Hello, everyone, and thank you for joining ICE's second quarter 2025 earnings conference call. The company's results were released earlier today and are available on the company's Investor Relations website at ir.ike.com. On the call today are Mr. Lu Gong, our Founder, Director and CEO, Mr. Jun Wang, our CFO, Mr. Xiaobui Wang, our CCO, Chief Content Officer, Mr. Liu Qiao Zhuan, Senior Vice President of our Membership Business, and Mr. Shang Kai Yang, Senior Vice President of Movies and Overseas Business. Mr. Gong will give a brief overview of the company's business operations and highlights, followed by Jun Wang, 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. ICE does not undertake any obligation to update any forward-looking statements except as required under applicable law. I will now hand over to Mr. Gong. Please go ahead.

Hello, everyone, and thank you for joining us today. Throughout the second quarter and the summer season, we delivered a diverse lineup of content, the current leadership in total drama viewership market share according to Enlightened. Our robust offerings were highlighted by three original blockbuster dramas that generated IG popularity index scores of over 10,000, namely Field, Bingjianxian, Coroner's Theory, Caoxilu, and the Thriving Land, Shiwanwu. Among them, Field and the Coroner's Diary resonated especially well with female viewers, while the Thriving Land captured the hearts of audiences of all ages and genders. These blockbusters further solidified our dominance in both the female and realistic genres. The performance of our variety shows was equally impressive. In the summer season, iQIYI accounted for four of the top five spots in our Enlightened total viewership list. The highly anticipated return of our flagship IP, The King of Stand Up Comedy Season two, and the season and the wrap of China 2025, Xinhua Chang, generated impressive viewership with The King of Stand Up Comedy Season two commanding the industry's highest viewership market share in its category in the summer. The strong performance of our premium content drove our key operating metrics in the summer, reflecting our commitment to delivering high-quality, diverse stories while continuing the user experience across our platform. Building on the strong momentum of our content ecosystem, we are proactively exploring new opportunities to foster sustainable long-term value creation and achieve meaningful progress in our experience business and overseas business. Let me begin with our experience business. We are focusing on two key areas: IP-based consumer products and offline experiences. We are leveraging our extensive and unique IP collection to enhance our competitive edge and tap into the booming IP merchandising market. In the first half of the year, our self-operated…

Thanks, Mr. Gong, and hello, everyone. Let me walk you through the key numbers for the second quarter. In the second quarter, the total revenues were RMB6.6 billion. The membership services revenue reached RMB4.1 billion, down 9% annually, primarily due to our lighter content slate compared to the same period last year. The online advertising revenue was $300 million, decreased by 13% annually. During the quarter, some advertisers adjusted their advertising and promotion strategies in response to macro pressures. The accounts and distribution revenue reached RMB436.6 million, down 37% annually, primarily due to the decrease in other transactions. Other revenues increased by 6% annually to RMB829.3 million. Moving on to costs and expenses. We have maintained a disciplined cost and expense management. The accounting cost was RMB3.8 billion, representing a saving of 8% annually, primarily due to a lighter accounted slate in the quarter. And the total operating expenses were RMB1.4 billion, representing a saving of 3% annually. Turning to profits and cash flows. The non-GAAP operating income was RMB58.7 million. The non-GAAP operating income margin was 1%. As of the end of the second quarter, we had cash, cash equivalents, restricted cash, short-term investments, and long-term restricted cash included in prepayment and other assets, totaling RMB5.1 billion. In addition, the company had a loan of $522.5 million to PAG recorded under amount due from rogue parties. We continue to improve our capital structure. In the second quarter, we repurchased a total principal amount of $85 million of the 2028 notes for cash and the outstanding principal balance remaining for the 2028 notes is $208 million as of the end of the second quarter. As we continue to optimize our debt structure, our net interest expense decreased by 33% compared to the same period last year. For detailed financial data, please refer to our press release on our IR website. Now we will open the floor for Q&A.

Thank you. Your first question comes from Maggie Yeh with CLSA.

Regarding the recent change of policy in China's long-form video industry, could management share with us your thoughts on the potential impact on the company? Thank you.

The introduction of the new policies represents a significant positive development for the overall long-form video industry, which we and the entire industry welcome and fully support. These policies bring benefits across multiple aspects. First, the time cycle from content production and review to broadcast can be effectively shortened, allowing content to reach audiences more quickly. This not only improves scheduling stability but also ensures that the content aligns more closely with current social sentiment and resonates with the audience. Additionally, it also enhances the efficiency of the company's capital utilization. Second, these policies enhance the flexibility of content creation, providing creators with greater creative freedom. This, in turn, can significantly boost the content appeal and promote greater content diversity. Third, the policies could strengthen the synergy between online video platforms and traditional TV networks. More content can benefit from simultaneous online and linear TV broadcasting, expanding distribution channels for quality production, stabilizing content distribution prices, and enhancing the reach and influence of content. This is beneficial for both online video platforms and traditional broadcasters. Last but not least, after the release of these new policies, it is sending a strong signal and that signal can attract more talent and capital into content production, driving the healthy and vigorous development of the entire industry. Thank you.

Your next question comes from Zhiking Zhang with CICC.

