DouYu International Holdings Limited (DOYU) Q3 2020 Earnings Report, Transcript and Summary

Good morning and good evening, ladies and gentlemen. Thank you, and welcome to DouYu International Holdings Limited's Third Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note today's event is being recorded. I will now turn the call over to the first speaker today, Ms. Mao Mao, Vice President of Capital Markets of DouYu. Please go ahead, ma'am.

Thank you, operator. Hello, everyone. Welcome to our third quarter 2020 earnings call. Joining us today are Mr. Shaojie Chen, Chairman and Chief Executive Officer; Mr. Mingming Su, Chief Strategy Officer; and Mr. Hao Cao, Vice President of Finance. You can refer to our third quarter of 2020 financial results on our IR site at ir.DouYu.com. You can also check a replay of this call when it becomes available in a few hours on our IR website. Before we start, please note that this call may contain forward-looking statements made pursuant to the safe harbor provisions for the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on management's current expectations and observations that involve known and unknown risks, uncertainties and other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or expectations implied by these forward-looking statements. All forward-looking statements are expressly qualified in their entirety by the cautionary statement, risk factors and details of the company's filings with the SEC. The company undertakes no duty to revise or update any forward-looking statements for selected events or circumstances after the date of this conference call. Now I will speak on behalf of our Chairman and CEO, Mr. Shaojie Chen. Overall, our financial and operational results maintained their stable growth rates in the third quarter of 2020, with our total net revenues increasing by 37.0% year-over-year to RMB 2.65 billion. We also achieved the seventh consecutive quarter of positive non-GAAP net income. At the same time, our average mobile MAU count maintained its robust growth trajectory, increasing by 14.4% year-over-year to 59.6 million while our quarterly paying users also grew by 12.7% year-over-year to 7.9 million during the quarter. Despite the lingering effects of COVID-19 and broader macro uncertainties throughout the country, users continue to flock our eSports-centric game live streaming platform for its vibrancy and enjoyment. Our total average MAUs reached 194 million during the third quarter of 2020, which was attributable to 5 factors. First, by strengthening our collaboration with Tencent Penguin, we added more users, especially those users on the PC platform. Also our broadcast of large-scale import tournaments such as the LPL 2020 Summer Tournament helped expand our user base while engaging those previously inactive users at the same time. In addition, new game launches attracted a wave of brand new users to our platform during the third quarter. Besides, the summer holiday boosted students' viewership and contributed to the positive seasonality impact. Above all, our continuous refinement of platform operations has enabled us to seize opportunities emerging from eSports events and tournaments and helped us to achieve steady growth in all of our operating metrics. For our content ecosystem, we continued to enhance our game-centric eSports platform, increase the content rep and depth in every segment of our platform, develop a variety of innovative content format and expand our coverage up and down the eSports industry value chain. During the quarter, we achieved superior results in investing high-quality eSport teams. For example, our sponsored League of Legend teams, such as CES, LGD and JDG all advanced to the LPL 2020 summer playout series. Notably, CES won the LPL 2020 summer championship. Moreover, our newly signed PUBG COC emerged as the dark horse team of 2020 and won the runner-up place in its inaugural participation in this year's PCL summer tournament. Meanwhile, we further deepened our collaboration with Tencent and other game developers and publishers and successfully broadcasted more than 50 large-scale official eSports tournaments during the quarter. For example, we obtained the exclusive broadcasting rights for Omega League, which was one of the largest professional championship for DOTA 2 in the world, thus further augmenting our platform's brand influence. In addition, we self produced more than 50 high-quality eSports tournaments during the period. Most notably, we organized the tenth consecutive production of our proprietary eSports event, Golden Grand Tournament, which has grown into