Good evening, ladies and gentlemen. Welcome to NetDragon's fourth quarter and fiscal year 2015 earnings conference call. At this time, all participants are in listen-only mode. There will be a presentation followed by a question- and- answer session. I would now like to hand the conference over to your host today, Ms. Maggie Zhou, Senior Director of Investor Relations at NetDragon. Maggie, please go ahead.
Thank you. Ladies and gentlemen, good evening and good morning. I would like to welcome everyone to our 2015 fourth quarter and fiscal year results earnings call. Before the presentation, I would like to remind you all that this call may contain forward-looking statements, which may not be relied upon in the future for various reasons. Non-GAAP data is included as part of this presentation. Non-GAAP data is not expressly permitted by the Hong Kong Financial Reporting Standards and therefore may not be comparable with other similar indicators. For more details on Non-GAAP financial measures, please refer to NetDragon's disclosed documents on the company's IR website at www.nd.com.cn. The company results were released earlier today and are available on our IR website. A webcast replay of the conference call can also be found there following the conclusion of this call.
Please allow me to introduce our management team who joined us today, Dr. Simon Leung , our Vice Chairman and Executive Director. He also holds the position of CEO of Huayu Education. Mr. Ben Yam, our Chief Financial Officer. Simon will begin with the review of recent developments in NetDragon, followed by Ben, who will then review the company's games business and go through the financial and operational data. Simon will update our strategy in gaming and education business. They will both be available to answer your questions during the Q&A session that follows. I will now turn the call over to Simon.
Well, thank you, Maggie. Good morning, good afternoon, good evening, everyone. Happy Easter to you all. Thank you for calling in. I think it's going to be an action-packed call today because we're going to be talking about not only Q4 2015, but we'll talk about the whole year, take a look back at what we have done in 2015, and more importantly, looking forward to the rest of 2016. I think it's going to be quite exciting. As Maggie mentioned, we decided to do the flow slightly different this call. What I will do is I'll make a short comment on Q4 in 2015. I'm going to hand it over to Ben, our CFO, who can run through the numbers and some of the details, overview for both the gaming and the education business.
Then I will come back and talk a little bit about kind of looking at the crystal ball, looking at the rest of 2016 in both the gaming and the education business. Also talk a little bit about our focus for this year, and then we will open it up for question and answer. With 2015, when we look back, it is actually quite an eventful year. So I joined the beginning of the year. It is a lot of fun. So I am so happy that I have the chance to join this team and going after these wonderful opportunities that we see in both in China and also globally. I think for last year, we went deep and we went wide. What I mean by that is actually we expanded geographically. Not only we are doing business in China, but we are also expanding our coverage globally.
I am happy to report this is both for the education business and also for the gaming business. When I say we went deep, it is actually, as you know, we have been developing and building our ecosystem. So we invest heavily into that. Mind you, we will continue to invest heavily into the technologies that is required to build up an ecosystem. At the same time, we have invested a lot into building up our sales and marketing capability. We can talk a little bit more detail later on. A lot of activities, a lot of positive progress in both businesses. So I talk about both on the technology standpoint and also from a sales and marketing and general standpoint. Last year was a very exciting year for gaming. Ben will go through some detailed numbers.
We also continue to invest in learning, both organically and inorganically, which is actually a part of our strategy. Some high-level discussions on gaming. We are seeing a growth close at around 20% year-over-year growth, which is actually very exciting. Our new game is actually Calibur of Spirit. Again, Ben will talk in more detail, is actually getting a lot of momentum. We are very excited about that. In addition, we launched some online games, that set the stage for us to do even more in 2016. The other exciting thing is actually our overseas expansion. We are seeing growth in our overseas market. So overall, very good year for gaming. If you look at our lifelong learning businesses, it was a very busy year. We build, we acquire, we partner. We talk a lot about our acquisition of ChiVox, the voice technology company.
Promethean, one of the world's renowned company in both hardware, software, ecosystem in the K12 space. We completed the acquisition in Q4 last year, so our result will reflect that. Again, Ben will go into details. We invest heavily into our ecosystem, which we call the Common Platform. This is actually quite exciting because the Common Platform is not only for us, but also for our partners, we will open it up so our partner can take advantage of it. Also, we have spent a lot of time upgrading our IM product and our App Store product, which is going to be a critical part in our building towards the community and also our monetization strategy. Collaborative Classroom is actually getting a lot of momentum, both in the Promethean space and also in China. It is actually, in Promethean, we call it ClassFlow.
