JOYY, Inc. Sponsored ADR Class A (JOYY) Q3 2014 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to YY, Inc. Third Quarter 2014 Earnings Conference Call. [Operator Instructions] I must advise you that this conference is being recorded. I would now like to hand the conference over to your speaker today, Lili Huang, YY's Investor Relations Director. Thank you, and please go ahead.

Thank you, operator. Welcome to YY's third quarter 2014 earnings conference call. With us today are Mr. David Xueling Li, CEO of YY, and Mr. Eric He, CFO. Following management's remarks, we'll conduct a Q&A session. Before we begin, I refer you to the Safe Harbor statement in our earnings release which also applies to our conference call today as we will take forward-looking statements. Now I would like to turn the conference call over to CEO, Mr. David Li.

Thank you. Good morning and good evening everyone. The momentum we saw in the first half of the year remained strong as we moved into the second half of the year. This was driven by both the exciting new initiatives that we have helped to diversify our product offerings over the first couple of quarters, as well as the continuing strength of our core business line. During the quarter we reached a tremendous milestone as our total revenue exceed RMB1 billion for the first time ever, more than doubled what we achieved during the same period last year. Our online music and entertainment business contributed significantly to this milestone as revenue grew by 133% year over year. Furthermore, our GAAP net income also grew at impressive rate of 122% year over year to RMB286 million. We remain focused on growing our user base and improving user engagement. In late September we launched a new version of our mobile YY. We've added a feature such as performance highlight video clips that can be shared to other social platforms, further improving the social bonding of our platform. We were pleased to see that in October. mobile paying user in our music business increased by 36% over the previous month. With this early success, we feel confident that our progress on the mobile front will continue to help increase our user base and position ourselves strongly for the future growth. In addition, we diversified our users and unique nature of our services marketplace platform. We believe that there are many unmet needs among our user base [indiscernible] and some of which would present huge monetization opportunities. Online dating is a perfect example. Launched less than a year ago, revenue for this segment surged in the last few quarters, increasing from RMB7 million in Q1 this year to RMB64 million in Q3. It is now the third largest segment of the business, only behind online entertainment and online games. We believe that such success can potentially be duplicated once the right opportunities are identified. As evidenced by our new initiatives, we will continue to explore new verticals that met the -- that meets the demands of our faster-growing user base, as well as provide numerous opportunities for the monetization. By developing our platform into a comprehensive talent and services marketplace for our community, we confident we can build upon our strong market-leading position and provide exceptional returns for our shareholders. With that, I will now hand over the call to our CFO, Eric.

