Ladies and gentlemen, thank you for standing by. Welcome to the NetEase Inc. First Quarter 2014 Earnings Call. During today’s presentation, all participants will be in a listen-only mode. Following the presentation the conference will be open for questions. (Operator Instructions) As a reminder, today's conference is being recorded. And at this time, I'd like to turn the conference over to Brandi Piacente, Investor Relations. Please go ahead, ma'am.

Thank you, operator. Please note the discussion today will contain forward-looking statements, relating to future performance of the company and are intended to qualify for the Safe Harbor from liability as established by the U.S. Private Securities Litigations Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control, and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect NetEase's business and financial results is included in certain filings of the company with the Securities and Exchange Commission, including its annual report on Form 20-F. The company does not undertake any obligation to update this forward-looking information, except as required by law. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on the NetEase corporate website at ir.com. I will now turn the conference over to Mr. Onward Choi, acting Chief Financial Officer, who will read the prepared remarks on behalf of Mr. William Ding, Chief Executive Officer of NetEase.

Thank you, Brandi. Before I begin, please note that for the purposes of this discussion, all percentages are based on renminbi. The markets for traditional and mobile internet in China continues to expand and introductions of our high quality games, products and services, is starting to build as well. During the first quarter, we grew our top-line by 11.6% with advancements across each of our three core segments. Our online games businesses increased by 6.3% and advertisement services increased by 47.9% year-over-year. Our first segment which we have remained email, ecommerce and others also imply an increase in growth in our revenue contribution. Revenues from this business increased 81.4% in the first quarter compared with last year as we saw rapid growth in our ecommerce services from third-party lottery and insurance products. Looking further at our Online Games segment, our games provide users within the widest range game play and superior services for both ourselves developed and licensed games. During the first quarter we officially launched Blizzard Entertainment’s free-to-play digital strategy card game Hearthstone, Heroes of Warcraft followed by an iPad version of this game in April. Hearthstone has proven to be extremely popular with players and its iPad version quickly became the top grossing app and top free download in Apple’s China iPad app store. Our self-developed games also continue to increase its popularity as we make exciting enhancements that attract favorable attention from our loyal and growing communities. During the first quarter, we launched new expansion packs for Fantasy Westward Journey II, New Fly for Fun and New Westward Journey Online III, each of these games performed well for the period. As did, New Westward Journey Online II supported by a series of successful promotional activities. In the coming months, we plan to introduce a number of new…

Thank you, sir. (Operator Instructions) Our first question comes from the line of Alicia Yap with Barclays Capital. Please go ahead,

Hi, good morning. William and Onward, thanks for taking my question. My first question is regarding Hearthstone, so I understand this is quite new to our overall game portfolio. So can you help us understand how big will this game to become from both the contribution on the PC and iPad going forward?

(Foreign Language – Chinese)

(Interpreted) So, basically, with regard to the latest introduction of Hearthstone II within the market, basically it is ranking as the number one globally within the personal entertainment gaming product and also it got a very high ranking in terms of the user numbers. And with the introduction of this game product to the China market, we also see that this has been very popular and well received in the China market. With the launch of the other versions in April of this year, we have seen that the game itself has been ranked number one for two weeks in the Apple’s iPad Store China and Apple Store on both the top grossing release and three time release. And one of the very – the special features of this game is that, it is freely interchangeable upgrading to this game whether it is using the PC or the iPad and basically, we will not stop any specific differentiations of the income coming from the iPad or the PC and we do see that even though the game has been in the market for not long because as it has just been launched in April. But we still see that users or the players very interested to play this game and very popular to play on the iPad platforms owing to the fact that they also find user experiences of playing using the iPad has been very good. And going forward, we do see that the revenue contribution from the Hearthstone would be quite apparent given the fact that the game has been in the market for not long. It has been less than five months so far. We would like to take more time to see how it builds in terms of its performance going forward.

