Phoenix New Media Limited (FENG) Q3 2014 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to the Phoenix New Media Third Quarter 2014 Earnings Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today, Friday, the 14th pf November 2014. I would now like to hand the conference over to your first speaker today, Mr. Matthew Zhao, IR Director for Phoenix New Media. Thank you. Please go ahead, sir.

Thank you, operator. And thank you and welcome to Phoenix New Media third quarter 2014 earnings conference call. I am joined here by our Chief Executive Officer, Mr. Shuang Liu; our President, Mr. Ya Li; and our Chief Financial Officer, Ms. Betty Ho. For today’s agenda, management will provide us with a review on the quarter and also include a Q&A session after the management’s prepared remarks. The third quarter 2014 financial results and the webcast of this conference call are available at the Investor Relations sections of www.ifeng.com. A replay of the call will be available on the website in a few hours. Before we continue, I refer you to our Safe Harbor statements in our earnings press release, which applies to this call, as we will make forward-looking statements. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in Renminbi. With that, I would like to turn the call over to Mr. Liu Shuang, our CEO.

Thank you, Matthew. Good morning and good evening everyone. We are very pleased to announce the third quarter 2014 with strong momentum propelled by robust growth in total revenues and non-GAAP net income. Advertising revenues grew by 45.5% year-over-year to RMB325.8 million, primarily driven by the growing success of our mobile internet and native advertising solutions. Furthermore, we continued to witness the rapid development of a number of our key verticals such as auto, real estate, fashion, finance and sports as evidenced by the growth in user, market share and higher spend. According to iResearch, iFeng’s average daily unique visitors on PC in the third quarter grew by 20% to RMB 47.1 million. On the mobile side, iFeng’s average daily active user number which combines mobile browser and in app visitors grew by 32% year-over-year to RMB 29 million in the third quarter demonstrating users’ strong demand to access iFeng’s premier content via the multi-screen devices. Turning to other key accomplishments recently, one of our major breakthrough developments was our strategic investments into Yidian Zixun, which is one of China’s most popular personalized news feed mobile applications. Using upon this investment on November 7, we invested an additional $8.5 million US in Yidian reaching our stake to 17.5%. The investment in Yidian, characterized iFeng’s evolution to an internet media platform powered by ongoing technology-driven investment in digital content generation and consumption. As an interest-oriented media app by similarly integrating content, search, and recommendation technologies, Yidian is able to learn from its user behavior and habits in order to provide each users with personalized content, supported by large user base, data analytics, technology, and the user behavior data, Yidian is also well equipped to offer advertisers enhanced solutions that target users based on their exhibit patterns. We aim to leverage such investments as to strengthen our own personalized content offering and marketing solution over our flagship platform, iFeng News. Over the longer-terms Yidian Innovations would also help us to improve our overall product development capabilities and in utilizing cutting-edge data analytics technologies over our multiple platforms. Providing a favorable one-stop solution for viewing desired content on the go fits into our overall strategy of enhancing the user experience throughout our platform by helping users to efficiently navigate the vast amount of highly fragmented online media content that it generates daily. Moving on, we continue to see solid progress in native advertising in the third quarter. Native advertising is essential to the evolution of digital marketing. It seeks to provide advertisers broader catalysts, and promote their products and services in numerous formats such as video, image, editorial, and common featuring. Native ads commands a much higher level of viewer attention and have the potential to go viral. By using thousands built trust and engagements with potential customers, native ad solutions allow advertisers to create marketing campaigns over digital platforms that are more effective and interactive than other traditional ad formats. We are one of the earliest media pioneers in China to explore in native ad solutions. We established our Native Marketing Research Institute for the purpose of exploring and tailoring native ad partnerships and have created more than 80 successful native ads innovating campaigns to better help our clients attract eyeballs and drive engagements over the past 12 months. To provide you clear examples of this innovation in advertising, last quarter, we partnered with several major global companies to make these innovative marketing campaigns a reality. Specifically, the creative native advertisements, Samsung S5, the S5 that I like employs superior visual effects to highlight the new features of the Samsung Galaxy S5. As a result, the native ads attracted a large amount of first-time users who are interested in the mobile phone. For this advertisement, iFeng took home the Interactive and Creative Achievement Award in the Consumer Electronics of China’s 21st International Advertising Festival in October 2014. Additionally, in September, we collaborated with Philips Healthcare, another native advertising program in the form of a five-part documentary which addressed common eat conceptions of healthcare professionals in China. The program has reached over 10 million views and has been re-posted by a number of major media elements including CCTV, Shanghai Media Group and News Agency. Our initial success with native advertising coupled with our exploration of personalized marketing characterized by our Yidian investment will set the stage for accelerating revenue growth in advertising as we are delighted by our leadership and continue to capitalize on emerging trends in this segment. Turning to our iFeng video offering. During the third quarter, we have further expanded our influence as an industry leader by beefing up our library of documentary and short form conference and facilitating deeper convergence with our parent Phoenix TV. Our high quality original content in the culture and the humanities continue to set us apart as an engine for creative content production in the internet media sector. The Match of Taste and the Search of Taste are two food related shows perceived to deliver incremental viewers growth and revenue contribution. The success of these quality productions demonstrate the tangible progress of our convergence with Phoenix TV and provides a top place for future collaboration on content generation and broadcasting. We are proud of the evolution of our company and our successful performance both operationally and financially thus far in 2014. Looking ahead, – are continuously improving and expanding capabilities on the product development, advertising and content generation fronts with confident intolerability to lead the industry and efficiently providing Chinese language viewers with the most personally relevant digital content while at the same time, capturing own monetization opportunities in order to further deliver long-term value to our shareholders. With this, I would like to turn the call over to our CFO. Betty Ho.

