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DATE

Monday, May 18, 2026 at 7 a.m. ET

CALL PARTICIPANTS

• CEO — Tim Yu
• Chief Financial Officer — Ying Zeng
• Chief Content Officer — Xiaohui Wang
• Senior Vice President, Membership Business — Youqiao Duan
• Senior Vice President, Overseas Business — Xianghua Yang

TAKEAWAYS

• Total Revenue -- RMB 6.2 billion, down 8% sequentially, reflecting slower content distribution and advertising segments.
• Membership Revenue -- RMB 4.2 billion, up 2% sequentially, driven by premium drama releases and extended subscriber plan durations.
• Online Advertising Revenue -- RMB 1.2 billion, down 8% sequentially, attributed primarily to seasonality.
• Content Distribution Revenue -- RMB 358.7 million, down 54% sequentially, as fewer dramas were distributed to third parties.
• Other Revenues -- RMB 426.7 million, down 22% sequentially, reflecting declines outside core business lines.
• Content Cost -- RMB 3.7 billion, down 2% sequentially, demonstrating discipline in production spending.
• Total Operating Expenses -- RMB 1.2 billion, down 10% sequentially, from ongoing cost controls.
• Net Cash From Operations -- RMB 186 million, indicating positive operating cash flow in the period.
• Non-GAAP Operating Loss -- RMB 149 million, non-GAAP operating loss margin of approximately 2%, suggesting a modest deficit with progress on operational efficiency.
• Cash, Short-Term, and Long-Term Investments -- RMB 4 billion at quarter end, after debt reduction via repurchase of 6.5% convertible senior notes due 2028.
• Share Repurchases -- Approximately 6.45 million American Depositary Shares (ADSs) repurchased for a total of USD 8 million under the USD 100 million program through September 2027.
• Overseas Membership Revenue Growth -- Exceeded 40% annually in Southeast Asia, with Indonesia up over 80%, while revenue in Brazil and Mexico increased by over 100% each, highlighting international expansion traction.
• Nadou Pro Creator Base -- Over 10,000 active creators adopted the platform since its April 20 rollout, spanning both traditional studios and independent participants.
• AI-Generated Micro Drama Releases -- More than 3,000 launched during the quarter, reflecting accelerated AIGC-driven content scale.
• Upcoming HK Listing Application -- Proposed listing on the main board of the Hong Kong Stock Exchange announced in March.

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RISKS

• Chief Financial Officer Ying Zeng reported, "Total revenues were RMB 6.2 billion, down 8% sequentially," with content distribution revenue down 54% and online advertising revenue down 8% sequentially, signalling headwinds in non-membership segments.
• "The sequential decrease in cash balance was primarily due to the repurchase of our 6.5% convertible Senior Notes due 2028," indicating pressure on cash reserves from debt management adjustments.
• Non-GAAP operating loss of RMB 149 million, with a 2% loss margin, points to ongoing profitability challenges despite cost reduction efforts.

SUMMARY

iQIYI, Inc. (IQ 1.77%) tightened its operational discipline with tangible decreases in content and total operating expenses, while maintaining positive operating cash flow and reducing outstanding debt through convertible note repurchases. New business initiatives, particularly Nadou Pro’s rapid adoption and the surge of AI-generated micro dramas, supported diversified content expansion without increasing cost burdens. International markets delivered outsized membership growth, most notably in Southeast Asia, Latin America, and among key youth demographics, while the company accelerated regulatory compliance and anti-piracy engagement as a strategic priority.

• Management confirmed a USD 636.6 million loan to PAG, marked under prepayment and other assets, affecting asset composition at quarter end.
• Proposed share repurchase program of up to USD 100 million runs through September 2027, with completed activity totaling 6.45 million ADSs at USD 8 million so far.
• Company introduced over 14,000 micro animation and AI-native titles as of period end, increasing content diversity and portfolio scale.
• Nadou Pro is now commercially available to all industry creators, with the international version under development, further expanding its addressable market.
• Recent domestic regulatory actions accelerated content approval, introduced anti-piracy mechanisms with clear enforcement standards, and mandated prompt removal of infringing content, impacting operating environment positively.
• Management announced the initiation of a Hong Kong main board listing process, supplementing financial strategy and market presence.

