Ladies and gentlemen we apologize for that slight interruption in today’s conference. Good day again and welcome to the NetEase Fourth Quarter and Full Year 2016 Earnings Conference Call. Today’s conference is being recorded. And at this time I would like to turn the conference over to Ms. Brandi Piacente. 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 Litigation 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. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures, and a reconciliation of GAAP to non-GAAP financial results, please see the fourth quarter and fiscal year 2016 financial results news release issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on the NetEase corporate website at ir.netease.com. I will now turn the call 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. I would like to remind you that for the purposes of these discussions, all percentages are based on Renminbi. Before we discussed the financials, I will provide some opening remarks from William. Good morning and thank you all for joining us on today's call. As one of the largest mobile game markets in the world there is a massive appetite for premium game content throughout China. NetEase has been serving to growing online populations for the past two decades and now it is a great honor to be one of the leading publishers in the mobile market where we strive to introduce premium game contents to entertain and inspire our growing community. These are the efforts that have supported our growth across our business. In 2016 our total net revenues grew by 67.7% for the year and 53.1% in the fourth quarter compared to the same quarter in 2015. For the fourth quarter we saw year-over-year net revenue increases of 62.8% from our online games segment. 9.2% from advertising services segment, and 38.2% from our e-mail, e-commerce and others segment. It is no surprise that our returns growth has been led by our accomplishments in the mobile market. In 2016, we introduced more than 40 new mobile games titles, including a number of chart toppers it is through considerable focus and investments in R&D that enables NetEase to bring highly desirable games to Chinese and the global players. Our hit game Onmyoji has been widely embraced since its introduction in early September. It was named one of the top ten outstanding games of 2016 in China's IOS app store. We are very pleased with this game's early success and we see exciting opportunities to extend its popularity worldwide. In December, we began to release Onmyoji internationally, beginning…

Thank you, sir. [Operator Instructions] We'll take our first question from Eddie Leung with Merrill Lynch.

Good morning. Congratulations on a very good quarter. Two questions on your mobile game business, the first one is more housekeeping, could you give us some color on the contribution of mobile games within your online game revenue segment? And then the second question is about the gross margins, the size - the mix shifts to licensing games as far as our mobile games, I’m just wondering within mobile games are we seeing a change in gross margins as well. And if so, what would be the reason? Thanks.

So first of all maybe regarding your first questions about the mobile contributions for the game businesses up to the end of the fourth quarter it has come up to 64% and with regards to the gross margins for the licensing ending mobile I believe that it has also came to a relatively stable levels, but of course if you compare to the overall gross margins for the gaming segments, the decrease was mainly due to the higher contributions being coming from the mobile games and also the license games.

Thank you.

And we'll go next to Natalie Wu with CICC.

Hi good morning William, Onward, Juliet, and Brandi congratulations sound on a very strong quarter and thanks for taking my question. Two questions from me, the first one is can management update us the recent development of Minecraft, including launch date, monetization method, expectation and also how to collaborate Minecraft with education? And the second one is that can William show some color with us regarding the international expansion plan in the future.

[Foreign Language]

[Foreign Language]

So with regard to your first question about Minecraft developments, so basically William highlighted that historically there would be two games that got the highest revenue on the global basis. The number one would be Tetris and the second one would be the Minecraft, and basically for the launch date for our own Minecraft game titles we’re expected to launch it by July this year. And this would be a very good diversions and different from the prevailing international versions that are currently in place. And with regard to your second question about the international expansion plans and this is - we have already got the plans to launch the Onmyoji versions on the 21 of February and earlier than we have already launched the games in some other areas like Taiwan, Hong Kong and also New Zealand that got the number one ranking on those app store chart on those places. And coming alone, we are also expected to launch the versions of the Onmyoji, by May this year. And at all times, we believe that is NetEase by cumulating with over 15 to 16 years of game development, experiences with the fact that we have also got a very strong capabilities to self-develop the games, and we also expected that there will be more games to come to launch in the periods to come. And basically this would be our current about the international expansions.