In China, we call it Collaborative Classroom, so getting momentum. I just have to remind everybody that one of the reasons we acquired Promethean is actually because of their reach in terms of the market. 2 million teachers on Promethean Planet, over 1.3 million classroom with our product in there. The channels and the reseller network that they have in the developed market is going to be a critical part of our growth globally for our learning business. We also spend a lot of resources in building up our sales and marketing channels inside China. This is in addition to the channels that we have in Promethean. All in all, very exciting year on lifelong learning. To be very specific on Q4, two key initiatives that we focused on in Q4. One, of course, is the integration of Promethean into the NetDragon family.
We spent a lot of time integrating the organization, both the front of the organization, which is sales and marketing, and also the back end, which is support, and last but not least, on the product side. We spent a lot of time working on leveraging the product roadmap on both sides. I should say on our own side now, because we are all one big company. We are going to be seeing some fruits of that integration very soon. In terms of progress in China, we are happy to report in Q4, we signed over CNY 100 million worth of contract. We took some revenue, actually some of them flow through into 2016. The contract actually cover about 5,000 classrooms in over 400 schools. So far, the response from the installation has been very positive. With that, I am going to pause.
I am going to hand it over to Ben, our CFO. He will be talking on the specifics, and I will come back and I will talk a little bit about, or a lot about 2016. Ben?
Thank you, Simon. Hello, everybody. I am going to first talk about the financial and operational highlights. I am going to go over first the gaming business, and then I am going to talk about the education business. Finally, I am going to share some key consolidated financial highlights for the company as a whole. First of all, the gaming business. The revenue for the gaming business for the full year was CNY 985 million, which was an increase of 11% year-over-year. For the fourth quarter, the revenue was CNY 283 million, representing an increase of 19% quarter-over-quarter. The segmental profits for the gaming business was CNY 357 million, an increase of 18% year-over-year. The strong growth in the revenue and the operating profits for the gaming business is driven by two major factors.
The first factor is that throughout the year, we experienced a very strong growth in our new game, Calibur of Spirit, which reached a record-high monthly gross revenue of CNY 32 million in December. The second factor is that we also experienced very strong performance in the overseas game revenue, in particular, in Conquer Online. That is a result of our initiative in enhancing a lot of the game features and also on the monetization strategy. In terms of the outlook for 2016, we are actually expecting a very strong year ahead for the gaming business with several growth drivers. First of all, Calibur of Spirit, we expect Calibur of Spirit will continue to generate significant growth given the strong momentum in Q4. We expect the strong momentum that we got in Q4 is going to carry over into the new year.
In addition to that, we are also going to be launching a new mobile game for Calibur of Spirit. That would leverage the success of the PC version and also the huge player base of the PC game title. Furthermore, we are also going to be launching one to two new mobile games for Eudemons Online, and those one or two games will be launched in the second half of this year. In terms of the longer-term outlook for the gaming business, we are going to be continuing to build new games, leveraging the brand value of our flagship game titles, in particular, Eudemons Online and Calibur of Spirit. These new games may extend into different categories, including 3D, VR, or card games, and with different gameplay or storylines.
In addition to that, we are going to be looking into leveraging our success in Calibur of Spirit to build an ecosystem for the esports community. That will further accelerate player acquisitions for Calibur of Spirit and also will lead to further monetization opportunities for the community itself. Over to education. For the full year, revenue was CNY 243 million, which increased over six times year-over-year. The bulk of the revenue, as a lot of us would expect, was in Q4, with revenue of CNY 210 million. In Q4, we started to recognize revenue from our pilot sales of our K12 product in China as we started to complete the delivery and validation of products for our customers. In Q4 alone, our sales in China of our K12 education product was approximately CNY 40 million.
