noticed that some live streaming peers were facing some regulatory monitoring recently. And we have noticed that the regulatory efforts have been strengthened with stricter standards and regulations. So for Li Zhi, we will reinforce the overall compliance management including the content safety and security and the management of internal systems, etc. Ensuring the content safety and security is actually our top priority. So we will conduct regular self-examinations in accordance with the latest policies to meet the overall compliance requirements.
spk03: Next question, please.
spk12: Once again, to ask questions, please press star 1-1 and wait for a name to be announced. As a reminder, to ask a question, please press star 1-1. If there are no further questions, now I'd like to turn the call back. I beg your pardon. One moment for the next question. We have the questions from the line of Serena Lee from China Securities. Please ask your questions.
spk01: Thank you for accepting my question. My question is also about overseas. Can you please share with us more about the progress of our overseas business, mainly from the management level, including users and product upgrades, to give us a more detailed introduction? Let me translate it myself. Thanks for taking my question, and shall the management share more about the progress of the overseas business, including operational level and some of the user metrics, as well as the outlook for the overseas business for the full year? Thanks.
spk11: Thank you. Thank you. Our overseas business is steadily developing.
spk08: And on the product side, we have been focused on user experience optimization and the functional upgrades and iterations. And since the launch of My AI Friend chatbot in the TI app in the first quarter of this year, we have noted the increase in user engagement. And currently, we are continuously enhancing the relevant functions including the recent launch of the multiple preset AI characters to provide users with an enriched online companionship experience. We are also working on iterations of the voice-based functions, and users can now experience the latest upgrades on the TI app.
spk11: In terms of commercialization, we have already launched our transformation model, but this still needs some time to continue to optimize. We hope to do a good job of verifying this transformation model and then put it on the scale. In addition, in the construction of global capabilities, we are also continuing to improve the construction of our entire international team. We have launched the monetization models for commercialization. We will keep optimizing these models for effective validation.
spk08: And additionally, we are focusing on building our global capabilities by improving our international teams to support more localized product operations and marketing and other aspects. So we will also step up investment in our overseas business, but it will be in line with the business growth. And in general, it will remain within a well-managed range.
spk05: Okay, thank you.
spk12: Thank you. If there are no further questions now, I'd like to send a call back to the company for closing remarks.
spk08: Well, thank you once again for joining us today. If you have any further questions, please feel free to contact Leach's Investor Relations through the contact information provided on our website at ir.leach.fm or the Piantre Group Investor Relations. Thank you.
spk12: Thank you. This concludes the conference call. You may now disconnect your lines. Thank you.
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