Brandi Piacente - IR, The Piacente Group Onward Choi - Acting CFO William Ding - CEO

Jialong Shi - Credit Suisse Alicia Yap - Barclays Thomas Chong - Citigroup Vivian Hao - Deutsche Bank Nick Ning - 86Research Tian Hou - T.H. Capital Charanjit Singh - HSBC

Good day and welcome to the NetEase First Quarter 2015 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brandi Piacente. Please go ahead.

Thank you, operator. Please note that 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 the reconciliation of GAAP to non-GAAP financial results please see the first quarter financial results news release issued earlier today. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on the NetEase corporate site at ir.netease.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. Our first quarter was driven by advancement in our online PC client and mobile games and other segments as we introduced new content and services. Total revenues increased by 54.2% year-over-year with growth [ph] from each of our business segments. Our online games business continues to [Indiscernible] with revenues from this segments increasing by 44% in the first quarter. Global games have become a major driving force in China’s online games market and we see substantial opportunities to diversify our gaming user base. We have seen remarkable interest in our self-developed mobile games, particularly for our Battle to the West and The World HD, both of which we introduced in the fourth quarter.. Moreover, our flagship game, Fantasy Westward Journey, continued to gain in popularity, with the mobile version of this game reaching No. 1 in the iOS China app store, and setting a record peak concurrent user count of 1.6 million after its introduction in late March. We now offer over 20 mobile games across over a variety of channels and we plan to build on this positive momentum as we deploy more new self developed and licensed mobile titles in the coming months. Our self developed online PC-client games also continued to be well received and there remains a successful [ph] appetite for new games as content. During the first quarter, users gave a warm welcome to the beta tests for one of our games under development Hegemon-King of Western Chu, our 3D warfare MMORPG. We also saw solid performances from Fantasy Westward Journey II and New Westward Journey Online II. In 2015, we plan to expand our portfolio with an exciting pipeline that includes a number of new online PC-client and mobile games, as well as new content for our existing games. We are already making progress towards this goal. In April, we commercially launched Demon Seals, a 2.5D MMORPG, and introduced expansion packs for New Westward Journey Online II and Ghost II. We have also received positive feedback from users in the closed beta testing’s of Revelation, our 3D oriental fantasy MMORPG, which began in January, with open beta testing to follow. We also continue to work closely with Blizzard Entertainment and have been delighted by the success of the open beta testing for the Chinese version of Diablo III: Reaper of Souls. That game sold over one million copies within 10 days of its launch in late April, setting the record for the fastest-selling PC game in China. We plan to begin open beta testing for Blizzard’s Heroes of the Storm in late May. We are excited to bring our successful games to overseas markets and to expand our global footprints. Later this year we plan to work with local partners to launch our games in other countries in Asia and North America so that users can enjoy the net user gaming experience. Looking at our advertising services business, this segment remains strong. Our Mobile News Application and the growing online advertising market in China, supported our growth in advertising services revenues which increased by 35.9% compared with the same period last year. Automobile, Internet services and food and beverage were the top performing advertising verticals in the first quarter. E-commerce in particular is an area where we see significant growth opportunity. While it is still in the early stages of operation, our self-operated cross border e-commerce platform, Kaola, has performed well so far. We are actively expanding our range of product offerings to service our growing customer base. Throughout the year we expect to see continued momentum across our businesses with high demand from the mobile market and stable growth from our PC client games and services. Our model is designed to build on our strength and lead new trends in China’s evolving online market. Throughout these changes our strategy will remain focussed on diversity, excellence and international expansions to achieve a healthy growth across all of our internet businesses where we can continue to serve our community and our shareholders. This concludes William’s comment. I will now provide a review of our first quarter 2015 financial results. I will primarily focus on the discussions of margins and expense fluctuations along with net profit. Before I begin, I would like to note that beginning in the first quarter of 2015 we made a reclassification of certain revenue and cost of revenue from our advertising services segments to our e-mail, e-commerce and other businesses segment. The reclassification of these segments reflects changes in the way we evaluate our business performance and manages our operations. The classifications of certain fourth quarter 2014 comprises [Indiscernible] in this segments has been changed to conform to the current period presentations. Total sales tax for the first quarter of 2015 were RMB225 million or US$36.3 million compared to RMB220.6 million and RMB153.5 million for the preceding quarter and the first quarter of 2014 respectively. The year-over-year and quarter-over-quarter increases in sales tax were mainly due to the increase in our total revenues. Gross profit for the first quarter of 2015 was RMB2.5 billion or $401.5 million compared to RMB2.5 billion and RMB1.7 billion for the preceding quarter and the first quarter of 2014 respectively. The year-over-year increase in online games gross profit was primarily driven by the revenue contributions from certain self-developed online games, such as New Westward Journey Online II and Fantasy Westward Journey II and licensed games such as Blizzard's World of Warcraft as well as mobile