INDUSTRY GLOSSARY

• AIGC: Artificial Intelligence Generated Content, referring to entertainment or media products created through AI technologies rather than conventional production methods.
• Nadou Pro: iQIYI’s proprietary AI-powered studio-grade content production platform, now open to all creators for diversified content formats and commercialization support.
• C-drama: Chinese drama television series, a key export and audience driver for iQIYI’s international business.

Full Conference Call Transcript

Tim Yu: Hello, everyone, and thank you all for joining us today. The convergence of breakthrough AI and supportive domestic regulatory landscape is fundamentally reshaping entertainment and creating incredible opportunities for iQIYI. Let me share iQIYI's value proposition in this new era from 3 perspectives: reinforcing our core today, igniting new growth engines and building for the long term. Let's start with the first perspective reinforcing our core fundamental foundational strategy. Premium content remains the cornerstone of our strategy. And in Q1, we reaffirmed its compelling appeal for audiences.

Our diverse lineup of hit dramas, including The Punishment 2, Azay Are, Born to Be Alive, Sheng Shu, Pursuit of Jade, Zhu Yu, and How Dare You!?, Chong Qi Tong secured our dominant position in the core drama category per Enlightent data. Moving forward, our commitment to content quality is stronger than ever, designed to deliver expert experience that profoundly connect with viewers. This focus is revitalizing our core operations evidenced by the sequential growth in membership revenue. We are also highly encouraged by the supportive domestic regulatory landscape, which is accelerating the content approval program and driving stronger capital efficiency. Importantly, these regulatory policies are unlocking innovation across new formats. This includes short-form dramas Zhong Ju.

Typically 15 to 25 minutes per episode with flexible episodes counts and internet feature films, Wang Wo Gu Shi Pian which are limited to 3 chapters of 60 minutes each. These formats are not only shorten production cycles and lower capital barriers, but also attract a broader pool of creative talent, enabling more innovative storytelling than traditional long-form content. Furthermore, they are perfectly for AI, perfectly suited for AI integration, ultimately enriching our portfolio and maximizing our ROI. Looking ahead, we plan to launch over 100 short-form dramas in 2026, while steadily building our Internet feature film slate. By continually delivering premium long-form content while strategically expanding into new formats, we are reinforcing our foundational strength.

Importantly, this expansion is efficient, allowing us to capture new opportunities without putting additional pressure on our overall content costs. Second, we are igniting new growth engines. Among our emerging business segments, our overseas business has established it as a proven second growth driver. In Q1, overseas membership revenue surged by over 40% annually. This success in from a highly differentiated market position compared to global peers, we focus on premium Asian content tailored primarily for young female demographics within our Asian content portfolio, K-dramas whose global influence continues to rise serve as the key catalyst for our international expansion, complemented by our growing slate of local content. Geographically, we are anchoring our presence in Southeast Asia.

We are also expanding into high-growth markets in the Middle East and Latin America with Brazil as a key focus. We are also deeply integrating AI across our global operations to drive efficiency. Parallel to our market expansion, we are maximizing IP value through our experience business, expanding our content value from online to offline and extending the IP life cycle. For IP-based consumer products, we are driving deeper user engagement through merchandising while empowering popular IPs to generate both broadcasting window and long-tail monetization. Finally, our foraying into offline experience is yielding encouraging results. Our first iQIYI LAND in Yangzhou has garnered solid initial feedback, allowing us to rapidly accumulate operational experience to apply to other locations.

Thirdly, we are laying a robust foundation for long-term growth powered by AI and our decentralized platform. AI is breaking down the historic barrier that once made quality content costly, time-consuming, igniting the explore growth in both creators and content value, anticipating that this accelerating shift will soon outgrow the traditional centralized media platform model. We have strategically pivoted to build an upgraded and vibrant decentralized social media ecosystem. This will unlock substantial value. A decentralized ecosystem greatly expands content supply, allowing us to meet diverse demand at a whole new scale. Creators will have greater opportunities to brainstorm and succeed, retaining full ownership of their IP and converting it into real attractive returns.

