Good evening, good morning, and welcome to Tencent Music Entertainment Group's First Quarter 2024 Earnings Conference Call. I'm Millicent T., Head of IR. .

We announced our quarterly financial results today before the U.S. market opened. An earnings release is now available on our IR website and via Newswire services. Today, you'll hear from Mr. Kar Shun Pang, our Executive Chairman; and Mr. Ross Liang, our CEO, who will share an overview of our company strategies and business updates. And then Ms.

Shirley Hu, our CFO, will discuss our financial results before we open the call for questions. .

Before we continue, I refer you to our safe harbor statement in our earnings release, which applies to this call as we make forward-looking statements.

Please note that the company will discuss non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under IFRS in the company's earnings release and filings with the SEC. .

[Operator Instructions] And please be advised that today's call is being recorded. .

With that, I'm pleased to turn the call over to Kar Shun, Executive Chairman of TME.

Kashan?.

Thank you, Melissa. Hello, everyone, and thank you for joining our call today. 2024 is off to a great start. Strong execution of our dual-engine content and platform strategy is yielding impressive results and pushing vitality industry-wide.

In the first quarter, the number of music-paying users increased to $113.5 million, totaling 43% of the overall growth in online music revenues. .

Our high-quality growth strategy also drove a robust net profit margin expansion. Subscriber growth in this quarter significantly exceeded our expectations, which in a quarterly historic high of 6.8 million net adds was more, we maintained the ARPPU at a healthy level.

All the achievements demonstrate our keen understanding of users' needs and our neck for anticipating and meeting their demands operationally. .

As you have seen in our earnings release, supported by our strong fundamentals, we are very pleased to announce an annual cash dividend policy and USD 210 million in cash dividends for the year of 2023. On top of our ongoing buyback program, this reflects our confidence in future growth and commitment to sharing our success with shareholders. .

Next, I would like to share an overview of this quarter's content development efforts. Through a balanced combination of copyright music and original content, we enable users to discover the latest and trendiest content and enjoy a superior experience on our platform. Let me go over a few highlights.

First, we renewed and reinforced the partnership with record labels to broaden our music library's comprehensiveness and popularity. Our innovative value-added features and promotion services expand from licensing, further unlocking the value of music content industry-wide. .

We renewed our cooperation with Time Fengjun Entertainment, featuring 30-day head start benefits on new songs and adding Dolby Atmos upgrades for popular groups like TFBOYS and Tintin Times.

We also expanded our agreement with HIM International Music, incorporating an industry-first component authorizing PME to use licensed AI features to promote HIM's iconic C-pop content. This will ensure the authentic and responsible use of AI, showcasing TME's commitment to protecting artists rights and interests in the ITC era. .

Active benefits from TME's tech-powered promotions and copyright protection, while users enjoy the latest in interactive features, which is a win-win. [indiscernible], is one recent success for its primary on our platform, we connect our AI thing on a long feature and TME Live off-line concepts, spurring fan interaction within new scenarios.

We enriched our K-pop content and relining offerings with various artisan activities, digital albums, and active merchandise for new generation groups like ILEC, Baby Monster, and Rice in the first quarter..

K-pop user engagement and streams both grew year-over-year. Next, we expanded our original content, a key differentiator to attract users and enhance engagement. Based on our key graphs of trends, we delivered an array of features catering to users' ever-changing tastes this quarter.

We produced original contracts for hit TV dramas, The Legend of Shen Li, including 17 songs and 30 expos, featuring coptraks by TME's strategic partner artists, such as Jesse, Itai, and Wangjing. These [indiscernible] create a massive social media bust that boost the streams and viewerships.

Their outstanding performance showcases our ability to support and set content trends while maximizing the value of content. .

Our OST for the region of SME produced by Tencent Video, also highlighted the power of collaboration within the Tencent ecosystem. It's matched to webcasts with over 150 million streams within 30 days of release, making it the #1 OST debut for this year.

We also partnered with strategic artists and Indian musicians on music production and promotion to build our performance quality music offering. Our cell produces [indiscernible], became the top rate is on social media this quarter. .

