Earnings Call: H1 2020

Aug 28, 2020

Dear friends, good morning. Thank you for joining NetDragon Websoft Holdings Limited today for our 2020 interim results presentation. Our presentation PPT will be broadcast on the live streaming platform, and the PPT is also available for download on our company website at www.nd.com.cn under the investor relations tab in IR Webcast section. Before the start of our presentation, please allow me to introduce the management who are joining us today. Dr. Simon Leung, Group Vice Chairman and Executive Director. Mr. Ben Yam, Group CFO. Mr. Lin Chen, Group Senior VP. Mr. Vin Riera, CEO of Promethean. Ms. Susan Kim, CEO of Edmodo. Now, let's pass our time to Dr. Simon Leung to host our presentation today. Well, thank you. Thank you, everyone, who attend our call today. Good morning, good afternoon, and good evening to our friends in the U.S. It's good to be here. Just an FYI, I'm doing this call to you in a hotel room in Hong Kong, because I will be locked up for 14 days because I just came back from Egypt. Later on in the call, you will know why I have to go to Egypt. But anyway, that's why I'm not wearing a mask, because I'm by myself. Okay, let's get the call going. I think the agenda is very simple. I think you all are very familiar with the sequence and most of the people. Of course, we have a new join today, Lin Chen, so welcome. If I may, I'll bring everyone back to our last announcement, which is in March, which is the one that we did for 2019. We did touch a little bit on the year, because this question came up about the impact of COVID-19. At the time, we did talk about the different businesses. For example, for Promethean, which Vin will talk a little bit more about later on. But the message we gave last time was, yes, there is some impact on the business, but more from a timing perspective than from a revenue perspective. That's why you're seeing some of the impact. There are also impact on Edmodo. Actually, the impact will be quite interesting. I'll let Susan talk about it later on during the call. If you look at our result in the first half, it's actually our revenue group. Some of the reason is actually the smaller growth is because the impact with COVID, and then there is some impact in terms of the profit because of the combination of deal being pushed out to third quarter and fourth quarter product mix, and also because the way we cast our budget is actually we cast it according to our original forecast, even though we have made some rapid changes in terms of how we do our businesses, is actually there is some impact because of that, because our changes, it doesn't match the rapid change of the timing of the sales. Okay, next page. There's a little bit of delay in the slide, so maybe I'll start talking about it. If we look at the timing, the gaming business. Sorry, I'm really struggling with the slides here. I hope you're seeing the slide now. Actually, I'm on the one that says operating metrics. Every time we show you some metrics so you know the progress that we have. Gaming pretty well remained the same. The big change is that you're all around learning. Wow, it takes about 30 seconds to get the slide going. If you look at learning, it changed quite a bit. If you look at our MAU, it went up to over 20 million, and our DAU is actually at 4 million plus. Our peak is actually over 5 million. That's where we are. Actually, there's a lot of positive changes in terms of our operating metrics. Then you will see some of the results after that. A quick comment on gaming, because Lin Chen is going to go into the detail. It's actually regrouped a little bit. COVID did impact our gaming business because the nature of our player, the age group is a little bit more mature, and they are more small medium business people. COVID, it did impact their spending. The impact is actually they're not spending as much. That's why we're still growing, but growing at a single digit year-over-year. The good news is actually, we took advantage of the first half, we spent a lot of time working on accelerating the metrics of the gaming business and also expanding it overseas. We're seeing very good progress on that one. Also because of COVID, we didn't launch any new games in Q1, which is not going to be the case in the second half, which again, Yinshan will talk about it. If I may, I'll move into learning. The biggest impact for us is actually our Edmodo business. Because if you remember how we position our education business, it has always been around the ability to learn in the school, in the classroom, at home, and also when you're mobile. That's exactly what blended learning is all about. COVID-19 not only supported our vision, but also accelerated that vision. Again, we're very excited about it. Not excited about COVID-19, but excited about the fact that with COVID-19, it allowed our vision of blended learning to realize earlier. That's really exciting for us. The next page is actually just a quick snapshot of what we do, is actually besides the hardware and the software that goes into the classroom, that goes into your devices and everything, but also we support services and content. That's what everybody's looking for. I can give you a very quick case study on the next page, which is about Egypt, which is the place I came back from, is actually 5, 6 days ago. I'm still in quarantine, but I'm kind of happy, because of Egypt. You have seen our previous press releases about Egypt. What happened in Egypt last week is we visited them, spent a lot of time with the Ministry of Education. We signed an MOU with the Ministry, covering basically the entire software architecture of the education system in Egypt. We are supporting them, is actually with our software and hardware and all the tools that we have. Number 1 is, for their blended learning, and also start to integrate all their resources so the student can do learning anywhere, anytime. So right now, Edmodo is actually supporting over 12 million students and teachers with the goal of going up to 22 million. Also, content is actually integrated. We also signed an agreement with them, is actually to continue to deploy the Promethean panel into all the classrooms, and also continue to work with them on the mobile classroom opportunities that we have. We also talk about creating a joint venture so we can really support them, not only in Egypt, but also, once everything is implemented and proven, we're going to take it outside of Egypt. Because it's actually very comprehensive. The solution will be very well-suited, not only for developing countries, but also for developed countries. A couple other projects I can mention, one is actually we call Leave No Child Behind project. The idea is to give devices to all the students in Egypt. It could be a handset or it could be a tablet. The key is actually we have all the resources on the device so students can use that device to access everything through Edmodo or through the Promethean panel to access everything. Another notable initiative is our online tutoring platform we're going to put in. This is a service that we launched last year, piloted in the U.S. We're getting a lot of good support, and we're going to take it, and we're going to be using it to complement all the learning