games including Battle to the West, The World HD and the mobile version of Fantasy Westward Journey. The quarter-over-quarter increase in online games gross profit was primarily driven by increased revenue contributions from our mobile games, Battle to the West, The World HD and the mobile versions of Fantasy Westward Journey. The year-over-year increase in advertising services gross profit was primarily due to strong demand from the automobile, internet services and real estate sectors, and the monetization’s of our mobile applications such as our mobile news applications. The quarter-over-quarter decrease in advertising services revenues and gross profit were primarily due to seasonality. The year-over-year increase in email, e-commerce and others gross profit was primarily attributable to an increase from our e-commerce services related to third-party lottery products. The quarter-over-quarter decrease in e-commerce and e-mail and others gross profit was primarily attributable to the temporary suspension of ecommerce services related to third-party lottery products since late February 2015, which was partially offset by an increase in revenues from our e-mail and other businesses in this segment. As expected, we saw some gross margin contractions in our online games businesses during the first quarter as we experienced increased revenue contributions from our mobile games which carry a relatively low gross profit margins. Gross profit margin for the online games business for the first quarter of 2015 was 73.1%, compared to 76.0% and 78.5% for the preceding quarter and the first quarter of 2014, respectively. Gross profit margin for the advertising services business for the first quarter of 2015 was 59.2%, compared to 65.9% and 47.8% for the preceding quarter and the first quarter of 2014, respectively. The year-over-year increase in gross profit margin was mainly due to enhanced economies of scale driven by revenue growth. The quarter-over-quarter decrease in gross profit margin was mainly due to the decrease of advertising services revenues due to seasonality. Gross profit margin for the e-mail e-commerce and others business for the first quarter of 2015 was 38.9%, compared to 48.2% and 6.7% for the preceding quarter and the first quarter of 2014, respectively. The year-over-year increase in gross profit margin was mainly due to increased revenue from e-commerce services related to third-party lottery products, which has a relatively higher gross profit margin. The quarter-over-quarter decrease in gross profit margin was primarily attributable to the fact that revenue from third-party lottery products decreased as a percentage of total revenues for this segment due to the temporary suspension I previously mentioned. Total operating expenses for the first quarter of 2015 were RMB1.2 billion or US$189.3 million compared to RMB1.2 million and RMB0.6 million for the preceding quarter and the first quarter of 2014, respectively. The year-over-year increase in operating expenses was mainly due to increased selling and marketing expenses for online PC-client and mobile games, promotions for the e-mail, e-commerce and others business, as well as the advertising services business, and increased staff-related research and development costs resulting from an increase in the number of employees and average compensation. The quarter-over-quarter decrease in operating expenses was mainly due to decreased promotional costs for online games and advertising services. We recorded a net income tax charge of RMB214.5 million or US$34.6 million for the first quarters of 2015, compared to RMB187.9 million and RMB179.6 million for the preceding quarter and the first quarter of 2014, respectively. The effective tax rate for the first quarter of 2015 was 14.1%, compared to 12.8% and 13.8% for the preceding quarter and the first quarter of 2014, respectively. We also had a net foreign exchange gain of RMB22.7 million or US$3.7 million compared to a net foreign exchange loss of RMB7.1 million and a net foreign exchange gain of RMB7.1 million for the preceding quarter and the first quarter of 2014 respectively. The quarter-over-quarter and year-over-year changes in foreign exchange gains and losses were mainly due to unrealized exchange gains and losses arising from our foreign currency-denominated bank deposits and short-term loan balances as the exchange rate of the U.S. dollar against the RMB fluctuated over the periods. Our net income attributable to shareholders for the first quarter of 2015 totaled RMB1.3 billion or $204 million compared to RMB1.3 billion and RMB1.1 billion for the preceding quarter and the first quarter of 2014 respectively. Non‐GAAP net income attributable to shareholders which excludes share‐based compensation expenses totaled RMN1.4 billion or US$229.9 million compared to RMB1.4 billion and RMB1.2 billion for the preceding quarter and the first quarter of 2014, respectively. Our basic and diluted earnings per ADS were US$1.56 and US$1.55, respectively, for the first quarter of 2015. We reported basic and diluted earnings per ADS of US$1.57 and US$1.56, respectively for the preceding quarter and the basic and diluted earnings per ADS of US$1.39 each for the first quarter of 2014. Non-GAAP basic and diluted earnings per ADS was US$1.76 and US$1.74, respectively, for the first quarter of 2015, compared to non-GAAP basic and diluted earnings per ADS of US$1.72 and US$1.71, respectively, in the preceding quarter, and US$1.46 each for the first quarter of 2014. As of March 31, 2015, our total cash and time deposits balance was RMB22.1 billion or US$3.6 billion, compared to RMB21.2 billion as of December 31, 2014. Cash flow generated from operating activities was RMB1.9 billion or US$310.6 million for the first quarter of 2015, compared to RMB1.9 billion and RMB1.7 billion for the preceding quarter and the first quarter of 2014, respectively. We continued to return value to our shareholders and are pleased to announce that in line with our public dividend policy the board of directors has approved a dividend of US$0.39 per ADS for the first quarter of 2015. We expect to pay this on June 05, 2015 to shareholders of record as of the close of business on May, 27, 2015. Thank you for your attention. We would now like to open the call to your questions. Operator, please go ahead.