Thank you, Shuang, and thank you all for joining our conference call today. As Shuang mentioned earlier, we had a very strong third quarter with both strong operational and financial results. As our total revenue for the third quarter came in at RMB 431.8 million, mainly driven by our robust advertisement revenue growth about 45.5% year-over-year. Adjusted net income attributable to Phoenix New Media Limited for the third quarter was RMB 93.3 million or RMB 1.21 non-GAAP net income per diluted ADS Now let me take you through our financial highlights for the third quarter of 2014 results. The amounts mentioned here are only in RMB unless otherwise noted. The differences between GAAP and non-GAAP are the adjustments of the share-based compensation; gain on disposition of subsidiaries and acquisition of equity investments and loss from equity investments. Starting with revenues, net advertising revenues for the third quarter came in at RMB325.8 million which represents a solid year-over-year growth of 45.5%. Average revenue per advertiser or ARPA increased by 36.6% to RMB 0.9 million and advertisers number increased to 358. Paid service revenues for the third quarter was RMB106.0 million which represents a year-over-year decrease of 31.6% mainly due to the decrease of mobile value-added services which was in line with our expectations. MVAS revenues decreased by 41.2% to RMB77.9 million, primarily due to a decrease in revenue generated from wireless value-added services with telco operators. Games and others revenue increased by 25.2% to RMB28.2 million, mainly due to the increase of a non-recurring content sales. Secondly, gross profits and margins, adjusted gross profit for the third quarter of 2014 increased by 25.9% to RMB234.5 million. Adjusted gross margins for the third quarter increased to 54.3% from 49.2% in the same period last year. In terms of cost of revenues, there are four components, revenue sharing fees related to paid services, content and operational costs, bandwidth cost and sales tax and surcharges. Adjusted content and operational cost as a percentage of total revenue increased to 22.9% from 19.4% mainly due to the increase in staff-related costs and advertisement-related content production cost. Revenue sharing fee as a percentage of total revenue decreased to 10.2% from 20.1%, mainly due to a decrease in mobile value-added services revenue. Bandwidth cost as a percentage of revenues remained stable at around 4.8%. And lastly, sales tax and surcharges as a percentage of total revenues increased to 7.8% from 6.4% due to the increase of net advertising revenues. Thirdly, adjusted operating expenses for the third quarter increased by 33.7% to RMB146.6 million from RMB109.6 million in the same period last year. The increase in operating expenses was primarily attributable to the increase in expenses associated with the company’s marketing and promotional initiatives and staff-related expenses relating to technology and product developments. We are expecting that the sales and marketing expenses will continue to increase in the fourth quarter of 2014 mainly due to a number of marketing events to be held before the year end such as, Phoenix Finance Summit and Documentary Awards. The incremental on mobile traffic acquisition cost as well as the delayed marketing expenses for our lately launched mobile games. Adjusted operating income for the third quarter increased by 14.8% to RMB87.9 million. Adjusted operating margin for the third quarter improved to 20.4% from 20.2% in the same quarter last year. Fourthly, GAAP net income attributable to iFeng for the third quarter of 2014 was RMB69.6 million. Adjusted net income attributable to iFeng for the third quarter increased by 13.7% to RMB93.3 million. The difference between GAAP and adjusted net income attributable to iFeng for the third quarter were RMB23.7 million, mainly due to the significant increase in share-based compensation about RMB17.9 million from RMB2 million in the same period last year and the incremental increase in loss in equity investment above RMB5.9 million. Adjusted net income per diluted ADS for the third quarter increased by 13.6% to RMB1.21 from RMB1.06 in the same period last year. In terms of balance sheet items, as of September 30, 2014, iFeng’s cash and cash equivalents and term deposits and short-term investments were RMB1.36 billion or approximately US$222.2 million compared to RMB1.41 billion as of December 31, 2013. The decrease of cash position is mainly caused by the company’s ongoing share repurchase program. As of September 30, 2014, the company had repurchased an aggregate of around 1.8 million ADS at an aggregate cost of approximately US$18.7 million. In the open market pursuant to the share purchase program approved by the Board in May 2014. Lastly, I’d like to provide our business outlook for the fourth quarter of 2014. We are forecasting total revenues to be between RMB439 million to RMB459 million, representing an increase of 10% to 15% year-over-year. For net advertising revenues, we are forecasting between RMB329 million and $339 million representing a growth of 35% to 28% year-over-year. For paid services revenue, we are forecasting between RMB110 million and RMB120 million representing a decrease of 19% to 12%. Based on this projection, we are forecasting total revenue in 2014 to be between RMB1.64 billion to RMB1.66 billion, which is in line with street consensus. This concludes the written portion of our call. We are now ready for questions. Please go ahead, operator.