that the Ministry of Education is providing to all the students in Egypt. We also start to do some vocational training with them. As you all know, we are not only just an education company, but we are also a gaming company. So we're going to be helping them through Edmodo so the vocational students can learn coding, graphics, and also game design. We also provide them with our game engine to allow the student to start innovating and be an entrepreneur after they learn our system. Which is actually very exciting. So our work with Egypt is actually very comprehensive. We're going to impact the education system. But even more exciting is actually we can take that outside Egypt and go into the other countries. Okay. With that, I talk a lot about Promethean. I'm going to hand this over to Vin, our CEO of Promethean, and he will take you through what he has done and the impact of the market and the outlook for the rest of the year. Vin? Great. Thank you, Simon. Hi, everybody. My name is Vin Riera, and I'm the CEO of Promethean. Today, I'm going to talk about the new market dynamics that emerged with the onset of COVID, our 1H2020 performance, and share some information about our top markets and areas of growth. I'm not able to see the slides, so I'm going to cue to change them up. We should be on the first slide now, which is the first half highlights. Let's start with the first half highlights. Promethean's revenue was up 8%, and unit volume was up 10% compared to our prior year. Given the first half of the year was impacted by school shutdowns and a push to blended learning and remote learning, I'll provide more context on some of the trends that we saw as schools tried to refocus their efforts from educating students in a classroom setting to educating their students in a remote and blended setting. In January and February, it was mostly business as usual. We were selling interactive panels with lesson delivery software. In March, many schools began to shut down, and by April, we saw the shift in interest on how our products could be used in a blended learning environment. Even though many schools were shut down, administrators and decision-makers were still working, and sales cycles continued. Some schools began to focus on remote and blended learning solutions, while others took advantage of placing orders to install while the classrooms were temporarily empty so that they were ready for the upcoming school year. Other schools sought out more permanent blended learning solutions. In all cases, this was a priority shift for our customers, and as their priority shifted, so did ours. Promethean used this as an opportunity to align our resources on the markets that were continuing to make buying decisions, and work with schools that needed blended learning solutions by emphasizing how our panels and lesson delivery software can be used in a classroom, in a blended environment, and even remotely. Aside from adjusting the messaging on our products, we adjusted how we engage with our customers. We made the shift away from events, trade shows, and in-person selling. By the end of March, Promethean was completely virtual, just like our customers. By the end of Q2, approximately half of our orders were being purchased as part of a blended learning application. There was no single use case. Schools wanted to be prepared for multiple scenarios. Some schools planned on returning to the classroom this fall, others planned on a partial return, and many opted to have a plan to be fully remote or have students remote where a teacher was in the classroom engaging with students virtually. This shift in the first half happened fast. While engagement with customers and partners did not slow down, volumes had a sharp drop off in April and May before picking back up again in June. By June, many of our sales were made with the intention to be used for blended instruction. Outside of our run-rate business, the tender business that is typically sold into ministries of education was slow in much of March, April, and May. Tenders did increase, and conversations around tenders began to increase in late June. A great example of the project in Egypt that Simon mentioned earlier, that incorporates products from all of the NetDragon companies and includes hardware, software, and even pop-up classrooms. I'm going to move on to the next slide, which is the volume growth. This next slide shows that volumes grew year-over-year above the pace of the market. Overall, Q1 was a strong quarter, and much of the momentum that was created in Q1 was converted to orders in late Q2. Many of our larger customers stayed on track and continued to place and install orders consistently throughout the first half of the year. Egypt also took delivery of their orders during the first half of the year, allowing us to work through the backlog. In geographies that were inaccessible during periods of mandatory shutdown, Promethean focused on recruiting new channel partners, and by emphasizing our brand recognition, financial stability, and availability of inventory. In multiple cases, we are successful in recruiting new channel partners. Many of these partners we recruited were seeking an interactive flat panel provider that had our financial stability, available inventory, and saw value and differentiation in our hardware and software products. As I mentioned earlier, a shift to virtual events allowed us to stay engaged with our customers and channel partners while we worked remotely, and I believe that these activities and the quick response to a blended learning solution had a positive impact on our volume growth. We are now going to move on to the next slide, which is the volume growth trend. The next slide is a three-year view on first half shipments. The dark bar represents the panels that we sold, excluding the large tenders that we won in Russia and Egypt. The light bar shows the overall panel volume. There are two points that I want to make on this slide. The first is that Promethean has successfully competed for and won large tenders in both Russia and Egypt with bespoke products over the last three years. This business, while initially new to us, has become part of our company's core competency. As you can see, volumes may vary year to year, but to the extent that there are tenders that we can compete for, we have a solid track record of winning that business. The second point I want to make on this slide is that our core business, excluding tenders, was flat in the first half of the year. This reiterates my point that in parts of the world that were open for business, we were able to sell our products. In geographies that were completely shut down, sales opportunities shifted into late Q2 or pushed into the second half of the year. Just to be clear, not all regions recovered in Q2, and some regions continue to be impacted in Q3. But in the regions that are open, we are engaged in winning business. Moving on to the next slide. This next slide illustrates that we are the number one provider of interactive front-of-classroom devices. In the first half of 2020, Promethean was successful at holding our leadership position in our primary markets. In some countries, like the U.S., we were able to grow share in the first half. We have an established base of