(Foreign Language – Chinese)

(Interpreted) Okay, so basically because the revenue data, because the product has been launched for a very short period of time within a month and so we have - yet to get a more of the revenues data from the Apple in order to build the – recognition of the revenue contributions from those games.

Thank you my second question is regarding the licensing that we have from Blizzard recently the Heroes of Storm. Blizzard’s is also beta testing the game. So I wonder whether you, NetEase would have any sense to be able to launch the games simultaneously as a global launch. And then lastly is, with the Ghost II from - which is operated by (foreign language) in China, would that be any, or potentially any impact to World of Warcraft? Thank you.

(Foreign Language – Chinese) (Interpreted) So, with regard to Alicia, your first question about potential launch of the Heroes of Strom, basically, we do anticipated that it would be launched on a quite close manner with the global launch or simultaneous launch because if you look back in the past, for the past one year, just like the World of Warcraft, usually, we would be able to keep the launch in the China market within one week following the global launch. And with regard to the (Inaudible) we do not foresee that this game will have any significant impact to our World of Warcraft.

(Foreign Language – Chinese) (Interpreted) And one statement that William has highlighted is that Blizzard is also very focused on the importance of the users in the China market and we would be working along these directions ambitions to make sure that the launch would be based on this one on a global basis.

Okay, thank you. So, William (Foreign Language – Chinese). So have you already applied for the license approvals from the government? Thank you.

(Foreign Language – Chinese) (Interpreted) Just wait until we got more updates regarding this.

Okay, thank you. (Foreign Language – Chinese).

Thank you. Our next question is from the line of Jialong Shi with Credit Suisse. Please go ahead, Jialong Shi – Credit Suisse: Hi, good morning William and Onward. Thanks for taking my question. First of all congratulations on the solid debut of the ourselves developed mobile game Mini Shield and the successful launch of Hearthstone as well. And most of the revenue from PC games, can management provide some color on the performance of your top five PC games and how their respective revenue trend?

(Foreign Language – Chinese) (Interpreted) So, Jialong, with regard to your questions about our top performing game titles, basically we are not ranking into order but perhaps we can give you a sense that up to now in terms of our self-developed games, our major revenue contributing game titles would be including our Fantasy Westward Journey online II, the new Westward Journey Online II, Tianxia III, Ghost II, Heroes of Tang Dynasty II and also the Kung Fu Master. Jialong Shi – Credit Suisse: Okay, how do your performance changed in both revenue and user traffic?

Well, I think, just as what we have highlighted in our press release or the earlier discussion, the performance of the game test has also been well on track and the user feedback has also been very positive. And we also see that they are doing good both in terms of this overall performance then also user traffic. Jialong Shi – Credit Suisse: Okay, understood. My second question is about, your mobile game Mini Shield. I just want, how much of the gross revenues in that platform was generated by NetEase primary channels?

(Foreign Language – Chinese) (Interpreted) So, basically, to recap on what we William has just highlighted of the Mini Westward Journey, with the launch of this game not long ago, which was on the 25th of April and we do see that this has been a very successful product though. And for now, in terms of the revenue contribution, more than 90% of this would be from our own internal channels. Jialong Shi – Credit Suisse: Understood. My last question is about the online – I noticed recently launched a new online platform, so can management elaborate its potential basic business model? And how is it different from your competitors (Inaudible)

(Foreign Language – Chinese) (Interpreted) So, basically, with regard NetEase’s online education footprint, first of all we have announced the NetEase education cost for more than three years history. And but now, it has more than 3000 hours of courses being translated and available for the users to download and to learn on a free basis. And earlier this year, we also undertook a co-operation with – and other very reputable service providers for the education and so far we have launched around 56 MOOC courses to allow the users to learn from it and basically one of the features of this education platforms is to allow the users are the awareness to get the learning credits are being certified after they have taken the course. And other things that we have also next we launching would be our – which is the NetEase cloud study room product. Jialong Shi – Credit Suisse: (Foreign Language – Chinese)

Thank you. Our next question is from the line of Tian Hou with T.H. Capital. Please go ahead.