Thank you, David. Good morning everyone. Before I get into discussing our financial performance, I would like to first talk about our online game broadcasting business and the general industry which has attracted significant attention since Amazon's recent acquisition of Twitch. After that, we will move on to discussing our financial results and outlook. In the third quarter, our online game broadcasting revenue grew substantially to RMB46 million, up from only RMB17 million a year ago, demonstrating the strong interest from Chinese viewers of such video content. Furthermore, recent acquisitions in the game broadcasting space in the U.S. has solidified the legitimacy and potential of this emerging content genre as well as the future growth prospects of this sector. On the flipside though, all this attention has attracted many other interested party, and with it, increased competition. Recently we have noticed more capital flowing into this sector in China, which has been used for higher sponsorship dollars for professional game teams, as well as providing enhanced video resolutions on their streaming broadcasts. Considering YY's market-leading position in this space, we acknowledge that this increased competition will both temporarily slow our revenue growth projection for online game and broadcasting, as well as increasing expenses for both bandwidth expenditure and sponsorship opportunity over the short term. Over long term though, we believe that we will maintain our sizable lead in this marketplace given our large user footprint and see rationalized return as the sector grows. Now moving on to our quarterly financial details. Before I get started presenting our financial numbers, I would like to clarify that all the financial numbers we are presenting today is all in renminbi amount and percentage changes are year-over-year comparison, unless otherwise noted. First of all, I would like to highlight that, in the third quarter, we were once again able to achieve result that exceeded our expectations on the top line. Moreover, we also saw net income attributable to YY increase by 122% due to expanding scale and leverage of YY business operation. Net revenues for the third quarter 2014 increased by 105% to RMB1 billion. This increase was primarily driven by the increase in IVAS revenues. IVAS revenues increased by 115% to RMB948 million. The overall increase primarily reflected an increase in number of paying users and an increase in ARPU. Let's look at each of our IVAS business line more specifically. Revenue from online music and entertainment increased by 133% to RMB534 million. This increase primarily reflected a 53% increase in the number of paying users to 1.2 million and 53% increase in ARPU to RMB453 during the third quarter 2014. Revenue from online games increased by 52% to RMB235 million. This increase primarily reflected the increase in ARPU of 40% to RMB485. Also the number of online games increased to RMB183 as of September 30th, 2014, from RMB111 last year. Revenue from others increased by 207% to RMB179 million. This includes revenue from online dating, which more than doubled to RMB64 million quarter over quarter, revenue from online game broadcasting which increased by 173% to RMB46 million, and revenue from membership program which increased by 46% to RMB54 million. Online advertising revenue were RMB52 million in the third quarter 2014, compared to RMB45 million in the corresponding period 2013. Cost of revenue increased to RMB483 million. This was primarily attributable to an increase in revenue-sharing fee and content cost, which increased to RMB301 million this quarter from RMB134 million last year. This increase included revenue-sharing fee and content costs to performers, channel owners and content providers was primarily due to higher level of user engagement and spending and increasing categories of emerging new business volumes. In addition, bandwidth costs increased to RMB88 million, representing 9% of the revenue, down from 11% of revenue in the same period last year, as we continued to manage our bandwidth costs through better allocation of bandwidth resources and infrastructure improvements. Gross profit increased by 117% to RMB570 million. Gross margin was 52%, compared with 49% in the corresponding period of 2013. The increase in gross margin was mainly attributable to increased operating leverage and one-off costs related to Happy Boy shows incurred in the corresponding period last year. For Q4 we have regular seasonality adjustment that includes several yearend events and accruals which will impact our margins. Additionally, due to the increased competition in our online game broadcasting business, we will see bandwidth costs increase slightly, allowing us to offer similar high-quality video resolution as other industry participants. All said, we expect our Q4 non-GAAP operating margin to be in line with current market consensus. Our non-GAAP operating income increased 96% to RMB345 million. Non-GAAP operating margin remained steady at 35% as compared to 36% in the corresponding period last year, primarily driven by increased sales and marketing expense this year. GAAP net income attributable to YY increased 122% to RMB286 million from RMB129 million. GAAP net margin increased to 29% from 27% in the same quarter last year. Non-GAAP net income attributable to YY increased by 89% to RMB322 million, while non-GAAP net margin decreased to 32% from 35% in the same quarter last year, primarily impacted by increased sales and marketing expenses and lower foreign exchange gain in 2014. Diluted net income per ADS increased to RMB4.77 or $0.78, from RMB2.17 in the same quarter last year. Non-GAAP diluted net income per ADS increased to RMB5.37 or $0.87, from RMB2.87 in the corresponding period 2013. For the fourth quarter of 2014, we currently expect our net revenue to be between RMB1.08 billion and RMB1.1 billion, representing a year-over-year growth of approximately 76% to 80%. This concludes our prepared remarks for today. Operator, we are now ready to take questions.

[Operator Instructions] Your first question comes from the line of Philip Wan of Morgan Stanley. Philip, please ask your question. George Meng – Morgan Stanley: Hey. Good morning everyone. This is George calling on behalf of Philip. Thank you very much for taking my question. I have a question regarding your game broadcasting business because you highlighted in your prepared remarks that the competition is increasing. I also noticed that one of your channel or game broadcasting channels, broadcasting the game of the other company, actually got kind of some, I would say, IP issue with that producer of that game. So I just wondered, first of all, do you see that coming for other games for your game broadcasting business? And number two, as you pointed out, the sponsorship fee for the professional gamers and also broadcast hosts are actually skyrocketing. We hear some anecdotal numbers, like RMB5 million kind of salary per year. So I just wonder, what's your strategy over this? Are you going to compete with some of these startups on this sponsorship fees to -- for like better talents, or you will stay put on this regard? Thanks.

Well, thank you, George. Because your question is a little vague to me. Can you be a little specific? What do you mean channel, other participant? Can you just bring out the names? Because I don't want to guess the names. So I think you can just bring out the names so I can answer very specifically. George Meng – Morgan Stanley: Sure. It's NetEast, so this Fantasy Westward Journey, the kind of band [ph] that user hosts from their channel because that's their game. So they say they have IP right over that game, so it's not allowed to broadcast on your channel. So I just wonder, is that going to happen to some of the other games or is that overall a concern for you going forward?