[Operator Instructions] Your first question today comes from the line of Jiong Shao from Macquarie. Please ask your question. Alice Yang – Macquarie: Hi everyone. I am Alice from Macquarie calling on behalf of Jiong Shao. Thank you very much for taking my question. And firstly, congratulations on a very strong quarter, especially on the advertising side. My first question is about the advertising investments. We see the ARPA and that’s a kind of trending this quarter. So can you share with us about the pricing strategy in the coming quarters and if possible, would you mind breaking the pricing trend into the price trend of PC, mobile and video? Thank you.

Thank you, Alex, this is Ya. Look back to answer this year, we had increased price twice. First in the beginning of the year, the overall PC advertising for the A plus inventory increased by 20% and for – then also in the beginning of the year we had an increase for mobile price. The exact number I have to get back to you later and July 1, we increased our video ads also for the A Plus category by 30%. And, we haven’t increased our price for mobile inventory during the second half. And, looking forward, right now, we are basing our pricing strategy a couple factors, first is – ad inventory sell through rate and on that factor, the overall PC non-video inventory, sell through it is about – it’s very low, it’s about 30% and so we do not have pressure on increasing the pricing and we’d rather trying to get more market share through relatively competitive pricing. And – but however on video side, also on the PC the sell through rate is very high and so we already made our plans to first increase the video inventory for payroll and also secondly to adjust the adding searching mechanism to allow more ad displays results into – results interfering with users’ viewing experience. And going forward for the next year, we expect to increase – on the mobile, especially on our mobile video inventory. We have about 5 million daily active users for mobile video on the iFeng website and also the iFeng video approximately. Right now, none of them is monetized, but we will be able to monetize the mobile video in 2013. And overall, because our PC traffic grew by 20% in this third quarter and for the mobile – for our new strategy of concentrating on the iFeng news app and also the newly investment in Yidian Zixun, we do expect that our advertising technology in terms of better targeting users through a personalized news feeds and through better data analytics to provide more time we did ads will help improve the ad result and which in turn will help us to increase our pricing capability. But at this stage, we do not have – we haven’t made up our plans for the exact numbers for our rate hike. Hope that answers your question. Alice Yang – Macquarie: Sure, sure. Very helpful. And can I follow-up with – we know that we have very strong momentum on our total advertising. So can you break it into like, in terms of PC, video and mobile, what is the percentage of revenue contributing to the total? And also respective year-over-year growth?