At the end of Q4, we also have about CNY 100 million of sales orders that has been secured, and that is expected to be recognized in the first half of this year. In addition to our China sales, in Q4, we started to consolidate the revenue from Promethean as we completed the acquisition of the company in November. So we consolidated about two months of revenue in Promethean, which is approximately CNY 156 million. It is also worthwhile to mention that as we look into the new year, the Promethean sales actually has a very high seasonality. The peak of the revenue is generally in Q2 and Q3 because that is the school's buying season. In general, Q2 and Q3 accounts for about 60%-65% of the whole year revenue.
Q1 and Q4 generally will be slower in terms of revenue, and historically speaking, Q1 will be weaker than Q4. Because there is no seasonality with operating expenses, basically the seasonality in revenue will carry over to the bottom line or the net profits. Generally speaking, we expect Q2 and Q3 will be the highest in terms of net profits. On the cost side, we actually are conducting cost reviews on several fronts on Promethean, and that will cover various areas, including supply chain and also the cost structure of various product portfolio and also our functional departments. In the meantime, we are also investing in boosting the sales and marketing team at Promethean and we also have increased sales headcount substantially in order to drive revenue growth.
If you look ahead to 2016, in China, the K12 education sales, it is going to be at a multiple level compared to 2015 as we transition from pilot sales into a full product launch this year. For Promethean, we are expecting Promethean as a whole to generate positive net profits for the full year of 2016, and that will be driven by significant growth in revenue, which we expect, and also cost rationalization. Finally, for the company as a whole, let me share several key consolidated financial highlights. Revenue for the full year for the company as a whole was approximately CNY 1.3 billion, an increase of 32% year-over-year. Non-GAAP operating loss for the year was CNY 22.5 million. Adjusted non-GAAP operating profits for the year, which excludes one-off tax charges and also one-off professional fees related to the Promethean acquisition, was CNY 0.6 million.
For the fourth quarter, non-GAAP operating loss was CNY 8.2 million and adjusted non-GAAP operating profits for the quarter, excluding the one-off expenses just mentioned, was CNY 1.2 million. It is also worthwhile to point out that it is meaningful to look at the non-GAAP figures rather than the GAAP figures if you look at the bottom line because non-GAAP figures exclude, among other non-cash items, amortization on intangibles and goodwills related to the acquisitions and also on the loss on revaluation of derivatives related to the preferred shares that we issued in our education subsidiary as part of our Series A equity round which we completed in early 2015. Finally, for dividends, we are proposing a final dividend of CNY 0.10 per share, subject to approval by shareholders at the coming AGM. We are proposing dividend because of our high profitability in the gaming business.
While we are investing heavily in the education market, we are very confident that the return on this investment will be extremely rewarding. Let me sum up, because there is actually a lot of details that I went through, so I just wanted to take the opportunity to sum up what I just highlighted for games and also for education business. Basically, for the gaming business, we are looking at a highly profitable gaming business in 2015, which we expect the growth momentum will sustain into 2016, and that will be on the back of success in Calibur of Spirit and also launching of several new games, including the mobile version of Calibur of Spirit, and also the mobile titles for Eudemons Online. For the education business, 2015, we carried out a successful launch for our pilot sales program.
Again, we have 100 million of sales orders secured at the end of last year. 2016, we're going to be transitioning into a full sales launch mode. In China, our K-12 product sales will be multiple fold compared to 2015. Promethean, again, we are increasing a lot of our sales and marketing resources. We are conducting cost rationalization, and we are also carrying out a series of integration initiatives. That's why we expect to see a big growth in revenue in 2016 and also a profitable business for Promethean as a whole. With that, I will turn back to Simon.
Thank you, Ben. Let me talk a little bit about 2016. First of all, we are a technology company. We will continue to focus in enhancing our competitive edge in terms of technology. If you look back, we have made substantial investment in the technology in 2015, be it in the area of cloud, big data, IM, voice, and video. 2016, the new addition that we're going to be looking at is actually in the 3D, VR, and AR area. A lot of people talk about VR, but we are taking the approach that we see VR and AR actually as a continuum. So we're going to be focusing and investing into it. We're doing this not because we want to jump on the bandwagon, because I know a lot of people are talking about this is going to be the year of VR.