customers that buy from Promethean as they upgrade to newer technologies or expand in new school buildings. Many of the teachers using Promethean panels or whiteboards also use our lesson delivery software, ActivInspire and ClassFlow, to teach their lessons. This combination of hardware and lesson delivery software makes Promethean use case much more integrated of a solution than our competitors that only have a hardware solution. Our engaged user base, coupled with a differentiated offering of hardware and software, help us retain our current install base and win new customers. Moving on to the next slide. I am going to talk about the growth trajectory in our major markets. Even during this pandemic, Futuresource estimates that the global IFP volumes to return to near normal levels in Q4 and begin to grow again on a full year basis in 2021. Our largest markets in the U.S., U.K., Germany, and Egypt are projected to grow between 12% and 20% through 2024. The growth will come from mature markets like the U.K., that have been using interactive devices for decades and have been through multiple replacement cycles that are now replacing legacy technologies with newer interactive flat panels. In other markets that have recently adopted interactive flat panels and are outfitting their classrooms for the first time. Another point to consider is with the onset of COVID, many schools purchased a one-to-one device for their students. In a blended learning environment, schools will need to consider their classroom technology to support the students' new one-to-one technology. In the next few slides, I'll give an overview of some of our largest markets to illustrate how each have room for growth over the next few years. Moving on to the next slide, the U.K. and Ireland growth opportunity slide. Let's start with the U.K. Ireland market, which happens to be the first market that Promethean entered over 20 years ago. This market has 644,000 classrooms, of which 96% of them have an interactive front-of-class device. At the end of 2019, only 35% of the classrooms had installed an interactive flat panel, which is the latest technology. Futuresource estimates by the end of 2023, 60% of the U.K. and Ireland market will have moved to interactive flat panels. The growth that we can expect in the U.K. market will be from converting classrooms from interactive whiteboards to interactive flat panels. The U.K. market is an example of a growing market that is in a replacement cycle with a very small number of classrooms that never adopted a front of class device. There are also funding sources to assist us with this technology change. An example in the U.K. is the transformative rebuilding program, which provides 1 billion GBP per year over the next 10 years. Moving on to the next slide, which is the growth opportunity in the U.S. I'll provide context on the U.S., which is currently Promethean's largest market. The U.S. has approximately 2.8 million classrooms. At the end of 2019, 81% of the classrooms had an interactive display, but only 17% of those classrooms had an interactive flat panel. Promethean's market share in the first half of 2020 was 28%. Futuresource estimates that the U.S. market will increase adoption of interactive flat panels from 17% to 58% by the end of 2024. Growth in the U.S. will come from classrooms upgrading to newer technology and from schools buying interactive panels for the first time. Funding for schools in the U.S. comes from federal, state, and local governments, and the most recent change in funding was the addition of the CARES Act, which will provide an additional $13 billion in funding to help offset the cost that schools incurred as a result of COVID. Moving on to the next slide, which is the growth opportunity in Germany. Germany, which has a much different market dynamic than the other two markets that I've talked about. At the end of 2019, there were 528,000 classrooms, yet only 36% had implemented an interactive display. Of the 36%, only 7% were interactive flat panels. Futuresource estimates that the interactive market will grow to 55% by the end of 2023, and the largest growth area being interactive flat panels. The German market is an example of one that has significant room to grow. A critical element in growth is funding, and the German digital school reform initiatives are being supported by over €5 billion in DigitalPakt funding. The DigitalPakt funding, coupled with the rapid adoption of interactive flat panels, make this a great market for Promethean. The next slide talks about the growth opportunity in Egypt. The Egyptian market is different than the other markets I've discussed today. In Egypt, we're working with the Ministry of Education on many of the teaching and learning initiatives. Promethean plays an important role by providing our classroom technology in a blended learning environment with other companies within the NetDragon families products. This model, where we sell multiple products to the Ministry of Education of a country, is something that we believe we can replicate with other countries. Finally, on the second half 2020 outlook slide, I'll provide some insight into the second half of the year. There will continue to be several unknowns due to COVID as different geographies continue with waves of shutting down due to the pandemic. As we did in the first half, we're going to apply all of our focus and resources on the markets that are doing business and continue to drive demand and awareness in the markets that may be slower to come back. Distance learning will continue to be at the heart of our message, specifically how our products work in the classroom and with blended instruction. In the second half, we're going to build on our K-12 market leadership position. We will continue to work with our channel partners and win new business, replacement business, and continue to work in the emerging markets. We'll have meaningful product releases that enhance the teacher experiences and assist IT managers in remote management of their devices. We're going to stay on track for recovery back to pre-COVID business. It may be a while in some countries, but the trends that we're seeing matches Futuresource's unit volume estimates that we will see a near full return in Q4 volumes. I personally believe that COVID has escalated the need for schools to have a blended learning model in place, and that students will return to the classroom at some point. Promethean will also capitalize on the trend to adopt classroom technology for use as part of a blended or distance learning solution. There are large funding sources that we will work with, and work with our customers to access, and we'll work together with NetDragon and Edmodo to provide a more comprehensive solution for our customers. Thank you for your time today. I'm now going to turn it over to Susan Kim, CEO of Edmodo. Thanks, Ben. Hello, everyone. Slide 24. Edmodo has always been at the forefront of education technology, offering an all-in-one solution for hybrid learning, and is the only learning platform that brings all the stakeholders together, teachers, students, and parents, to support learning everywhere. Even before COVID made distance learning tools a necessity, Edmodo offered the best of classroom tools, enabling