Moving on to our commitment to social responsibility. We cooperate with Tencent Charity for the third consecutive year on our FIM program to drive autism awareness. If Music has a shape this year, [indiscernible], more than 60 other renowned artists and groups, including [indiscernible] also share songs in support of children with autism.

We then host an exhibition featuring artwork by children with autism inspired by these musical works, leveraging multimedia to amplify our carrying message and boost music's social value. .

In conclusion, by expanding content and introducing more tailored platform offers that resonate deeply with users, we continue strengthening our rivency to drive industry development. We are confident that our powerful content and platform dual engines and ever-deepening understanding of content will propel our sustainable growth in 2024 and beyond. .

Now I would like to turn the call over to Ross for more color on our platform development. Ross, please go ahead. .

Thank you, Kar shun. Hello, everyone. Strong execution once again resulted in solid online music growth, record high net subscriber rates, steady ARPPU, and [indiscernible], all reflect this robust performance.

Our efforts to attract and retain users were the driving force behind it, utilizing our extensive industry experience and prelease insights into users and content. We are laser-focused on anticipating and meeting users' needs with enhanced experiences on the 200 minicar journeys. .

First, I want to talk about user retention. We have taken a multipronged approach to engaging users through constant innovation of transiting features. I will walk you through a few examples. Our new AITC applications make music discovery more fun, engaging, and accommodating.

In the first quarter, we launched a large audio model that increases promotion accuracy, helping users discover more high-quality music content. Initial results show that the live-streaming share of promoted songs increased notably following the models released.

We also tested an AI system that supports tax and vice rating for a more customized search experience as well as an AI playlist assistant to curate playlists, a key personal music site that strengthens users' stickiness. .

Recently, we introduced an indicative rewards program. Users can exchange the points they earn for benefits such as trail, subscriptions, digital aircons, and personalized privileges. While enhancing user experience, the program also opens new avenues for commercialization for the future.

Ongoing platform upgrades continue to reinforce our products here. This quarter, we introduced a light listing mode, [indiscernible] to facilitate a small leasing experience in low bandwidth environments. Our enhancements allow greater interface customization driving increased user adoption of our platform players.

Beyond the leasing experience, we captivate users with a variety of interactive activities, including same-song gas, contract subscriber budgets, and more. These interactive filters not only boasted strong streaming volumes but also posted more artist follows and additions to favors.

Aside from personal music assets, our platform grows so as their loyalty to TME. .

Moving now to user acquisition. Our focus here is on discovering and cultivating users with long-term paying potential through refined marketing and operations. During Chinese New Year, reading under favorable seasonality, we utilized our deep understanding of users across various demographics to roll out a series of effective promotion activities.

Our targeted multichannel promotions with e-commerce, telecom operators, and long-form video platforms contributed to stronger-than-expected subscriber growth in the first quarter. We also teamed up with auto companies to launch holiday same playlist and common share promotions.

This all organically broadened our reach to new users and increased user activity, contributing positively to the sequential MAU recovery in our online music services..

On partnerships, we recently focused on a pre-installation partnership with Xiaomi sushi, we also enhanced our collaboration with rideshare leader, Total Cushing. Our new self-service real estate music selection features offer red share passengers easy-to-navigate music construction, further extending our reach.

Our transiting a new 2Q [indiscernible] for the first time included online more off-line offerings, participation in the active online futures rewarded funds with tickets to Artists Meet, artist merchandise and more. Thanks to our line-up of popular artists and inspired performances. This event reinforced our appearance among our core young user base.

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In short, our rich content and paralyze product offerings continue to fill user acquisition and engagement. With user needs at the heart of everything we do, we remain committed to creating a music platform that users trust. .

With that, I will turn the call over to Shirley Hu, our CFO, for a deep dive into our financials. .

Thank you, Ross, and greetings to everyone. I will now turn to our financial results. Our success in effective monetization for music services and operational efficiency management continues to need to do financial results in the first quarter of 2024.

