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spk15: Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining SOHO's fourth quarter 2022 earnings conference call. At this time, all participants are in the listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. And I'd like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu. Please go ahead.
spk13: Thanks, operator. Thank you for joining us to discuss Sohu's first quarter 2022 results. On the call are Chairman and the Chief Executive Officer, Dr. Charles Zhang, CFO Joanna Liu, and Vice President of Finance, James Dunn. Also with us are Chang-Yu Seo, Do Wen Chen, and CFO Albin Wang. Before management begins their prepared remarks, I would like to remind you of the company's safe harbor statement in connection with today's conference call. Except for the historical information contained herein, the matters discussed on this call may contain forelooking statements. These statements are based on current plans, estimates, and projections, and therefore you should not place undue reliance on them. Forelooking statements involve inherent risks and uncertainties. We caution you that A number of important factors could cause actual results to differ materially from those contained in any forwarding statements. For more information about the potential risks and uncertainties, please refer to the conference's filings with the Securities and Exchange Commission, including the most recent annual report on Form 20-F. With that, I will now turn the call over to Dr. Charles Zhang. Charles, please proceed.
spk04: Thanks, Feng. Thank you, everyone, for joining our call. In the fourth quarter and full year of 2022, we continue to refine our products and optimize operating efficiency with strict budget control. Despite the massive impact of COVID-19 and the macroeconomic challenges, thanks to our efforts, brand advertising revenue and bottom line performance both exceeded our prior guidance for the fourth quarter of 2022. At Soho Media Portal, we continue to dedicate ourselves to improving user experience by providing richly premium content and making significant improvements in both product and technology. At Soho Video, based on our team engine strategy, we continue to develop both original content and the science-based live broadcasting with our advanced live broadcasting technology. Meanwhile, we proactively explored a range of monetization opportunities with our differentiated content marketing campaigns. Online games delivered stable performance, revenue in line with our prior guidance. I'll go into detail about each of these businesses in a moment, but first, a quick overview of our financial performance. For the fourth quarter of the year, 2022, total revenues $160 million, down 17% year-over-year, and 13% quarter-over-quarter. Brand advertising revenues were $29 million, down 14% year-over-year, and up 12% quarter-over-quarter. Online game revenues, $121 million, down 16% year-over-year, and 18% quarter-over-quarter. Gap net loss attributable to SOFO.com Limited was... $7 million compared with an income of $4 million in the first quarter of 2021 and net loss of 22 million in the third quarter of 2022. Non-GAAP net loss attributable to Zoom.com Limited was $2 million compared with the net income of $0.2 million in the fourth quarter of 2021 and a net loss of $17 million in the third quarter of this year, of 2022. For the full year of 2022, total revenues, $734 million, down 12% compared with 2021. Brand advertising revenues, $103 million, down 24% compared with 2021. Online game revenues, $585 million, down 8% compared with 2021. Gap net loss attributed to Pursuit.com. was $17 million compared with the net income of $69 million in 2021. Not having that income attributable to Soho.com Limited was $2 million income compared with the net income of $79 million in 2021. So now let me go through our key business in more detail. First Media Portal and Soho Video. At Soho Media Portal, during 2022, we upgraded algorithms, technologies, and products through refinements to each work hard at improving our user experience and keeping users engaged by offering a wide range of premium content and the self-media content and also their social distribution We kept strict control of budget and made a continuous improvement in operating efficiency. With these efforts, we were able to further reinforce our reputation as a mainstream media platform by leveraging our advanced live broadcasting technology and rich media resources. At Video, we focused on our twin-engine strategy by providing compelling content in both long and short form. We launched several original dramas and reality shows, including Ye Cheng Fu, and the fifth season of our On Her Way Home, the fifth season. Audiences were enthusiastic about both of these. We have several new original dramas in our pipeline to be released in coming quarters. In terms of short-form content, we launched a successful series of science-related live broadcasting