Okay, yes. The video ads grew at 68% and contributing the shares grew from 16% to 19%. For the mobile ads, its growth rate is 124% and it grew from 9% to 14% of our total ad revenue. And for the PC non-video part and it grew by 31% and contributing to 68% this quarter. Alice Yang – Macquarie: Great, great. Thank you very much. Just as one last question about the guidance. We see that in the fourth quarter, your guidance is a little bit conservative and for the advertising only increased by the maximum of 28% year-on-year is a little lower than the recent – I mean, past recent quarters. Can you share with us about why and how you think about; is that the market sentiment changes or other kind of focus change?

Traditionally, the markets’ sequential growth for fourth quarter over third quarter is only about 1%. So, it’s more about the same as third quarter and part of – I think we do show some sequential growth for the fourth quarter. And the reason I think with the forecast is only in the high 20s instead of the 40s which we achieved in the first three quarters is because last year, the fourth quarter was very strong and it made the comparison a little difficult. And also some of the new initiatives in terms of monetizing on mobile video et cetera will only start next year. I think these are the main reasons. Alice Yang – Macquarie: Okay. So there is – you don’t think there is any kind of market sentiment changes towards advertising activities from companies?

Of course, I think, right now, we are trying to look beyond the fourth quarter there is lot of uncertainty and the very low visibility, so, but we don’t feel the budget reduction at this time. I think clients are in the process of making their projects and overall trend I think in China is that the internet industry or marketing advertising through internet is taking market share from advertising traditional platforms. So overall, I think, the market is stable, I think the market trends according to the iResearch or CTR’s research, next year online advertising growth is probably the same as this year which is about 40%. Alice Yang – Macquarie: Okay, very helpful. Thank you. Thank you very much.

Thank you.

Your next question today comes from the line of Alex Yao from JPMorgan. Please ask your question. Alex Yao – JPMorgan: Hi, good morning everyone. Thank you for taking my question. The first one is, as the consumer continue to shift from PC to mobile from single screen to multiple screen, what are you seeing from advertiser perspective and what are the emerging demand and what are the opportunities there? How would you guys position yourself to capture the opportunity? Thank you.

Okay, thank you, Alex. I think on the one hand, I think the time share in terms of consumer or audience spending on mobile continues to lead the marketing dollar share spend by advertisers. And, meanwhile, I think, overall the industry is trying to develop better targeting technologies, so that even for the smaller screen and the advertising results are – can be no less than that on PC, I think one of the major in this is to better targeting technology. And that’s why one of the major reason I think we invested strategically in Yidian Zixun because, through its targeted information and news feeds, it can provide better matching ads with the users’ exhibited behaviors and interests. And, also Yidian Zixun does have the kind of technology and products to provide a leading ad solution on the targeting ads front. And secondly, I think overall, our mobile ad inventories is still sell through rate is at very low level, I think, compared to the fast growth of the users. And also at this time, we are monetizing mostly on our mobile websites. We are still trying to focus growing the user experience and product features on our mobile apps. And, so I think this monetization on the mobile platform will be a long run but the targeting technology personalization that will help drive the results and second, of course, the other monetization such as mobile games will also help to turn the mobile traffic into revenues. Alex Yao – JPMorgan: Got it. And then secondly, can you talk about a little more on your native ads initiatives? What are the progress you have achieved in the quarter? That the growth outlook for next year and profitability versus your existing advertising service? Thank you.