Thank you, George. It's good. I think I will pretty much translate this question to our CEO, David. David would like to answer the questions. David, please.

[Interpreted] I think in the world of internet, open and cooperation is the core of the essence of internet. That's why internet industry can become so huge, so big, after just more than a decade development, recently. We believe that the gaming industry, online games specifically, is part of internet business. In the history of internet in China or in the worldwide basis, we have never seen anybody who has done this kind of things to close up on their own loop. So we are very surprised by this movement of NetEase.

[Interpreted] I think from our viewpoint, we believe that NetEase's movement of blocking our games is actually specified as NetEase is actually withdraw itself from the game broadcasting business. Because not only that NetEase block people to broadcast their games, they actually don't block -- broadcast any other people's games. So, NetEase only broadcasts its own game, Westward Journey and other series. So I think to us it's a very surprising movement because this movement not only that hurt NetEase previous efforts on the game broadcasting business, also NetEase will block their Westward Journey's future development. We think that this movement will hurt their future prospects and future performance, because game broadcasting business actually helps games to be distributed to -- among gamers. So I think NetEase's movement is going to hurt themselves in the long run. George Meng – Morgan Stanley: Got it. Thanks.

[Interpreted] We are very confident that game broadcasting business is going to grow even further and faster in the future, because we have seen the recent development outside of China, very famous company like Riot, the developer of League of Legends, in the U.S., they already opened API, which actually will allow game broadcasting companies to have connections to retrieve game data specifically from League of Legends and to broadcast, to help them to broadcast League of Legends. I think the trend is on the right path, and this openness will actually create even more audience and users for League of Legends in the future. So -- and also will further push game broadcasting business as a big -- very big business and industry in the future. George Meng – Morgan Stanley: Okay. Thank you.

Next question please?

Your next question comes from the line of Gregory Zhao of Barclays. Gregory, please ask your question. Gregory Zhao – Barclays : Good morning, Lili, David and Eric. Thanks for taking my question, and congratulations on the strong quarter. I have several quick questions. The first question is about our online gaming revenue. In this quarter we saw very solid growth in Q3, and we want to know more about the drivers behind, and what's the outlook of the whole China MMO game and web game sectors? This is my first question.

Okay. Greg, yes, indeed. I think in last conference call I already indicated that, because of the -- some of the problems in the pipeline of our online games, specifically web games, so our second quarter online game revenue was a little disappointing. So, only grew at 10% year over year. And I indicated that in Q3 we see that our backlog of these games will come back to normal. So this is exactly what happens. In Q3 we have two games -- two web games performing very well. So I think that was the main contributor to the strong performance of our online game revenue in Q3. Gregory Zhao – Barclays : Okay, thank you. My second question is about our online dating business. Just want to understand the current cross-selling between the dating business and our music business, and what's the current ARPU compared to the music business and the gaming business?

Well, I think, yes, as David mentioned it, that our online dating business is a very new business, but it has performed very steadily and very strongly. And we actually believe that online dating business actually can become a very important segment of our revenue generation business into the future. But we have not disclosed specifically on the ARPU on online dating. We did actually disclose the ARPU for online music, but I can indicate that online dating's ARPU is lower than online music. Gregory Zhao – Barclays : Okay, thank you. My last question is about our gross margins, considering the online dating and broadcast -- game broadcasting is growing very fast. Considering the revenue mix changes, so, how will this impact our gross margin in the future? Thank you.

Well, in Q3, as you can see, that our gross margin performed very strongly. That was -- one of the reason for that was because the portion of our online game revenue has gotten bigger, because for those of you who follow our company closely, you know that our online game revenue is being booked as in net revenue basis. So with that, our online game business actually will generate higher margin for us, specific higher gross margin for us. So that's why in Q3 our gross margin was very strong, very big. Moving forward, yes, I did indicate in my script that, because of the heightened competition among online game broadcasting participants, so we are going to provide more bandwidth for higher resolution streaming. That will -- that's going to temporarily slow our margin or lower our margin a little bit in Q4. That's why I said that operating -- non-GAAP operating margin is going to be pretty much in line with the current market consensus. Gregory Zhao – Barclays : Thank you. Thanks very much, Eric.