during the year, including the highly regarded IP of my . Charles Physics class, which I taught online. This IP has drawn significant attention and attracted hundreds of leading professional broadcasters in a variety of fields, consolidating, yeah, attracted hundreds of leading professional broadcasters and influencers in a variety of fields, consolidating our reputation as a leading science and knowledge-based live broadcasting platform, and also not only live broadcasting, but short-form, short video platform. On the monetization side, the COVID-19 pandemic and the microeconomic uncertainties have negatively impacted the whole market. Even under these conditions, we explore new application scenarios using our advanced and live broadcasting technology, benefiting from our unique IPs and continue to host traditional flagship events as well as unique and innovative content marketing campaigns. For example, these events and campaigns provide us with great premier content, at the same time strengthen our brand influence and brought us new and significant financial opportunities. In 2022, we successfully hosted the Soho News Marathon, a traditional IT, and Soho Finance Annual Conference, the Talk Under Starry Sky, a new program, and others. This quarter, we hosted in fantastic factories tailored to an advertiser, which not only drew a significant attention across media platforms, but also consolidated SOHO's competitive brand advantages and captured the advertiser's budget. Now turning to online game business, during the fourth quarter of 2022, online game revenues were in line with the company's prior guidance In our business line for PC games, we adjusted the battlefield map and the gameplay of regular TLBB PCs, cross-server, clan, or system. We launched a new expansion pack for TLBB Vintage to celebrate its anniversary with the expedition of its first new clan. In mobile games, we introduced a survival mode PvP event for Lexi TLBB Mobile. In the first quarter of 2023, to keep players engaged, we will launch expansion packs to celebrate Chinese New Year and a series of holiday events for TLBV PC, like TLBV Mobile and other games. As demand in the online games market becomes deeper and more diversified, We intend to stick with our top game strategy by promoting professional talent development as well as innovation in content technology and roll out more high-quality mobile games of different types. In terms of game pipelines, while maintaining our core competitiveness in MMORPGs, we will also invest in more games of multiple types, including card RPGs, strategy, sports, and idle games. I'll turn the call to Joanna or CFO, who will walk you through our financial results.
spk14: Thank you, Charles. I will now walk you through the financials of our major segments for the fourth quarter and the full year of 2022. All the numbers on the non-GAAP basis. You may find a reconciliation of non-GAAP to GAAP measures on our IR website. For Soho Media Portal, quarterly revenues were $16 million. down 16% year-over-year, and up 9% quarter-over-quarter. The quarterly operating loss was $32 million, compared with an operating loss of $38 million in the same quarter last year. For the full year of 2022, Soho Media Portal revenues were $61 million, down 19% compared with 2021. The full year operating loss was $156 million, compared with an operating loss of $134 million in 2021. For Soho Video, quarterly revenues were $16 million, down 28% year-over-year and up 1% quarter-over-quarter. Quarterly operating loss was $21 million, compared with an operating loss of $11 million in the same quarter last year. For the full year 2022, Soku video revenues were $63 million, down 28% compared with 2021. Full year operating loss was $99 million, compared with an operating loss of $47 million in 2021. For Chanyu's online game business and 17173, quarterly revenues, $122 million. down 15% year-over-year and 18% quarter-over-quarter. Quarterly operating profit was $54 million, compared with the operating profit of $55 million in the same quarter last year. For the full year 2022, Chang'e's total revenues were $592 million, down 5% compared with 2021. The four-year operating profit, $282 million, compared with the operating profit of $310 million in 2021. For the first quarter of 2023, we expect brand advertising revenue to be between $20 million and $23 million. This implies annual decrease of 3% to 16% and a sequential decrease of 20% to 31%, online game revenue to be between $121 million and $131 million. This implies annual decrease of 70% to 23% and a sequential increase of nil to 8%. Non-GAAP net loss attributable to Soho.com Limited to be between $15 million and $25 million. and the gap net loss attributable to SOHO.com Limited to be between $20 million and $30 million. Our guidance reflects our current and preliminary view, which is subject to substantial uncertainty. This concludes our prepared remarks. Operator, we would now like to open the call to questions.
