Thank you for standing by, and welcome to the iQIYI Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Ms. Chang You, IR Director of the company. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining iQIYI's Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. The company's results were released earlier today and are available on the company's Investor Relations website at ir.iqiyi.com. On the call today are Mr. Yu Gong, our Founder, Director and CEO; Ms. Ying Zeng, our Interim CFO; Mr. Xiaohui Wang, our Chief Content Officer; Mr. Youqiao Duan, Senior Vice President of our Membership Business; Mr. Xianghua Yang, Senior Vice President of International and Online Game Business; and Mr. Gang Wu, Senior Vice President of Brand Advertising Business. Mr. Wong will give a brief overview of the company's business operations and highlights, followed by Ying, who will go through the financials. After the prepared remarks, the management team will participate in the Q&A session. Before we proceed, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC. iQIYI does not undertake any obligation to update any forward-looking statements, except as required under applicable law. I will now pass on to Mr. Gong. Please go ahead.

Hello, everyone, and thank you for joining us today. In 2025, we focused on strengthening our core business to renew growth while achieving advancements in emerging businesses. These efforts drove a solid year-end performance with total revenue in Q4 returned to growth both annually and sequentially. Notably, our long-form dramas secured #1 in viewership market share on Enlightent data annual rankings with 5 titles exceeding 10,000 for the iQIYI popularity score. More importantly, we made remarkable breakthroughs in IP franchise development, moving beyond making individual hit titles to building evergreen IPs that drive growth across diverse formats. Strange Tales of Tang Dynasty stand as a stellar example as a flagship IP with 4 consecutive blockbuster seasons. It's influence has expanded from long to short and micro dramas as well as off-line experience. Our advertising businesses continue to demonstrate strong growth potential. Our overseas business has evolved into a sustainable and scalable second growth engine powered by accelerated organic momentum. In 2025, membership services revenue increased by over 30% year-over-year with growth accelerating to 40% in the second half of the year. The subscriber base reached an all-time high. At the same time, our experience business has entered a critical stage of development. For IP-based consumer products, we have built a dedicated in-house team and upgraded from a listening-only approach to a dual-track model, combining self-operated mechanism merchandise with licensing. This strategic shift strengthened our control our IP operation and amplifies monetization efficiency. On the offline experience front, we launched our first iQIYI LAND in Yangzhou on February 8, 2026, receiving positive initial reception. Two additional parks scheduled to open later this year. 2026 marks a key step towards scaled development as we build the experience business into a new engine for long-term value creation. Now let's dive into the details…

Thanks, Mr. Gong, and hello, everyone. Let me walk you through the key numbers for Q4. Total revenues for Q4 were RMB 6.8 billion, up 2% sequentially. Membership services revenue reached RMB 4.1 billion, down 3% sequentially due to seasonality. Online advertising revenue was RMB 1.4 billion, up 9% sequentially, primarily driven by the streaming content and e-commerce Double 11 campaign. Content distribution revenue reached RMB 787.7 million, up 22% sequentially, primarily driven by the increase in cash transactions. Other revenues were RMB 547.9 million, down 6% sequentially. Moving on to cost and expenses. Content cost was RMB 3.8 billion, down 5% sequentially as we adopt a more curated content acquisition strategy centered on quality. Total operating expenses were RMB 1.4 billion, up 2% sequentially. Turning to profit and cash balance. Non-GAAP operating income was RMB 143.5 million. Non-GAAP operating income margin was 2%. As of the end of Q4, we had cash, cash equivalents, restricted cash, short-term investments and long-term restricted cash included in prepayments and other assets at a total of RMB 4.7 billion. At quarter end, the company had a loan of USD 636.6 million to PAG recorded under the line item of prepayments and other assets. For detailed financial data, please refer to our press release on our IR website. Now I will open the floor for Q&A.

Your first question comes from Xueqing Zhang with CICC.

[Foreign Language] With recent upgrades in AI video generation models like Seedance, which are approaching production level quality. Could management share your view on how these advancements may impact iQIYI's business, particularly in content production and cost structure. What's your plan on leveraging AI video generation models?

[Foreign Language]

Our CEO, Mr. Gong is taking this question. Video generation models will substantially reduce the cost of producing long-form videos, shorter production time and lower the barrier to creation. This potentially will attract more new creators to this business and ultimately lead to more creations for the long-form video production. And this is very much beneficial to long-form video platforms like iQIYI, which means this will lead to increase in both the quantity and quality of long-form video content.