one of the largest PUBG tournaments in China. As we continued to innovate our business model, we improved our user experience significantly by launching the beta version 2.0 of cloud game, which has a brand-new UI design as well as optimize further functionality and compatibility. Going forward, we plan to explore further into cloud game. Also, as we almost completed the design and development of the mobile application for prerecorded game videos, we were able to rotate prerecorded game broadcast with livestream game content, provide a more diverse supply of content to our platform, expand our coverage of various user scenarios and stimulate our user engagement. On the streamers front, we continue to improve our efficiency in managing and monetizing the mid-tier and long-tail streamers during the period. We are glad to see that it has become a norm for our partner talent agencies to proactively uncover and grow new streamers. Also, revenue contribution from our mid-tier and long-tail streamers has been increasing continuously. In addition, by recruiting the new nongame streamers to our platform, we have been able to cover a broader array of user demographics. Looking ahead, we shall continue to execute our game content-centric growth strategy, engage more game users through diverse content, capture user addition opportunities borne out of new game title launches, satisfy a wider range of new user viewing demand through segmentation of nongame content, proactively explore new business models and invest in those areas aligned with our long-term strategy. In terms of monetization, as we continue to refine and optimize our interactive product functionality, we were able to grow our quarterly paying users by 12.7% year-over-year to 7.9 million and our paying ratio to 4.1% during the quarter. Meanwhile, our ARPU also increased by 25.2% year-over-year to RMB 297. In addition to solidifying our existing users' paying habit, we rolled out additional innovative initiatives to add more paying users and lay a solid foundation for our sustainable growth in both paying users and overall revenue. Looking ahead, we will continue to explore new product functionalities and revenue models, enhance our platform's overall operational efficiency and advance the monetization capabilities for every platform segment or even every live streaming room. At the same time, we will bolster our management in the design and production of large-scale events to promote monetization consistency. On the research and development front, we continued to invest in our technology development capability during the quarter with our support for the display functions of the more efficient video compression technology. As you can see, our users can enjoy videos of the same video quality with only half of the previously required bandwidth, thus, leading to a smoother viewing experience, especially for our mobile users. As we continue to implement the display functionality of Edge 255 across our platform, we foresee more room to optimize our bandwidth path. In addition, we rolled out the real-time playback function at a large scale on our platform by leveraging AI technologies to accurately tap key game moments such as [ kills and team blasts ]. We enabled our users to replay precisely the moment of their choice, thus significantly improving their viewing experience. On the globalization front, we continue to increase in our investment and exploration in the Japanese market as we made further improvements to the product functionalities and content varieties of our Japanese live streaming platform, Mildom. It was able to maintain its steady growth trajectory. In summary, during the quarter, we sustained our continued growth and exploration in our user base expansion and content ecosystem development. Looking ahead, we plan to further build out our game content-centric platform, deploy resources both up and downstream the eSports industry value chain, bolster our operational performance, ramp up our R&D efforts and optimize our user experience. Furthermore, we remain committed to upgrading our platform's monetization capabilities, improving our operating efficiencies and enhancing our financial performance over the long run. On October 12, 2020, we entered into a merger agreement with Huya. We look forward to working together with Huya by providing our users with high-quality content and services and creating long-term value for our shareholders in the future. With that, I will now turn the call to our Vice President of Finance, Mr. Hao Cao, to go through the details of our financial performance in the third quarter.