spk15: Thank you. We will now begin the question and answer session. To ask a question, please press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. To withdraw your questions, please press star 1-1 again. Please stand by while we compile the Q&A roster. Once again, a star 1-1 for questions. Our first question comes from the line of Thomas Chong from Jefferies. Please ask your question, Thomas.
spk20: Hi, good evening. Thanks, management, for taking my questions. My first question is about the overall advertising industry outlook in 2023. Can management comment about the sentiment so far? And on Sohu, how we should think about the advertising spending among auto FMCG internet services? And my second question is more about the use of cash and our investment strategies for this year. And finally, may I also get some color for management about our thoughts on the recent chat GPT and how it reshaped the internet sector? Thank you.
spk04: Okay, so the first overall advertising market after basically the lift of lock-up and after the COVID-19, I think the economy is picking up in the first quarter. So we are seeing an outlook of a kind of optimistic about the overall end of the banking market compared with last year, 2022. because companies are starting to spend, start marketing events, start spending money to market their products and brand. In terms of industry, specific industry, I think auto is the first to come, right? Auto and followed by FMCG is doing fine. Internet service in Q4 is doing, yeah. Actually, for most part of the Q4, we're still in the lockdown era, right? But because of our live broadcasting activities, we have growth, right? Advertising up, right? Improvement of 12% in Q4. But that was still during the lock-up years. And so 2023, we are kind of optimistic. We see the economy is picking up, and the company is starting to spend money now. And the investment strategy, I think, first of all, we will continue to invest in the products, refining our products, and building and also the social networks. And also to spend user acquisition with the product ready and with its features, with improving stickiness. We're going to spend money on user acquisition. As we did in 2022, on video, on video, on SoFu video, spending more than before on SoFu video. That's why you see the loss of video business widening, right, in last year. So this year we'll spend both on video and on the SoFu News, SoFu Media portal. It's separate SoFu News app. when we believe that our product is ready and with stickiness and to acquire users and make sure they come and they stay. In terms of more investment, probably with AI technology and chat GPT and we'll actually, our news recommendation algorithms is a deep application of AI technology, like deep learning and all these algorithms or AI. But to have the whole chat GTT type of open AI services, it's This is already, you know, SOGO, you know, we already sold SOGO. So we don't, this need, you know, to have the whole, develop the whole algorithm from bottom up, it's really need the kind of company with the search engine background. Now we already sold SOGO, so right now we are not able to develop the whole OpenAI system, but we can outsource the, you know, the fundamental layers of those algorithms to some other companies and then to just use applications, apply them to our social network because it's about questioning and answering and interactivity. So it fits well with our social network strategy. Yeah. Well, I hope I answered your question.
spk09: Thank you, Charles. Thanks for the detailed answer.
spk15: Thank you. Our next question comes from the line of Eddie Leung from Bank of America Merrill Lynch. Please ask your question, Eddie.
spk06: Good evening, guys. Just two questions. The first one is about games. Just wondering if Darwin has any, I won't say guidance, but any outlook on the potential launch time of some of the new games. And then secondly, I think Charles should talk a little bit about that. So in terms of use of cash, because you guys still have a very good cash balance. In addition to investment, will there be any potential plan for, for example, more share buyback or even dividend?
spk08: Thank you. 按照目前的计划是在今年的Q3,新天龙上市。 Currently, we plan to launch new TLPP in third quarter this year.
spk07: Got that. Thank you.
spk04: Yeah. So we will not exclude the possibility of share buybacks this year. Yeah, it's possible. We may.
spk05: Understood, Charles. Thank you. Thank you.
spk15: Our next question comes from the line of Alicia Yap from Citi. Please ask your question, Alicia.
