Good day, and welcome to the Bilibili 2021 First Quarter Financial Results and Business Update Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Juliet Yang, Senior Director of Investor Relations. Please go ahead.

Thank you, operator. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectation as of today. Actual events or results could differ materially from those mentioned in today's news release and in this discussion due to a number of risks and uncertainties, including those mentioned in our most recent filing with the SEC and Hong Kong Stock Exchange. The non-GAAP financial measures we provide are for comparison purpose only. Definition of these measures and a reconciliation table are available in the news release we issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on the Bilibili IR website at ir.bilibili.com. Joining us today from Bilibili's senior management are Mr. Rui Chen, Chairman of the Board and Chief Executive Officer; Ms. Carly Li, Vice Chairwoman of the Board and Chief Operating Officer; and Mr. Xin Fan, Chief Financial Officer. And I will now turn the call over to Mr. Fan, who will read prepared remarks on behalf of Mr. Chen.

Thank you, Juliet, and thank you everyone for participating in our 2021 first quarter results conference call. I'm pleased to deliver today's opening remarks on behalf of Mr. Chen. 2021 is off to an excellent start for Bilibili. On March 29, we successfully completed our secondary listing of Hong Kong Stock Exchange, three years after we listed on NASDAQ. We would like to take this opportunity to thank our supporting shareholders as well as our talented content creators. Video users are the dedicated colleagues that helped make this happen. With our secondary listing, we see an opportunity to broaden our investor base and attract more high-quality shareholders. We also gain more strength in the capital markets, laying a solid foundation to better acute our growth strategy and tap into the massive video-based market in China in the coming years. After officially starting to the 200 million MAU Club in 2020, we continued the momentum, further increasing our influence among China's Gen Z+ cohort and expanding our user base. In the first quarter of 2021, our MAUs were up 30% to 223 million and our mobile MAUs grew by 33% to 209 million, both on year-over-year basis. And our DAUs reached 16 million, up 18% year-on-year. It's particularly impressive given last year's remarkable high base. As a testament to our rich offerings and engaged community, our users spent an average of 82 minutes per day on our platform in the first quarter. During this time, we roll out more premium content and the services and strengthened our commercialization capabilities while converting more traffic to paying users. Our MPUs grew to 21 million, increasing by 53% versus Q1 2020, and our paying ratio is a record high of 9.2% compared with 7.8% for the same period last year. Advertisers are widely turning…

[Operator Instructions] Your first question comes from the line of Alex Poon of Morgan Stanley. Please ask your question.

[Foreign Language] The question I have is regarding advertising business. We have seen continuous acceleration in year-over-year growth for eight consecutive quarters. Could management share with us the drivers behind this growth and how should we think about the growth in the next one to three years? Thank you very much

[Foreign Language] Okay. I'll briefly translate for Ms. Carly Li. So, we think the value of platform's advertising business actually equals the values of the user itself and also accurate MediPharm would be many other platforms out there, they are running a rental or a tourist model, you never know when your user will come, when they will go. So the easiest way is to leverage advertising to quickly achieve monetization and use the money that they make to buy more content. This is the traditional Internet model, but for Bilibili, what we are trying to do is to build a city. We are trying to gather the young users with similar interest, ask them to become residents of the city. We provide different type of consumption scenarios to them to cater their needs, including such as games, live broadcasting, movie and content, and derivative products, and even offline activities, and they will grow fund of the city and even fall in love with it and they will be inviting more friends to join the neighborhood. And for this process, it might start really - probably start really slow, but once the momentum is built, it will accelerate and has great potential. [Foreign Language] So, what does the Bilibili's advertisement potential is look at the residents. We have captured nearly half of the China's young generation. On our platform, the average age of our user is about 22.8 years old, and 86% of our user is aged 35 and below. And our users, about 50% of them live in the first and second-tier city. They are deeply influencing the mainstream ideals, and they are the key driving force for all kinds of consumption, and they are the most wanted cohorts that chased by all advertisers. So, we believe in the…

Your next question comes from the line of Lei Zhang of Bank of America Securities. Please ask your question.

[Foreign Language] Thanks, management, for taking my question. My question is mainly about user engagement. We noticed that some king indicators like DAU versus MAU interaction and types[ph] saw sequential improvements. So, wondering can you share with us what's the churn going forward? And what is your plan to further improve your engagement? Thank you.

[Foreign Language] So, indeed from last year, we see a temporary job for the DAU to MAU ratio. And we have to look into the reason behind it. And the reasons are not - it's not because there is some matrix decline, but for a certain period of time, the growth rate of our MAU exceeded significantly of our DAU. [Foreign Language] So, we think the temporary job is absolutely normal given that last year we have raised our MAU target and we are really focusing on growing our overall users. And during that process, we think this is just a temporary effect given that when the user joins the community, it really takes time for them to become part of them - part of the community. We need time to cultivate user habit and establishing community behavior such as following different content creators, they have to get in touch with the content creator and other users in the community. And if they come to Bilibili for one and specific interest point, they also need time to establish and expand their interest point on Bilibili. So, all of that takes time and there will be some lap during the process. [Foreign Language] So, we think for products at Bilibili, we actually stand a pretty good DAU to MAU ratio in terms of that community product and because we also have very vast content offering. We think during a fast user growth period, a temporary job of the engagement ratio is absolutely normal, and as long as we see the ratio starting to bounce back and we continue to maintain a very fast user growth phase, it should be fine. [Foreign Language] And we'll definitely continue to be very focused on elevating the engagement level, and there are several ways. One is to whether we can help our users to become part of the community a little bit quicker, and the measurement would be help them to connect with more content creators, follow - allow them to follow more content creators that fits their interest, allow them to establish more engagement between content creators and other users. [Foreign Language] And secondly is on our AI-powered recommendation system. We will continue to improve the recommendation efficiency to allow our algorithms to discover more interest points for certain users and to push more relevant content that fits to different users' need. And for that, we will continue to invest in R&D in our algorithm to improve our AI-powered recommendation system. [Foreign Language] So, these above-mentioned points will be our constant areas for improvement.