Thank you, Mao Mao. Hello, everyone. During the third quarter of 2020, in response to a lower than expected sales performance of certain major fan events, we took decisive action, shifting our attention in the second half of the year to the development of content and acquisition of broadcasting rights for eSports game. In addition, we also maintained our focus on new and innovative ways to further optimize user streamer interactions on our platform. As a result, our total revenues in the third quarter of 2020 increased by 37% to RMB 2.55 billion from RMB 1.86 billion in the same period of 2019, with live streaming revenues in the same period increasing by 41.3% year-over-year. Meanwhile, we also improved our net income in the third quarter of 2020 to RMB 59.6 million from a net loss of RMB 165.4 million in the same period of 2019, while adjusted net income in the third quarter of 2020 increased by 36.8% to RMB 98.7 million from RMB 32.2 million in the same period of 2019. Now please allow me to provide you with some more details regarding our key financial metrics. Total net revenues in the third quarter of 2020 increased by 37% year-over-year to RMB 2.55 billion with RMB 2.35 billion in live streaming revenues and RMB 197.8 million in advertising and other revenues. Live streaming revenues in the third quarter of 2020 increased by 41.3% to RMB 2.35 billion from RMB 1.66 billion in the same period of 2019. This increase was primarily attributable to the improved pay habit of existing users as well as our successful attraction of new paying users, resulting from our continued requirement of event mechanisms. As a result, paying users in the third quarter of 2020 increased by 12.7% to 7.9 million from 7 million in the same period of last year. In addition, improvements made to interactive features also helped to raise our user payment frequency on our platform and drive the growth of year-over-year basis. Advertising and other revenues in third quarter of 2020 increased to RMB 197.8 million from RMB 196.1 million in the same period of 2019, which was mainly driven by ongoing growth of our brand recognition and the corresponding increase in demand for streamers, integrated advertising and promotion solutions. Cost of revenues in the third quarter of 2020 increased by 41.2% to RMB 2.18 billion from RMB 1.54 billion in the same period of 2019. More specifically, revenue sharing fees and the content costs in the third quarter of 2020 increased by 48.9% to RMB 1.95 billion from RMB 1.31 billion in the same period of 2019. The increase in revenue sharing fees and the content costs can generally be explained by the following drivers: first, during the quarter, our revenue sharing fees increased, which was mainly due to the increases in live streaming revenues in the same period and increased incentives given to streamers during certain major fan events; second, our content cost increased, which was mainly driven by 3 factors: first, we continue to engage with quality streamers abroad to expand our footprint in overseas markets, especially in Japan; second, we continue to focus on leveraging our platforms in eSports-related content; and three, we purchased additional live streaming rights for eSports games in the second half of 2020, which was previously delayed in the first half of 2020 as a result of the outbreak of COVID-19. Bandwidth costs in the third quarter of 2020 increased by 12.1% to RMB 169.1 million from RMB were RMB 150.8 million in the same period 2019. The increases to bandwidth costs were mainly driven by increases in both mobile user growth and total user engagement, partially offset by the efficiency improvements resulting from technical upgrades. Gross profit in the third quarter of 2020 increased by 16.6% to RMB 369.4 million from RMB 316.8 million in the same period of 2019. Gross margin in the third quarter of 2020 was 14.5% compared to 17% in the same period of 2019. Now turning to our operating expenses. Sales and marketing expenses in the third quarter of 2020 decreased by 7.5% to RMB 160.3 million from RMB 173.2 million in the same period of 2019, mainly due to the decrease in share-based compensation expenses recognized in the third quarter of 2019 following our IPO. Research and development expenses in the third quarter of 2020 decreased by 8.6% to RMB 109.6 million from RMB 119.9 million in the same period of 2019. This decrease was primarily due to the decrease in share-based compensation expenses recognized in the third quarter of 2019 following our IPO, which was partially offset by the increase in expenditures for the research and development of our new products as well as the increased headcount of overseas research and development personnel during the third quarter of 2020. General and administrative expenses in the third quarter of 2020 decreased by 59.6% to RMB 94.2 million from RMB 232.9 million in the same period of 2019, mainly as a result of the reduced share based compensation expenses recognized in the third quarter of 2019 following our IPO, which was partially offset by the increase in professional service fees. The amount of share-based compensation expenses allocated to operating expenses in third quarter of 2020 was RMB 33.2 million compared to RMB 228.2 million in the third quarter of 2019 and RMB 33.9 million in the second quarter of 2020. Operating income net in the third quarter of 2020 was RMB 32.5 million compared to RMB 11.8 million in the same period of 2019. Adjusted operating income in the third quarter of 2020, which excludes share-based compensation expenses increased by 130.7% to RMB 31.2 million from RMB 30.8 million in the same period of 2019. Net income in the third quarter of 2020 was RMB 59.6 million compared to a net loss of RMB 165.4 million in the same period of 2019. Adjusted net income in the third quarter of 2020, which excludes share-based compensation expenses, share of loss in equity method investments and impairment loss of investments improved to RMB 98.7 million from RMB 72.2 million in the same period of 2019, implying an adjusted net margin of 3.9%. For the third quarter of 2020, basic and diluted net income per ADS were RMB 0.27 and RMB 0.26, respectively, while adjusted basic and diluted net income per ADS were RMB 0.39 and RMB 0.39, respectively. As a result of uncertainties surrounding the current modes of infection, which we believe could potentially affect our views on both operational conditions as well as the market, we will not provide guidance for the fourth quarter of 2020. As we advance throughout the remainder of 2020 and beyond, we remain committed to improving our monetization capabilities and operating efficiencies. At the same time, we also plan to continue upgrading our user experience, diversifying our platform offerings and building the growth of our international initiatives to capture additional market share in selected overseas markets. This concludes our prepared remarks today. Operator, we are now ready to take questions.