spk11: Hi, can you hear me? Hi, good evening, management. Yeah, thanks for taking my questions. I have a couple questions. First, follow up on the gaming business. So the driver for your sequential improvement for your gaming business that you've guided for first quarter is that mainly on some of the expansion packs that has released and, you know, been doing well. So that's your guided flight improvement on the gaming for 1Q. That's the first question within the gaming. And then follow up on the new TLBB launch. Because we also notice there is another similar title, which is called TLBB2 by Perfect Wall. So would that be, can you comment, would that be any confusions or any kind of realization effect from this similar title? And then for advertising business, yes. You know, can you also elaborate a little bit in terms of the first quarter guidance? Do you think this is actually considering an improving trend? Because it does look like your guidance on the year-over-year basis is still a negative growth despite the entire year already having declined. But is it because of the Chinese New Year in first quarter? So would you expect second quarter onward we should start to see get positive year-over-year growth. So, yeah, thank you.
spk03: Let's talk about the game first.
spk08: Yes, the first question is, in the first quarter, it seems that there will be a slight increase in the number of games in the first quarter. Is it because some of the information on the first quarter is better?
spk01: Mainly because in the first quarter, the old game is doing some activities and sales for the Chinese New Year.
spk08: Because we launched some promotional activities for our existing games in the first quarter around Chinese New Year. The second question is related to New Dragon, because there is already news about Dragon 8 II in the world. So can you ask the management to evaluate whether it will have any impact on our Dragon products? First of all, New Dragon 8 and
spk01: and Skyrim 2 are both for mobile users and the same IP. So I think these two games will have some impact on each other. But from our previous experience, when we went to launch this Skyrim 8 mobile game, it actually has a positive effect on our other Skyrim 8 mobile games and mobile games.
spk08: Yeah, first of all, we are aware of that new TLVB and TLVB2 are made for mobile games, and we are sure there will be some kind of impact, but from our past experiences, especially like legacy TLBB Mobile or TLBB Honor, when they launched to the market, there was some kind of positive impact to the existing TLBB franchise games. So we can only see the result by then, after the games, two games launch.
spk04: Okay. All right, in terms of advertising, so... The first quarter of 2022 is basically before. It's prior. It's before the real lockdown that happened in Q2. So it's relatively a more normal quarter, Q1. But this quarter, the Q1 of 2023, as Q4, we already pick up some, at the time, pick up some, but it's due to some of our special unique offering of this class. But Q1, first of all, it's a slow season, but it's also a, it's still restoring, right? It's resuming, but it's still not fully to its prior guidance, prior lockdown quarter, right? That's why it's kind of decreased. Yeah, answer your question.
spk11: Yeah, I see what you mean in terms of the year-over-year come.
spk04: It's a year-over-year. Q2 is going to pick up speed, yeah. I'm sure Q2 will definitely be better than Q2 in 2022. I think Q2 and Q3 of 2022 are the worst, right? Because the lockdown is in lockdown with Shanghai and... So this Q1, we already see some hope, right? So it's picking up, but it's still not fully, you know, resumed or restored.
spk11: I see, I see. Thank you, Charles, and also thank you, Dylan, for the answer. I just have one very quick follow-up. In terms of the Soho Media and Soho Video, do we have any plans or target to narrow the loss this year?
spk04: Yeah. Actually, the answer is no, because we're going to spend. You were asking the question about how do we spend, we have a good cash balance, right? So that's why we need the WarChat to really develop. In order to ultimately have the profitable platform, we have to have a larger user base. You have to have the scale of the user base. And that's the only way for a platform to make money, right? But to reach that, you need to spend. That's why we're going to, this year, as I said, when we believe that the kind of products that we are designing or have been perfecting or developing are ready, have the right kind of stickiness to make the user stay, Then we're going to spend, as we did on video, kind of spending a little more on video on 2022. And we see the user base actually grow quite well. So we're going to spend both on video and on use app.
spk10: I see. OK. All right. Thank you for your answer, Charles. Thank you.
spk15: Thank you. As a reminder, to ask a question, please press star 1 1. All right. I am showing no further questions. And with that, we conclude today's conference call. Thank you for participating. You may now disconnect.
spk18: The conference will begin shortly.
