A：The key financial results for the second quarter of 2026 include a total revenue rise of 8% to RMB 7.9 billion, an increase in gross profit of 10% year over year to RMB 2.9 billion, a gross margin expansion to 37.2%, net profit growth of 55% year over year, and an adjusted net profit of RMB 704 million with an adjusted net profit margin of 8.9%.

A：AI is contributing to the company's strategy by helping creators produce great content faster and by making content recommendations more efficient. The company's focus on AI investment is to improve content and efficiency without losing sight of its community roots and unique advantage, and to strengthen the flywheel of community and monetization for users, creators, and shareholders.

A：AI tools are impacting content creation and user experience by enabling creators to produce high-quality content much faster and by improving content understanding for more efficient recommendations. AI also catalyzes content consumption, as evidenced by a 24% year-over-year increase in watch time for music content through AI-driven creation. Additionally, AI has led to a 28% year-over-year increase in daily video submissions.

A：The core pillars of the company are content, community, and commercialization. In terms of content performance, total time spent on the platform expanded by 14% year over year, watch time from videos over five minutes grew by 18% year over year, and there was steady growth across core and emerging interest-based content categories such as game-related and general entertainment content.

A：The company's approach to content distribution and monetization for creators has evolved through refined algorithms that match quality content with interested users, resulting in a 30% year-over-year growth in the number of creators with over 1,000 followers. Furthermore, average creator income increased by 21% year over year in the second quarter due to diverse monetization channels.

A：The unique aspect of the company's community that helps users find a sense of belonging is its authentic human connections, which are considered rare and valuable in the age of algorithmic content. Users connect over shared passions, express their feelings through comments and bullet chats, and find a genuine sense of belonging in the community.

A：The company's signature events, such as Vili World and Vili Macro, contributed to community engagement by bringing the community offline, gathering more than 400,000 fans for one of the largest offline ACG Expos in China. This event is indicative of the company's community's vitality and passion, emphasizing the authentic, energetic, and deeply connected nature of the community off-screen.

A：Advertising revenue increased by 28% year over year to RMB 3.1 billion in Q2, marking the company's 14th consecutive quarter of 20% year-over-year growth. AI is contributing to this growth by scaling advertisers, increasing revenue from the AI vertical more than double year over year, improving ad efficiency through a better understanding of product information, creative assets, user interests, and conversion goals, and extending AI across creative production and campaign operations.

A：The company is extending monetization across user scenarios and devices by focusing on high-intent user scenarios such as search, which saw a year-over-year doubling of revenues in Q2. Monetization is also expanding across additional scenarios including PC, smart TV, and the watch page, which contributes to the company's vast commercial potential as it continues to monetize the entire user journey.

A：The main reason for the decrease in game revenues was attributed to 'high days,' a reference to the short-term impacts of timing and specific events, as 'San Mo' sanguo moin Xia said' did not directly translate to 'high days.' The actual performance of 'San Mo' in its latest season was positive, ranking number 2 on China's iOS top roasting chart.

A：The planned global launches for the company's new games include the self-developed simulation game 'Lumi Master SOA' on September 17, a new licensed SLG title 'San Wang Zang guozhi Wang Gao tianxia' in Q4, and three new titles launched at Filipino World: 'Ragnarok Online 3,' a m.p.g. based on a globally recognized IP, 'Frank Event,' and a card game 'he got Ta Hao,' all three to be released next year.

A：In the second quarter, Vas (Virtual Services) revenues grew 5% year over year to RMB 3.0 billion. The live broadcasting business maintained steady performance, and operations were refined to ensure stable and sustainable growth with improved margins. The number of premium members reached 25.7 million, up 9% year over year, with around 80% on annual or auto renewal plans. Fan charging also showed momentum, with revenue up nearly 50% year over year.

A：MSCI ESG's upgrade of the company's ESG rating to 'Aa' from 'A' recognizes the ongoing progress in using technology and culture to create meaningful social impact. It signifies the company's commitment to ESG principles and its efforts to foster a healthy culture and community for China's youth.

A：The financial highlights for the second quarter, as per the press release, include total revenues of RMB 7.9 billion, a year-over-year increase of 8%. The breakdown of total revenues by revenue stream was approximately 39% advertising, 37% VAF, 18% mobile games, and 6% from IP derivatives and other businesses. Cost of revenues increased by 7% year over year to RMB 5.0 billion, gross profit increasing around 10% year over year to RMB 3.0 billion with a gross margin of 37.2%, and total operating expenses up 7% year over year to RMB 2.6 billion.

A：As of June 30, 2026, under the new 200-million-U.S.-dollar share repurchase program approved by the board, a total of 1.9 million shares had been purchased for a total cost of 31 million U.S. dollars. From the beginning of the year through the call date, a total of 5.8 million shares had been purchased for a total cost of 118 million U.S. dollars.

A：The two main factors behind Divide's ability to curate high-quality content are: 1) they have a talented group of content creators who believe in the community and the platform's ability to promote high-quality content, and 2) they have a very engaging community with users who appreciate and select high-quality content, helping to define and promote it among millions of daily video submissions.