[Operator Instructions] And today's first question comes from Daniel Chen with JPMorgan.

[Foreign Language] I have a housekeeping question on the merger deal with Huya. So how do DouYu and Huya arrive at 10 ADS in exchange for 7.3 ADS of Huya? And what are the major process in the future for the merger deal? And which we think we receive from the financial release that will happen in the first half of '21?

[Foreign Language]

[Interpreted] I'll translate the response to English. Regarding the question on the merger, both Huya and DouYu have established their own special committees composed of independent directors, and with assistance of financial advisers and legal counsel, both special committee conducted due diligence on their respective company's accounting, tax, business operations, legal and other relevant matters and carefully evaluated the financial forecast and valuation and engaged in the negotiation of merger agreement on behalf of their respective companies. So on this basis, both companies' independent financial advisers have provided the special committee with their fairness opinion on the share exchange ratio. And based on the special committees' recommendation, both Huya and our Board of Directors approved the merger agreement.

[Foreign Language]

[Interpreted] Regarding the key next step, a few hours ago, we have filed a Form S-4 with the SEC and is currently waiting for review and approval, which is a form for informing issuers in relation to M&A transactions. It serves as a registration statement for Huya's newly issued stock, which also includes a proxy statement for DouYu to solicit votes from its own shareholders at the upcoming shareholder meeting. So Form S-4 also contain other crucial information related to the merger. And in the meantime, we have submitted a form 13E-3 to the SEC for its approval, which is an application form for delisting and privatization. After getting this approval on F4, we will hold an extraordinary general meeting to vote on this merger. And once the number of votes for the merger reach 2/3 of those votes presented at the meeting, the merger will be considered approved by our shareholders. And regarding the timetable, we don't have a definitive timetable yet, but all parties are working towards to finish or close the transaction.

Our next question today comes from Alex Liu with China Renaissance.

[Foreign Language] So first question regarding the proposed merger, could you share with us where are we going to see the synergies on both revenue and cost side going forward? And the second question is that I notice our bandwidth cost was up slightly sequentially this quarter. What are the main reasons? And how should we think about this item in the longer term?

[Foreign Language]

[Interpreted] I'll translate for Mr. Chen. So due to the fact that the merger has yet to close, we have not reached a conclusion on the potential synergy effects we could achieve from the merger, and neither have we quantified these synergies. But from a higher level, we believe there are a number of areas that we should explore for the synergies. First of all, users and revenue, we believe the content of mobile and PC game from respective platforms are complementary to each other, and the merger should result in more comprehensive content coverage to further improve the depth and breadth of the consolidated content ecosystem to further boost user traffic and user engagement. And secondly, from cost perspective, we think the merger will create a better economy of scale on the content cost, for example, streamer's signing bonus. And certainly, we think there could be further synergies to be achieved from other operating expenses, such as G&A, R&D and IT infrastructure expenses. And in the future, we believe that both platforms, plus Penguin, will be able to leverage their respective leading advantage on gaming content and strengthen our joint cooperation to develop more innovative user interactions, content formats and monetization methods.

[Foreign Language]

[Interpreted] Regarding your question on the reason we are seeing a decreasing trend on the bandwidth cost or an increasing trend on the bandwidth cost on a quarter-over-quarter basis. In the third quarter, bandwidth costs increased slightly due to the fact that we have seen increased user traffic and higher yielding engagement as well as more intensive tournaments during the period. But this increase was partially offset by our video coding technology, which helped us to achieve more efficient bandwidth usage in the quarter. And we expect the bandwidth cost in the fourth quarter of 2020 to increase slightly on a sequential basis due to more eSports tournaments during that period.

Our next question today comes from Lei Zhang with Bank of America Securities.

[Foreign Language] My first question is about the competitive landscape. Could you share with us your update view on the competitive dynamic in recent quarters? And do you see any change in game streaming industry after our merger with Huya? Secondly, we noticed that some of our shop video peers are also doing like shop all video and e-commerce streaming. So can you share with us some updates on your game video and e-commerce live streaming business? And another housekeeping question on OpEx, what are the main reason of the increase of forecast in the third quarter? And how should we look at the OpEx trend in the next 1 or 2 quarters?