spk15: To raise and lower your hand during Q&A, you can dial star 1 1. Hello. Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining Soho's fourth quarter 2022 earnings conference call. At this time, all participants are in the listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. And I'd like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu. Please go ahead.
spk13: Thanks, operator. Thank you for joining us to discuss Sohu's first quarter 2022 results. On the call, Chairman and the Chief Executive Officer, Dr. Charles Zhang, CFO Joanna Liu, and Vice President of Finance, James Dunn. Also with us, Chang-Yu Seo, Do Wen Chen, and CFO Albin Wang. Before management begins their prepared remarks, I would like to remind you of the company's safe harbor statement in connection with today's conference call. Except for the historical information contained herein, the matters discussed on this call may contain forelooking statements. These statements are based on current plans, estimates, and projections, and therefore you should not place undue reliance on them. Forelooking statements involve inherent risks and uncertainties. We caution you that A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the conference's filings with the Securities and Exchange Commission, including the most recent annual report on Form 20-F. With that, I will now turn the call over to Dr. Charles Zhang. Charles, please proceed.
spk04: Thank you, everyone, for joining our call. In the fourth quarter and full year of 2022, we continue to refine our products and optimize operating efficiency with strict budget control. Despite the massive impact of COVID-19 and the macroeconomic challenges, thanks to our efforts, brand advertising revenue and bottom line performance both exceeded our prior guidance for the fourth quarter of 2022. At Soho Media Portal, we continue to dedicate ourselves to improving user experience by providing richly premium content and making significant improvements in both product and technology. At Soho Video, based on our team engine strategy, we continue to develop both original content and the science-based live broadcasting with our advanced live broadcasting technology. Meanwhile, we proactively explored around monetization opportunities with our differentiated content marketing campaigns. Online games delivered stable performance, revenue in line with our prior guidance. I'll go into detail about each of these businesses in a moment, but first, a quick overview of our financial performance. For the fourth quarter of the year, 2022, total revenues $160 million, down 17% year-over-year, and 13% quarter-over-quarter. Brand advertising revenues were $29 million, down 14% year-over-year, and up 12% quarter-over-quarter. Online game revenues, $121 million, down 16% year-over-year, and 18% quarter-over-quarter. Gap net loss attributable to SOFO.com Limited was... $7 million compared with a net income of $4 million in the first quarter of 2021 and net loss of 22 million in the third quarter of 2022. Non-GAAP net loss attributable to Zoom.com Limited was $2 million compared with a net income of $0.2 million in the fourth quarter of 2021 and a net loss of $17 million in the third quarter of this year, of 2022. For the full year of 2022, total revenues, $734 million, down 12% compared with 2021. Brand advertising revenues, $103 million, down 24% compared with 2021. Online game revenues, $585 million, down 8% compared with 2021. Gap net loss attributed to Pursuit.com. was $17 million compared with the net income of $69 million in 2021. Not having that income attributable to Soho.com Limited was $2 million income compared with the net income of $79 million in 2021. So now let me go through our key business in more detail. First Media Portal and Soho Video. At Soho Media Portal, during 2022, we upgraded algorithms, technologies, and products through refinements to each work hard at improving our user experience and keeping users engaged by offering a wide range of premium content and the self-media content and also their social distribution. We kept strict control of budget and made a continuous improvement in operating efficiency. With these efforts, we were able to further reinforce our reputation as a mainstream media platform by leveraging our advanced live broadcasting technology and rich media resources. At Video, we focused on our twin-engine strategy by providing compelling content in both long and short form. We launched several original dramas and reality shows, including Ye Cheng Fu, and the fifth season of our On Her Way Home, the fifth season. Audiences were enthusiastic about both of these. We have several new original dramas in our pipeline to be released in coming quarters. In terms of short-form content, we launched a successful series of science-related live broadcasting during the year, including the highly regarded IP of my . Charles Physics class, which