[Foreign Language]

Let me just discuss the impact of AI generation content for each content genres. For example, the micro animation is actually an AI-native content created entirely by AI. And for children's animation and also micro dramas, it has been demonstrated that large models can produce this content and reducing the production cost to 1/10 or less compared to traditional methods. For online films, animation and documentary, et cetera, these are rapidly permitted by AI-led production approaches as well. Among all these long-form video content, the most difficult ones to produce are the live-action content, for example, the theatrical films, drama series and variety shows. And in fact, these content have in part adopted AI in their production process and which the results have proven that these have significantly reduced the content cost -- content production cost. And based on our projections and estimations that we think the AI-led commercial film probably will emerge within the next 2 to 3 years.

[Foreign Language]

For iQIYI, we are actually placing our focuses on 2 areas to embrace these AI initiatives. On one hand, we have developed a Nado Pro an industry-specific AI agent for video content production. And on the other hand, we are working to build a new AIGC content ecosystem through various operation methods. Hopefully, that we can attract more creative talent under this new AI era.

Your next question comes from Maggie Ye with CLSA.

[Foreign Language] Can management walk us through company's content strategy for 2026 in more details? For example, how are we thinking about the key priorities across different genres, including drama, variety shows, film and micro drama, et cetera? And how are you thinking about the mix of self-produced content versus licensed one?

Thank you, Maggie. We will invite our Chief Content Officer, Mr. Xiaohui, to take this question.

[Foreign Language]

Given the current volume of in production dramas, we will slightly reduce the number of dramas to be produced in 2026 and place greater emphasis on top-tier titles in terms of their quality.

[Foreign Language]

In terms of the realistic and suspense and crime genres and these content categories have been iQIYI's strength in fact. And in these areas, we'll continue to maintain our innovation to create new content and more creative content and then maintain our advantage in these areas.

[Foreign Language]

Starting in 2025, we have increased the supply of female-oriented content. For example, starting from the end of 2025, we started to roll out a new variety show called Winter Together. This is targeting for the new female users and also that the beginning of 2026, we also launched a female-oriented -- a young female-oriented drama called How Dare You.

[Foreign Language]

For young male users, we have released multiple original animations this year, including the long-running series The Great Ruler, How Dare You Season 2 and a Way of choices.

[Foreign Language]

With the support of new regulatory policies, we will step up exploration of innovative content, for example, the short-form drama series.

[Foreign Language]

We recently introduced a unified revenue sharing policy across 8 major content categories, including dramas and films. And under this new framework, production partners return actually will be more directly linked to each title's revenue contribution and allowing outstanding work to earn higher returns.

[Foreign Language]

Apart from the content category, for example, like theatrical films and drama series, like Mr. Gong mentioned earlier, we are actually gradually adopting and actually very proactively adopting AI-led production for categories such as micro animation, animation and micro dramas, while we're applying AI across other content categories to cut cost and also accelerate time line.

Your next question comes from Lincoln Kong with Goldman Sachs.

[Foreign Language] My question is about the overseas business. How is our plan and strategy for 2026?

Thank you, Lincoln. We'll invite our Senior Vice President of International Business, Mr. Xianghua Yang to take this question. Please go ahead.

[Foreign Language]

In 2025, membership revenue grew by over 30%, with annual growth rate actually accelerating to 40% in the second half of the year. 2025 marked our highest growth rate year since the overseas business entered a stable operating phase.

[Foreign Language]

For 2026, our strategy is to sustain high revenue growth rate or even accelerate our growth rate.

[Foreign Language]

In terms of the content strategy, our market tailored content mixes actually have proven effective and continue to attract users. For C-dramas, they continue to expand their influence overseas. And the C-dramas will remain at the core of our overseas content portfolio, especially genres with strong cross-over appeal such as ancient costume, romance and contemporary romance.

[Foreign Language]

I am sorry, one more thing. Yes, go ahead.

[Foreign Language]

For content, we actually ramp up original production and local content licensing in Thailand, Malaysia and Indonesia. And in terms of operations, AI-powered translation and dubbing actually have significantly improved efficiency, reduced cost and accelerated the content release schedule. And going forward, we will fully leverage social media channels and use AI to generate promotional efforts, enabling low-cost, high-efficiency content distribution and user reach. Meanwhile, we will continue online and offline advertising to further amplifying the influence of C-drama. And last but not least, we will continue to promote content and strengthen our brand presence in international markets through initiatives such as celebrity sign-ups and also offline events.

Your next question comes from Rebecca Xu with Morgan Stanley.