[Foreign Language]

[Interpreted] Okay. I'll translate for the response to the first question. Regarding the competitive landscape, we have not seen significant change since last quarter we speak. As a leading game licensing platform, we continue to build our game-centric content ecosystem and energize our eSports community and for other user segments, such as developing short-form gaming videos. In short-form video platform centered game live streaming phase, overall, we've seen both user traffic and customer's application to increase accordingly, which has also helped to raise the seeding of the entire game live streaming market and further accelerated the development of the industry. And from the competition perspective, we believe in the short run, the industry competition will mainly revolve around the refinement of marketing efforts, the diversification of high-quality content and the innovation of monetization value. In the long run, we expect the competition to focus on more rapid product upgrades and innovation of content form such as video and entertainment contents and the establishment of social communities together with [indiscernible] health such as in eSports community and the further integration of the resources, both up and down the industry value chain. And we have been focusing on building a game-centric content platform since inception, and we have clear advantage in terms of professional content creation and content accumulation, vertical game user base formation and the buildup of talent agencies as well as cultivation of the professional eSports content ecosystem. Now we have created a stronger content barrier. And as a result, we have clear leading advantage in attracting and maintaining those core paying users. So looking forward, we believe with the raised ceiling of the entire industry, we were at a more advantaged of the above-mentioned content and value chain brands to further expand our user coverage and boost traffic. And lastly, after the merger, we expect more invest commercial cooperation between the 2 platforms as well as with Tencent, which we believe will further enhance the positioning of the combined entity.

[Foreign Language]

[Interpreted] Regarding the second question on the short videos and e-commerce business, so we believe that the prerecorded paid videos including short videos and the content carrier is more difficult for playbacks. It's also more inconvenient for the users to share and forward on the social platform, which in turn will help us to obtain more users and increase user traffic. As of the third quarter, we had essentially completed the design and development of our application for prerecorded game videos. Through this application, we are able to provide our users with an organic combination of rotating the prerecorded game broadcast and the live streaming content, offering a more diverse supply of content to our platform, expanding the coverage of various user channels and, obviously, stimulating our user engagement. And speaking of our e-commerce business, we are position it as supplement component to our live streaming business. And considering the unique user profile on our platform, which mainly consists of young male users, we believe that games and sports-related products are more suitable for our e-commerce live streaming. And in the short run, our main goal will be to utilize our e-commerce live streaming business model to further diversify our content and increase the streaming income.

Our next question today comes from...

[ Mr. Chen has a comment though ] before we take up the next one.

[Foreign Language]

[Interpreted] Regarding the change on the operating expenses, first of all, sales and marketing expense, excluding SBC, mainly includes the staff salaries and other related expense, channel promotion costs, sponsorship fees for our eSports team as well as expenses for the online and offline events. In the third quarter this year, the sales and marketing expense, excluding SBC, increased on a sequential basis, mainly due to our increased marketing efforts for the eSports tournament resulting from the increase in the eSports tournament frequency as compared to the prior quarter. It was also due to our increased investments into those eSports teams which is known for marketing. We are quite positive about the long-term development of the eSports industry, and we will continue to invest in eSports-related events and eSports team sponsorship going forward. Meanwhile, we will also consistently upgrade our product features to improve our user conversion, and we will also enhance our content. In the future, we expect the absolute value of our sales and marketing spend to increase, as well as a percentage of total revenue to continue to improve. Speaking of G&A, for the third quarter of 2020, G&A, excluding SBC, increased on a sequential basis, mainly due to higher professional service fees resulting from the merger. And going forward, we believe the G&A spend will grow at a slow and steady rate. With higher operating leverage, we expect the G&A spend as a percentage of the revenue to further decrease. And lastly, on the R&D cost. In the third quarter, R&D, excluding SBC, increased quarter-over-quarter, mainly because the increase in expenditures for the research and the development of new products to maintain the leading position of our technology and products in the industry as well as the increased headcount for the overseas R&D personnel. And the staff salaries accounted for more than 80% of our total R&D expense. So going forward, although we will continue to invest in our R&D development now to maintain our industry leadership, we think our overall R&D spend will grow steadily. And with the rapid revenue growth, we expect our R&D cost as a percentage of revenue to further improve.