But if you really look at it, and we showcase a lot of capability in one of the recent events in Fuzhou, I think maybe some of you were there. We've been looking and thinking and investing into this area. That's why we have been able to show a lot of progress and a lot of capability when we had that event in Fuzhou earlier this year. It is part of our DNA. That's why we, as a gaming company, we believe that we can do a lot more than gaming, because there's actually all the end-user interface, end-user experience, all the technology, all the graphic capability is going to help us. VR and AR and 3D will go across all the different businesses that we have. That's one of the beauties of NetDragon's model.
We invest in technology, but that technology is spent across many different businesses so we can share the investment. We are going to look at taking advantage of our global footprint to help us to advance in the area of VR and AR. The development is not going to be happening only in China, but we also look at outside of China, in terms of people, in terms of capability, both in terms of technology and content. Stay tuned for that one. I don't know about you, I get very excited myself. Other areas that I want to mention, Ben alluded to it. It's going to be a big year for Promethean because it's actually, not only we invest a lot into the resources, I think it's going to be a year of a lot of new products from Promethean.
New version of panels coming up, a new technology we call ActivWall that is going to be launching in Q2. In terms of the VR area, we have a concept of VR classroom, which we expect to happen in the second half of 2016. That product is not only for China, but it is a global rollout. Again, that is the beauty of the acquisition of Promethean. The channel networks that they have, in addition to the one that we have in China, we can take our product across the world.
We also have an AR product in learning that we call English Galaxy. We are going to be rolling it out in China first, and then we send it worldwide. It is a product that make use of AR technology. We expect market share gain in most of the market we operate in, so we are quite bullish about that.
We are also making good progress on building the community, the learning community. I will talk a little bit about it later on to close it. Other countries, we are making very good progress. India, Thailand, Myanmar, those are the places that we are going to be having our footprint, in addition to what Promethean has been doing. I do not think we mentioned it, another big investment we are making is actually in the content area. That is why we build up a concept called 3D and VR Content Factory. We will have it in China first, and we look at expanding it. That content factory is not going to be only supporting our own initiative. It is going to be all open to our partners so they can take advantage of it, in addition to taking advantage of our technology.
Let me make other comments in terms of the different market in China. Ben mentioned it, but I will reiterate that we are going to see significant revenue growth in China because we launch the product in addition to the Collaborative Classroom. Do not forget, we are going to be having our VR classroom for sale in China that will add to the revenue opportunity. I think that is very exciting. Quick word on Promethean. We expect significant growth in Promethean. That is all the work that we have done in the last few months with teaming up to help us to gain share. The significant growth represents the fact that there will be top-line growth because of all the integration work and all the cost rationalization and some of the work we are going to be doing on the supply chain. We do expect that business to be profitable.
Again, because we grow things significantly, kind of by default, we are gaining share against our closest competitor, which is actually one of the reasons we invest heavily into the sales and marketing resources. I am happy to report, this is not a guidance it is actually everything seems to be on track, so we are keeping our fingers crossed. Quick word on building the community. The ultimate goal for us is to actually build the world's largest learning community, and we have started that journey already. We are leveraging Promethean's user base. If you remember, they have over 2 million teachers on their network. Over a million to, they are in the U.S. We start to build a network, the community in the U.S. Currently, there is over 400,000 teachers already on the network.
The new release of ClassFlow coming out in a couple of months will allow the teachers not only to take advantage of ClassFlow to help them to teach inside the classroom, but also to help them to communicate with the students and ultimately with the parents. If you kind of do the math, you can see our opportunity of building this particular community is going to be tremendous in terms of our user base with Promethean and also in China. Leveraging what NetDragon has in terms of IM and App Store and to be part of the whole software stack is going to enable us to monetize the community base in more ways than one. You can expect millions of users to be on that network by the end of this year.
I'm looking forward to sharing some good news with you in the later course. Last but not least, I want to make a very quick comment on gaming. As you can tell, Ben has spent a lot of time talking about the momentum. We are seeing a really interesting opportunity ahead of us. One is because of our growth both in China and outside China, and also the kind of the inventory of games that we have, both in terms of desktop and also in terms of the mobile games, or we call it the pocket version. I think the other thing is actually the esports opportunity that Ben mentioned. We are seeing a very different landscape in gaming, and that work right into our strength. Our strength is actually to do O2O, online to offline, and also our strength is to build community.