A：The key performance indicators for user interaction on the platform include monthly users' interaction, which was over 17 billion in the second quarter, showing a year-over-year growth of 9%, and a faster growth rate of 67% year over year. These high levels of real human interaction help the platform to better identify high-quality content.

A：The speaker believes that AI tools will exponentially increase the supply of video content and that only high-quality content will have viewership in the AI era. Low-quality content is not expected to survive, while talented content creators will benefit from the evolution of creation tools. AI is also enhancing the creative outcomes of content creators, evidenced by a 28% increase in monthly content submissions in the second quarter.

A：In the AI era, the speaker is focusing on two main aspects: content creation and content distribution. For content creation, the speaker is paying close attention to how content creators with high intelligence and creative power are using AI to turn their ideas into actual work, which is beneficial for those who create high-quality content. For content distribution, the speaker is leveraging AI to comprehend and recommend longer, more comprehensive content, leading to a 7% year-over-year growth in video观看量 and a 14% year-over-year increase in user time spent. The use of AI algorithms has also contributed to a 30% year-over-year increase in the number of creators with over thousand followers.

A：Despite macroeconomic pressure on consumer spending, the advertising business has delivered a strong performance with revenue reaching 3.13 billion, marking a year-over-year growth of 28%. This resilience is attributed to the market recognition of the user base and community value. The business has also seen success in vertical industry strategies and ad scenario expansion. In the second quarter, there was a 72% year-over-year growth in user time spent on AI-related knowledge content searched, making it the largest AR learning video community across the internet.

A：The impact of AI on the advertising sector is significant as the AI sector grew by over 100% year over year, driven by a strong match with AI target audiences. The business is expected to continue seeing demand from various clients across different stages due to AI being a major long-term trend. For the second half, the focus is on advertisers demanding higher conversion efficiency in the short term while also seeking channels for sustained long-term impacts to build brand value. The top 5 ad verticals in the second quarter were consumer electronics, internet services, e-commerce, automotive, and other retail, with a 14% year-over-year growth in the total advertiser base.

A：The significance of user age and purchasing intent for the company's advertising model lies in the fact that the average age of liability users is 26.5 years old, making them prime consumers in current Chinese society. They have a strong purchasing mindset, preferring to buy products recommended by the platform or content creators. In the second quarter, these users were the main driver of consumption and were willing to purchase products recommended by the platform or content creators.

A：The company's multi-screen, multi-center strategy contributes to ad revenue by allowing users to seamlessly interact with ad scenarios throughout their day, from listening or watching content during commute to casting content at home or using the app during e-learning. This strategy has led to a 50% increase in revenue from multi-scenario placement in the first half of the year.

A：The 'Three Kingdoms' strategy team's game has been launched for two years and is now in a harvesting season of urban games with several exciting titles lined up for launch. However, specific details about the most anticipated game or the launch timing were not provided in the transcript.

A：The first title in the company's pipeline is Loma Loy Master, a self-developed casual game involving pack catching up and simulation gameplay, which received positive feedback during its global test in May. The global launch is planned for September 17 next month.

A：The second title in the pipeline is a strategy game officially licensed from the classic '3 Kingdoms' IP, targeted at a more mature audience with a strong interest in the IP and both visual style and gameplay. The game has been significantly upgraded compared to the classic IP and aims to complement Symbol in both gameplay and target audiences, strengthening the company's presence in the strategy genre.

A：The new pipeline introduced in the Digital World is titled 'Three Kingdoms: The Raves of Time', another self-developed title focusing on the tactical RPG genre, based on a classic manga IP with a history of over 20 years.

A：The goal for the classic Se game is to make it the last strategy game that can accompany gamers for life. The strategy will remain focused on the vertical genre, aiming to either become the best or first in its segment, and ensure every title has a long life cycle.

A：The company plans to improve user engagement and retention in the game by launching game season 2 in October, focusing on improving long-term retention and adding more interactive, fun gameplay, including a light casual poker game and an immersive core strategy game.

A：The company's approach to utilizing AI is to focus on three core business areas: video understanding, video distribution, and video creation. Investments in AI are designed to engage with and enhance the company's core business.

A：AI is helping the company understand content by providing better insights into video library content and user interests. This enhances user experience and commercialization efficiency by improving video understanding, search, and recommendation capabilities, as well as matching users with content that meets their needs.

A：AI is enabling content creators to produce high-quality content by unleashing their creativity and productivity. AI tools allow individual creators to create professional-grade content that can reach tens of millions of viewers, and it's inspiring new types of content across various formats, such as animation and film.

A：The company has made significant progress in its AI investment strategy, having already achieved 70-80% of its goals in the first half of the year, including server procurement and capital expenditure priorities.

A：The company views AI as a key driver for future profit improvement. It is confident in maintaining healthy revenue growth and continuously improving operating efficiency, striking a balance between AI investment and commercial monetization. The company aims to realize sustainable and healthy trading going forward.

A：The company's stance on capital allocation is to balance investments in AI with commercial monetization. As for shareholder returns, the company has executed share repurchases and has a new program approved, indicating a commitment to returning value to shareholders in the long term.