I think, if you remember that, we had mentioned the term big data traffic idea, I think this internally we also have native advertising and also native marketing. The native marketing really is based on our content of capacity and our insight, the interest consumers into the content and so we can build the kind of content, branded content and through the interest of the consumers and which can usually attract greater attention and even go viral through the other social platforms. And this native marketing strategy really helps us capture larger shares of major advertisers, advertising budgets and we did mentioned that we had so far 80 different native marketing clients already and also we won quite a few awards in the recent China Advertising Festival through this enhanced content marketing strategy, the native marketing. The contribution from native marketing is in the very low double-digits and we do expect that to steadily grow next year. However, we also have other approaches which we call it native advertising which is more or which is similar I think to that term mostly used in the states, resemble and as the native advertising for the native advertising product, we do plan first on providing a new ads format and ad inventories on both on mobile and on PC. So that instead of too many banner displays, we will start to provide more instream ad inventories. And also through personalization and so targeting technology to make that interim advertising to the interests of the viewer. That’s the first thing and we are trying to do internally and we will see the progress starting in January as we revamp our PC home page design and also the mobile app side designs. And secondly, of course, the native advertising product development will be accelerated through our co-operation and with Yidian Zixun which I did mention that their unique and technology and also their – the recommendation engine combined with the search engine will provide a strong interest engine and the interest based advertising will also help the native advertising approach. So internally, this native marketing plus native advertising represents our approach of big idea plus this data and it puts us in the forefront of leading China’s advertising evolution. Alex Yao – JPMorgan: Got it. Very helpful. Thank you.

Your next question today comes from the line of Eileen Deng from Deutsche Bank. Please ask your question. Eileen Deng – Deutsche Bank: Hi, management. This is Eileen Deng from Deutsche Bank and I have three questions on behalf of – I have two questions. The first one is regarding your fourth quarter’s guidance. On the paid services, we see a Q-on-Q increase, I want to ask whether it is due to some potential offering on mobile games or other – increase? And my second question is regarding your – you did mentioned on the Yidian Zixun investment, could give us some kind of your initial efforts that you are trying to work out and when do we see the Yidian Zixun and our own mobile news app will bring explosive revenue growth? Thank you.

Thank you, Eileen. This is Betty. With respect to your paid services question, actually, for paid services, we have seen decline in percentage in terms of total revenue, it has declined from 30% as of last quarter to 25% as of total revenues for this quarter. And, we’ve seen the paid services, there are about four items under it, one is the mobile value-added services, I mean, wireless value-added services and mobile video the third item, the third item is mobile editorial reading and the fourth item is games and others. For the decrease, it’s mainly due to the decrease of the wireless – traditional wireless value-added services which mainly due to and highly the policy of telcos. So this part of the business has been a declining business and as a percentage of total revenue on a positive note, it has declined from about 24.7% as of last year, second quarter last year to only about 10% this quarter. So, moving forward, its fluctuation will be less – we will have less impact on our overall financial statement because it now only consists about 10% of our total revenues. We are still seeing it will fluctuate. In the future. it will be decreasing business and because its unstable nature, which is entirely based on telco’s policies. So this part of the business fortunately, it will – it’s reducing to a 10% of our total revenue.

This is Ya, for your second question, and first I want to say that, Yidian Zixun and iFeng News app are two complementary products aimed at different usage situations and iFeng News is more timely news provides deep coverage and also major events mostly. And also at higher demographics at this stage. But we do plan to focus growing our iFeng News audiences through iFeng’s existing audience base on PC and also our capability in this area with major news breakouts every now and then. And our Yidian Zixun and as we mentioned, it provides uniquely personalized news and other information content to a broader demographic and also the sophisticated data analytics and the fast-growing user base and also the users’ interest data will enable to develop a personalized interest portal if we can call it instead of traditional news portal. And so it is first the positioning of these two are complement are different. Secondly the Yidian Zixun after our initial investment so far, we have incorporated it with Yidian Zixun in areas like building – built content partnerships with the major content sources in China. Also help them develop future marketing plans to enhance its brand and also planning for brand advertising monetization on the Yidian Zixun in the future. At this stage, monetization is not the priority and growing user base enhancing the brand is the key focus. In addition Yidian Zixun also has very influential leading handset manufacturers in China, as its major shareholder. We are also developing all these plans allowing its major shareholders and to grow Yidian Zixun to the next-generation mobile news app. Eileen Deng – Deutsche Bank: Thanks, that’s helpful.