synchronous and asynchronous learning, content integration, and robust collaboration and community features. Next slide. Around the world, user engagement and active user growth have grown tremendously in a short span of time. I think there's probably a lag on the slides. Yeah. I'm just going to wait a second because this chart's really good. Slide 25. I think you should just keep talking because the delay is actually quite a bit. It's pretty severe, yeah. Around the world, user engagement and active user growth have grown tremendously. Italy has grown at over 11x. This is when we compare pre- and post-COVID. Spain at almost 4x, Indonesia at almost 6x, Egypt at 126x. Overall, we've seen our global numbers increase by 4x. These are daily active users. Next slide. Edmodo began as a free business to consumer, so free to C product, focused on bottoms-up acquisition, acquiring users on a teacher-by-teacher basis. This year, we have rapidly shifted our focus to schools, districts, and country-level customers, moving to a top-down acquisition model, driving rapid scaling of user acquisition and driving even higher levels of user engagement. Slide 27, next slide. With our global reach and large installed user base, Edmodo has signed on key partnerships. We are the only learning platform offering a seamless Zoom integration, and we recently signed a global partnership with one of the leading content publishers around the world, Pearson. Slide 28. With renewed focus on schools, districts, country-level customers, we have launched an annually recurring business model. In this model, the non-enterprise version of our offering, teachers will continue to be able to use Edmodo for free. However, schools and districts will pay an annual subscription license. Their offering is more robust. With states and countries, they will pay, on top of an annual subscription license, an upfront implementation fee. The enterprise version of Edmodo offers far superior, robust administrator controls, privacy settings, private content repository. Slide 29. In just a short amount of time, we have built a strong pipeline globally. In the U.S., driven by CARES funding that Ben referenced, we've got over 30 deals in the pipeline, which include schools, districts, as well as other organizations beyond schools. For example, we've got the Girl Scouts of America, which represents 2 million users, as well as religious organizations and nonprofits. Demand for our product moves beyond education. There is also strong demand globally with ministries of education and school districts looking to rapidly digitalize education. I'll turn it over to Lin Chen, Senior Vice President of Gaming. 另外一方面，我们在营销活动的不断的PGC跟我们品牌上的持续投入，也证明了过去很长一段时间内，我们在魔域IP上的持续的打造跟投入是成功的。对游戏来讲，活跃用户跟用户是整个游戏很大的一个基石。随着活跃用户的不断增长，也为我们长期未来的游戏的稳定跟收入增长奠定了非常好的一个基础。接下来我为大家重点介绍一下我们几款主力游戏的一个情况。第一个是我们的旗舰游戏，也就是我们的魔域。魔域大家可以看到，在我们的上半年，我们持续性地去推出我们很多热点的营销活动，也在围绕整个IP的打造上去传递给用户一个信息：魔域它不仅是一个很强的IP，而且是一个不断有活力的IP。也可以看到在故宫或者一些国潮的热点，跟我们整个魔域IP的整个品牌形象，可以进行不断地结合跟发酵，也可以引领我们整个游戏，让玩家觉得这是一个不断成长、不断欣欣向荣的一个IP。同时，在半娱乐的一些营销下，我们不光是跟IP联动，还有跟黑豹乐队一些线下的联名不断地融合在一起。事实上来讲，游戏对魔域玩家来讲，不仅只是一个玩法，它代表了一种文化，代表了一种生活，也成为他们生活中的一个很大的习惯。我们在前面也讲到，今年上半年大量的回归用户的回流，也给予了游戏很正面的反馈。这其实提升的幅度也是有一些超乎我们的意料的，这也说明游戏玩家对游戏的信心是随着我们不断持续地打造，能够更好地呈现出来。第二个，介绍一下另外一款我们MMO上的一个旗舰游戏，也就是征服。征服这款游戏在今年上半年，我们在持续地推出大的资料片、功能玩法和新的内容。事实上来讲，征服的时间周期比魔域更长一些。我们在这里也是通过MMO的内容生产，这个也是我们擅长的部分，持续不断地输出内容跟活动玩法。在保有现有的玩家的同时，也不断用一些新的玩法跟内容去吸引新的用户。在这里，我们也在服务跟内容方面进行了一些升级。一方面，在手机端移动版本上面，也有越来越多的玩家在呼吁这些事情，也使得我们的一个很大的计划是在手机端的更新。无论是在端游还是手游的部分，在内容、服务和品牌方面，全方位地去回应跟响应服务我们的游戏玩家。接下去的是我们的英魂之刃。事实上来讲，英魂之刃是另外一个品类，也就是MOBA的品类。MOBA是一个大用户基础的游戏品类，事实上来讲，整体的用户池跟用户群对我们来讲就特别重要。过往英魂之刃整个的品牌形象，大家所熟悉的英雄，一些人物，尤其是喜爱我们一些中国传统的一些像诸葛亮，或者说一些传统的人物。在过去一段时间内，我们持续打造我们的英雄的宽度跟深度。在今年上半年，我们跟日本知名的Overlord动漫IP、二次元IP做了两次的联动，这些的联动也为我们带来了比较好的效果。不仅是说现有用户，尤其是年轻用户，对这样的联动融入是非常喜欢的，同时这些新玩家也为我们带来了很多的新增用户，他可以感受到我们的整体的英魂之刃，不但有一些指中国文化的元素，也有一些二次元的元素。在竞技来讲，它是一个相对可以构建一些更加丰富的内容，更加健康的一些竞技的环境。随着U Space的扩张，也可以使得英雄跟皮肤也是持续是这个品类能够推动收入稳定跟不断上涨的一个动力。在未来，包括了今年的下半年跟明年，我们都会有持续的在IP联动的计划，在不断扩充我们的整个IP的用户池。接下来也给大家介绍一下整体的我们在用户经营跟游戏战略上一个很重要的一点，就是我们的IP跟用户池。作为IP，作为我们游戏业务的一个很重要的战略，我们对IP有一个持续的经营。事实上，以魔域IP为例，它整个的用户池已经达到了3个亿，对于英魂IP来讲也达到了两个亿这样的规模。这时候，对整体的魔域IP用户来讲，它随着这个有一些的用户玩家从小学或者更年轻的时候开始玩魔域，到大学，可能工作以后，其实他们持续地都在玩魔域。这时候来讲，只不过他的用户习惯、玩游戏的习惯产生了一些变化，但是他对于我们来讲，还是我们整体的魔域IP用户。那这时候，在我们的整体的产品线布局上面，无论是我们的普通版、我们的口袋版，还是我们的H5，也是从不同的维度去跟我们的IP用户去做一些个联动，跟吸引我们的IP用户持续在整个魔域系的池子里。那这时候来讲，也有一个很明显的优势，对于一个IP用户来讲，无论他的导量的成本，还是长线的用户价值，IP用户都明显高于非IP用户。那这时候来讲，我们也会根据不同IP的属性去打造不同的产品矩阵。像MMO，它是一个典型的内容项的产品。这时候来讲，我们会围绕内容这个维度，去持续打造我们的品牌矩阵跟产品矩阵。而MOBA相对是一个竞技，强调竞技，强调大家互相之间社交，能够组队去刷一些副本，开黑的一种品类。那在这个方面，我们也会根据不同用户的一些游戏习惯跟竞技的习惯，推出不同系列的英魂之刃的产品。这样子就可以使我们的用户不仅是单个游戏的用户，而是整个IP的用户。那接下来也可以给大家介绍一下，其实在整个网龙大家庭里，除了我们有比较强的MMO跟MOBA之外，事实上来讲，我们还有海外的休闲的Neopets这个IP，它也是有1.5亿的历史用户。那事实上来讲，除了过去从最早的开始的Neopets.com，到Neopets的手机版，我们还在不停地把我们之前在IP经营上的一些成功的方法跟方式，带到我们的Neopets IP上。不管是Neopets Island Builders，还是说Neopets的三消，事实上来讲，这些都是从不同的IP用户年龄，随着他的年龄发展，他的游戏习惯的改变，包括他的使用习惯，去照顾到整体的我们整个IP用户池，包括Neopets TV，使得这些内容可以用最好的形式跟最好的方式去触达我们的IP用户，能够让我们的用户持续在我们的整个IP上进行活跃。那接下来为大家介绍一下我们未来的游戏发布计划跟推出的计划。事实上来讲，我们前面讲的一个重点就是我们会围绕我们的IP去持续打造内容。我们在新游戏的推出上，也是会根据我们不同的IP，有一个长线的、持续的游戏推出的计划。像《魔域手游2》、《风暴魔域》或《魔域传说H5》都是围绕这个魔域IP持续的，有的是作为一些魔域手游的续作出现，有的是作为一个新的方式进行一个破圈。那事实上，从用户的导入来看，IP用户他为我们游戏的稳定的在线跟收入有一个良好的保证，同时像H5，它其实在H5的使用习惯上，也可以纳入不同的这个品类的用户玩家进入到我们的IP来，持续为IP输入一些新鲜血液。而在新游戏上来讲，像《终焉誓约》，我们不光是把它当做一款二次元产品来看，也是把它当做一款新的IP去持续地打造跟经营。那接下去，我为大家介绍一下我们在海外方面的一些布局。事实上来说，在过去的几年，海外游戏业务的收入都是不断增长的，这也得益于我们在海外的一些早期的投入跟尝试。在海外的部分，我们也会总结我们自身在海外的一些优势，包括了一些地域的优势，包括了我们在品类上的一些优势。同时针对品类跟地域，事实上我们在海外的自研自发上，我们还可以有效地去针对一些特定市场做一些优化，把我们在国内一些成功的实验跟被证明成功的一些玩法和内容，跟当地的海外的用户习惯结合起来，把我们的IP组合也拓展到海外。下面其实也是配合我们的海外产品布局进行一个介绍，因为在今年下半年，我们会有推出新的海外的扩展游戏，包括在2021年，会有更多的产品推向海外市场。那这里事实上来说，我们在国内是有研发团队，在海外同时也有研发团队。第一步我们更多的是把国内的游戏推向海外。同时，我们也在不断地跟海外的团队在研发上有不同的碰撞。像Neopets三消这个产品，就是一个双方碰撞很好的结果。不但是我们能够把国内的一些成功的游戏变现的方式去带入到现有的用户，也把一些IP用户的一些经营的方法带给海外的Neopets IP。我相信在这种化学反应良好的碰撞之中，能够为我们在海外获得更大的增长动力。最后还是想跟大家再多介绍一些关于魔域IP年轻化这件事情。事实上来讲，这个也体现了我们对游戏，对于内容产业，包括对创新创造的一个理解。事实上，魔域的成功在我们看来并不只是一个游戏的成功，也代表了游戏作为一种文化产业，它在传递人们的一些情感的诉求，或者说回应一些情感的诉求。其实从魔域早期的火爆开始，对被玩家充分认同的，无论是热血还是爽快，都会发现玩家在游戏里持续地活跃去付费，他不仅仅是在玩这个游戏，事实上通过这个游戏也能够找到他的一些心理的诉求。在过往，在人们的定义里，热血跟爽快可能是由以前的无论是说打boss，还是说放插画这种形式去表达的。但是在新的时代里，这种情感的诉求也发生了一些变化。像我们游戏里的一些12年制，在最近几年新的年制的推出里面，我们也融入了很多新的21年制，也得到了一些新用户的喜爱，同时老玩家也有一定的接受度。那这时候，我们会在今年底之前完成这些新的IP核心元素的设定，包含了我们的幻兽的一些重新年轻化的设定，去更加符合现有的一些年轻人的诉求。同时，我们会围绕这些IP的元素去推出各种的衍生品，无论是动画还是漫画，用现在的玩家、用户更喜欢、更接受的渠道跟方式，把这些内容推出到大家面前。也就是说，无论是在哪个时代，热血、爽快、一些兄弟情，这些永远是人们追求、喜欢跟觉得能够感动的一些内容。所以游戏对我们来讲不仅仅只是一些玩法，它更多是包含了有更多的内涵，也有更多的可能。也是上次我们在提及说，其实游戏也许是有天花板，但IP对我们看来它是一个没有天花板的内容。以上就是我对游戏内容的介绍。谢谢大家。接下去把时间交给我们的CFO Ben同学为大家分享财务相关的内容。谢谢大家。 