Your next question comes from the line of Jialong Shi of Credit Suisse. Jialong, please ask your question. Jialong Shi – Credit Suisse: Hi. Good morning management. Thanks for taking my question. I have a quick follow-up on the previous question on the game broadcasting. Just wonder if you have seen any impacts on the user traffic and revenue on your game broadcasting business in the wake of recent NetEase incident.

Yeah, hold on a second. I'm translating the question to David. David would like to take on the question. Jialong Shi – Credit Suisse: Sure.

[Interpreted] Well, I think -- we believe that the current competition in the game broadcasting business can, short term, temporarily, create some noises in the marketplace. But over the long term, we think our market-leading position will not be changed. The reason is very simple. We have the largest voice communication communities among gamers in China. And number two, we are the largest game portal in terms of internet traffic in China. So those two are very important for the long-term sustainability of game broadcasting business. We especially believe that the grassroot player, the grassroot users, competitions or contests are the most important part of game broadcasting business. Yes, we understand that professional game teams is very important, will catch lots of eye balls short term, but in order to maintain those users and eye balls over a long period of time is not easy task. So we believe we have built such a very strong foundation and base for us to have a very long-term sustained competition with industry participants. So we are very confident over the long term our game broadcasting business will win over the competitors, become the market leader. Jialong Shi – Credit Suisse: Thank you for the color. My last question is, just wonder if management can provide some colors on the overlap paying users for your music and online dating business in Q3.

Can you repeat the question? Online dating and? Jialong Shi – Credit Suisse: Online music.

Online music. You mean the paying users? Jialong Shi – Credit Suisse: Right, yeah, paying users. Overlap.

Our online dating and online music paying user has grown very strongly, very steadily in Q3. Specifically, I think we have not disclosed our paying users for the game broadcasting business, but actually disclosed the paying users for online music business. Right now if I'm not mistaken, it's 1.2 million, which is from the 1.1 million number in Q2 to Q3. And our game broadcasting and game -- and dating business, both paying users have grown very steadily as well. Jialong Shi – Credit Suisse: Thank you. I'll get back to the queue.

Your next question comes from the line of Natalie Wu of CICC. Natalie, please ask your question. Natalie Wu – CICC: Hi. Good morning, David, Eric. Thanks for taking my question. I have two questions. The first one is, as you mentioned, average MAU in the third quarter reached 105 million. So, how much of the 105 million comes from online music business? And could you please remind us of your long-term target of YY Music's paying conversion ratio? Thanks. That's the first question.

Yeah. As we indicated that MAU numbers has grown steadily, in Q2 our MAU number was 100 million. I believe in Q3 our MAU number is 105 million. In terms of percentage for music, percentage for games, I think these are all detail numbers, we have not specific pictures yet. But I can tell you that, from my impression, that the online music business continue to gain monthly active users. As David indicated in his script, in the month of September, we launched a new mobile YY's versions, that mobile YY is mostly geared toward online music business, so, which actually created a lot of tractions. So we would expect that in current quarter, in Q4, our online game -- our online music business will continue to gain more users down the road. In terms of conversion ratios from active users to paying users, I think the ratio currently is still at around 2.5%. I think over the long term our goal is to get above 5% first in maybe next one or two years. That's our long-term goal. Natalie Wu – CICC: Thanks, Eric. Actually several -- we noticed several new competitors have appeared this year. It means that there's [indiscernible] game broadcasting, there is [indiscernible] CCC [ph], et cetera. So with regards to your revenue sharing ratio, do you see any chance of increasing the sharing ratio to broadcasters on your platform amidst current fierce competition?

Well, our revenue-sharing ratios with our performers, with all these game teams, has been pretty stable, pretty consistent. So we don't see too much of the changes. You mentioned, yes, there are a lot of competitors coming into the music field, coming into game broadcasting field. It creates competition. But so far, I think our revenue-sharing ratio has been fairly consistent. Natalie Wu – CICC: Thanks. That's very helpful.

Your next question comes from the line of Chao Wang of Nomura. Chao, please ask your question. Chao Wang – Nomura: Hi. Good morning. Thank you for taking my question. I have two questions. The first one is on deferred revenue. It further declined sequentially in the quarter. Could you give us some more color on that? And which business line drove the decline in the quarter? And secondly, could you update us on your client-based game progress? Thank you.