I taught online. This IP has drawn significant attention and attracted hundreds of leading professional broadcasters in a variety of fields, consolidating, yeah, attracted hundreds of leading professional broadcasters and influencers in a variety of fields, consolidating our reputation as a leading science and knowledge-based live broadcasting platform, and also not only live broadcasting, but short-form, short video platform. On the monetization side, the COVID-19 pandemic and the microeconomic uncertainties have negatively impacted the whole market. Even under these conditions, we explore new application scenarios using our advanced and live broadcasting technology, benefiting from our unique IPs and continue to host traditional flagship events as well as unique and innovative content marketing campaigns. For example, these events and campaigns provide us with great premier content, at the same time, strengthen our brand influence and brought us new and significant financial opportunities. In 2022, we successfully hosted the Soho News marathon, a traditional item IT, and Soho Finance annual conference, the Talk Under Starry Sky, a new program, and others. This quarter, we hosted fantastic factories tailored to an advertiser, which not only drew a significant attention across media platforms, but also consolidated SOHO's competitive brand advantages and captured the advertiser's budget. Now turning to online game business, during the fourth quarter of 2022, online game revenues were in line with the company's prior guidance In our business line for PC games, we adjusted the battlefield map and the gameplay of regular TLBB PCs, cross-server, clan, or system. We launched a new expansion pack for TLBB Vintage to celebrate its anniversary with the expedition of its first new clan. In mobile games, we introduced a survival mode PvP event for Lexi TLBB Mobile. In the first quarter of 2023, to keep players engaged, we will launch expansion packs to celebrate Chinese New Year and a series of holiday events for TLBV PC, like TLBV Mobile and other games. As demand in the online games market becomes deeper and more diversified, We intend to stick with our top game strategy by promoting professional talent development as well as innovation in content technology and roll out more high-quality mobile games of different types. In terms of game pipelines, while maintaining our core competitiveness in MMORPGs, we will also invest in more games of multiple types, including card RPGs, strategy, sports, and idle games. I'll turn the call to Joanna or CFO, who will walk you through our financial results.
spk14: Thank you, Charles. I will now walk you through the financials of our major segments for the fourth quarter and the full year of 2022. All the numbers on the non-GAAP basis. You may find a reconciliation of non-GAAP to GAAP measures on our IR website. For Soho Media Portal, quarterly revenues were $16 million. down 16% year-over-year, and up 9% quarter-over-quarter. The quarterly operating loss was $32 million, compared with an operating loss of $38 million in the same quarter last year. For the full year of 2022, Soho Media Portal revenues were $61 million, down 19% compared with 2021. The full year operating loss was $156 million, compared with an operating loss of $134 million in 2021. For Soho Video, quarterly revenues were $16 million, down 28% year-over-year, and up 1% quarter-over-quarter. Quarterly operating loss was $21 million, compared with an operating loss of $11 million in the same quarter last year. For the full year 2022, Soku video revenues were $63 million, down 28% compared with 2021. Full year operating loss was $99 million, compared with an operating loss of $47 million in 2021. For Chanyu's online game business and 17173, quarterly revenues, $122 million. down 15% year-over-year, and 18% quarter-over-quarter. Quarterly operating profit was $54 million, compared with the operating profit of $55 million in the same quarter last year. For the full year 2022, Chang'e's total revenues were $592 million, down 5% compared with 2021, The four-year operating profit, $282 million, compared with the operating profit of $310 million in 2021. For the first quarter of 2023, we expect brand advertising revenue to be between $20 million and $23 million. This implies annual decrease of 3% to 16% and a sequential decrease of 20% to 31%, online game revenue to be between $121 million and $131 million. This implies annual decrease of 70% to 23% and a sequential increase of nil to 8%. Non-GAAP net loss attributable to Soho.com Limited to be between $15 million and $25 million. and the gap net loss attributable to SOHO.com Limited to be between $20 million and $30 million. Our guidance reflects our current and preliminary view, which is subject to substantial uncertainty. This concludes our prepared remarks. Operator, we would now like to open the call to questions.