Thank you. [Operator Instructions] We’ll take the first question from Jialong Shi with Credit Suisse

Hi, good morning thanks for taking my call. And I have a few questions. The first question is about your advertising business and your online [ph] advertising revenue gross was much faster than your total peers. So I just wonder how much your apps revenue was contributed by mobile apps and also the same constitute for your online gaming business and just wonder how much of your gaming revenue was from mobile games in 1Q. [Chinese language]

[Chinese Language]

Okay Jialong first of all regarding the mobile apps contributions for our advertising businesses just as what we have mentioned in previous calls we haven’t disclosed the exact percentage of this but it has also been come to a double digits levels and on a quarter-over-quarter basis we have also seen there has been a good growth in terms of this contributions from the mobile fronts for our advertising businesses. As for our mobile game revenue contributions in the last quarter as we mentioned it has come up to a – of about 1% and for this quarter it has come up to 20% about.

With a percent of your total gaming revenue?

Yes.

Okay, so in terms of the mobile games, I just I know you guys have launched a mobile apps titled Fantasy Westward Journey in Q1 so how much of your mobile game revenue was configured by mobile Fantasy Westward Journey? [Chinese language]

And so far as the launch of the mobile versions of Fantasy Westward Journey is concerned because it has been just launched by late of March and we have also seen there has been some contributions there, but we haven’t been disclosed the percentages what they have so far, but and so far if you look back to our performances on the ranking board on the China iOS app store it has been upkeep as a ranked as number one on that chart for already over months and so you will see that its performances have been very encouraging.

Understood thank you. And my second question is about how large the cross border you kind of dismiss [ph] and I just wonder what they are like or what it can be for Kaola or what advantage can it be for Kaola. I know recently you said you guys just started in Q1, so maybe in Q1 the changes was still small, so I just wonder what percentage it can be and what you think are your competitive edges in this first quarter you kind of.. [Chinese language]

Okay, with regard to your questions about our cross-border e-commerce businesses and so far that this would be our newly introduced business initiatives and we are still in the early stage of implementing these new business strategies. We are still seeing how it goes down the roads. And so far we are still quite happy and satisfied with this performance so far and perhaps we will give you more colors to it at a later stage.

Thank you very much the answer. Congratulations on a very solid quarter.

