Good day, and welcome to the NetEase 2023 Fourth Quarter and Full Year Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brandi Piacente, President of Piacente Financial Communications. Please go ahead, ma'am.

Thank you, operator. Please note the discussion today will contain forward-looking statements relating to the 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 in 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 and the announcements and filings on the website of the Hong Kong Stock Exchange. The company does not undertake any obligation to update its forward-looking information except as required by law. During today's call, management will 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 2023 fourth quarter and full year earnings news release issued earlier today. Please note that certain financial information regarding Cloud Music we will be discussing on this call has been prepared in accordance with IFRS. For additional information including a definition of non-IFRS measures and a reconciliation of IFRS measure and a reconciliation of IFRS to non-IFRS financial results, please refer to Cloud Music’s annual results announcement for 2023. 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. Joining us today on the call from NetEase Senior Management is Mr. William Ding, Chief Executive Officer; and Mr. Bill Pang, Vice-President of Corporate Development. I will now turn the call over to Bill, who will read the prepared remark on William’s.

Thank you, Brandi and thank you everyone for participating in today’s call. Before we begin, I would like to remind everyone that all percentages we're talking about here today are in RMB. 2023 marks another year of innovation for NetEase. We drove momentum across our businesses, expanding our top and bottom lines year-over-year for both 2023 and the fourth quarter. Continuous cross-category innovation at NetEase Games is actively expanding and diversifying our ever-growing game portfolio. On top of our inherent strengths in MMO and Chinese culture-derived titles, in 2023, we have landmark success and breakthroughs in diversified genres. This powerful combination is driving our game business with healthy fourth quarter performance from both our new and time-honored titles. Looking first at some of our MMO performance for the period, we remain highly committed to supporting and growing the robust appeal of our esteemed legacy franchises, such as Fantasy Westworld Journey and Westworld Journey Online, with fresh content and exciting in-game events like our annual celebration for Fantasy Westworld Journey. In the fourth quarter, we held a series of carnival-themed events that re-invigorated players, reaffirming the importance of Fantasy Westworld Journey's IP and its stature as one of the most influential MMORPGs in China. The longevity of these flagship titles also underscore our commitment and ability to elevate traditional game standards through ongoing in-game innovation. Adding to our conventional MMO titles, our new MMOs are pushing the boundary of what MMOs can be. The revolutionary advancements we have introduced with games like Justice are evolving the genre as a whole and continue to gain player momentum. In the fourth quarter, the Justice Lishuihan [ph] franchise reached a new milestone of 100 million active users, encompassing a broad and diverse user base. In our experience, these are telltale signs of games' potential…

Thank you. [Operator Instructions] Your first question comes from Felix Liu with UBS.

[Foreign Language] Thank you. Let me translate myself. Thank you, management, for taking my question. And congratulations on Banhao for the mobile version of Naraka Bladepoint. My question is on the game. Can management share a bit more color on the R&D progress of the game? How would the mobile version differ from PC version? And what is your expected launch time for this game? Thank you very much.

[Foreign Language] Yes. I will do the translation. For the mobile version of Naraka, we did a test. Everything is on track. We did a test in Chengdu back in December. The result was fairly good. Regarding your question on the experience between mobile and PC, what William said is that during the past two and a half years operating on PC, we have accumulated time of experiences. And we're doing all the needed modifications and everything. Optimization for the mobile version. And regarding the going live date, everything is on track. And now our best estimate is somewhere Q2.

Your next question comes from Alex Poon with Morgan Stanley.

[Foreign Language] Congratulations management for very strong results and the game pipeline. My first question is regarding the overseas expansion of Eggy Party. We have launched in many countries already last year what our latest thought for the game in 2024. My second question is related to the progress of Project Mugen. Thank you very much.

[Foreign Language] Okay, I will do the translation. First of all, as everybody knows Eggy Party has achieved success in China and with tons of experience. And regarding overseas market, we are in the exploration period now. And we are doing that step by step validating a lot of cost up [ph] and thoughts to try different things out. [Indiscernible] please stay tuned, we are going together for the overseas market of Eggy Party. Regarding the status of product Yugan [ph] is under normal game development now and of course it’s also in the process of trying for the publishing number as well. The product has very specific, very clear positioning and development target and we hope in the area of ACG Open World Game we can make the game flagship enough to have this on the market. Thank you. Next question.

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

[Foreign Language] Thanks management for taking my question. My question is regarding overseas business. Can you give us some updates on overseas game plan and do we have any plan to expand or acquire more overseas studios? Thank you

[Foreign Language] So now we have studios in U.S. in the United States, Japan, U.K. and other countries. This is quite normal when we are going global. We have set up our studios around the globe, that’s quite normal. And we are going to, it's going to be a new norm for us in the future. Thank you. Next question.

Your next question comes from Yang Bai with CICC.