We are also cultivating private traffic, traffic, building loyal fan base and gathering valuable data from direct user interactions. Meanwhile, for iQIYI Originals, we are sharpening our focus on premium content while decentralized planning flow drives scale. Our original will serve as our signature offerings. Additionally, we are building comprehensive support system so creators can focus purely on creativity. One key pillar is Nadou Pro, iQIYI's proprietary platform for studio-grade content production. Nadou Pro is powered by both public and self-deployed large models, but it goes beyond generic models. It built upon our years of technology infrastructure and deep content expertise.

We transform years of industry know-how into AI agent and combine them with our core IP and digital assets to deliver accessible platform capabilities. Nadou Pro offers one-stop services from content creation to operations and commercial collaborations. Beyond, Nadou Pro we offer professional training and workspaces. We also facilitate financing solutions, connecting talent with capital from our own funds and external investor networks. Now let's explore what define iQIYI's long-term investment value and how we are uniquely positioned to lead in the AI era. Our confidence rests on 2 core pillars. First, hard-to-replicate competitive moat. We possess a unique blend of deep content expertise and a cutting-edge technology.

We have a proven DNA of innovation from pioneering in genre-specific theater brands to now leading the AIGC transformation in the industry. Crucially, we possess a vast high-quality IP library that is essential in the AI area. Alongside a high engaged user base that we are committed to serving with excellence. Second, long-term structural enhancement to our business economics. AI is poised to address major industry pain points, expanding our margins and maximizing capital efficiency. At the same time, our decentralized platform will boost content diversity to capture a broader audience base, while IP originals focus on crafting enduring premium IPs together.

The initiatives fuel our diversified monetization system, expanding membership, advertising and offline experiences, unlocking IP value across both domestic and global markets. Before we dive into Q1 details, I want to emphasize our core philosophy, the true power of technology to empower humanity, not replace it. It will serve audiences with richer, deeply resonate content. It will empower creators to overcome human limitations and turning their boldest inspiration into reality with absolute efficiency and freedom. Ultimately, it will elevate the entire industry, unlocking new avenues for growth and helping more creators, especially young talent realize both their creative vision and commercial value. Now let's move on to the detailed performance in Q1. Let's start with content.

We are pioneering AI-driven storytelling and talent cooperation. In Q1, we unveiled Peter Pau iQIYI AI Theater, featuring a suite of 16 titles across Science Fiction, Thriller, Wuxia and Fantasy genres, each running 11 to 20 minutes, Nadou Pro powered key production process from capture, design and scene setting to storyboarding. Demonstrating AI transformative potential in professional content creation. In terms of our long-form drama performance, The Punishment 2 became our second franchise with 2 seasons exceeding the 10,000 iQIYI popularity index. Pursuit of Jade also surpassed 10,000 while our in-house produced custom drama How Dare You!?, exceeded 9,000. Pursuit of Jade and How Dare You!?, resonated strongly with young female audiences, further solidifying our connection with these key demographics.

Furthermore, we secured our leadership in realistic and suspense genres. Born to Be Alive earned the highest Douban rating among all domestic drama releases in Q1. And The Devil Between Us 2, and our own suspense theater brand, was also well received by users. For variety shows, our in-house production Wander Together, [Foreign language]. Topped enlightent market share ranking for the first quarter. For animations, we expanded our offering with 4 key original titles among these, the long-running The Great Ruler continued to captivate audiences and Season 2 of How Dare You achieved a strong synergy with its drama series adaption. For our micro dramas, original production contributed over half of revenue from this category in Q1.

AIGC has emerged as a powerful driver for content releases. In Q1, we launched more than 3,000 AI-generated micro dramas, further enriching our offerings. Finally, for micro animation and AI native format, we are rapidly expanding our library, which featured over 14,000 titles as of quarter end with viewership continuing to rise steadily. Next, let me show our Q2 content pipeline. Our drama serials lineup features a rich variety of titles from historical tactics to niche genres, including Echoes of a Thousand Moons [Foreign Language] Bloom Lion, [Foreign Language] Born with Luck, [Foreign Language] The Heir and Archives: The Nanyang Mystery, Nandu Dang An.