What we're going to do is actually we're going to spend the next couple of months to step back and take a look at to do a strategic review of the gaming business to see how we can take advantage of the new opportunities ahead of us, and then we can grow the gaming business even more so. Just want to reiterate, because I know a lot of people think we are transforming ourselves into an education business. I can guarantee you with my last comment is actually we're going to be working very hard on both businesses. Again, 2016, we expect positive progress, a positive outcome. That said, there are some economic challenges in different parts of the world. We are keeping a close eye on it. While we're expanding, we're also being very prudent in terms of our approach.
The good news is actually when we look at this when it comes to challenges, it presents opportunities too for us because we're looking at expanding the market and also looking at investing, looking at acquiring. This may work out to our benefit. We'll continue with our current strategy, which is actually to build, to partner, and to acquire. With that, thank you for your time. We are very excited about 2016. I hope you do, too. With that, I'm going to pause, and I'll hand it back over to Maggie.
Thank you. Thank you for your presentation. Now we will enter into the Q&A session. Please feel free to raise any questions. The first question, please.
Thank you. Ladies and gentlemen, we will now begin the question- and- answer session. If you wish to ask a question via the audio line, please press star one on your telephone and wait for your name to be announced. Please be advised that we request you to limit your questions for one question at a time. If you have further questions, please press star one again. We have the first question from the line of Brandy Sun from BOCOM International. Please ask your question.
Hi. Thank you for taking my question. This is Brandy from BOCOM International. I have two questions on behalf of Martina. The first one is about the online education business. In terms of the 2B business, while penetrating to schools in different provinces or areas, are there any difficulties or issues that you need to face, and how will you figure out these issues? On the other hand, what is your advantage in this industry? The second one, in terms of the numbers, how do you expect your margin trend in 2016? That is all my questions. Thank you.
Okay, thank you. I will take the first one. I will give the second one to Ben. If I tell you it is very easy to go into the provinces, I think my boss is going to fire me. All kidding aside, it is a very competitive market. It is competition. That is why we invest heavily into the sales and marketing. It is actually not only in China, by the way. This actually is globally. I think the difference for us is actually in a few fold. One is we are a total solution company. We are not just focusing on one part of the businesses. So, essentially, if you look at our Collaborative Classroom, because it is actually leveraging our capability in terms of the ecosystem, so we were able to beat our current competitors because we actually offer a much better solution, much better end-user experience.
We are addressing the teachers' needs, which is actually most important. That is why we can report to you that the response back is actually very good, because everything got to start with the teachers. If the teachers do not embrace the system, it is actually going to be very hard for us to deploy and take full advantage of all the features and capabilities within our system. The other thing is actually the support afterwards. That is why the extensive channel partners network in China is important. I hope I answered your first question. From a margin perspective, I will give it to Ben.
Yeah. From a margin perspective, I guess I would talk about it in two folds, China and Promethean. If you look at China, first of all, I think we should be clear that our priority is really to penetrate the market, to penetrate the classrooms, into the schools, and to ramp up users. With that, our priority is really not to make a lot of margin on our sales revenue in China at the moment. To be more specific, if you look at our product sales revenue right now, the composition of it, a lot of it would be hardware, because hardware, obviously, we have to charge price for it. In terms of software, we charge revenue on software on a case-by-case basis. We are giving some of our software for free.
But on the other hand, we are going to be monetizing our software on the back end as we progress. More specifically, if you look at our hardware revenue in China, right now, we are looking at a single-digit gross margin in China, and for the reason that I just mentioned. For Promethean, it has been selling hardware for many years, and its margin, I can report to you that its gross margin is going to be around 35% for the full year. It may be a little bit lower in Q1 or Q4 because of the seasonality factor, because of the smaller scale in those two quarters. But overall, we are looking at about 35% gross margin for Promethean.
Well, let me add to the margin question, because to look at our business, we should not be just looking at a one-time sale, because I talked about it earlier. Our ultimate goal is to build the world's largest learning community. The best way to look at this is actually each user in our network and their lifetime revenue, if you will. We have defined what lifetime is or whatever the cycle is. A good way to look at this, maybe an analogy, is more like an elevator business. When you sell elevators in the buildings, you do not make a lot of margin, but you make a lot of money afterwards in terms of the services, in terms of the new features you want to put in.