Yeah. The question regarding deferred revenue, I think deferred revenue is, as all you know, that is a liability to us, because we will keep a certain portion of the -- on service, so that deferred revenue in Q3 compared with Q2, yes, it dipped a little bit. But deferred revenue in our balance sheet actually consists of many lines, including game, music, dating and every, you know, using virtual items lines. I think specifically, there are two lines actually decreased a little bit, that is music and games. The reason that for them to decrease a little bit is because of the user behavior. As you know that when you actually use all your virtual items, then we will have to recognize larger portion of the revenue. When you actually save those virtual items and has not been used, put in to your inventory, then you have to defer to next quarter. So deferred revenue numbers will fluctuate over the quarter-by-quarter basis. So I think it's quite normal. Number two, our client-based game business actually has progressed very well. It's actually a small reason for us to have such a good performance in Q3. Moving forward into Q4 and next year, we do think that client-based game business would actually represent bigger pies in this online game revenue for us. Chao Wang – Nomura: Thank you.

Your next question comes from the line of Alex Yu of JPMorgan. Alex, please ask your question. Alex Yao – JPMorgan: Hi. Good morning everyone. Thank you for taking my question. I have two questions. Number one is, regarding your new initiatives, the game broadcasting and dating business. What are the fundamental demands you addressed for the consumers that encourage them to join the platform and make payments? And what have you done to drive the monetization? And secondly is, how do you think about the addressable market for these two business? And on a two to three years' view, do you expect these two business to be as significant as your existing gaming and music business? Thank you.

Yeah. Alex, you said game broadcasting business, and what is the second one? I missed it, sorry. Alex Yao – JPMorgan: Online dating.

Dating. Sorry. Okay, dating. Got it. Well, I think that both new areas actually utilize virtual item based monetization. I believe the whole fundamental is very similar to our current online game business and online entertainment business. Because online dating and game broadcasting business is something that user will have a very strong engagement and they will feel the belongingness into different teams. So they will support the players and they will support the games. So they would spend money to buy virtual items as a gift to those players. And on the dating, it's a little bit different because the people who actually participate in the dating scene, they are attending a show. They just want to let people know that they are capable of making friends there. So they will spend money to let people know their status. So that is the main incentive for them to spend money. So both of them -- both two line of business we believe has a chance to become even bigger, because as I see, as we see, that the industry trend, explained by David before, that industry is becoming even more open into the future. So, more game company would open up their platform or their games, allow us to have more value-added service to their games. So I think that will actually spur more interest of our users to participate into this business. In terms of dating, as you know, that dating has been -- or meeting people has been a very important service among internet users in China. We believe the next step for our dating business is to go out of the YY platform to attract users from outside of YY platform. If we can be successful doing that, we believe this online dating business could have a very long-term future and big future for us. Alex Yao – JPMorgan: Got it. Thank you very much.

Your next question comes from the line of Na Yu of ICB International. Na, please ask your question. Na Yu – ICB International: Good morning, David and Eric. I have three questions here for quick follow-up. First, a question regarding to the next year's growth. Do you have any expectation about the 2015's growth? What's your focus for the next year and what's the new revenue driver will be? This is the first question. Second question, regarding to the mobile side, can you share with us about the updates about your mobile business, like the traffic contribution, revenue contribution? Any matrix in that will help us understand your business, would be helpful. This is the second. And the last question is regarding to the competitive landscape. As we know, Momo is going to list in the U.S. and its momentum is quite strong. Do we see any potential impact on user acquisition from this player? Thank you.

Yes. I would translate the questions to David a little bit, and I will answer the first one. I would like to ask David to answer the second and third one. Na Yu – ICB International: Thank you.

Okay. For the first question, yes, we understand that the market actually already has built in 2015's growth rate. I believe, if I'm not mistaken, the market expect us to grow our top line in the range of 45% to 50% from 2014's level. That is the current market consensus. We think this goal -- we think this revenue growth is very challenging. But if you notice, we are a very strong company. We love to have challenge. So we would like to say that, for 2015, I think if we can deliver a revenue growth of 45% to 50% on the basis of 2014, we will be very happy. I think that's the goal that would wish we can deliver. And that is the current market consensus. As to the number two question for mobile and for the competition from the players such as Momo, I would like to ask our CEO, David, to answer the questions. David, please?