Among the already released titles Born with Luck gained wide popularity driven by its innovative storytelling combining comedy and mystery and surpassed iQIYI popularity score of 10,000, becoming the third title to reach such mark this year. For films, our pipeline includes original online movies. The Same Trick, Zuiue, Wind of Death, Man Lizhi, and The Counterfeit, Wei Chao Zhong An. For licensed titles, we will release theatrical hits on our platform like Pegasus 3, featuring Shang, Awakening of Insects in Silence, Jing Zhe Wu Sheng, and The Blaze of the Goddess, Biaoren, along with the online film, The Legend Hunter, Xiang Long Ju.

For variety shows, we will continue to captivate audience with established franchise such as Fight House Season 6, Become a Farmer Season 4, The Rap of China 2026, and Yes I Do Season 6, Xi Huang Mi Wei Shi. While launching new IP like Voice of the Youths, Chao Ren Qing Chun De He Chang. For micro dramas, we have a diverse slate schedule, including Perfect Match, Deng Duili, San Di Yu, Zhong Yi Ni, One Night Pearl, Bai Ye Wei Qing, Phoenix Rules, Ou Scan, Man Zha Chou Huang, and Spring Rain of Phoenix, Feng Ren.

For animations and children's content, we will continue the long-running Against the Gods, Ni Tian Xie Shen, and then debut a localized adaptation of the BBC classic I'll Tell You With. Now turning to membership business. Revenue grew sequentially, primarily driven by premium titles, including Pursuit of Jade, The Punishment 2, How Dare You!? and The Devil Between Us. Operationally our refined upselling strategies and value-driven membership options successfully encouraged users to extend their plans, driving a year-over-year increase in average subscription duration for monthly subscribers this quarter. Additionally, our higher care F7 membership continued to scale, driven by a highly differentiated value proposition that features free express packages. Next, moving on to advertising business.

For brand ads, revenue contribution from targeted dramas recorded double-digit annual growth with titles like Born to Be Alive, How Dare You!? and Pursuit of Jade gained strong recognition from advertisers. Sector-wise, food and beverage, Internet services and e-commerce all achieved double-digit annual growth. Furthermore, we are expanding our advertising appeal new content formats. For example, we partner with leading advertisers to coproduce stream of content for micro dramas, creating new avenues for brand integration on the technology front. AI continue to empower our advertising operations. We leverage Nadou Pro to produce marketing materials and combine AIGC capabilities with our IPs to generate high-quality ad content.

During Q2, our focus will be on maximizing ad sales across premium variety shows, dramas and traditional display ads with further enhancing monetization on large screens. Concurrently, we will continue to leverage AI to optimize advertising efficiency. For performance ads, the advertiser mix is healthier and more balanced. Revenue from small and mid-sized advertisers recorded strong annual growth with sustained improvements by sector. Internet services, e-commerce and mini games delivered outstanding quarterly results. Additionally, monetization efficiency for micro drama improved as well. Measured by revenue per inventory unit increased by over 60% year-over-year.

For the rest of the year, our strategy for performance ads focus on 4 key areas: First, expanding our client base across high-growth verticals, including Internet services, short-form videos, mini games and AI tools; second, capturing greater market share during peak windows such as major e-commerce festival. Third, enhancing monetization efficiency through AI-powered capabilities. Finally, tapping into additional ad budgets by harnessing a more diverse content ecosystem and upgraded ad placement system. Moving on to our business performance in regions outside of Mainland China. Membership revenue increased by over 40% annually in Southeast Asia markets. Membership revenue from Indonesia grew by over 80% annually.

Meanwhile, Portuguese and Spanish-speaking regions demonstrated robust growth with membership revenue from Brazil and Mexico both grew by over 100% annually. Average daily subscribers reached a new high. The global influence of C-dramas continues to expand. Notably, Pursuit of the Chaser Games lead last performance across multiple markets and secure top position on our international platform viewership rankings. It topped the Google Trends among all C-dramas broadcasted during the same window in 15 markets and set a record as the most Chinese drama on Google. Beyond C-dramas we are scaling original local production to elevate the appeal of our content library, particularly in key Southeast Asia markets in Q1.