IFRS's net profit increased by 28% year-over-year to RMB 1.5 billion, and net profit rose by 24% to RMB 1.8 billion. .

Our total revenues were RMB 6.8 billion, down by 3% year-over-year. Our online music services achieved significant revenue growth, which largely offset the decline in revenue from social entertainment and other services. In the first quarter of 2024, our online music revenues increased by 43% to RMB 5 billion on a year-over-year basis.

This surge was driven by the strong expansion of our music subscription and the growth in the advertising business, supplemented by an increase in revenues from offline performances. .

Music subscription revenues in the first quarter reached RMB 3.6 billion, marking a 39% increase year-over-year and a 6% rise sequentially. Our refined operation and effective pricing strategy enabled us to achieve higher-than-expected growth in music subscribers while maintaining a healthy monthly ARPU.

Monthly ARPPU was 10.6%, up from 9.2% in the same period last year. Taking the difference in the number of days into consideration, our monthly ARPPU would have remained relatively stable sequentially. .

The number of online music-paying users was $113.5 million, representing a 20% increase year-over-year and a record-breaking quarterly net adds of 6.8 million users. Our enriched content offerings and enhanced member privileges such as dubious upgrades have made our products more attractive and improve user stickiness.

Advertising revenue also had a strong year-over-year growth primarily due to the growth in ad-supported advertising. We upgraded our incentive ad experience and provided more attractive and active futures to our users, which helped the improvement in the entrance rate. We continue to innovate and diversify our product suite and advertising formats. .

Social entertainment services and other revenues were RMB 1.8 billion, down by 15% year-over-year. This was mainly due to adjustments in certain live streaming in active functions and more stringent comprehension procedures as we implemented several service enhancements and risk control measures since the second quarter of 2023.

As these adjustments and the procedures are largely completed, we expect our social entertainment services to remain relatively stable. .

first, the growth of revenues in online music subscription and advertising has generated the benefits of economics of scale. Over the years, we have made significant efforts and investments in the music industry and have built win-win relationships with labels and artists allowing these efforts and investments to start bearing fruits.

Additionally, the ramping up of our own content continued to impact our margin favorably. Lastly, we have optimized the revenue sharing ratio for live streaming and also improved the monetization in racing membership and advertising, which also benefits our gross margin.

All the above factors have collectively enabled us to move to a health market model. .

Moving on to operating expenses. In the first quarter of 2024, they amounted to RMB 1.1 billion, representing 16.8% of our total revenues compared with 70.5% in the same period last year. Selling and marketing expenses were RMB 187 million, down by 2% year-over-year.

We will continue to spend in areas such as online music with a long-term growth perspective as well as content promotions. .

General and administrative expenses were RMB 949 million, down by 7% year-over-year, primarily driven by lower employee-related expenses. Our effective tax rate for Q1 was 19.9% compared to 12.2% in the same period of 2023.

This increase was primarily attributable to the back of reporting tax of RMB 107 million related to earnings to be limited by our PIC subdues to offshore entities. Additionally, changes in corporation tax rates for certain entities also impacted our effective tax. .

For Q1 2024, our net profit and net profit attributable to [ agrit ] holders of the company were RMB 1.5 billion and RMB 1.4 billion, respectively. Non-IFRS net profit and non-office net profit attributable to active holders of the company were RMB 1.8 billion and RMB 1.7 billion, respectively.

Our diluted earnings per ADS reached a record high this quarter at RMB 0.91, up 25% year-over-year. Non-IFRS diluted earnings per ADS increased to RMB 1.1, up 23% year-over-year. These results underscore our robust financial performance, enhanced operating efficiency, and the beneficial impact of our share repurchase program. .

As of March 31, 2024, our combined balances of cash, cash equivalents, and term deposits were RMB 34.2 billion as compared with RMB 32.2 billion as of December 31, 2023. This combined balance was also affected by changes in the exchange rate of RMB to USD at different balance dates. The share repurchase program was announced in March 2023.