Thank you. Once again next question from Alicia Yap with Barclays

Hi, good morning, William, Onward, Brandi and Cassia. Thanks for taking my questions. And also congratulations on the strong results. I have two questions. Number one is regarding the fantasy mobile, fantasy versus journey mobile. So what makes fantasy mobile so successful, how long do you think the strong trend [ph] highs and traction to continue. And then given typically mobile games usually have a relatively short life cycle. Should worried for fantasy or will this be an exception? [Chinese language]

[Chinese Language]

This is William. So with regard to your questions about the [Indiscernible] our business launch on the Sinotrans mobile versions first of all on the IPs of this game itself has already been surpassed 10 years or more than 10 years in the market. And so far as the project teams is concerned they have been working very diligently and in order to enrich the game content and the game play as well as in order to make it to be a very good product to our targeted audiences or the players in the market. And that’s why for this mobile version of the Fantasy Westward Journey game we have to do quite a lot of inspirations and new innovations in the way to attract our targeted audiences in this new space. And we have also taken the previous experiences that we have earned or developed so far in executing or running our own busy client Fantasy Westward Journey games in the market. And so that’s why we believe that we have do a very good job in order to shape a very competitive and good quality products in the market place. And so far as this performance is concerned we are still quite happy and satisfied with this performance so far and we are looking forward that we would be working more game titles along these lines to put forward to the market. Thank you.

Okay, thank you. Second question very quickly on impacts on the lottery suspension, so when do you think the suspension to be leased and after it is leased how should we think about the revenue of rents compared to previously? Thank you. [Chinese language]

[Chinese Language]

Okay in terms of the temporary suspensions is concerned I think the companies will not be in the most suitable positions to comment on when this would release or this suspension would be over. But we would be consider that and so far as this revenue contribution is concerned it is still a relatively small part to the overall businesses that we have been doing. And I think this would be the updates that we can share with you for now. And in case we do got more updates with us on the developments we’ll keep you posted as soon as possible.

Okay. Great, thank you.

We’ll take the next question from Thomas Chong with Citigroup

Hi, good morning thanks for taking my questions. . I have two questions. The first question is about the mobile games market as well as Fantasy Westward Journey. Given we have seen the lifecycle of mobile games in China is somewhat like idea [ph] also, so how should we think about the life cycle for mobile Fantasy Westward Journey, then I have a follow up, thanks? [Chinese language]

[Chinese Language]

So with regard with our expeditions on the life cycles for the mobile games or perhaps the Fantasy Westward Journey games titles in particular basically we have full confidence about developing long listed mobile games like the Fantasy Westward Journey that was launched recently. And if you look to the market so far there would be a couple hundreds of thousands mobile games in the market and not many of them would be very successful. But given the fact that because of for net uses that we are pursuing the highest qualities and the best user experiences in launchings and upgrading our various products and sources. We believe that and – with are continuing innovations and to adding some creative stuffs to our games. We do look upon that; we would be able to run out something that would be of a much longer life cycles.

Thanks, thanks for the answer. And my second question is about the cash, given like you said such a high cash would management kind of see increasing the dividend payout ratio or any other area you would consider doing M&A etcetera? Thanks. [Chinese language]

[Chinese Language]

So basically the company will still be upkeep with our three main directions on the potential utilizations of the cash. First of all the dividend payout which we already have a very clear quarterly dividend policies that we will be giving about 20% to 25% of the quarterly net incomes by returning values to our shareholders. And secondly, hopefully if the conditions or the criteria would be suitable then we would also be considering some potential buyback or stuff like that. And you would also be aware that we have one last program that we announced in last year that unfortunately we haven’t been brought out brought back any shares upon this in February this year. And that the – of course the company has also been actively pursuing some investing opportunities in the market and we believe that those will be the streaming [ph] ways that we will be considering utilizing the cash going forward.

That’s all of it.

Okay.

We’ll take our next question from Vivian Hao with Deutsche Bank.