spk15: Thank you. We will now begin the question and answer session. To ask a question, please press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. To withdraw your questions, please press star 1-1 again. Please stand by while we compile the Q&A roster. Once again, a star 1-1 for questions. Our first question comes from the line of Thomas Chong from Jefferies. Please ask your question, Thomas.
spk20: Hi, good evening. Thanks, management, for taking my questions. My first question is about the overall advertising industry outlook in 2023. Can management comment about the sentiment so far? And on Sohu, how we should think about the advertising spending among auto, FMCG, Internet services? And my second question is more about the use of cash and our investment strategies for this year. And finally, may I also get some color for management about our thoughts on the recent chat GPT and how it reshaped the internet sector? Thank you.
spk04: Okay, so the first overall advertising market after basically the lift of lock-up and after the COVID-19, I think the economy is picking up in the first quarter. So we are seeing an outlook of a kind of optimistic about the overall end of the banking market compared with last year, 2022. because companies are starting to spend, start marketing events, start spending money to market their products and brand. In terms of industry, specific industry, I think auto is the first to come, right? Auto and followed by FMCG is doing fine. Internet service in Q4 is doing, yeah. Actually, for most part of the Q4, we're still in the lockdown era, right? But because of our live broadcasting activities, we have growth, right? Advertising up, right? Improvement of 12% in Q4. But that was still during the lock-up years. And so 2023, we are kind of optimistic. We see the economy is picking up, and the company is starting to spend money now. And the investment strategy, I think, first of all, we will continue to invest in the products, refining our products, and building and also the social networks. And also to spend on user acquisition with the product ready and with its features, with improving stickiness. We're going to spend money on user acquisition. As we did in 2022, on video, on video, on SoFu video, spending more than before on SoFu video. That's why you see the loss of video, video business widening, right, in last year. So this year we'll spend both on video and on the SoFu news, SoFu media portal. It's separate SoFu news app. when we believe that our product is ready and with stickiness, and to acquire users and make sure they come and they stay. In terms of more investment, probably with AI technology and chat GPT, and actually our new recommendation algorithms is a deep application of AI technology, like deep learning and all these algorithms or AI. But to have the whole chat GTT type of open AI services, This is already, you know, SOGO, you know, we already sold SOGO, so we don't, this need, you know, to have the whole, develop the whole algorithm from bottom up, it's really need the kind of companies with the search engine background. Now we already sold SOGO, so right now we are not able to develop the whole OpenAI system, but we can outsource the... you know, the fundamental layers of those algorithms to some other companies and then to just use applications, apply them to our social network because it's about questioning and answering and interactivity. So it fits well with our social network strategy. Yeah. Well, I hope I answered your question.
spk09: Thank you, Charles. Thanks for the detailed answer.
spk15: Thank you. Our next question comes from the line of Eddie Leung from Bank of America Merrill Lynch. Please ask your question, Eddie.
spk06: Good evening, guys. Just two questions. The first one is about games. Just wondering if Darwin has any, I won't say guidance, but any outlook on the potential launch time of some of the new games. And then secondly, I think Charles should talk a little bit about that. So in terms of use of cash, because you guys still have a very good cash balance. In addition to investment, will there be any potential plan for, for example, more share buyback or even dividend? Thank you. 按照目前的计划是在今年的Q3,新天龙上市。
spk08: Currently, we plan to launch new TLVP in third quarter this year.
spk07: Got that. Thank you.
spk08: Yeah.
spk04: So we will not exclude the possibility of share buybacks this year. Yeah, it's possible. We may.
spk05: Understood, Charles. Thank you. Thank you.
spk15: Our next question comes from the line of Alicia Yup from Citi. Please ask your question, Alicia. Hi, can you hear me?