So same thing for us, is actually, we will give you the basic hardware and software, but we are going to monetize it throughout the lifetime. That is why the content actually is important for us. That actually is a revenue generator. The community, the App Store is important for us because there will be a lot of partners having apps and services on there that either the teacher can get access to, or student can get access to, or the parents can access to. So I will urge you, may not be on this call because this is a very complicated kind of methodology. So, really understand what we are trying to do as an end game, and then kind of look at how we are going to be monetizing it over time. So, that is a comment I want to add.
Thank you.
Thank you. The next question comes from the line of Ryan Roberts from MCM Partners. Please ask your question.
Hi. Good evening, Simon, Ben, and Maggie. Thanks for taking my question. My question was on the sales push and kind of how that is going to look in 2016. I think last, was it Q3, we were talking about kind of a slow, deliberate kind of launch rollout of the overall product and offering in education, and now it seems like 2016 is going to be the full sales push. That is the phrase you used. Can you kind of give us an idea of what that will look like in terms of perhaps any kind of idea on unit growth and also kind of numbers to revenue?
Well, we are talking about giving guidance now, but no, good question. Let me look at it in twofold, because we need to look at China, then we look at outside of China, which is actually Promethean. We have talked about it. Maybe I can be a little bit more specific in terms of the Promethean part first. We are talking about significant growth. They are not single digit because they are not in the teens. I will leave it at that. Again, it is going to be very aggressive. The growth will be both in top line and also in units. That is why we are confident that we say we can take market share. China is the rollout of our Collaborative Classroom. Plus, in addition to that, we can integrate some of the Promethean hardware into the sale.
That is why we are also talking about very significant growth in terms of our business in China, because what we reported in Q4 was really a Q4 business. Also, that is only the beginning, so you can do your own math there. The other thing we talk about is actually in the second half of the year, we have new products coming out. That will also add to the revenue line, which is in addition to the Collaborative Classroom. We call it VR classroom for now. Again, going back to Promethean, I did talk about we have new models of panels coming out. We have a new version of the whiteboard, which is more than just for the school and also can be for enterprises. As you can tell, I ramble on and on for a lot of things.
I do not think I can give you specific guidance in terms of the specific revenues and units, but I think you can read between the lines.
Okay, just a quick follow-up if I could. I think last Q3, we were talking about how some of the challenge in the integration would be to push Promethean products into China. I think you were discussing how, again, the integration was pretty challenging in the sales cycle. What have you seen since then that has changed your mind to give you more confidence in the sales cycle ahead?
I do not remember talking about challenges in terms of integrating their product into the product lines in China. It is actually one of the reasons, not the only reason, why we acquired Promethean. A lot of the hardware actually complement what we have and vice versa, by the way. For example, we do have a tablet product, which Promethean does not have. Promethean has the displays unit, what we call front of the room, whether it is an interactive whiteboard or display or ActivWall. We can integrate it very easily into our product line. If we said that, we may have misled you. I think the challenges in the integration, I would not say challenges. We need to be cautious is to integrate the back end and also the longer-term product roadmap. I think that is what I was referring to.
Okay. Yeah, sorry. I meant in terms of the timing for the sales cycle. But thank you very much. That is very helpful. Thank you.
Okay, thank you.
Thank you. Your next question comes from the line of Jeff Hao from China Merchants Securities. Please ask your question.
Hi, Simon, Ben, and Maggie. Thank you for taking my question. I have two questions. The first is regarding your China education business. You sound very confident that your revenue will be growing very fast in this year. I am trying to understand what is the reason behind your confidence for the multiple times growth on your revenue compared to last year. Is it because you are taking a large market share from your competitors or the market as a whole is growing very fast? For your China education business, are you expecting still a loss-making year in this year? Last quarter, Ben mentioned that your quarterly expense on the education business is around $2 million, if I am correct. Can you give us update on this number and maybe the trend in this year quarter-over-quarter?
Will that be increasing very fast, or it will be stabilizing this year? That is my first question.