Great, thank you. Hello, everyone, I'm glad to be here virtually with all of you, and I'm going to quickly take you through our financials in the first half. If you go to the first slide. On the top line, we've got revenue growth for both our gaming and education business in an environment which has presented us with both short-term challenges and also tremendous opportunities in the near term and over the long run. On the cost side, we have been very disciplined on cost control that resulted in a relatively flat year-over-year selling and marketing as well as administrative expenses. Overall, our SG&A increased by roughly about 6%, and I would say most of that is due to increase in our staff salaries on a relatively stable headcount. If you go to the bottom line, you will notice that our net profits decreased by 20%, but the difference is primarily due to several accounting GAAP adjustments or charges which are not really related to our operating performance. I will go into more details on that in the later slides. If you look at non-GAAP EBITDA and non-GAAP operating profit, I would say that is a much more fair representation of the true profitability picture of the company. You can see that the earnings show a slight drop of roughly about 3%-6%, and that's due mainly to higher SG&A as mentioned. Also COVID-19 has affected our Promethean earnings in Q2, which typically is the peak season of the whole year for Promethean. As Vin has pointed out, we do expect that the second half is going to come back strong and we're going to be gradually getting back to normal in terms of our profits growth. Last thing on this slide that I want to highlight is our operating cash flow, which increased by 26% year-over-year despite the drop in accounting profits as we were able to exercise very strong discipline in working capital management to ensure that our cash flow stays healthy. In the second slide, with the segmental breakdown, a little bit more details to go through. Top line of our education business continues to generate growth despite a challenging market for Promethean in Q2. The gross profits decline is actually due to product mix or more precisely it's the mix between tender and one-way business. Because in the first half we recognized revenue for major tender and because of the large size of the tender and the strategic nature, the margin is lower than our usual one-way business. If you take out the tender business, ex-tender the gross margin is actually over 30%, which is in line with our normal margin level. In terms of the core segmental loss, it has increased. The main reasons is due to the U.S. tariff impact on our Promethean products. That's actually a big one. The other one is actually increased server hosting cost due to a lot higher user traffic for our education business. The last reason is the increased staff salaries. On the gaming side, as mentioned, in the first half, we were able to maintain our revenue growth, and with a stable bottom line. If you go to the third slide, the third and fourth slide, I thought for this earnings presentation, it would be very helpful to show a couple of bridges. First of all, for the net earnings, for the accounting net earnings bridge, you can see that as a drop of net earnings. But as you can see in this chart, 80% of the drop actually came from accounting GAAP charges, which are largely non-cash related and are completely not related to the operating performance of the company. In particular, just to note that the finance charge and exchange difference on the CB is actually related to the fundraising round, which we closed in March of this year with Ascendent Capital Partners on our education business, which actually value our education business at $1.35 billion. That round is actually more structured as a preferred round, but it is technically structured as a CB round. So that is why we have those accounting charges that you can see on this chart. Okay, on the fourth slide, this is actually a bridge that I think it shows a better picture of our operating performance because it shows a picture from a cash flow perspective. As you can see, we were able to maintain a healthy growth of cash inflow from operations, despite the accounting profits drop. A big part of that, again, is due to our ability to execute our operations process and working capital management with discipline and rigor. Okay. With that, I am going to turn it back to Simon, who is going to take us through the outlook. Thank you, Ben. So, let me reiterate. For the last mini-announcement, we have emphasized on operation excellence. I think, once again, we show our ability to number one, is actually manage our business, is actually what Ben said about our cash flow is actually one of the very important metric, and then we have improved greatly managing our cash flow in a down market, mostly on the education side. So which is actually a lot of credit goes to our teams, in education to do that. The other point I want to reiterate, I think Vin has talked about it, is actually we are growing our business in Promethean, even at a down market. Now, I mean, exactly, we got impacted by product mix and some tariff and all that, but if you play the movie forward for the rest of the year, we are very confident, and then we will recover from that. Also, if you recall what Susan is talking about, is that even though we take a short-term expense hit because of the traffic went up, so we have to pay for more hosting costs. But, at the end, that tees up for our SaaS revenue coming in in the second half of the year. So we are very confident we can capitalize on the trend of blended learning. We are also very confident starting in the second half the monetization of Edmodo, especially is actually on the SaaS part. We will be seeing a lot of good results. Is actually also, just to remind everybody, we were able to pivot our business from a very difficult COVID situation into the new operating model, both from the Promethean standpoint and also from an Edmodo standpoint, which I believe is actually very impressive. Of course, I cannot close this without talking about the Egypt MOU. It is a very comprehensive kind of framework that we're working with the Egyptian government. We're going to be spending a lot of effort and a lot of time to implement that MOU, and the result will be shown in the second half of the year. Vincent talked a lot about gaming, so I'm not going to repeat that way too much. But we are confident that we're going to grow our gaming business half over half, and we will continue to launch new games for the rest of the year. So with that, thank you. Is actually, we are very confident that we will rise through this COVID-19 wave, and then we'll get into a growth phase with blended learning and also with the gaming business. With that, I'm going to stop, and I think we go into the Q&A session. Thank you. Thank you, Dr. Leung, and thank you management for the presentation. Now it's time for our Q&A section. You are welcome to raise questions in two ways. First, if you would like to raise questions through teleconferencing system, you may press star 1 on your phone keypad and our operator will bridge you through. Second, if you would like to raise questions via our webcast platform, please click the question mark on the screen and type your question in the Q&A box. 感谢梁博士和各位管理层的分享。现在我们进入问答环节，欢迎各位以以下的方式提问。一、如您希望透过电话会议系统方式提问，请按星1键，我们的操作员将为您接入。如您希望透过网络平台发问，请点击左方问号，并在问答框架内输入您的问题。We welcome questions in both English and Chinese。我们欢迎各位以英语或中文提问。Now let's welcome our first question。现在我们邀请第一道问题，operator。好的，谢谢。第一个问题，稍等一下。我们邀请DBS的Susanna提问，请开始，谢谢。 