spk11: Hi, good evening, management. Yeah, thanks for taking my questions. I have a couple of questions. First, follow up on the gaming business. So the driver for your sequential improvement for your gaming business that you've guided for first quarter is that mainly on some of the expansion packs. that has released and been doing well. So that's your guided slide improvement on the Gaming for OneQ. That's the first question within the gaming. And then follow up on the new TLBB launch. Because we also notice there is another similar title, which is called TLBB2 by Perfect Wall. So would that be, can you comment, would that be any confusions or any kind of realization effect from this similar title? And then for advertising business, yes. You know, can you also elaborate a little bit in terms of the first quarter guidance? Do you think this is actually considering an improving trend? Because it does look like your guidance on the year-over-year basis is still a negative growth despite the entire year already having declined. But is it because of the Chinese New Year in first quarter? So would you expect second quarter onward we should start to see get positive year-over-year growth. So, yeah, thank you.
spk03: Let's talk about the game first.
spk08: Yes, the first question is, in the first quarter, it seems that there will be a slight increase in the number of games in the first quarter. Is it because some of the information on the first quarter is better?
spk01: Mainly because in the first quarter, the old game is doing some activities and sales for the Chinese New Year.
spk08: Because we launched some promotional activities for our existing games in the first quarter around Chinese New Year. The second question is related to New Dragon, because there is already news about Dragon 8 II in the world. So can you ask the management to evaluate whether it will have any impact on our Dragon products? First of all, New Dragon 8 and
spk01: and Skyrim 2 are both for mobile users and the same IP. So I think these two games will have some impact on each other. But from our previous experience, when we went to launch this Skyrim 8 mobile game, in fact, for our other Skyrim 8 mobile games and mobile games, in fact, the old game has a positive effect.
spk08: Yeah, first of all, we are aware of that new TLVB and TLVB2 are made for mobile games, and we are sure there will be some kind of impact, but from our past experiences, especially like legacy TLBB Mobile or TLBB Honor, when they launched to the market, there was some kind of positive impact to the existing TLBB franchise games. So we can only see the result by then, after the games, two games launch.
spk04: Okay. All right, in terms of advertising, so... The first quarter of 2022 is basically before. It's prior. It's before the real lockdown that happened in Q2, right? So it's relatively a more normal quarter, right, Q1. But this quarter, the Q1 of 2023 is, you know, as Q4, we already, you know, pick up some, you know, at the time pick up some, but it's due to some of our special unique offering of this class. But Q1, first of all, it's a slow season, but it's also a, it's still restoring, right? It's resuming, but it's still not fully to its prior guidance, prior lockdown quarter, right? That's why it's kind of decreased. Yeah, answer your question.
spk11: Yeah, I see what you mean in terms of the year-over-year come.
spk04: It's a year-over-year. Q2 is going to pick up speed, yeah. I'm sure Q2 will definitely be better than Q2 in 2022. I think Q2 and Q3 of 2022 are the worst, right? Because the lockdown is in lockdown with Shanghai and, you know, and So this Q1, we already see some hope, right? So it's picking up, but it's still not fully, you know, resumed or restored.
spk11: I see, I see. Thank you, Charles, and also thank you, Dylan, for the answer. I just have one very quick follow-up. In terms of the Soho Media and Soho Video, do we have any plans or target to narrow the loss this year?
spk04: Yeah. Actually, the answer is no, because we're going to spend. You were asking the question about how do we spend, we have a good cash balance, right? So that's why we need the WarChat to really develop. In order to ultimately have the profitable platform, we have to have a larger user base. You have to have the scale of the user base. And that's the only way for a platform to make money, right? But to reach that, you need to spend. That's why we're going to, this year, as I said, when we believe that the kind of products that we are designing or have been perfecting or developing are ready, have the right kind of stickiness to make the user stay, Then we're going to spend, as we did on video, kind of spending a little more on video on 2022. And we see the user base actually grow quite well. So we're going to spend both on video and on use app.
spk10: I see. OK. All right. Thank you for your answer, Charles. Thank you.
spk15: Thank you. As a reminder, to ask a question, please press star 11. All right. I am showing no further questions. And with that, we conclude today's conference call. Thank you for participating. You may now disconnect.
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