Our next question comes from Billy Leung with Haitong International.

[Foreign Language] I have 2 questions. The first question is related to the recent LoL Grand Finals, the competition. So from our perspective, has the eSport events been bringing a lot of traffic and users to our platforms? And the second question is related to our cloud gaming. Can management share some color in terms of how our cloud gaming has been developing?

[Foreign Language]

[Interpreted] Regarding S 10, we all know that the League of Legends world championship has branded official event for LoL has always been attracting great number of users, especially this year, given many large-scale off-line events have been delayed or canceled due to COVID-19, making S 10 one of the very remaining global eSports events of the year. Besides being held in Shanghai also helped it to attract a large audience domestically and attention over the Internet, the LoL has always been a premium content segment for DouYu. We have many well-known streamers and a multiple layer streamer and content supply system. We also signed many famous LoL eSports teams at home and abroad, including LGD, GDG, TS and the Champion team GWG. And these advantages helped the LoL segment to reach historical highs in many operating metrics during the championship, making DouYu the first choice for the audience and attract high-quality user traffic on our platform.

[Foreign Language]

[Interpreted] Regarding the cloud gaming, we believe that the cloud gaming industry chain and related infrastructure construction is still underway. And as the pioneer in the industry, we continue to explore in cloud gaming in the quarter. For example, we launched the beta Version 2.0 of cloud gaming this quarter. The updated version has a brand new UI design and supports over 200 games to date. We also optimized the server functionality and compatibility, reduced the clearing time and delay which helps to further upgrade our users' overall gaming experience. And in addition, we also explored the application for the cloud game club live streaming user scenario with gaming developers and publishers. In the future, we're aimed at creating new business models by helping users experience games directly or compete with other players from direct -- different live streaming room.

Our next question today comes from Thomas Chong with Jefferies.

[Foreign Language] My question is about our content strategy in the next couple of years as well as the growth driver in Q3 revenue as well as what are the key factors in driving the revenue growth in future?

[Foreign Language]

[Interpreted] On the content strategy, first of all, we position ourselves as a game-centric commerce platform and the live streaming is just one way to display our content. So in the future, we believe it's still our first priority to meet user need and we will keep raising user traffic through content enrichment. And secondly, games will continue to be our key content segment. Apart from our advantage in the existing game content, we also pay close attention to the new blockbuster games, explore other vertical games suitable for livestreaming and create eSports-related content, events and programs. For example, in the third quarter, we noticed a number of new game titles delivered stronger trends on our platform. Meanwhile, we continue to recruit new streamers for different game titles to maintain a steady supply of high-quality content and attract more users to our platform. And at the same time, we will continue to enrich our main game content in areas like food, live talent show, outdoor and ACG, which will help us to better meet our users' identified needs.

[Foreign Language]

[Interpreted] On the revenue growth trend in the third quarter, our revenues from the Tencent events continue to grow steadily, although the event at the end of the quarter did not meet our internal expectation. We continue to optimize and improve our interactive product functions while cultivating the pay habits of existing users and actively acquiring new paid users. And as a result, our live streaming revenue in the third quarter continued to grow on both year-over-year and quarter-over-quarter basis. Meanwhile, our paying users increased by 4.5% quarter-over-quarter to 7.9 million from 7.6 million in the previous quarter. And secondly, our refinement of operations across different segments helped to improve each segment's monetization efficiency. We also continue to diversify our content to improve the monetization efficiency and revenue contribution from our non-gaming segments. And we also further improved the monetization efficiency of our mid-tier segments through a deeper collaboration with talent agencies as well as payer monetization products. And on the advertising revenue, the quarter-over-quarter increase was mainly attributable to an increase in streamer's promotion ads, at the same time, the launch of new game titles such as [ GenShin ] and [ Bonku jesi ] helped us further increase the game advertising revenue. And we expect brand advertising revenue to increase in the fourth quarter as a result of increasing branding activities during that period, including those that will take place during the Double 11 shopping festival.

Ladies and gentlemen, this concludes the question-and-answer session. I'd like to turn the conference back over to the management team for their final remarks.

Thank you all for joining us today. If you have any further questions, please feel free to contact us through our IR site. Thank you, and have a good day.

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]