So, William and Onward, couple questions, one is, I was wondering about the revenue contribution potentially from the mobile games. So, one thing I do realize from a launch of a mobile game operators, so the game is ready, it’s – when they reach the top in their ranking, so the revenue may not necessarily big enough, I speak as a user. And so, I wonder, we just launched several really popular games and I wonder how is the revenue contribution could be? Will that be, NetEase game revenue growth driver and so that is the first question. The second is related to the e-commerce business. So, in China markets, you get to know, that only two vendors are making money is - and Alibaba. A number of other ecommerce guys are actually making money and may not making money in the long time. So what’s our consideration in this area? (Foreign Language – Chinese)

(Foreign Language – Chinese) (Interpreted) Okay, so, with regard to Tian Hou’s first question about the revenue contribution potentials from the mobile games, basically, our will is that, as long as those games came to the proportion we do see that this got the good potential of being profitable. And we also anticipated that the profit viabilities of those mobile games that wouldn’t be lower than what our client base campus has been doing so far and another point is that, we have got good confidence to do this kind of new business initiatives regarding the mobile games on a very sustainable pattern. Because just as what we have experienced in the past, we have been asking by the investors that for some of our longer term operated game patents like the Fantasy Westward Journey or even the Westward Journey Online II and stuff like that, they have been in the market operational for up to 10 years and the investors would be interested to know whether it has come to the peak point and then it got some plan cycle issues. But the fact has proved that those games are still operating well and still making some new such records of peak PC numbers in recent years. And although we do see that the growth potential wouldn’t be best as comparing the past and that's what we have been doing so far. But we do see that we do possess the capabilities and the vision to make it to be a very sustainable business model. And this was to the first part. And with – to your second question on the ecommerce, so far, NetEase has been undertaking on a wide area of ecommerce related activities, say for example, the sellers of the games. We have already made it available to do it online or using the ecommerce kind of methods of doing so. And basically, for now users like our World or Warcraft and even our other games, users can readily available to purchase those points online. And secondly, with the introductions of the sales of the insurance products, the movie tickets and train tickets and stuff like that, we have been entering into the area of like a ecommerce area or so to call, without any logistic related kind of commerce, we do foresee that this would start a good fundamentals for us to move into this area. And other than those items that we have just mentioned, we have also get into areas like the financial products and even for the sales of luxury products as well. That's what we have cited in these earnings.

Those are very helpful. Just a follow-up on the luxury sales, recently the government they came say, none of the selling agencies online has government licenses. So will that be some concern going forward? William, (Foreign Language – Chinese)

(Interpreted) So, basically, just think of an answer to your last question, there has been some rumors in the market then, after that there has been some clarifications in the media or in the market. Yes.

That's all my questions. Thank you.

Okay, thank you.

Thank you. Our next question is from the line of Philip Yuan with Morgan Stanley. Please go ahead. Amanda Chen – Morgan Stanley: Hi, thank you for taking my question. This is Amanda Chen asking on behalf of Philip Yuan. My first question is regarding your sales and marketing expenses. You are going to launch some new model games and also you are going to broadcast your – starting from 2014, so I was wondering, well, if that impact your margins in 2014? Thank you.