Hi, thank you management, thank you Simon and Ben taking all my questions. I have mainly two questions. The first one is about the online games. Your online games revenue growth moderate a little bit up to 5% in the first half versus peers around 20%-40% growth year-over-year. May management elaborate more about the reason behind? Is it because your company has not launched the expansion pack and any expansion pack pipeline in the second half, can management share? Could we also know the second half growth outlook and also to 2021 as well? Actually the second question is about the online education. The MAU of growth from 22 million in the first quarter to 23 million in the second quarter, which is quite good. So maybe low about if management have any targets in monetization, in second half or next year, any number of the target paying ratio or ARPU is helpful. Thank you. I'll suggest either Lin Chen or Ben take the first question. I'll take a crack at the second one. Thank you. 好的，谢谢。那我先为林总翻译一下第一条关于游戏的问题。林总这边投资者的问题是，我们今年上半年网络游戏业务整个增长是在5%左右，相比之前的一个增长有所下降。所以想请林总分享一下具体的原因，是否因为我们今年上半年有一些资料包还没有推出，那我们下半年是否有一些新的资料包、游戏的一些新的extension会推出，然后还有我们下半年游戏推出的整体策略是怎样的？谢谢。 OK。我从上半年的业绩我可以从两个维度回答。第一个，其实前面Simon也有提到，上半年整个疫情的影响对我们的活跃用户有一些增长，但确实对我们某一个固定群体的付费玩家，尤其是对实体经济的冲击还是有一些影响。这是一部分。第二部分是关于游戏的生命周期。事实上去年上半年，我们会看到我们有《风暴魔域1》，还有包括一些魔域其他的产品线的手游的一些周期的收入。事实上疫情的关系也延缓了我们在新游戏的推出上一些的进展。刚刚在PPT上有提到，尤其是在今年下半年，我们已经发布了《风暴魔域2》的一个上线的计划，包括我们的《魔域传说》的H5的版本，肯定也是会在今年下半年进行上线。包括了《魔域手游2》，它也会在今年年底到明年年初这个时间点推出。所以下半年的话，它的新游戏的发布肯定是远远大于上半年，我们也预期在这些游戏的推动下，我们会能够继续把游戏进行增长。以上，谢谢。 Okay. Let me talk very quickly on the model kind of revenue, on the SaaS revenue. Actually, I don't think we have disclosed our Q1 MAU, so the MAU was showing the 20 million in there for the first half. Actually our MAU has grown tremendously in the last six months, if you go back to our last announcement. So the nature of the SaaS business we're signing is actually multi-year contract. Exactly, we charge it by per student or per teachers. So we can't disclose the detail of a lot of our contracts, but I can make a statement about you will see a lot of the effect coming the second half of this year. Susanna, as you know, we don't give guidance, so I'll leave it at that. Okay, thank you. Thank you. [Foreign language]. Let's welcome our second question. [Foreign language]. 好的，谢谢。下一个问题是来自海通的赵飞雅。请开始，赵小姐。夏萌：好，各位管理层早上好。非常感谢刚才比较详细的分享。我主要有两个问题，第一块是关于游戏这块，想请教一下未来对游戏这块，尤其是手游这块业务的战略规划，比如说手游的发行方面的计划是否也可以分享一下？然后刚才也看到公司未来也会发布几款休闲游戏的产品，在这个付费模式上面，是不是也可以跟我们做一个分享呢？未来咱们在休闲游戏这一块是有什么打算吗？另外一个就是关于教育这块的问题，因为Edmodo现在我们有一些业务是在美国，就想请教一下现在中美关系对Edmodo业务开展的影响是什么样的？集团内部有没有做过一些评估？然后还有一个就是随着疫情的平复，咱们有没有看到普米出货量的增加？就这些问题，谢谢。林峰，你先回答游戏的问题吧，好不好？游戏在手游上，我觉得可以分成两块。第一块，手游其实是在已有IP、已有成功的游戏玩法跟商业模式上的变现，其实是一个方向。所以也可以看到，无论我们的魔域口袋版、魔域手游，还是风暴魔域还是风暴魔域2，事实上它都是借用IP的一个助力，在成功已有的付费模式上，对收入跟用户的一个放大。事实上这块，不光是我们，我觉得在业内的游戏厂商都是认可这种做法的。这是一个方面。第二个方面，其实是一个创新的方向。尤其像刚才您也提到了关于休闲品类，事实上休闲品类也是在不断进化，从传统的三消开始到梦幻家园这种三消加RPG元素的一个融合。事实上来讲，这次我们为什么举例提到Neopets三消，也是因为Neopets作为一个IP，它有一个庞大的用户基数，而这些用户基数其实对这个品牌，对这个IP，事实上是有一些很深的感情。我们也希望借助在三消的基础上，围绕我们特别擅长的RPG的元素做一些融合，让我们的用户，尤其是IP用户，能够在这个游戏里活跃，包括付费。你刚才也谈到了一个付费跟商业模式的部分，事实上来讲，其实梦幻家园这个模式它是已经证明了长线的用户活跃，包括用户愿意为什么付费，他还是愿意为IP、为他的情感，比如说他小时候接触到Neopets的一些可爱的元素，为这些情感的联系去付费。其实在付费上来讲，我回答一下刚才的问题，我们刚才前面其实提到，用户并不是完全为玩法而付费，就像二次元为爱付费一样，我觉得IP用户他其实也是因为对这个整体IP的情感，对我们提供的一些优质的内容，跟这些的一些关键点去付费。这是我们在游戏的活跃跟付费方面的一些思路。谢谢。对，Neopets其实我们一直都比较低调，但是我们现在有几款新的游戏，我们的用户群还是挺大的，所以我们会创造一个我们叫ecosystem，一个生态系统。所以我们对整个Neopets在海外的发展其实也蛮有信心。刚才问到Edmodo的事情跟中美关系，其实我们一直都有评估，我们开始购买那个公司的时候，我们已经看到。其实我们的所有的做法都是按照美国的要求，譬如说所有的美国的数据都是放在美国，所有我们的美国的数据也按照美国的条例来处理。然后所有碰美国的数据的都是美国的员工，不是我们中国的话，是国外的员工。所以我们觉得中美关系其实对我们的Edmodo来说是没有影响。然后我们也同一时间，也看在欧洲、其他国家他们本地的要求，因为我们的Edmodo是一个面对全世界的一个公司，不是只面对美国的。所以我们也花了很多精力在那方面，就看所有的我们有用户的国家，我们也会按照他们本地的条例处理，无论是数据也好，我们自身也好，这个都是我们会做的。当然我们现在发展得很快了，所以我们也是会增加资源放在Edmodo方面。对不起，普米那个问题我忘记了。你是问出货的问题还是什么的？对。因为上半年其实普米订单量也看到还不错。现在随着疫情的逐渐平复，下半年普米的出货量，如果我们环比来看，是不是还会有一个增加呢？应该是的。所以我为什么说普米跟其他人不一样，你看看其他的公司，其实Q1、Q2都是蛮艰难，我们还是有增长。刚才Vin也讲过了，在五六月份就开始看到美国，还有欧洲一些国家也都回来了，所以我们对下半年信心还是挺大的。除非COVID有很大的影响，但是我们现在看不到。所以我们普米对下半年还是有比较大的希望。谢谢Sam，谢谢林总。我没有其他问题了。 OK，谢谢。谢谢。Let's welcome our next question. 我们接下来接入下一道问题。下一个问题来自CICC的李婷赵，请开始，谢谢。好的，谢谢管理层给我机会提问。我这边也有三个问题。首先第一个问题是关于游戏这边，我看今年上半年收入还是略微增长，然后毛利率也维持得比较好。那是不是净利润端也没有一些费用端的增加导致我们—— 对不起，我听得不是太清楚，隔壁声音可以大一点好不好？喂，可以听到吗？现在没问题。现在好一点。好好好。我第一个问题是关于游戏这边，就是游戏我们看到收入和毛利其实都维持在一个略增长的状态，但是经营性利润的话是略下滑。我不知道是因为费用端有什么比较特殊的项目导致的吗？然后第二个问题是关于Edmodo，因为我们在前面的presentation里面说Edmodo会有一些变现上的突破，那我想知道管理层能不能具体介绍一下大概的商业模式，以及我们觉得这个变现的突破在哪里？然后第三个是关于我们埃及的MOU落地的情况，我不知道现在海外的疫情的情况，会不会让我们的产品落地有一些延迟呢？谢谢。 Ben, why don't you take? 你回答第一题，然后我回答其他的。没问题，谢谢你的问题。关于游戏的财务的情况是这样的，我们在上半年，其实从费用上的话，我们是没有任何的特别的一些地方。其实如果你看我们过去几年，我们游戏的费用方面的话，都是略有一些增长。我们的head count，人员的数目的话，其实是比较stable，但是在国内，其实全世界也是一样的，我们要不停地motivate我们的员工，所以我们的工资还是会有一些增加。因为本身你有一个base，然后你有一个工资的增长的话，就导致SG&A费用方面会有一些增长。当然了，上半年的收入的增长是moderate的一些，几个%的增长，所以就导致说我们bottom line可能flat在first half。但是长远来讲的话，其实我们top line肯定会sustain我们的growth，我们的OPEX，费用也是只是一个比较平稳的增长。所以未来来讲的话，整个operating leverage还是会存在的，然后我们的bottom line，我们整个游戏的利润还是会继续逐步增长的。那我回答Edmodo的问题了。其实我们就是讲得很快，我们说我们怎么转变我们的model，从以前To C，现在我们是To Enterprise，是To B。我们现在有新签的合约，但是我们很多是per student，然后per year来收费。所以很快我们就会有一个recurring revenue的stream，就是我刚才提的SaaS model。以后的很多合同都是multi-year，都是多年的，然后是每一个学生或是每个老师来收费，这个是第一。以前的变现的方法还存在，因为他们上线之后，我们还是可以卖广告，还是可以卖服务，所以我们是增加了另外一个收费的模式在里面。关于埃及我提一下了，我们跟埃及签的合同就是每一个学生收钱的。所以基于埃及的MOU，我们一直在进行。现在疫情对我们没有影响，因为我们现在做很多的东西都是在线上来做，就是在Edmodo基础上来做事情，所以我们可以远程来支持他们。然后我们也可以用类似Zoom来开会，其实我们也可以利用我们Edmodo的功能，因为Edmodo也跟Zoom都已经做了一个整合，所以现在我们可以利用我们自己的技术来继续支持埃及的MOU。唯一有一点点影响的就是我们的移动教室，因为我们是要在中国制造我们的教室，然后运到埃及，到了埃及以后也要各个地方来把教室建起来。所以我们不是说已经有100个也能送到埃及了吗？安装有了一点的延误，这个是唯一有影响的。好的，谢谢。谢谢. Let's welcome our next question. 现在接入下一道问题. 下一个问题来自广发的杨小姐，请开始，杨小姐。好的，谢谢管理层。我是广发证券的杨琳琳。我有几个小问题想问一下，一个是关于游戏这一块，因为我们看到其实在过去几年，我们的游戏是超预期的增长情况，尤其是核心的IP，比如说像《魔域》用户数跟流水都在快速的增长。然后今年上半年我们也看到日活用户数同比也是40%以上的增长。那我不知道对应到收入端大概是怎么样的情况？那再往后看，比如说这个IP它大概还有多大的一个增长的空间？然后因为财报里面也没有披露端游手游的收入，我不知道手游现在收入占比或者增长情况怎么样。然后另外就是财报披露了海外的，海外现在收入占比占到差不多12%，海外现在主要的增长驱动是什么？这个关于游戏这一块。然后关于教育这一块，我们也看到现在今年海外的疫情，我不知道对于普米的项目的落地大概有多大的一个影响，然后我不知道下半年还会不会说有这个影响在。然后另外，因为也有好多投资者问，问上半年我们教育这一块好像亏损没有缩窄，或者亏损率没有缩窄，他们也会考虑到是不是因为一个是疫情的影响，还有一个是不是因为ad model，因为数据表现得很好，所以要加大投入。然后再往后看教育的盈利或者是亏损的情况，再往后看怎么看？谢谢。林晨，你回答那个游戏的问题吧。 OK。第一个我回答的是游戏的问题。第一点是关于《魔域》的用户跟收入的情况。事实上来讲，确实是说我们《魔域》整体的玩家的结构跟付费习惯，跟其他的游戏可能是有一个比较大的不同。比如说像我们自己的MOBA游戏，确实它的付费的高点是在假期，或者说正好在疫情的上半年的期间。那事实上来讲，《魔域》从过往以来，它在上半年的收入一般是比较平稳的，它下半年的收入都会好于上半年。所以说刚刚也提到了，因为过去的几年的《魔域》它的收入有一个大幅的增长，也得益于在线用户数跟付费池的增长。今年上半年由于疫情的关系，前面提到对我们有一部分对实体经济的冲击，还是对有一部分用户的收入跟消费产生了一些影响。所以说包括这一次，因为这个契机，我们是做了更多的活跃性的回流的活动。我们也认为一般我们在上半年是希望持续地去，因为春节的原因，能够维系整个的用户。说实在上来讲，也就是上半年我们更多是在活跃上的努力得到了很多的回报。收入上的话，我们并不是那么非常强地去push它的这个数字，所以说也看到了上半年《魔域》的用户是上升的，在付费上来讲它是相对比较稳定的那种状态。接下去《魔域》整个线的未来的话，我觉得它可以分成两个部分。已有的现有的产品，你会看到过往的数据，它有一个高速的增长。以现在来讲，在端游上来讲的话，我们依然是在上半年有一个增长，事实上来讲，现有的user base跟用户收入，我们是能够持续保持稳定的。手游上来讲的话，前面也有提到，我觉得说在一个略微下跌的原因是说我们手游是有周期性的，去年的手游还是通过不断的续作跟不断的新产品去推动的，它的整个的生态跟用户习惯是跟端游是有所不同的。也就是说，可能在去年有的《风暴魔域》跟一些《魔域》的衍生的手游，它在下架以后，今年的下半年，新的手游像《风暴魔域》或《魔域手游2》跟《魔域传说H5》的推出，它会重新激发手游这个部分的收入的增长。我们也提到的是整体的《魔域》IP，它整体的用户的盘子，包括衍生产品数，包括整体的《魔域》的整个的收入也是在不断增长的，所以说我们会继续加大在《魔域》整个IP上的投入，它的流水跟增长，我们依然是认为它能够继续地往前做增长。接下去是关于海外的收入的部分，实际上可以看到的是说我们最先出海的征服是游戏贡献的收入的主力。但最近一年开始，我们的中文版的《魔域》在推出在海外，变成英文《魔域》上。由于我们在本地化的一些特定的优化，跟运营上的一些投入，跟持续的优化，现在来讲，海外的《魔域》的部分已经基本上持平或者超过了过往在征服上的策略。所以说的话，海外的游戏的收入的推动力，我觉得主要是分成两块，一个就是已有的游戏，随着我们对海外市场的理解，已有的游戏能够更好地去推向海外市场。另外一块就是刚才提到的说，像Neopets三消，它本身的设计就是以针对海外用户的国际化的IP去设计的，这一块也是另外的一个增长点。所以说我们其实在海外的增长分成了这两块，它是各有特色，不同的角度能够更加健康地发展，这是我的看法。谢谢。普米方面，其实你看整个大屏的市场，在Q1、Q2，其实影响是挺大的，但是我们还是有增长，这个其实就是管理层，普米的团队是做得比较好的。但是刚才也讲过，我们看到5月、6月，看到这个事情又回来了，所以我们对下半年还是挺有信心的。关于教育的亏损，其实有几个方面。第一个你讲得非常对，因为Edmodo增长得比较快，所以刚才Ben也讲过了，我们在AWS的服务器的费用会用得比较多。但是这个对我们现在签一些合约是有很直接的关系，所以在下半年Edmodo的收入应该有很明显的增长。另外一个就是在普米，因为是我们叫做product mix的问题，所以就影响到我们的毛利。虽然我们增长了一点，但是毛利也有一些影响，但是全年来看，我们还是正常的。所以希望大家可以看看我们下半年的表现。OK，谢谢。可能针对教育亏损的方面，我也补充一下。还有一个比较大的item就是关税的问题。