And we’ll take our next question from Fan Liu with Goldman Sachs.

Morning William, Onward and Juliet, thanks for attending my question. Could you please share with us what are your invitation from a legacy titles such as FWJ and WJ all this year, we know that you tend to add more game content and also launch more promotion campaign follow titles, so which is now maybe you can add some colors on this front. And then I have a follow-up question.

[Foreign Language]

Apologize me interruption. We are experiencing again an interruption in the conference. And Ms. Liu you would just one moment we want to restate your question. Let me put everybody on hold for just a moment. I’ll let know this since we have speakers back on. [Technical Difficulties]

Hi Fan Liu.

Hi. Can hear me?

Yeah. Could you just repeat your question please, there’s some technical difficulties.

Sure. Of course. So my question is that could you please show that’s what’s your expectations from a legacy titles such as FWJ and WJ all this year. So we know that you plan to add more game contents in act of this year from this legacy title, so just I want to know maybe you can add some colors on this launch. And then I have a follow-up question?

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[Foreign Language]

So basically, sorry, Fan maybe you just get me to recap in English very quickly. So basically with regard to the expectations about the Company’s on two games WJ and also FWJ basically with a very long history. So game developments in the past 10 plus years we do have very strong capabilities to deliver the highest qualities and premium game to our players, and no matter we are talking about the PC and mobile games. We definitely what we able to deliver more new and innovative contents to our part of the players and as well as to serve our fans with the highest quality and enabling them to experience the best ever contents that they can from those games. And the early of the year we have also been implementing some try out on the AR technologies and going forward we would also be planning to incorporate this kind of features to our existing games like the WJ and also the FWJ.

Thank you. So my question, yeah, thank you. My second question is about we know that the e-commerce, e-mail others so quarter-on-quarter decline on gross margin this quarter, so may I know the reason behind that. Is that possible to have maybe around your breakdown between this and also platform been this, is possible?

[Foreign Language]

Okay. So Fan maybe I will take this question. So, basically this is quite obvious that in the past products there has been the probably the revenue coming from the e-mail, e-commerce and others segments. Just as what we have also highlighted in the press release because there are certain e-commerce businesses that has also been scaling down in the past quarters of which they what processed are relatively higher gross margins and that’s why you will see that there has been a decrease in terms of the gross margins in the fourth quarter. And in terms of the overall makeup of this segment just as what we have also previously highlighted I would say that a high portions of it would be coming from our e-commerce businesses like the Kaola.com and also Yanxuan.

And we’ll take our next question from Jialong Shi with Nomura.

Hi, good morning. Thanks for taking my questions. Congratulations on a very solid quarter. I have two quick questions. First is about we noticed there is the one of royalty expense book into our cost cut sales in Q4. So I just wonder which game if this royalty expense for is that a new game or it is related to some gaming - some existing games. And also I just wonder for Kaola and Yanxuan both business have been quite strong growth in the past quarters. If we look at the next few quarters you expect to see that growth rate for Kaola and Yanxuan to slow down because of that rising base effect, and also what is that trend for the margins of Kaola and Yanxuan over the next year. I would translate the questions myself. [Foreign Language]

[Foreign Language]

So maybe I just recap your second question about how we will pass the Kaola and Yanxuan development especially in 2017. So basically for both the Kaola and also the Yanxuan platforms they are both very important to us as an e-commerce businesses and for Kaola basically we are doing a huge and large volumes of purchases from overseas by ourselves, and which in the way we can ensure the authenticities of the goods and at the same time we are also offering a very good pricing to our customers who are purchasing from our Kaola.com platforms. And in 2017 in terms of this growth expectation we do anticipate that the growth rate would be much faster than last year, which is 2016. And also another point that we would like to reiterate is that the Kaola.com e-commerce platform is very unique by itself from all the other platforms doing similar businesses. And as for the Yanxuan businesses, basically we're adapting to a ODM models and we are pioneering with some very establish we known in large factories are producing still quality goods to our customers, and we are also making good use of this platform to deliver the highest values to our customers, especially China customers who are buying those stuff. And in a way that they can have a very good experience from those fine experiences. And going back to your previous question is about the one-off recognitions of the relative expenses. This is related to some of our existing licensing teams and that it has also come to the timing that we have to it at a one-time treatment.