Okay, with regard to your questions on the potential spending on the sales and marketing, basically, we are still upholding the business of holding about 12% of our total revenues on the basis of spending in order to promote our various products and services. And so you will see that, up to now, we do not foresee there would be a very significant impact or significant impact on our overall operating margins. Of course, we do see that given the higher sales force trends and there would be some competition pressures in the market, but our vision is to try and keep our current levels of the operating margin. Amanda Chen – Morgan Stanley: Okay, my second question is regarding the YiChat, as William just mentioned that you are going to introduce social networking functions through the mobile games by connecting them to YiChat, so, my question is, could you please give us more colors on that and if possible could you please give some operational data of internet and then your registered users. (Foreign Language – Chinese)

(Foreign Language – Chinese) (Interpreted) Okay, so, basically with regard to the company assets or the convenience on developing the YiChat business our focus so far we would make sure that the YiChat would be developed in a very well manner. And with regard to how to start – on the social networking impact, end of this month, we would launch new functions or new features on the YiChat platform by launching the mobile game and by then, we would be able to make it more complete user experience to the users of the YiChat. And with regard to the user population development, so far, it has been within our own expectations and our targets and we would also find a more appropriate timing to talk about the active user’s profiles on this new initiative. Amanda Chen – Morgan Stanley: Okay, thank you. I have another question if I may, so, regarding your mobile games, so compared to other PC game developer and companies what’s your advantage or in the mobile game area compared to that? (Foreign Language – Chinese)

(Foreign Language – Chinese) (Interpreted) So, with regard to our mobile games development capacity advantage is, basically we can take the recent launch of New Westward Journey game, begin to saw, it’s a very interesting game with rich game play and features and we also have the contest there is, it’s very fruitful as compared with all the other games so far as we identified in the market. And for other mobile games titles the performance was somehow be reliance on the channel’s abilities. So for – to us, our games is things on our own reputation and the qualities of the game and then is a saying that, the first year game products would be able to perform well based on this own reputation or its quality and the second tier games can only do so by way of finding the different channels so to call. And to give you another supplement on the performance of our various mobile games that have launched so far, for our licensed game like the Hearthstone, since its launch to the China market that has been standing at the top ranking for two weeks on the iPad’s App Store and our Mini Westward Journey so far it has been ranking in the top-10 in the China ranking list.

(Foreign Language – Chinese) (Interpreted) Another point that William would like to supplement is that, given the fact that it has been in the client base games, the development of markets for over 14 years and we have committed a very loyal and supportive players in the market and more importantly from time-to-time and then we’ve got some new game initiatives being launched in the market our players and our users would got the passion and got the wish to have a try of our new games in the market.

Thank you. Our next question comes from the line of Thomas Chong, BOCI. Please go ahead. Thomas Chong – BOCI: Hi, good morning. Thanks for taking my questions. I have two questions. The first question is about the advertising sentiment. Can management comment about the advertisement sentiment in your second half, as well as your views about the trend in mobile advertising going forward? And my second question is related to the online game revenue outlook. Given that the online games revenue grew by 6% year-on-year in the first quarter should we expect online games revenue will also to accelerate in the second quarter going forward? Thanks.

(Foreign Language – Chinese) (Interpreted) So, with regard to your first question about the advertisement sentiment, basically, we do hold a positive sentiment because of 2014 is a special year it’s because of the World Cup 2014 and with the fact that we are following with two popular football teams from the Brazil and Spain. And we are also the official partners to broadcast those matches and so we do see that this kind of content or the resources would stand out some good deals especially during this - special with this year and so we do look forward that in the second half of the year and there would be a good growth potentials in particular on our advertisements businesses. And at the same time, we also see that in terms of our monetization on our mobile user applications this has also been doing in a good trend so far with a better restructure of the advertising and the users in general. And on the second question regarding the online games outlook and for this year basically in 2014, this would be a year for NetEase to actually give away a lots of new initiatives whether they are the mobile games our self-developed games or even our newly introduced license games in this part of the market and we feel very positive about its growing potential in the upcoming period of this year.

Thank you. Ladies and gentlemen, that's all the time we have for questions today. At this time, I’d like to turn the conference back to Brandi Piacente for closing remarks.

Thank you once again for joining us today. If you have further questions, please feel free to contact Cassia Curran, NetEase's IR manager, based in Hangzhou or The Piacente Group. Have a wonderful day.