其实现在在普米的P&L上面的话，我们整个关税做了reserve，我们是用最大的、最保守的一个关税率去做reserve，因为这样子的话比较保守。但实际上来讲的话，我们现在这个reserve没有反映cash flow，因为我们不认为我们需要给最大的tariff。所以这个我觉得也是一个比较大的item。然后刚才Simon提到Enboard云端的费用的问题，或者server的费用的问题，其实hosting跟刚才说到的tariff，这两个其实就是你现在看到增长整个亏损扩大的主要的部分，应该是大部分的。谢谢Ben，讲了reserve，很重要，我们这个是一个reserve，是我们还没付出去的，其实我们在争取不用付关税，因为我们是觉得我们的产品是不应该有那个影响的。所以我们希望下半年可以有好消息给大家。好的，明白。谢谢。谢谢。谢谢。Let's welcome our next question. 接下来我们有请下一道问题。谢谢，下一个问题来自Doric Capital的Jack。Jack请开始。管理层您好，我也是一直关注着魔域这个游戏，也一直玩了很久。关于魔域这个游戏，我有大概三个问题想请教一下您。首先公司刚刚提到发行魔域，尤其是这些手游，因为我们知道手游的话，公司在这边做的是一个IP的提供商，还是说同时也做了游戏开发商的事情？在游戏的整个流水里面，公司大概可以拿到是8%、25%，还是加起来大概35%到40%的分成？然后平均一个魔域的流水，公司能不能给一个指引，包括之前说的今年下半年可能会出的魔域手游2，它流水大概是多少？第二个问题就是关于魔域的货币化方法。因为我看到过去几年魔域这样一个快速的营收的增长，也很大地来自于打年兽的这个活动，但是今年好像是说从去年11月、12月开始，政策在这一块开始慢慢地趋严，魔域的货币化方法这一块可能存在着一些问题，不知道今年现在这个解决了没有。对于今年下半年或者说上半年，魔域看到营收的增长也比较慢，5%，是不是也多少受到了政策的影响？然后最后一个问题就是关于因为今年新诞生了一个传奇联盟，魔域其实跟传奇在某些玩法上面是类似的。可以看到上半年的话，几个传奇类的手游，包括像盛大他们的那些传奇的老牌游戏，他们的MAU、DAU其实也都是有所回暖的。然后我想问一下，公司魔域和传奇类游戏相比，未来在大家进入这样一个存量竞争的时代的话，这一块的收入还能够保持吗？会不会有负增长的情况出现？就这么多，谢谢。看起来你对魔域都是非常了解。一直对公司很感兴趣。谢谢。OK，我们请林晨同学回答你的问题吧。 OK，那我这样回答吧。事实上来讲，作为一个IP来讲，它有多种的研发跟发行的模式。你刚才讲的，前面讲的是对的，事实上来讲，我们的魔域包含了比如说自研自发，然后代理开发、代理发行，包括IP授权这种不同的模式。比如说我们的端游跟口袋版是属于自研自发，像我们的西山居魔域手游属于我们自研，然后代理发行。包括还有一些是属于IP授权。事实上来讲，我们会根据我们IP的价值的最大化这件事情，去判断我们在每一种合作上采用哪一种方式。因为事实上来讲，可以看到首先一个IP的声量是需要不断扩大的。事实上来讲，过去多款魔域的出现也会使我们整个IP用户非常有信心，他认为IP在不断产生新的内容跟新的玩法。所以你刚才提到这个分成比例的话，我觉得相比其他的业界通用的点数，实际上对大IP来说还是有优势的。当然我觉得这可能是业界有一个常规的指标，比如说分成比例，比如你如果看腾讯精品，比如说代理腾讯的精品，它可能在流水10%几到20%的区间。如果自研自发，那肯定你的收入比例会更高。这时候来讲，我们会根据合作的形式去定义这件事情。接下去说到比如说在玩法上，比如说魔域跟传奇类的，这个事实上来讲我觉得是不同的目标用户定位的问题。事实上来讲，业界其实大家都会用不同的成熟的游戏模型跟变现方式去获取用户，包括变现。比如说传奇它也有几个迭代的用户模型。事实上来讲，在H5这个版本我们也会对现有的魔域的一些IP的元素跟一些其他游戏成功的玩法做一些结合。事实上我们的魔域H5，至少从测试的数据的用户构成来讲，它其实也可以吸纳同类型性质的用户。你刚刚提到，比如说传奇会不会吸引魔域的用户？它有可能。那你说魔域能不能吸引传奇的用户？我觉得这也是可能的事情，因为这里核心是看大家的IP的声量、大家的玩法跟商业化变现的成熟度，谁做得更好。我觉得这暂时不存在说哪个就一定特别占优势的问题。所以说这里应该这样综合来看。接下去从商业化变现的部分来看，你提到的商业化的变现，我们在国内依然是说我们会在合理合法的方式上去考虑各种各样的收入的方式。事实上来讲，我觉得对魔域来讲，我们希望它更加健康地发展，也就是说我们不会依赖于单一的游戏的收入的系统。毕竟我们是一个RPG的游戏，在整体的比如说外观，或者说炫耀性，我觉得在一些各种各样的收费模式上的扩展，对我们来讲也是一个非常重要的一种模式。这些包括我刚才提到的，对IP用户来讲，它的衍生品也是大家非常关注的。像今年上半年，我们比如说推出了一些跟运动鞋的一些联名，或者说一些内容，我觉得它应该是一种全方位对玩家的一些服务跟回馈，而不能说单一性地把一个东西做得特别高。这是我的看法。谢谢。谢谢。Let's welcome our next question。现在我们接入下一道问题。我们下一个问题来自哥伦基金的邓月，请开始。喂，管理层听到吗？谢谢您。听到。我想我这边有三个问题，想简单问一下。第一个是关于普米的，想问一下能简单分析，就拆分一下一季度和二季度的出货量和同比增速这样子，以及普米在哪一些市场受到的影响会比较大。第二是疫情当中研发的人员有没有受到影响，上半年的研发费用有持续在提升吗？第三就是想请问能不能有教育和游戏分别的收入和利润指引？谢谢。 It's actually Ben or Vin, so the question is actually about Promethean, it's actually Q1 and Q2 shipment numbers. Do we have it right here or should we provide it afterwards? Because we disclose the shipment, I mean, it's actually in Vin's slide, it's actually for the first half, and he's looking for Q1 and Q2 breakdown. I don't have that in front of me, Simon. That would be a follow up. 因为我们现在在手上没有，但是你看得到上半年的那个出货量其实在我们刚才Vin在presentation里面是有的。所以要是你真的需要Q1跟Q2的，我们可以在之后提供给你。你第二个问题是研发是什么？研发有没有受到疫情的影响？然后上半年的研发费用有持续的提升吗？我不是很了解有没有影响的意思，因为其实我们继续去研发，这个对我们来讲，Q1是没有改变。 Q1没有改变。就是研发人员的工作有没有受到影响？就是疫情。研发人员的工资？工作。工作，没有。我明白你的意思。所以你看刚才Vin也提过了，我们整个不单只是普米，其实我们Edmodo也好，我们网龙也好，其实因为我们基本上是技术的公司，所以我们是很快都可以在家里工作。所以我们其实不光是研发，我们做市场也把我们总体地改变，这个也是在Vin的演讲里面有提到这个事情，我们可以用很短的时间，无论是做研发的模式，还是我们做市场的方法，都变成在线上来做，所以我们的反应还是挺快。好的，谢谢。我想问一下，教育和游戏有分别的收入和利润可以吗？ Ben, did you get it? 不好意思，刚才问题听得不是很清楚。就是教育和游戏，top line 和 bottom line 有没有 guidance？谢谢。我们不给guidance。好的，谢谢。但是我们不给guidance，我也说了，在我的outlook，第一，游戏我们half over half，第二half会比first half比较好。其实教育也是同样。好，谢谢。特别是在Edmodo，因为Edmodo我们签了很多合同，这个是在下半年才可以take revenue。好的，谢谢关总。 Thank you. Due to the time constraint, we would like to welcome the last question. As many questions on the webcast platform are similar to the questions raised in the phone call, so we will not repeat here. [Foreign language] Let's welcome our last question operator. [Foreign language] 好的，谢谢。最后一个问题来自梁小姐。梁小姐请开始。你好, is it okay if I speak English? Of course. Okay. Actually we are a private investor from a family fund in Hong Kong. I have a few questions. It actually is my first time attending this. We actually invested a lot 广东话都得。 [Foreign language] Okay. Oh, I think some of the audiences, they may not understand Cantonese. We can translate. That's okay. I speak English. Okay。 Actually, our family has been watching your company situation for a few years. Last year, we decided to invest quite heavily in your company. That's why I had to attend this. We would like to know what's going on with the company. I will have to say, regarding the game business, I have to say that it is disappointment. Maybe it's regarding the top line. We expect it will be in line with China game business growth as published. It should be. I just heard some of the audience questions. It seems to me there could be some one-off happened last year. That's why last year's business was boosted a lot. That's why it looks like when you look at the growth rate, it slowed down a lot. Is that the case or we are losing some market share to our competitors? Is it a temporary situation or do you expect that will continue in the coming two years? That is my first question. Well, let me make some general comment, then I will ask maybe Ben or Vincent to go into detail. If you look at our gaming business, I would say for the last 2 and a half years, maybe 3 years, we have been growing double digit year over year. So it is actually 25%, 35% actually. Well, it is actually double digit year over year. I mean, so we have been growing. Did I say something? So, my point on that one is actually it is not just last year's boost. So point number one. Point number two is actually when you are growing so fast, your base is becoming bigger. So I mean, again, that will affect the growth rate. Also because of the nature of the players, our player mainly on Eudemons is actually different from a lot of the other mobile games, because the other player you are looking at is actually more in the mobile area, then we are kind of both in mobile and also in PC games. So with that, either Ben or Lin Zheng can comment on the specifics. Yeah. Maybe I can elaborate a little bit. Just want to make sure that I'm not on mute. Yeah. I think if you look at the performance in the first half, as Simon mentioned, we've been growing at over 30% CAGR for the past few years on the gaming business. Yes. In the first half, Lin Zheng also kind of mentioned the specific reasons. First, COVID-19 is having an impact on some of the spending pattern of our players, especially in Eudemons, because Eudemons, we have a lot of high spending players, where their spending willingness, if you will, was affected a little bit by COVID-19, but that's expected to be temporary. Then the second thing is, if you look at our growth forecast in the next few years, you cannot rely on just all the existing games to grow forever. Obviously, you have to rely also on the new games. If you look at the new games, we have a very robust pipeline of new games, but none of them were launched in the first half. I would say that the COVID-19 also has an impact on the development and the testing schedule of our new games. But if you look at going forward, we got several games in the pipeline that will be launched by the end of the year. We got at least 3 Eudemons games launched month by month in the next few months, by the end of the year. We got Eudemons Storm, we got Eudemons HTML5, and we also have Eudemons Mobile 2. So I think