As of March 31, 2024, we had repurchased 32.2 million from the open market for a total cash consideration of USD 235.5 million, of which approximately USD 61 million were repurchased in the first quarter.

Looking forward, we will continue to invest in high-quality content and original content productions as well as new products and technologies, such as AITC. We remain confident in the prospect of the music industry and our new suppression and advertising business. .

This concludes our prepared remarks. We are now open to taking your questions. .

Thank you, Shirley. [Operator Instructions] And the first question comes from the line of Alicia Yap from Citigroup. .

Congratulations on the solid results. My question is for the 2024 outlook.

So after achieving a strong set of results, especially with record-high quarterly net adds, what should we be expecting for the net add trend for the second quarter and also the ARPPU trend for the second quarter and also the rest of the year? And any comment on the overall growth rate expectation for the total online music revenue?.

Okay. Thank you so much, Alicia, for your questions. For the full year of 2024, our online music and subscription revenue are well on track, and the profitability is also expected to be slightly better than previously anticipated.

So for the subscription side, I think that we are pleased to see that in Q1, the net ads is really quickly exceeding our expectations. So it really gives us a really strong start for this year.

Therefore, we are confident that the total net adds for 2024 will exceed our initial projections indicating to be a total greater than the year of 2022 and yet slightly slower than last year, which is 2023. .

But on the other hand, we remain really committed in the healthy long-term growth of our business. So on a full-year ARPPU side, we expect it to continue to expand year-over-year, although at the moment, I think a more modest growth rate compared to 2023.

To recap, I think last year's rapid year-over-year growth was primarily due to the scale-back of the discount. So based on last year's healthy ARPPU level and the benefits of some of the operational optimization to be introduced throughout this year, we expect a slight ARPPU growth in the second half of this year when compared to the first half. .

However, we will remain unchanged and confident in long-term ARPPU expansion potential, supported by our experience in user education and also a variety of operational strategies. A couple of points that I would like to add should be we have better than expected Q1 which is primarily due to a couple of reasons.

First of all, I think Q1 is typically the peak season for the entire year, especially due to the Chinese New Year. So users are more willing to pay for the entertainment. And secondly, we are also expanding effective promotional activities, which attract more high-potential users.

So we food multichannel promotions across different areas, and we significantly drive the good growth of our user base. But I think that as we communicated and seen in the 2023 patent, I think rolling offers strong seasonality, and the net adds should return to more normalized and sustainable levels over the next few quarters. .

So besides the subscription business, I think that for the loan subscription business, we also had a strong start in Q1 this year, and we expect growth to be solid in the remainder of this year as we continue to innovate the advertising products and expand the merchandise sales with labels and artists as well. .

The next question comes from the line of Alex Poon from Morgan Stanley. .

Congratulations management on a very strong quarter. My question is related to gross margin. In Q1, while we had negative seasonality for both advertising and social entertainment, we still expanded the gross margin significantly sequentially from 38% to almost 41%.

Can management share how the revenue and cost structure have changed on a sequential basis? And how should we think about gross margin in the rest of 2024?.

The gross margin is 4.9% in Q1 increased by 7.8% year-over-year, an increase of 2.6% quarter-over-quarter. There are several reasons as follows. The first music subscriber revenues and advertising revenues have significant growth.

Second, we have made significant efforts and investments in the milk industry and have built relationships with labels and artists. Additionally, we focused on ROCE to manage content costs more efficiently. Our online music revenues growth ratio was higher than the net gross ratio of content cost. .

Third, we gradually ramp up our self-owned content, which is a positive impact on our gross margin. Fourth, even with the live stream revenue decrease, we optimized the live streaming revenue sharing strategy.

The live streaming revenue sharing ratio decreased and revenue and advertisement revenue on the leasing platform increased all above the benefit of our gross margin. Our gross margin has improved for 8 consecutive quarters. Looking forward to Q2, we expect subscription revenue and advertisement revenue will continue to be healthy growth. .

On the cost side, we expect our in-house made contract will have a positive impact on gross margins continually, and we will continue to increase our operational faces and monitor each cost item for model.