[Interpreted] Well, in terms of Momo's strategy, I think our strategy has been very consistent. It is our belief that we would like to provide service to our users, and specifically, our service is provided by different functionality. For example, our media business will use mobile YY to deliver our real-time online streaming services to our users. So we have mobile YY as an app. And for education business we will have a separate app, to provide the services to our users. For game broadcasting business, we have a separate app to provide the services. For online dating, we will have separate app to provide the dating services. And on top of that, recently we have added some additional features such as asynchronous content or static content. This is something new to us because in the past the services or the streaming that we provide mostly are real time. And now we believe this asynchronous content will help our users to understand our community a little better, a little deeper. Because there are a lot of content on our platform which is very premium content. We would like those content being remembered, being left on our platform so that users can come back and enjoy the content many times. So we added those new functions to mobile YY. We have seen actually those functions work very well for us. So that is the answer for the mobile part. Well, I think all those asynchronous contents help us to disseminate our content much better among those social networks platforms. Recently there is a song called Xiao Xi Bibibi [ph], it becomes very popular among the internet users. And that is actually original song from YY platform. We hope that this type of things will become even more popular and widely disseminated in the future. [Chinese language spoken]

Well, Momo actually, the founder of Momo is Mr. Tang Yan, is actually the ex-colleagues of David himself at NetEase, so they know each other well. And he would like to congratulate Tang Yan for the wonderful job he has done on Momo. And lots of luck and lots of congratulations to Momo. In fact, Momo is a company which is different from us. We don't think that we have too much of competition with Momo, because our platform, as all you know that, is mainly based on real-time communications, real-time streaming. And that's the core of our service. And on YY platform, the format, the style is like a show. It's like a party. So our users, when they actually get onto YY platform, they feel like they are a part of a party, a part of a show. So just like you are attending a Halloween festival so that you are part of it. And being part of it is entertainment for themselves. So this type of user participation and user experience is very different from Momo. So we don't see there is too much of direct competition between Momo and YY. Next question?

Next question comes from the line of Vivian Hao of Deutsche Bank. Vivian, please ask your question. Vivian Hao – Deutsche Bank: Hi, Eric. Thank you for taking my question. I've got two questions. First one, we've seen there's some deceleration in the paying user for music, while the dating site seems to be off a very strong trajectory. Just wondering if there's any cannibalization between this category -- these two categories. And the second question is, can you give us some color on the PC game contribution for this quarter? We understand you have joint cooperation with Shanda and GA. Just if possible, can we have a forward-looking outlook for the two -- for the MMORPG games that's currently under operation? Thank you.

Well, thank you, Vivian. Yeah. I don't -- first of all, I had been -- actually said many times, so far we have not seen any cannibalization between music and dating. I don't know where you get the number from, that our paying users of music is declining. No. But if you actually look at the third quarter's numbers, you maybe misinterpreted because in Q3 our music revenue is particularly soft, as I have indicated many, many times in the past. So I think third quarter is not representative at all. From our backend metrics, we just don't see there's any cannibalization between music and dating. To be honest with you, those guys who spend money on dating shows is a bunch of guys coming out of nowhere. We don't know where are those guys before. They are now the spender and big spenders in our music business, they are now big spender on our game business. So it's quite interesting. Just like David says, the diversity of our platform, our users is amazing. So you never know what's -- what are the new activity is going to emerging from YY platform in the future. And it's quite surprising. That's number one. Number two, you're talking about this client-based game collaborations with other game companies. Yes, as I indicated before that we started the effort and initiative in the beginning of the year and it's been three quarters. The progress has been very good, albeit a little slow. The reason is that, when we actually collaborate with all those client-based online game developers, they need to do a little work on their games, such as changing the scheme a little bit, changing the graphics a little bit, so that when we actually cooperate with them to run their games, the game that we cooperate will not actually cannibalize their existing games. So that from the outlook you would think that that's a different game, but the core is very similar. I think this approach is yielding some fruits now. In Q3 it's a small portion of the input for us to grow so strongly in the gaming revenues. I think moving forward into Q3 and 2015, I expect that client-based game collaboration is going to help us to grow our game revenues even further into the new year. Vivian Hao – Deutsche Bank: Thank you.

There are no further questions. I would now like to pass the call back to management for closing remarks.

Well, thank you very much. I think we reported great quarter. And thank you all for your participation. See you next time.