going forward, I think we'll be looking at more growth coming from our new games which we are confident about. Maybe, Simon, can you talk a little bit about our outlook for some new games, especially 魔域? Yes. Let me explain this. In the past few years, our game revenue has grown significantly. In fact, the revenue curve of the terminal game is relatively stable. For mobile games, I think the industry is the same. Mobile games have a problem with their life cycle and revenue curve. In fact, I also mentioned earlier that last year our 风暴魔域 1, for example, it contributed revenue online, including some revenue from 魔域 derivatives H5. As for this year, in fact, we will only launch our 风暴魔域 2 and 魔域传说H5 in the second half of the year. In fact, this is the same as before. Our entire revenue curve will change. It is true that due to the epidemic, the R&D cycle of these two mobile games has been affected, which has led to some changes in the contribution of the entire game in 1H2021. I think this is one reason. The other one, I think, actually, from the game market, one is revenue. I think the other one may depend on users, because we hope to have a healthier and longer-term development. Because I just mentioned whether our games can keep up with the times. In fact, as I mentioned earlier, we can see that in different categories, in the MMO category, in the MOBA category, including some casual categories, we have a better layout that can more steadily our user base and revenue. In fact, for example, MMO, its user age group is a little higher, and it has a stronger payment capacity, while MOBA is more youthful. In fact, we hope that different IP combinations will cover different age groups, including casual users, to make our entire user base continue to expand. In this way, our revenue can develop more stable and healthily in the long term. We consider more aspects, including the second half of the year. As mentioned earlier, Eudemons Storm and Eudemons Legend H5 are actually separately verified models. I think it is a better promotion. It is not a new product. I think in terms of revenue, it will have a more stable outlook. With that, back to you Ben. Okay. Oh, Lin Chen. Thank you. Okay. Is it fair to say that the company did not have any intention to divert some resources from game to education, and game will maintain the original focus? Yeah. Actually, we don't see that happening at all. Yeah, because I saw that investment, your R&D on games, your run rate is about 18.5%, and it looks like you're keeping that rate in the past few years, so I would expect you would keep that in the future, and we would- You're right. You're absolutely right. Yeah. Yeah. There is some concern in the market that because it looks like education still needs a lot of resources, so they would divert some resources from game to education. No. Actually, you kind of No, exactly. That is what it seems like. No. Exactly, if you remember, we did a fundraising for the education business at the beginning of the year. That is where the CB is coming into play. So actually, we are really separating the investment into education versus our investment into gaming. Mm-hmm. Yeah. Okay? Yeah. Okay, good. Thank you. Oh, sorry. I still have one last question. It is regarding the education. Actually, up to now, why we invest heavily in your company last year, because we still can see, it looks like your company still has a lot of potential, and the market price to your company seems it is not fully reflected. For example, on the education side, we expect it would at least worth about 10 billion CNY in the market if I compare to other peers. Do you have any intention to spin off the education from games in the near? Because we look like, for the game part, we believe you are at least worth 10 billion, and education at least 10 billion CNY or even more than that. So looks like now you are being unfairly treated in the market. If you can spin it off, you can actually get extra capital to support your education business. Actually, we couldn't agree with you more. I think that's why you also invested in our stock. That's one maybe upside. Yeah. I think we did talk about this particular subject in previous calls and previous events. It is our intention eventually Yeah to have education separate from the gaming business. The sum Yeah of all parts is better than where we are, so we don't have to deal with the whole discount and all that. You're absolutely right. If you kind of look at the CB that we did, the pre-money is actually $1.2 billion, it's actually US, and then post-money is 1.375, I guess. 1.35. Yes. That's your RMB 10 billion. Yes. Actually, we do exactly the same math as you do. Exactly. When you mentioned it, I just kind of smile. I look at your peers. I look at all your peers, Youdao, et cetera, and I just can't believe why you are so cheap. That's why we think there's huge potential, to be honest. Yeah. Well- I think it is also a good timing because, in the past, the investors for HK, they are very conservative regarding companies not making money. But that is no longer the case. If you look at those companies not making money, they are still very highly regarded by the market. Yes. You look like actually most of education company, they are not making money, but they still- Yes can raise a lot of funds. Yes. Because, I think you have to change regarding some of your packaging, separating games from education and repackage it a little bit. I really can see you have very high potential. Really. We agree with you. Yeah We can't go into the details. Yeah The only thing I can say is that stay tuned. How's that? And that's why today, when your stock price dropped 15%, I think great. You should buy more. You should buy more. You guys should buy more because I really expect your company at least worth $23 billion to $25 billion. Really. We agree. Yeah. Yeah. Okay. Thank you. That's all my questions. Great. Thank you. First of all, thank you for the comments. We couldn't agree with you more on that one. Thank you for investing into our company. I can assure you, your investment will be handsomely paid off soon. How's that? Because actually, we hesitate a little bit because I think there are so many smart investors in the market. Why can't they see it? We're doing. It's just, I think, just a little bit to do with packaging. You see all the education companies. Well, actually, Can't believe. going back to the whole discount, because I think you're absolutely right. When you are a multi-portfolio company, and people, to your point about packaging, then people go like, "Am I investing in a gaming company, or am I investing in an education company? Yeah I think that confuse the issue a little bit for some investors. Yeah. We totally agree with you in terms of the direction. Yeah I'm biting my tongue. I can't say way too much on this call. Okay. Thank you. Okay. Thanks. Thank you. Okay, good. Thank you. Thank you so much. Okay. Thank you. Yeah. Bye. Okay. Bye. Bye. Yep. Okay, I think that was the last question. With that, thank you everybody for calling in. If you have any follow-up questions, do not hesitate to call us. Thank you to all my colleagues, especially the ones in the U.S. With that, goodbye. Thank you. Thank you. Thank you. Bye-bye. Thank you.