We expect our gross margin will increase in Q2 continually and look forward in the second half of 2024, we expect our gross margin will also increase. .

And the next question comes from Goldman Sachs Lincoln Kong. .

Congrats on the strong quarter. So my question is about online music services, specifically advertising. So could management comment on what you have seen in terms of advance in the first quarter and into the second quarter? And by a different format, so what are the new aerating format company thinks to implement? And any [indiscernible]. .

[Interpreted] Thank you very much. Thanks for your question. Indeed, for the advertisement service in Q1, we have a very strong growth. And I think in Q2, we're going to maintain such a strong growth. You know that we are not expanding our subscriber base.

But I think the key challenge for the advertisement is how we're going to elaborate on the traffic of the non-subscribers. So you can say that we see the traffic from the nonsubscribers continue to go down because we are now having more subscribers. That is way up for us.

We need to continue to optimize the solution we provided to the advertisers and making sure we can also provide a very attractive interest package to continue to operate and optimize the traffic operation. .

You can see that the start from the year of 2023, we already registered a very good performance regarding the advertisement business. Well, regarding what we're going to do for this year. I think for this year, we're going to maintain a more stable growth for the advertisement business.

At least from what I can see from Q4 to Q1 of this year, we have a very strong growth.

Especially, we have the key revenue contributor coming from the e-commerce, the gaming industry, the content, information, and the faster consumption industry and especially due to the income, they are launching the large-scale promotional activities during the new Chinese year.

So we're opening to say that in Q1 of this year, we also have very good growth coming from the e-commerce channel regarding the advertisement business. .

We're talking about the Q2 of 2024. I think the key events we're going to have in Q2 would be the 6 shopping festivals online. In that way, we're going to leverage this great occasion to serve our e-commerce advertisers because we hope that by serving that, we will be able to have further growth compared with last year.

And we also prepared many of the good solutions in order to continue to serve the e-commerce advertisers. .

You know that besides that, we are also leveraging the very enriched and diversified music ecosystem of [indiscernible] to continue to roll out more diversified formats of advertising and the advertising business model. For example, for the investment in advertising, it could also be well combined with our offline performance and concepts.

As I mentioned, in Q1 of this year, we also launched a sent-based advertisement for a matcher that is based upon the coin. By launching these new models, we hope that we will be able to continue to improve user retention while at the same time, to start a new stream of revenue for the advertising business.

So you can say that based upon the 3 business models regarding price competition, contracted advertising, and investment advertising, we do have a full portfolio of advertisement solutions. In that way, we will be able to leverage the full mix of the product to continue to grow our advertising business in housing and sustainable approach. .

And the next question from Lei Zhang, Bank of America. .

[Interpreted] My question is mainly regarding the margin trend, especially the sales and marketing trend. I consider we have our Q-on-Q control on the sales and marketing best to maintain the MAU sequentially largely stable.

So how should we look at the driver and the overall sales and marketing and the margin trend in the following quarters?.

[Interpreted] Thank you very much. Thanks for your question. Just in our private sensor, we also mentioned about the GP margin. Actually, for our GP margin, we registered a significant growth matter on a Y-o-Y or MOM basis. That should be a very solid baseline for our performance. I do believe in the near future, we're going to continue to grow this.

And in Q1 of this year, talking about the marketing expenses, it was ever going down Y-o-Y and MOM basis. .

When talking about the seasonalities of the marketing expenses, in Q1 of this year is transitionally considered as a low season of the marketing events because the majority of the brand rementions and promotion activities being conducted in Q4 of each year. So about in Q1, we launched less marketing events.

But I can say that our platform or should I say, the monetization of our music platform continues to be improved. And also with the well-established mobile management and assets in place, we do accept we're going to extend the more marketing expenses in order to regain the traffic for our channels. .

Where at the same time, we're also going to reduce the marketing expenses in the channel upside streaming. Well, my second point is regarding the content, especially the self-commissioned who self-develop the content. This is going to serve as a key driver for our future business. So we're going to make a good investment for content promotion.