Hi, Onward and William thank you very much for taking my question and congratulations on a great quarter. I had two questions, first of all we’ve seen that the mobile Fantasy Westward Journey has been a great success so far, just trying to understand how can it be listed is our mobile games to our legacy PC online portfolio under the same IP. For example like we still have, we have [Indiscernible] and also probably incoming we have the Westward Journey Fall, this is my first question? And second question is regarding can we get a sense to roughly like how much lower is the margins for our mobile games versus PC games that will be very helpful? Thank you. [Chinese language]

[Chinese Language]

Okay so basically Williams comments is that and so far as the game is concerned we do not see that would be a very obvious or significant kind of realizations coming up from the launch of the mobile games to our existing PC client games. And with regard to your second questions about the mobile games gross margins basically we have previously also highlighted that we are expecting that is overall gross margins would be lower than what our existing PC games will be doing, the most obvious fact is that there would be some revenue sharing cost that we will be paying out to the third party distribution channels but having said that and so far as the distributions of the mobile games is concerned, we would be implementing an overall strategies by considering what works best in order to put forth to the market, of course while we would be using some third party resources and at the same time we would also be making good use of our own internal resources to distribute our own games titles.

This is clear. Thank you very much.

Thank you. We’ll take our next question from Nick Ning with 86Research.

Hi, thanks for taking my questions and then congratulations on the strong results. So my question is with the success of a Fantasy Westward Journey mobile are we confident that we can obtain a bigger market share of mobile and PC in the next two years even though we were a bit late in mobile gaming. And how do we see the overall mobile game market despite a relatively short period, will this become much bigger by size than PC Gaming? Thank you. [Chinese language]

[Chinese Language]

So basically with regard about the market shares in the mobile games markets, first of all we have a very strong confidence about making good market shares in this part of the new businesses and the very clear signs that you can make reference to this our [Indiscernible] about the top grossing applications the Fantasy Westward Journey has been ranking as number one for a very long time and at the same time for the top pay chart. You would also see that our latest launch of mobile games like the MMORPG has also been ranked as number one. And so far as the overall gaming package is concerned for both the mobile and also the PC-client games markets is concerned we still believe that the success package would be attributing to companies that will be able to deliver some highest quality stuff to the markets in order to secure their positions in the market place. And at the same time we do see that with the various new initiatives in terms of the PC-client games that we have been doing we are also in a very confident position to think that we will be doing good in the gaming market.

Thank you. And my second question is judging by the current trend of Diablo III, do you see its possible to become as big or even bigger than what workout in China? [Chinese language]

[Chinese Language]

And so far as the launch of Diablo III is concerned with the relatively strong launching [Indiscernible] since it has just launched on the 23rd of April not a very long time so far we are still quite happy with this performances. And for PC games like these which you say adopting the onetime payment model we do see that the upcoming performances would be depending on how the contents will be developing or evolving whether or not we would have richer contents within the games and how the game play would be evolved to make it more attractive to our targeted audiences. And while we wouldn’t be making any specific expectations on how good the game will be doing but we still believe that this would be a very successful PC game in the market place.

Well thank you. Congratulations on the strong results again.

We’ll take our next question from Tian Hou with T.H. Capital

Hi, William and Onward. So I have a question related to mobile game. So what’s the major channel of your mobile distribution besides the app stores? And how much of the traffic actually comes from your issues [ph] and do you also take you know use this payment from overseas this is also in app store? [Chinese language]

[Chinese Language]

With regard on to the distributions of our mobile games, basically we would be emphasizing and also placing much effort to make good use of our own internal resources to promote our various game titles. And just now you mentioned about the YiChat and this is not the only way that we will be distributing our phone game titles. In fact we would have also gotten some other very popular and traffic rich [ph] mobile applications available on hand including the mobile news applications and Youdao dictionary. And definitely this would be our interactions with what we are doing going forward. And so far as the overseas payments is concerned this option is already available in the U.S. markets for games like the Fantasy Westward Journey and for players in the overseas market like U.S. the players can make the payment there. And basically we are also setting aside our work of – of working, expanding our foot links outside the China market and with the concurrently doing the localizations of our various games titles we would be looking for that more and more games would be made available or distributes in overseas markets via the Apple stores or the Google Play. And for other game title distributions just like Battle to the West we have also been into operations with a Korean company and also in Taiwan and also Thailand and a company called the [Indiscernible] and so you will see that in terms of the overall distribution strategies for NetEase we would be embracing it very wide and extensive and comprehensive solutions in order to put through our various skin titles to our targeted audiences in different parts of the world.