Thank you.

Your next question today comes from the line of Natalie Wu from CICC. Please ask your question. Natalie Wu – CICC: Hi, Shuang, Ya, and Betty, thanks for taking my question. So, can you please give us some color on the DAU of Yidian Zixun and what is the advantage compared with this headline – and I noticed that, the second largest shareholder of Yidian Zixun is Xiaomi. So will Xiaomi provide any strategic support to this business? This is my first question. Thanks.

Yes, hi, yes, this is Shuang. Let me answer your question. Right now, we are not in a position to disclose the past number of that menu on DAU of Yidian Zixun. But, Yidian Zixun definitely enjoyed very rapid user growth in the last couple of months. And thanks to the Yidian Zixun’s very strong shareholder Xiaomi. Xiaomi is the leading mobile handset manufacturer. And so Xiaomi on every Xiaomi’s mobile handset, Yidian Zixun is bundled. So that provides a very strong support for Yidian Zixun’s channel distribution. And also, going forward we will definitely better leverage Phoenix New Media’s experience in brand promotion and our other platforms to further boost Yidian Zixun’s usage on Xiaomi handsets. We have very covenant product and as to your second point about comparison with other competitors, actually, we have more willing to emphasize Yidian Zixun’s unique strengths. Yidian Zixun’s has very strong shareholder back like I mentioned Xiaomi and also Phoenix New Media. We have accumulated deep insight in user behaviors, especially, high-end user behaviors. So Yidian Zixun to leverage our experience in this and also Phoenix New Media has very rich content, unique content, especially on video and video area, that these we can collaborate with each other. And also, Yidian Zixun’s team has a very unique – has very unique search-related background. The Founder Dr. Zheng Zhaohui has rich experience in searching area – online searching area. He is one of the top efforts in world arena in this sector. So, by leveraging his insights and expertise, we are confident Yidian Zixun can become a leading next-generation mobile portal in this arena. Natalie Wu – CICC: Okay, thanks.

If I may add just one sentence, I think about I Zheng who was leading the personalization efforts, even ten years ago, and he was later the Head of Yahoo Research Labs in China another Co-Founder Yang, was the Vice President formerly at Baidu and along with other major scientists and chief engineers, Yidian Zixun has a very strong team and which can go far in the long run. Natalie Wu – CICC: Impressive. And just another housekeeping question, could you please update on – update us the top-five sectors for the third quarter ad revenues and their relative contributions?

Yes, I think the order of the first side doesn’t change from the previous quarter. Number one, 34% food beverage and – 11% ecommerce 10%, medical and healthcare 6% and financial services at 5%. Natalie Wu – CICC: Thanks a lot.

[Operator Instructions] Your next question today comes from the line of Philip Wan – Morgan Stanley. Please ask your question. Amanda Chen – Morgan Stanley: Hi good morning this is Amanda…

Your voice is too low, can you speak louder? Amanda Chen – Morgan Stanley: Sorry, hi, Shuang, Ya and Betty. This is Amanda asking on behalf of Philip. The first question about the Yidian Zixun investment. This is maybe a very long-term question, we saw there is some competition now is trying to push you that information to use this system on your own interest. And just now I guess, Shuang, you mentioned that because Yidian Zixun is more focused on user interest and therefore your iFeng application is more about related to the information used. So in the long run how do you leverage this on your apps? And then maybe as also needed to push some information based on users’ interest and also user interest – so how do you leverage these two applications? That’s my first question. Thank you