[Foreign Language] My question is about iQIYI LAND. Could management share the operating performance of iQIYI LAND, Yangzhou since its opening. Also, can you please share the 2026 plan for this business?

Thank you, Rebecca. I will invite our CEO, Mr. Gong to take this question.

[Foreign Language]

Our very first iQIYI LAND actually opened in Yangzhou on February 8 and offers 7 core immersive experiences, including stage performances, multisensory theaters, interactive light and shadow spaces.

[Foreign Language]

The first iQIYI LAND opened about 20 days since its opening and during which also we experienced the Chinese New Year holidays. And actually, the performance and the feedback actually are meeting expectations, which can be reflected in the ratings on major OTA platforms. And the average points are 4.8 out of 5. And actually recently, the latest rating exceeded -- reached 4.9 for certain platforms.

[Foreign Language]

From the opening until now, the visitor numbers have continued to grow. And based on the actual operations, we observed that this experience really offered fun for all ages. We see participants ranging from children as young as 4 to 5 years old to seniors in their 60s and 70s.

[Foreign Language]

We are looking at the potential for a 1 to 2x increase in peak single day revenue during the following peak period. For Yangzhou location actually has its special areas and for the spring season, especially March and April is a peak travel season for Yangzhou. And also upcoming, we have the Labor holiday in May, the summer months of July and August and also the National Day holiday in October and all these key holidays and periods could potentially boost the revenue performance compared to the first 20 days.

[Foreign Language]

And the expected growth will come probably from 2 major areas from a more deeper operations to a more finer detailed operation for the entire iQIYI LAND and also the increased efficiency for iQIYI LAND as well.

[Foreign Language]

Currently, the average transaction value for consumer products at iQIYI LAND is about RMB 100. We think there's potential for growth in the future. We will try to load more products in the future and also to extend to other content categories as we do a more refined consumer product team operation.

[Foreign Language]

And for this year, we will focus more on the self-operated IP consumer products and the operations will be strengthened this year, and this will lead to a revenue potential growth of 100% this year.

Your next question comes from [indiscernible] with Guangfa.

[Foreign Language]

We'll invite our international business leader to take this question.

[Foreign Language]

In terms of our content, our brand or our slogan is beloved Asian content. So we focus not only Chinese content, but also the Asian content as well. Of course, Chinese content, which we call people or C-drama is our foundation because all the content has been already produced for our domestic business. So we only have to incur some of the dubbing and also translation, which is the cost with AI is much more efficient and controllable. But in addition to C-drama and also Chinese content, we also have, for example, Japanese animation, also Korean dramas and also the local content, for example, for the Thai region, Malaysia and also Indonesia. So this is how we set apart from many of the Western players in overseas. And for example, the Netflix and other houses, they host a lot of the Western content, whereas for us, we are the home of the beloved Asian content.

[Foreign Language]

Also, I want to add real quickly in terms of another content channel called micro drama. We actually -- this is something we rolled out end of last year. And in terms of the content viewing time contribution, micro drama already ranked us #2 content categories of the overseas platform and has been growing quickly and also very recently for the Chinese New Year, we have experienced rapid growth as well and reached a new high. So this is something else also that set us apart from the Western players in overseas market.

[Foreign Language]

And in terms of your question regarding ARPU and also membership performance. For ARPU actually for each region, it's actually different. Overall speaking, we think we're at the midrange of the price tier. For each different region, we expect a different price point. For areas more developed similar to the Western spending powers, the ARPU is a bit higher from the China domestic region. And for regions for the developing regions, for example, like the Southeast Asia, the average ARPU is a bit lower than the China domestic region. But overall speaking, I would say that the overseas ARPU will be greater or more than the China domestic ARPU.

[Foreign Language]

And in terms of the membership retention, in overseas business, we adopt the premium model, which is the free plus paid content model. And in areas such as more developed regions, I will say that this is very much similar to their spending habit and viewing habit, the retention is actually a bit better than domestic areas. But in some of the areas such as the developing regions, the retention performance is a bit lower. But overall speaking, the overall membership retention is similar to domestic level.

[Foreign Language]

In terms of we're adding the performance for the financial aspect. Overall speaking, the free cash flow now is positive. But in terms of the P&L performance for operating income because there is some financial accounting treatment that we still have to sort out. Now we haven't disclosed the exact numbers, but we will share more insights as we have more clarity.

There are no further questions at this time. I'll now hand back to management for closing remarks.

Thank you, everyone, for joining the call today. And if you have any further questions, please do not hesitate to contact us. Thank you.

Thank you. Bye-bye.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.