This is very helpful. May I ask one more question, this is related to your mobile, BOBO is like a mobile entertainment, so I wonder if you could give you some color on the progress of that. And also in terms of your e-commerce program, so what is your plan for your overseas direct title program so do you plan to make it a major part of the business or it’s just a side business? [Chinese language]

[Chinese Language]

So with regard to your first question about BOBO basically this would be our online video entertainments services that have been offered to our targeted users. And in fact or so called the internet interactive communication services, we have two services in particular one is called the BOBO and the other one is called the CC. The BOBO one is targeted more to the public entertainment needs and the CC is more targeted to the game broadcasting to explain how the games would be doing and to show some of the tournaments or the performances of various games on these channels or the self-operating platforms. And so far we have also accumulated quite a good user base there a traffic reach and with our new innovations there and we also see that our targeted users has been expressed very positive effect to us of using these two different platforms. And in so far – and one more thing and so far as the cross border e-commerce is concerned basically we are still looking forward that with the launch of Kaola, cross border e-commerce since they generate it we have been using this spending to source good values or value for money is crossing [ph] over the world in different parts of the world. And you will appreciate that for NetEase we have been doing very well in particular to on the information surfaces and we are looking upon that as we are entering to a new emerging areas like the cross border e-commerce we will also be doing a very good on the merchandised surface to our targeted customers in China. And what we have said as our visions is that for the self operated cross boarder e-commerce platforms we would like to become one of the top three operators in the market place and we also look upon that with discount of platform services, we would be working out something more meaningful perhaps in a year’s time.

That’s very helpful. Thank you.

And your next question from Charanjit Singh with HSBC.

Good morning. Thanks so much for taking my question, and again very nice results, congratulations. I was wondering if you can just give us an update on YiChat. I read in the press that you are sort of launching more features and functionalities, so if you can just give us an update on maybe users, habits you know if any type of operational update on YiChat would be very helpful. Thanks so much. [Chinese language]

[Chinese Language]

So basically in terms of the newly introduced or implemented functionalities for the YiChat services data back in the Chinese New Year holidays we have launched the free call functions on the YiChat platforms which also prove to be very popular to our targeted users. And we have also seen that both the traffic and the activity in the network has been rising since then. And we are also quite happy and satisfied with this performance so far and we will update our momentum in the rated [ph] capabilities to roll out something more interesting to the market. And we do see that what the market or the users has been expecting is a more efficient and easy to use tools to facilitate their communication needs or interactions needs. This is also our long term visions to operate this kind of communication services in the long term with a more successful will.

Thank you.

And we’ll take the next question from [Indiscernible] with CICC.

Hi, good morning William Onward Choi and Brandi. Thanks for taking my questions and congratulations on a solid quarter. I have two questions; first you mentioned that you have overall expansion later this year. Can you give us some extra color on this plan? Are you – to mobile game or client base game on this aspect and what’s specifically kind of game will you involve? You already have overseas version of Battle to the West, are you just planning to reach the overseas portfolio in addition to that or you are going to take more significant steps and will you recruit more people and overseas results [ph] to facilitate better expansion. [Chinese language]

[Chinese Language]

Okay basically was making indications on the of the terms that you have just used. Basically rather than saying that we are doing expansions in on the gaming business to be more specific we are referring to our overseas distributions of the games and basically our targeted products would be focussing on the mobile games. And so far as the game titles are concerned so far other than Battle to the West we have also got other games like The World HD and also the Speedy Ninjas that soon go to the overseas market. And basically we would like to fit and reach the different types of mobile games that we are going to roll out in the overseas market and one way of doing it is that we would be distributing it by ourselves and we would also be considering to get into co-operations with some other parties in the overseas markets.

Thank you, William. So I notice that how the iOS and Android version has already been released last month, wondering how you get some revenue sharing from this game and if yes how much could we get and how much should we allocate to [Indiscernible] as it claims to be the operator on the Android version. [Chinese language]

[Chinese Language]

So basically you are right in saying that we are distributing some of the – tone on both the Android and also the self-operating [ph] platform and that there will be certain stipulated rules on how the revenues will be sharing out on different platforms.

That concludes today’s question and answer session. I will turn the conference back to management for any additional or closing remarks.

Thank you operator, and thanks everyone for joining us today. If you have any further questions, please feel free to contact Cassia Curran, NetEase's IR Manager based in Hangzhou or the Piacente Group Investor Relations. Have a wonderful day. Thank you.

This concludes today’s conference and thank you for your participation.