So they are two – fundamentally different product logics behind and certainly, as Ya mentioned before, iFeng News apps focus more on current fear related news. It’s more time-sensitive and Yidian Zixun actually give you all kinds of information you need, not only current affairs but more on lifestyle related services, like fashion, healthcare, like baby care, like auto finance, everything you name it. So, the offering of information on Yidian Zixun is unlimited. So, it creates new needs for people consummate on run allowing to queue their leisure time. So it’s not the – part of logic is very different. And also because of the personalized information and recommendation technology, it gives advertisers more room to do more targeted advertising. So, in that sense, these two products are complementary to each other. But, they can definitely can lead to leverage each other’s core competence. For us, we can leverage their analytics technology to do more target user behavior on advertising. And they can leverage our very strong brands, brand promotion, our proprietary content and the contacts to further boost operations of this asking time. So they are two – fundamentally different product logics behind and certainly, as Ya mentioned before, iFeng News apps focus more on current fear related news. It’s more time-sensitive and Yidian Zixun actually give you all kinds of information you need, not only current affairs but more on lifestyle related services, like fashion, healthcare, like baby care, like auto finance, everything you name it. So, the offering of information on Yidian Zixun is unlimited. So, it creates new needs for people consummate on run allowing to queue their leisure time. So it’s not the – part of logic is very different. And also because of the personalized information and recommendation technology, it gives advertisers more room to do more targeted advertising. So, in that sense, these two products are complementary to each other. But, they can definitely can lead to leverage each other’s core competence. For us, we can leverage their analytics technology to do more target user behavior on advertising. And they can leverage our very strong brands, brand promotion, our proprietary content and the contacts to further boost operations of this asking time.

I want to add also some other synergies, first of course, iFeng does have a very unique exclusive news video content. We are providing this news video content to Yidian Zixun to make its own product more competitive in terms of the variety of a news product offering on its platform. And I think the key message here is that, iFeng is already the number one online media platform on PC. And this demonstrates our determination to continue to evolve, to lead as the number one media platform on mobile in the future.

I also would like to add that, the mega trend is, users are migrating from PC front to mobile front. So it’s exactly not enough for a company like us with the dream to become a gateway of choice on all screens to just have one mobile apps. We need to target at different demographics, we need to address the different needs for people consuming fragmented information and media. So, by having another pillar like Yidian Zixun, while able to further expand to broader demographic will capture different diversifying needs of people currently online. Amanda Chen – Morgan Stanley: Thank you. I have a second one, it’s about your vertical channel like property and auto – do you have any update on this channel and obviously do you have any plans to launch initiatives, so it’s like online transaction or something else? Thank you.

Amanda, is your question is about, real estate and auto verticals? Okay, yes, the real estate market in China, I think this year is showing some uncertainty. And our joint venture, the iFeng real estate vertical actually – the growth rate for – I think is as expected. But we are exploring new opportunities associated with some new challenges facing the real estate market. And sometimes, partnering, even partnering – there are certain partnership opportunities with other parties to provide the kind of services needed by the industry and also by the consumer in this changed market condition. But at this time, we do not have much to disclose. But, the – that we exploring new approaches, new strategies to cope with this new market transitioning and for the auto sector, auto – these exhibited strong contribution to our advertising revenue in the third quarter at 34% and I think this is partly because of our internal native marketing approach really improved our results and customer satisfaction by the advertising clients. And, of course, there is a general industry recovery, I think from a year ago, when the restriction on purchase was first put in place and this time we are looking at the competitors because in both real estate and auto sector there are very strong independent verticals who are already public traded companies. We are looking at the natural and logical evolution as a media or content provider in these verticals to more transaction-oriented and we have a couple approaches. One is through product development, especially on mobile and another is through strategic investment or co-operation with other companies, But for these two sectors from one we are very new into the real estate, so the another one that is a major contributor to our advertising revenue. So for both, we are developing carefully strategies. We hope to have more to disclose later next year. Amanda Chen – Morgan Stanley: Got it. Thank you. Very helpful. Thank you very much

[Operator Instructions] It seems you have no further questions on the line at this time. I would now like to hand the conference back to management for closing remarks.

Thank you, operator. We have come to the end of our Q&A session and our conference call. Please feel free to contact us if you have any questions. Thank you for joining us on this call. Have a good day.

Ladies and gentlemen, that does conclude our conference for today. Thank you for participation. You may now disconnect.