[Foreign Language]

Yes, I will do the translation. Regarding our understanding of the year, first we would like to say ACG Game is now the EBITDA [ph], looking globally now many companies successfully do that. And for NetEase we have our strengths, our experience our unique experience and strength, but what we are doing is keep exploring. What we can do is keep a humble and accretive attitude and keep exploring the new ways of doing creative, being creative in the year of game, design. And regarding the [Indiscernible] on the synergy between domestic success and going overseas, games the fun part of games are the same, regardless where the game stays, where the player stays. So what we can do is leverage what we learn on the fun part, how to do a fun game, how to do a game by design and apply that to global products. Thank you, and next question please.

Your next question comes from Jialong Shi with Nomura.

[Foreign Language] Thanks management for taking my question. I have a question on Eggy Party. We know that since the end of last year, many offline promotional activities have been held for your game Eggy Party. Just wonder what is the trend for your marketing spend this year, whether or not this promotional expense for Eggy Party was it rather for a acceleration in your marketing expense last year for? Thank you.

[Foreign Language] Yes, I will do the translation. Jialong you are right. In Q4, if you look at our marketing spending ofcourse as you are commenting there is some factor of competition that we have to deal in the market. But in the meantime, if you look at the recent performance, our performance during the Chinese Year 2024, Eggy Party achieved RMB40 million DAU achievement, which shows that the initiative we spent are quite effective. The result is quite good and quite effective. Looking forward, we don’t see a big increase on the marketing spending and we keep exploring the most effective marketing spending as well as the more rigid work with the spend. And the marketing spending increase shouldn’t be a concern. And William also talked about some greater macro [ph] backdrops that as you can see as the quality of games in general increased year-over-year it’s more and more challenging for other companies to compete in the market. For NetEase, because we have long-term, long time accumulation in the games development everything and we also invest weekly into our new project. So to some extent year of 2024 is actually a year of harvest to us. We are going to unleash the accumulation, experience we accumulated for the past 20 years and you will see more and more result of new games comes out. Thank you and next question please.

The next question comes from Lincoln Kong with Goldman Sachs.

[Foreign Language] So I will translate myself. My first question is about where we meet. So with our target to launch timeline for this game. It will be a cross-platform global launch for this time. And it seems, during the testing, it requires quite high equipment for the PC world. So would that affect the mobile world in terms of the gameplay and the components? How would that fit in both PC and mobile? And the second question is around the overall market. We do see some of the uncertainty around the macro economy and consumption going forward into 2024. So in those longer-term legacy games like Westfall Journey, and Westfall, do we see any of the change in terms of the user spending behavior or paying willingness on those games? What's our outlook for this year's gaming industry?

[Foreign Language] Thank you. I will do the translation. First of all, regarding your question to where Winds Meet. Where Winds Meet, as we explained, is the game we spent three years developing is a very high-quality martial arts-based open-world RPG game. Regarding the specific graphic question, that's something you don't need to worry about and players don't need to worry about either. Our engine has the capability to adapt on different hardware platforms to push the limit of that specific hardware but also make sure it's runnable on different platforms. So that's been taken care of by our in-house game engine and everything. In the meantime, for the game itself, it's indeed a high-graphic game on advanced hardware platforms. Also, from our experience, we saw people like the Wuxia culture like to play the game and we hope this game could be a vehicle that we could promote the Wuxia culture to the world as well. And to your second question regarding the macroeconomy uncertainties, how will that impact the game performance? From our observation, actually, gamers, they spend pretty prudently how much they spend in different games to get the fun they are pursuing. From our experience, it's not very related to macroeconomic conditions. It's actually more related to the quality of the game itself. Now, as we said, the gamers, not only in China, but globally, become more and more picky regarding the quality, which puts all the developers included to spend more and more effort to making high-quality content. Yes, that's kind of the game industry macro we're in. Thank you. And next question, please. I think we have time for one last question.

Thank you. Your last question comes from Ritchie Sun with HSBC.

[Foreign Language] So I will translate this question myself. So [Indiscernible] will be launched in March, and [Indiscernible] can be launched in the first half. So in terms of the user demographics, how big is the overlapping between these games and our existing games? And how would NetEase coordinate the promotion and launch schedule to maximize the hit rate? And when will [Indiscernible] be launched? Thank you.

[Foreign Language] So regarding your question on the two different martial arts-based games, these two games have totally different IP attributes. One is very loved by Jin Yong fans. The other one is more like an Asian reality kind of setup. And both games are developed by different teams with different art styles, different system setups. We don't see that the game is going to have a lot of collaboration with other games. And actually, our view is the market is actually looking for high-quality martial arts, open-world games. And by offering two high-quality martial arts games in the market with different positioning, we hope we can push the market further. And on the go-live date, everything is being prepared. Everything is on track. And yes, everything is on track. Thank you.

And that concludes the question-and-answer session. I would like to turn the conference back over to Brandi Piacente for any additional or closing comments.

Thank you once again for joining us today. If you have any further questions, please feel free to contact us and have a great day.

Thank you.

That does conclude our conference for today. Thank you for participating. You may now disconnect.