So we foresee in Q2 of this year, the marketing expenses will rise, but overly speaking, the marketing expenses for 2024 for the full year would be in line with what we saw last year in 2023. .

So coming next, let me comment on G&A and expenses, and essentially the investment we made on the team. And actually, for the past 1 year, we have already adopted the cost initiative and continue to downsize the team. At the same time, we're also going to continue the investment in new technologies and new products, for example, like BGC.

So generally speaking regarding G&A, we do believe the total GMV expenses in 2023 would be in line with -- in 2024 would be in line with 2023. So overall speaking, as you can see, we continue to grow the GP margin.

Also, we fill the revenue in H2 of this year will go up, where at the same time, we also stabilized the promotion expenses and the G&A expenses. So I do believe that for the full year, the net profit rate and the net profit will be improved. .

We are coming next. So please allow me to talk about the ERT effective tax rate. Regarding the effective tax rate, in Q1 of this year, it has been rising to 90.9%. The key reason is because the dividend payout needs to be made from the onshore company to the offshore company. So we're going to pay for the [indiscernible].

So that's the reason in Q1 2024, the effective tax rate in Q1 is on the upward..

But generally speaking, the sum is quite small and it's not going to impact the net profit and net profit rate that much. So I do foresee for net profit and the net profit in 2024 is going to keep riding on the [indiscernible]. .

And the next question from Macquarie, Ellie Jiang. .

Congrats on great results. It's been very great to see the improvements in our music paying conversion. So if you compare the existing users versus the newly acquired users, just wondering can management shed some light on the average pricing gaps between these 2 cohorts.

Also, during the opening remarks, management shared some very exciting AI and powered initiatives that have been driving better user engagement. Just wondering anything you can share on the recent trends for next month's retention and whether there could be more operating leverage for higher customers kind of lifetime value down the road. .

[Interpreted] Thanks for the question. Regarding the existing customer, yes, indeed, for the existing customer or the user, we do have a very high retention rate because many of them are our long-term users, and if we're going to convert them, that means they just continue to renew our service.

So mechanistic in the conversion rate of our existing users would be very high.

Well, for the newly acquired users, as we mentioned just now, in order to engage those users we provide some discounts and some promotional activities even if we are already scaling back the discount, but actually, the conversion rate of the new users will go in line with our promotional activities and sometimes it's subject to the change of the promotional activity time line.

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The second part of our question is regarding how AI can empower user retention. I have to say that the large model indeed helped to ground the retention. But let's be clear first. For the music platform, the recommendation system was based on the newer network model, and it is different from the large language model we're talking about today.

But generously speaking, I do believe as we're having those great models and by introducing the large set of parameters into our existing platform, we will be able to continue to improve the recommendation capacity and search capacity. As you can see from our actual operationals, that can help us to continue to grow and optimize the US retention.

So indeed, by leveraging those caring technologies, our overall retention rates improved. .

Actually, when you talk about large models and generated technology. In Q1 of this year, we also launched the open-source of self-developed minicam video model drives, which has already seen very positive feedback from the open-related. And something that we're truly proud of is that we also newly introduced a large model, we call it audit model.

This auto model can help to distinguish the coordination as we can to standard sense based on the characteristics of the auto. And this is also a very good result that has been harvested from the [indiscernible]. .

Well, regarding the content creation, we have already received a very good result from artificial intelligence-generated models, no matter from the user scale or from the revenue of the users, we are foreseeing very good progress demand. In that way, it can actually facilitate the users of identifying new music and new songs and new content..

Another milestone I have to mention in Q1 of this year was we are working with Tencent AI and introduced the first music generation model for music. It is through this model, we're working with Shanghai National Orchestra to organize the ever-first AI in-commerce concept in China.

Besides that, we are also keeping an eye on the seeding models in the industry, one is solar and another one is BIL, and we're exploring those new models to see how they can fit into our platform. .

And then next question comes from Fang from Mizuho. .