We’ll take your next question from Hillman Chan with Macquarie.

Congratulations to the teams on a very strong quarter. I have two questions. First one is that regarding our overseas expansion I let say Onmyoji, could you also share more games in the pipeline that you want to bring into the overseas market. And these overseas markets what is our strategy to package the game that we publishing on our home or we partnering with some local distributors [Foreign Language].

[Foreign Language]

So basically with regard to our overseas expansion plans apart from a very good success that we have already made for Onmyoji there are definitely some other games that we are also making good progress things like the VR games which is called the Twilight Pioneers and the other one which is the - in Chinese which is the strategy [ph] and we have also been rolling the overseas versions as well. And we believe that in three to five years’ time based on our efforts by expanding our footprint in overseas markets, we do definitely got a much better developments on that front.

And also on the VR/AR game pipeline, could use share more colors for this year or next year and when do you see the VR/AR market would pick up more meaningfully in China and how do you see the barrier and how it size well, right now, people just requiring your VR/AR that you’ll see the pipeline. [Foreign Language]

[Foreign Language]

So with regard to the company’s strategies on the VR and AR front NetEase is definitely very serious and taking a leading role in terms of its developments and the potential game throw out in the market. And earlier this year in 2017 we have also been embedded some AR features within our Onmyoji games which also got a very good feedback from the market. And in fact another games which is - which can become considered as our first VR games which is called a Twilight Pioneers that we have to roll out on the Google platforms that have also been currently very good feedback so far.

We’ll take your next question from Thomas Chong with BOC International. Mr. Chong your line is open; please check your mute button on your phone.

Hi William, Onward, Juliet thanks for taking my question. I have a question about Onmyoji is about how should we think about the January performance versus the month of December, because we see that from marketing promotions for the games for other peers, so obviously month-on-month trend in January [Foreign Language].

So I believe that for now, because we would be focusing more on the yearend performances so far and so we would perhaps give more colors perhaps as a later stage.

Thanks Onward. May I have another follow-up question is about the online advertising trend. If any color about the sentiment this year and how we think about the growth rate in this year. [Foreign Language]

[Foreign Language]

So there would be two parts of the responses that William would like to highlight. So with regard to the advertising services trend, so basically, the simple answer to it is that we are still expecting that there would be a good growth in 2017, owing to the fact that we have quite a comprehensive mobile applications in place apart from the mobile news applications, we have our own stock and also the Cloud Music stuff and all of those would be able to generate a meaningful and good traffic stands off which we can also enjoy it could grow in 2017. And another point that William would like to highlight it would be with regard to how we view about the overall performances on the Onmyoji, because NetEase has been a companies that has been a very good capabilities of developing its own game and things like - games like the FWJ, WJ online have already been in the operations for 15 years, and they are still doing very successfully somehow this would be attributed this to our strength in order to develop some very new and premium content that can also fit the expectations of our targeted games and players, and in three to five years times we do see that not only just the Onmyoji is there would be perhaps some more great titles to put into the market that can also be doing a very good in the coming businesses. And at the same time, we are also expecting that the Onmyoji well within the would be following this similar trend that we have seen from the FWJ and WJ online that would also be a very long lasting game titles.

[Foreign Language]

Okay. So another supplement that William would also like to highlight it with regards to how the performances of Onmyoji’s in general was, is that the overall spending, I think assumptions that’s also been rising in the January this year.

And ladies and gentlemen that is all the time we have for questions today. I’d like to turn the call back over to management for any closing remarks.

Thanks everybody for joining us. If you have further questions, you can feel free to contact us or Juliet Yang and Hangzhou for the investor relations. Thank you so much.

Ladies and gentlemen, that does conclude today’s conference. We appreciate your participation.