Our first original Thailand show, Running Man Thailand delivered exceptional results, setting multiple new records for variety shows on our international platform. Google Trends confirmed its position as the most popular paid variety show over the past 3 years and the title earned strong recognition from advertisers. Meanwhile, our first original Indonesian drama is on track to premiere in Q2, marking a further step in our localization journey. Our overseas micro drama business also gained momentum with growing revenue contribution fueled by both licensed and original content. Our original production pipeline consistently delivered new releases across multiple language, including English, Thai, Korean and Indonesian. Next, our experience business we focus on 2 core areas, IP-based consumer products and iQIYI LAND.

For IP-based consumer products, our self-operated merchandise delivered solid performance with collectible cards from Pursuit of the Chaser Games, setting a new sales record in this category. For offline experience business, our first iQIYI LAND in Yangzhou performed in line with expectation and was highly acclaimed for its scenery design, immersive experiences and technology-enabled interactions. Going forward, we will continue refining operations and introducing new creative offerings to encourage repeat visits and on-site consumption. Furthermore, we are leveraging our experience gained in Yangzhou to drive through development of new location in Kaifeng and Beijing, which are progressing smoothly. Now I would like to hand it to Ying for the financials. Thank you.

Ying Zeng: Thanks, Mr. Gong, and hello, everyone. Let me walk you through the key numbers for Q1. Total revenues were RMB 6.2 billion, down 8% sequentially. Membership services revenue reached RMB 4.2 billion, up 2% sequentially, driven primarily by our diverse lineup of key dramas. Online advertising revenue was RMB 1.2 billion, down 8% sequentially, primarily due to seasonality. Content distribution revenue reached RMB 358.7 million, down 54% sequentially, primarily because less number of dramas we distribute to third parties. Other revenues were RMB 426.7 million, down 22% sequentially. Moving on to cost and expenses. We adopted a disciplined strategy in Q1. Content cost was RMB 3.7 billion, down 2% sequentially. Total operating expenses were RMB 1.2 billion, down 10% sequentially.

Moving on to cash flow. Net cash provided by operating activities were RMB 186 million, reflecting some encouraging early signs in financial performance driven by our new business initiatives. Turning to bottom line and cash balance. Non-GAAP operating loss was RMB 149 million [ RMB 1,400 million] and non-GAAP operating loss margin was approximately 2%. As of the end of Q1, we had cash, cash equivalents, restricted cash, short-term investments and long-term restricted cash, including prepayments and other assets at a total of RMB 4 billion. The sequential decrease in cash balance was primarily due to the repurchase of our 6.5% convertible Senior Notes due 2028. Which reduced our outstanding debt, further strengthening our capital structure.

At quarter end, the company had a loan of USD 636.6 million to PAG recorded under the line item of prepayment and other assets. We remain committed to delivering shareholder value over the long run. In March, we announced a proposed listing on the main board of the Hong Kong Stock Exchange and our first share repurchase program of up to USD 100 million effective through September 2027. Up to now, we have repurchased a total of approximately 6.45 million ADSs for a total cost of USD 8 million. For detailed financial data, please refer to our press release on our IR website. Now I will open the floor for Q&A.

Operator: [Operator Instructions] Your first question comes from Xueqing Zhang with CICC.

Xueqing Zhang: [Interpreted] And my question about Nadou Pro. The company previously launched Nadou Pro, an AI agent for film and television content creation. Could management share more details about the recent progress of Nadou Pro and any specific examples of its practical applications. In addition, how does management view the future commercialization prospects for Nadou Pro.

Tim Yu: [Interpreted] The CEO Gong is taking this question. So Nadou Pro is iQIYI's proprietary platform for studio-grade content production. It is powered by public large models, but it goes beyond generic models. It's actually built upon our years of tech infrastructure and deep content expertise. For example, we have transformed years of industry know-how from key areas such as screen writing, filming and production into AI agents and combine them with our core IP and digital assets to deliver accessible platform capabilities. Creator tools previously used only within iQIYI such as the script evaluation and shot-based reference search, have now been incorporated to Nadou Pro. Nadou Pro has been available to all creators across the industry since April 20.