Your next question comes from the line of Xi Jing Xu [ph] of UBS. Please ask your question.

[Foreign Language] Thank you, management, for taking my question. I have one question. Recently, we see BILI has quite a few investment deals on other game-related companies. What's the reason behind? Are we going to consider more acquisition or investments in this space for coming quarters? Thank you.

[Foreign Language] So, I always say that game is one of the most important business for Bilibili because, for us, it's not only just monetization, it's also a very important component or content and there's just great synergies between our game offerings as well as our video game, space game related video content. And for Bilibili, for this game - regular game business, it's just very natural as long as we started to offer better content, the monetization just happens very naturally. [Foreign Language] So, second of all, we think for game industry, there is still plenty of room for growth, I believe, that in the next few years, and they could be multiple times growth for this segment. So, I personally take great care and put in a lot of efforts in looking into this market. [Foreign Language] And for Bilibili, it's not just game department, it's dealing with or facing the game industry. It's across all business department and it's through our whole company. For example, game-related video content has always been our top three content verticals and for our live broadcasting, game related live broadcasting is our number one content on our platform, and we are also working with majority of the game content developers in this industry, establishing close partnerships. [Foreign Language] And for the game distribution business currently is playing a very important role in our business and it's also contributing very decent portion of our revenue. [Foreign Language] So, why we want to invest in this area? Because we wanted to establish strategic collaborations. Like I mentioned, there is multiple departments that's jointly working in the game space, so the reason why we invest in this area is hoping to further enhance our partnership across different legs of our business. [Foreign Language] So, for example, the investment we made in [Foreign Language] because we see a lot of the synergy and collaboration in terms of game distribution. So, all of the investment that we make has a prior purpose of establishing strategic collaborations. [Foreign Language] And that goes with the same with all our investment in other area. The purpose is hoping to achieve business collaboration and achieve business synergies across different departments.

Your next question comes from the line of Daniel Chen of JP Morgan. Please ask your question.

[Foreign Language] I will translate myself. My question is on the - I would say more on the product side and on the content side. So, as we target to reach 400 million MAU by 2023, just wondering what's our plan in 2021 in terms of product feature, innovation, and content vertical expansion? Thank you.

[Foreign Language] So, Bilibili's growth model is content ecosystem driven and essentially is through our content creator producing more and more high-quality content across different content verticals and attract more users. And what we are - what we have been constantly doing is to view such platform to keep attracting more content creators. [Foreign Language] So, what we have been doing is to focus on the categories that can attract young user, can resonate with young generations, and over the year, we have established unparallel leadership in categories like games, lifestyle, entertainment, knowledge, and digital products. And step by step, we continued to be more and more diversity of content, and more and more high-quality content. As we move forward, we'll be focusing on improving the diversity of that content and continue to let out more high-quality content and to attract more wider range of content creators. [Foreign Language] And moving forward for this year, while we continue to enhance our leader categories such as knowledge and lifestyle-related content, we aim to further expand our content offering in categories like relationship, automotive, anime-related, fitness, and health. Those categories that fits the Gen Z+ interest points and also open up us to more wider demographics.

Your next question comes from the line of Jialong Shi of Nomura. Please ask your question.

Thanks. Good evening, management, and thanks for taking my question. So, my question is about the live broadcasting service. Can you give us some colors on the growth trends for live broadcasting service? We saw industry-wide slowdown in this live broadcasting revenue since last year. I just wonder what is the outlook for the live broadcasting service in this year and for the next few years? [Foreign Language]

[Foreign Language] So, two years ago, I forecasted our live broadcasting business will keep a very high growth rate. The reason why I said that is because I believe Bilibili's live broadcasting has always been a part of the PUGV content ecosystem. It's a natural extension of video content. And as a matter of fact, live broadcasting should be part of the video product. [Foreign Language] So, once again, that live broadcasting is a natural extension of Bilibili's overall content ecosystem. We don't need to deliberately expand the content categories. We don't necessarily have to pay extra high price to attract live broadcasting host. All of the content offering is growing out of our content ecosystem is based on our content creators, is based on the popular content on our video platform. [Foreign Language] So, like I mentioned earlier that our - on our video platform, game is our top three contemporary hosts and it's a number one contemporary host on our live broadcasting business. And for the game categories, the live broadcasting host and the video content creator has 40% overall. [Foreign Language] And lifestyle and entertainment-related content is also very popular and entertainment live broadcasting is also our second most popular live broadcasting content. [Foreign Language] In many cases, for Bilibili, our content creators is our live broadcasting host and the video content, it's a neutral up beneficial relationship. We think the live broadcasting can help our content creators to establish better interaction with their followers and their video submission can feedback to their live broadcasting traffic. And on the other hand, we think live broadcasting is a good revenue avenue for content creators to monetize their traffic. So, on Bilibili live broadcasting and video, they are born to get - born to be together as they have…

And that concludes the question-and-answer session. I would like to turn the conference back to - over to management for additional or closing comments.

Thank you, once again, for joining us today. If you have further questions, please contact me, Juliet Yang, Bilibili's Senior IR Director, or TPG Investor Relations. Our contact information for IR in both, China and US can be found on today's press release. Have a great day. Bye-bye.