I want to double-click on the offline concerts, right? So we see pretty good coming back last year and so far this year. Just wondering if management can help remind us your position and your strategy for this segment.

And also, what are the business models there other than sponsored advertising?.

Okay. Thank you so much for your questions. And basically, I think 2023 is a big year for the live performance businesses. And we are also seeing that we will continue to trend in this year. But definitely, it's going to be normalized and will not have such a big growth when compared to last year's performances.

I think from the TME point of view, we have different pillars of strategy in order to support our overall strategies. First of all, we are committed to build our own IP, for example, the TMEA music festivals and also the war ceremony.

This year is going to be the 5th year of us, and we have already we see a lot of very good results from our partnerships as well. We are focusing on not just bringing the local artists, but also the international artists to our state as well. .

Besides our own IP music festival, we also came up and also helped to organize and produce top-tier artist Life2 as well in China and also in Southeast Asia that we have successfully launched it out in the year 2023, and we are continuing to do that.

And the last one, which is we will continue besides the top-tier assets, we will be focusing on building some of the smaller stages, for example, Lifehouse events for the Tencent musicians, which will help us to incubate a lot of younger generation of new musicians in order to continue to improve through the life performance event. .

Besides the strategy, the different types of concepts that we are organizing, we will have different business models as well. First of all, we have the ticketing. We can also have the advertising sponsorship model.

And as we have mentioned before, we are also working on the fans-based economy like the merchandise and all these kinds of things that we are working on. We will also continue to collaborate on our life event, not just offline, but together with online, with different pervades with our Super VIP plan as well.

So we have an exciting journey that we are looking forward, and we will continue to pull in more resources in order to grow the life performance business in TME. .

Okay. In the interest of time, we take the last question from Thomas Chong, Jefferies. .

My question is about our new initiative, such as long-form modia, IoT, can management comment about our thoughts about the outlook in these areas? And my second question is about our long-term target.

Given we have talked about our 2024 outlook on the top line and the bottom line, can management comment on how we should emission TME in 3 to 5 years' time down the world. .

[Interpreted] Thanks for your question. Regarding the loan for holding, from the business strategy perspective, it's going to complement to our existing online music savings. It will help us to get to the needs of the diversified customer especially including the users from different entities.

So that's the reason we will not continue to introduce the top content and the new content in the market. Essentially, we do see some very good performance in the [indiscernible]. .

And the second point is we're going to keep a very close aboration with [ Santen ]Group, especially with open. I do believe in Q2 of this year, the key events we're going to say in the robot for release of the second phase.

If that is to be successfully rolled out, I do believe and it's also to help us to continue to improve the user retention for the loan portfolio. .

I think for the entire overall strategy of an entire company, I think that we are right now on a really good pace in driving the online user services in a really good form. So we will do it going to be one by one for example to continue to improve the overall subscribers and also our ARPPU as well.

But at the same time, this is the core that most of our company, I think, is very important is we have to continue to build our content ecosystem, which ensures that we will have a good coverage of all of these libraries that we should have. And also, we will continue to pull in more resources in doing content, and coproductions.

Deciding that, we will also extend our footprint, not just locally, but we also can do some of the international development, for example, according to not just the business side of the platform side, but also the content side as well. So I think that is definitely going to be a lot of interesting and exciting projects ahead. .

I think from our company's point of view, I think we definitely is not just doing a 100-meter sprint. We are doing a marathon. So I think that we should strike a balance. At the same time, we continue to have a quarter-by-quarter growth. And at the end of the day, we will be focusing on the long-term sustainable development of the entire group.

And we are ensuring that we are going to have to ensure to drive good investor returns to all our investors as well. So we would like to share our success not just doing business well, but also ensuring that we have a good dividend policy and also we continue to have our share buyback program at the right moment. Okay. I think that's it for today. .

Thank you, everyone, for joining us today. If you have any further questions, please feel free to contact our IR team. This concludes today's call, and thank you so much again, and look forward to speaking to you next quarter. .

Okay. Thank you very much. Thank you. .

Thank you. Bye..

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.].