We now currently have over 10,000 active creators on board, ranging from traditional production companies to independent creators. Content productions cover a wide variety of formats, including the long-form dramas, micro dramas, micro animation and for videos and also for some commercial app content. Among which about 100 of them are iQIYI original titles projects. Nadou Pro actually recently launched a creator community as a platform for creators to interchange experiences and for some feedback and that will feed internal development for the upgrades in the coming up versions. And also, this platform will feature some commercial matchmaking features upcoming. And then these will empower the creators with the full cycles from content creation to commercial monetization.

In addition, the international version of Nadou Pro is in development and will be online soon. Regarding Nadou Pro's commercial prospects, it will serve as a stand-alone product to boost actually monetization capabilities. And it will continue to reiterate and continue to improve the development and also roll out the upgraded version to create more better features.

Operator: Next question comes from Vicki Wei with Citi.

Yi Jing Wei: [Interpreted] Would management share some latest progress about the industry anti-piracy update?

Tim Yu: Thanks. We will invite our Chief Content Officer, Xiaohui to take this question. Please go ahead.

Xiaohui Wang: [Interpreted] For the anti-piracy situation, we actually have observed very positive progress. Around the end of April and early May, the National Radio and Television Administration launched a targeted campaign to crack down on the pirated distribution of drama content across illegal websites, browsers, search engines and cloud storage services. The industry regulators actually attach great importance to this issue and have established clear requirements for the prevention and handling of online copyright infringement, including some of the initiatives. To give you guys some examples. For example, we established a rapid response mechanism for infringement content, enabling real-time communication between copyright owners and platforms to ensure swift response and removal.

Second, the new policies and regulations actually enforce dual responsibilities for platforms and local authorities requiring provincial and municipal bureaus to fulfill their local management duties, for example, enhancing monitoring and improve processing efficiency. The platforms must resolve and remove infringing content within 24 hours of receiving a report or notice -- for newly released dramas, hit series or key titles, the removal must be completed within 4 hours. And third, building a coordinated enforcement mechanism, regularly reporting on infringement status, takedown and typical cases for repeat offenders who will be publicly named and handed over to copyright and police authorities for investigation and prosecution. This targeted campaign will be integrated with routine regulatory enforcement.

Looking ahead, the National Copyright Administration SwordNet 2026 anti-piracy special campaign has designated online copyright infringement and piracy as its top priority, signaling even stricter enforcement measures. Currently, we're happy to see the efficiency of handling infringement has improved significantly, and we believe the piracy issue will be substantially mitigated in the future. We believe strong copyright protection safeguards the commercial interests of all industry stakeholders, boosts the willingness to invest in high-quality content creation and fosters a virtuous cycle of content supply. And for iQIYI, we will continue to upgrade our technology and operational mechanism to co-build a healthy copyright ecosystem, ultimately helping to drive user growth and revenue of our long-form video business.

Operator: Your next question comes from Jenny Yuan with UBS.

Yicheng Yuan: So let me translate myself. So membership business saw sequential recovery in the first quarter. In particular, overseas business delivered a robust growth momentum. So how does management view the sustainability of this improving trend? And how should we think about the membership business outlook into second quarter and beyond?

Tim Yu: Thanks, Jenny. We'll invite the Senior Vice President of membership business to take on this question. Go ahead, please.

Youqiao Duan: [Interpreted] In Q1, driven by a strong slate of premium content and refined operational strategies, membership revenue delivered sequential growth in the first quarter. We have a rich content pipeline for Q2. A number of recently launched titles actually have performed well. Notably, Born with Luck surpassed 10,000 on iQIYI's Popularity Index, powered by a distinct suspense but comedy narrative style. And in addition, we have also expanded slate for the second quarter, including the long-form dramas, for example, Echoes of a Thousand Moons, The Epoch of Miyu, The Heir and for variety shows, we have Hahahahaha Season 6, Become A Farmer Season 4. And we believe this content will effectively reach a broad membership base.