Thanks, management, for taking my question. You mentioned a great number of hit dramas and variety shows during the summer seasons in your prepared remarks. We have also noticed that recently, Austin Stone has achieved the ICT popularity index of over 10% and received excellent reviews. Could the management provide an overview of the content performance this summer? Additionally, considering the impact of the new regulations, what's your future content strategy? Thank you.

The CEO is taking the first part of the question. He is commenting on the new policies. After the release of the policies, I think from the company standpoint, we will promote innovation in different aspects of content production. For example, seasoned multi-season content and also different formats of innovative dramas can be produced in the future. And then next, we'll invite our Chief Content Officer, Xiaobui Wang, to take the rest.

During this year's summer season from June to August, we delivered outstanding performances across drama, variety shows, film, and micro dramas. Three of our original drama blockbusters, namely Field, Coroner's Diary, and Describing Lines, all achieved ITE popularity index scores of over 10,000. For micro drama, How Dare You hit a new milestone for ITE Popularity Index score. And for variety shows, returning flagship titles such as The King of Stand Up Comedy Season two and The Wrap of China 2025 led the market. Last but not least, on the film front, the theatrical release, The Shadow's Edge recently surpassed RMB300 million in box office revenue and the third-party market forecast predicted total box office revenues to exceed RMB1 billion. In the future, benefiting from the new policies for the industry, we aim to strengthen our content strategies across different categories. For the long-form dramas, we will continue to focus on premium productions with high commercial value. And like CEO Lu Gong mentioned earlier, not only will we focus on innovations for long-form video dramas, but we will also improve our innovations for short dramas as well. And also for long-form video dramas, we will leverage our five major drama theaters to comprehensively cover key content genres such as suspense, romance, realistic, and comedy. For the production side, we'll focus on creating innovative contemporary storylines with tighter pacing and greater viewer appeal. In terms of content promotion, we'll place a stronger emphasis on creativity, buzzworthiness, and emotional resonance, adopting strategies that better engage younger audiences. For micro drama, our approach for premium quality production is expected to attract more users who previously did not watch micro dramas to the content genre. We'll continue to apply our long-form drama development expertise, expand collaborations with top creators, and produce more flagship titles while exploring serialized formats. On the monetization side, beyond our existing membership and free models, we will actively explore opportunities such as content distribution, branded content integration, and IT merchandising development. Beyond dramas, we're also striving for breakthroughs across different other categories. For variety shows, our focus remains on the flagship multi-season IPs, while continuing to explore innovative content formats. For films, we're working on a comprehensive framework to strengthen our original film projects through our three strategic initiatives, namely blockbuster project, Sleeper hit project, and an immersion film project. These efforts will expand our market share in online video online movie streaming, enhancing our influence in theatrical releases, and strengthen synergies between IT's online and offline platforms. And for animation and children's content, we will continue to improve our original production capabilities, focusing on high-quality domestic animations while enhancing the monetization of children's content. Thank you.

Your next question comes from Jijie Zhu.

I will translate the question myself. This year, we have seen that iQIYI is preparing for the offline theme park, at the same time selling related iQIYI products during the broadcasting of some top key dramas. Could you share about these strategies in the future? And how do you think of this market size? Thank you.

For IT's experience business, we have two key areas: IP-based consumer products and offline experiences. For IT consumer products, in the past, we fully operated in IT licensing, but the percentage of GMV is relatively low in the whole market. So starting this year, we're now transitioning to a self-operation, building a consumer product system that includes planning and design, manufacturing, and sales. Right now, we're starting to test the waters starting from the collectible cards. And then also we're testing the waters for different sales channels. So we will expand those efforts in the future. And for the offline experiences, overall, we take an asset-light approach to this strategy. It mainly has two parts: the immersive theaters, which now is a licensed model that we operate with different stores, now has over 30 cities, have more than 50 stores. And also for IG events, we also take the asset-light approach and we support in terms of content management and technology. For IT land, in addition to the games and experiences based on our IPs, we also have the derivative products, the IT consumer goods that we'll be selling in the stores. So collectively, it will create synergy for our overall experience business. Right now, we have the Yangzhou and Otto, Taifeng locations are in development. And by the end of this year, probably we'll have more locations to be announced. Thank you.

Your next question comes from Thomas Chong with Jefferies.

Good evening, management. My question is about our debt management plan. Can management share more color about this? Thank you.

Thanks. As you probably noticed, for our debt, we have two parts: overseas U.S. Dollars and domestic RMB. And as of the end of the second quarter, you will notice that the outstanding balance for the 2028 convertible notes is only $208 million. And currently, the company has sufficient cash to meet the debt obligation if the CP holders decide to provide to us. In terms of the domestic debt denominated in RMB, you probably noticed in the past few quarters, the long-term loan versus short-term loan has significantly improved. Currently, the portion is like fifty-fifty in terms of our outstanding loans as a whole. And so overall speaking, the capital structure now is pretty healthy enough to support our daily operations and also the long-term development and growth in the future. Thank you.

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

Thank you everyone for joining the call today. And if you have any questions, do not hesitate to contact us. See you next quarter. Thank you. Bye bye.

Thank you.

Thank you.

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