Jeff, thank you for the question. Let me answer the first one, and Ben will take the other second one. If you remember, our product availability in China was towards the second half of the year, actually towards more like Q4. The fact that we started in Q4, we secure about $100 million of contracts. That tells you a little bit about our momentum. That is point number one. Point number two is this year we have a full year of selling, and you are very familiar with design cycle also in China. It is not that much different from other parts of the world. A lot of the business will happen in Q2 and Q3 and then going out to Q4.
Now we are going to have the whole full year with a full product. We can integrate some of the Promethean technology into our solutions. That is why we are seeing significant growth. The growth will be just, we have a fully upselling. Number two is we are taking full advantage of the budgeting cycle. The third one is in terms of every deal, we perceive it to be bigger because we have more to sell now. That is what we are looking at. In terms of the spending, I will make a general comment. We will continue to invest in the education business. I fully expect our expenses up. The other thing is we are going to be growing our revenue. Again, the expenses will also grow from that standpoint. That also applied to [audio distortion].
Yes. Just to add on Simon's comments. The education operating expense on a monthly basis, excluding Promethean, is about CNY 20 million-CNY 25 million . That's just a figure for your information, Jeff.
Okay. That's for the last quarter, right? Or for the guidance for this year.
That's the current run rate. I don't have the number in front of me for the last quarter, but that's the current run rate at the moment. And that figure includes roughly about 70%-80% of salaries, essentially.
Roughly, are we-
Yeah. Sorry, again, it is a run rate. I would expect it to go up because we are going to continue to invest. For example, I talk about VR and AR investment in addition to all the other stuff. I talk about the content factory. That is going to go. Purely from an expense standpoint, I think you can pretty well expect the expenses will go up.
Also just to make one comment on that one is that number I just mentioned does not include depreciation and amortization.
Okay. My second question is on Promethean, actually on financial side. Can you talk about the major financial metrics in 2015, the whole year on whole year basis? You have talked about the gross margin in 2016, which is 35%. Can you maybe talk about the operating margin guidance on what level in this year? Thank you.
Okay. Ben, can take you through very quickly on those metrics.
Okay. For Promethean, if you look at the revenue for the whole year, it's about $171 million in terms of U.S. dollars. The gross margin for the whole year, it's about 26%. Okay. The total operating expense is about close to $60 million. In terms of full year EBITDA, we are looking at roughly about $26 million. Sorry, it's the full year EBITDA loss is about close to $19 million. Okay.
Jeff, I think the way we spend a lot of time in like rationalizing a lot of these things within the Promethean in 2015. I think going forward, we should look at a couple of things. We talked about 2016 will be significant revenue growth. The revenue growth is actually, I think there are a few elements in there. One is actually pure unit growth. Okay, so because we start to take share and we are seeing the market, so we see it better now. The other one is actually product mix, because there will be also more panels shipped than IWB, which is actually the interactive whiteboard.
So that help with the revenue growth. So both units can also, because of the ASP, for each unit will go up. I think gross margin will decline slightly because of the mix, because of the panel. We also rationalize the expenses even though we invest into the sales and marketing.
So all in all, that's why we expect. We also did a lot of work in the supply chain. So that's why all in all, we believe, this year, it will be a profitable year. So I think the last year's metric is really for reference.
Okay.
That's why we specifically talk about Promethean for 2016.
Okay. Sorry, just to clarify, the operating expense for Promethean in 2015 is around $16 million ? Is that correct?
Oh, 6-0. $60 million.
Oh, $60 million. Okay. Thank you. This is very helpful. Thank you, Simon.
Okay.
Thank you. Once again, ladies and gentlemen, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced.
Okay.
Once again, ladies and gentlemen. Sorry. There are no further questions at this time. Please go ahead.
No more. If we have no further questions, should we end the call, Operator?
Yes, sir. We will do that.
Okay. Thank you. Thank you very much.
Thank you.
Thank you. Thank you. Bye-bye.
Thank you. As there are no further questions, we will now conclude today's call. On behalf of the entire NetDragon management team, I would like to thank you for your participation in today's conference call. If you have further questions about NetDragon, please feel free to contact the investor relations department. Have a good day or good evening. Thank you and goodbye.