Looking ahead, for Q2, we're looking at our operations and sales priorities. For example, we're focusing on reactivating dormant members, optimizing variety shows schedules to offer more content for members and expanding large screen membership via joint operating initiatives with smart TV manufacturers and also leveraging the June 18 e-commerce festival to boost annual and bundled membership. And together, we believe these efforts will expand our subscriber base and expand subscription cycles. And looking ahead, as the stability and consistency of our premium content pipeline continues to strengthen and coupled with our ongoing optimization of our membership operations, we believe our membership business will maintain a steady development trajectory.

Operator: Your next question comes from Thomas Chong with Jefferies.

Thomas Chong: [Interpreted] Congratulations on the fast growth of your overseas business. Just now, we talked about the fast growth in Southeast Asia. So may I ask about our investment strategies in Southeast Asia market? And also, can you share about some of the differences or similarities in terms of the audience preference in domestic versus overseas?

Chang Yu: Thank you, Thomas. We'll invite our Senior Vice President of our overseas business, Mr. Xianghua to take on this question.

Xianghua Yang: [Interpreted] Okay. Well, I will take this parts into 2 segments. First, for the key markets. Currently, our key markets are performing pretty well. And then for the Southeast Asia market has been growing quickly. And for the market that's crucial for our Southeast Asia, we'll continue to invest in countries such as Thailand, Indonesia, Malaysia, Vietnam and Philippines. And also for some of the emerging markets that's been also growing pretty well, for example, North America, Brazil, et cetera. So we'll continue to invest in these areas and markets. Let's start with content. So for us, our key differentiation is our C-drama.

So that will continue to be our key in terms of getting users and especially for the content that's favorable and liked by young female users. And in key areas that I mentioned earlier, that will increase the promotional activities and marketing activities for the market. For example, for user growth, using content to attract and also to retain users. And for local content, we control and also have good pace in terms of the content investment also in terms of the volume that we're investing into the local content. We also focus for the young female users like genre and content for local production.

And third, for our mature markets, we'll continue to cooperate with telecom carriers and also e-commerce platform to increase our membership scale, and we will continue to use this strategy to replicate to other markets that we're trying to explore. In terms of the user demographics for overseas audiences, is majority focusing on the young female users who are under 40 years old. For the user behaviors for overseas market, each major market is a bit different. Some of them have higher user subscription cycles, better cycles, better retention than others. But overall speaking, the ARPU for overseas memberships are higher than the domestic ones.

Operator: Your next question comes from Gigi Xiao with Guangfa.

Unknown Analyst: [Interpreted] I will translate the question myself. Seeing iQIYI's efforts in Nadou Pro and fostering AI-driven creation and talent cultivation, how do we view the competitive landscape in the AI era.

Tim Yu: [Interpreted] For long-form video, in the past, our challenge has been the investment scale or the amount that we invest in content is massive. The content cost is high, which means the investment risk is high, which leads to less number of titles that is invested and rolled out for the industry. And for any content that we invested, we typically focus on the premium head content. That was the cycle that we faced and the challenge we faced. For AI, it actually fundamentally improves the situation. Under the AI model, the content cost is much cheaper.

The production cycle and production period is shorter, which means there are more titles, more number of titles will be rolled out and introduced in this industry. And because there are more content, there are more choices for users to enjoy. So user scale will increase under the new AI model. So overall speaking, we think it's greatly beneficial for long-term video to improve its business fundamentals and economics and also to attract more users to the platform. To better accommodate this industry trend, we roll out a number of initiatives and also the iQIYI accounts which means the users can upload the content to our platform.

Under the revenue share model, they will have the opportunity to introduce the content to more users to enjoy and to increase the revenue performance and also monetization capabilities. So under this backdrop, we believe the content cost will be lower and the number of video content will be increased. If we look back for the past 10 years of the Internet, and especially for short-form video and also micro drama in the recent years, we believe that technology is the fundamental driver in terms of the industry boom and industry development. So we think under this AI era, we think it becomes a great opportunity for the long-term video to have better economics and better industry dynamics.

Operator: There are no further questions at this time. I'll now hand back to the company for closing remarks.

Tim Yu: Thank you, everyone, for participating on the call today. If you have further questions, don't hesitate to contact us. Thank you.

Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]