Good evening, ladies and gentlemen. Welcome to NetDragon's 2016 first quarter earnings conference call. This time, we also have a live webcast on our website, which you will be able to view the quarter earnings presentation. At this time, all participants are in listen-only mode. There will be a presentation followed by a question and answer session. Before the presentation, I would like to remind you 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 a 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 the Non-GAAP financial measures, please refer to the disclosed documents on the company's IR website at www.nd.com.cn/ir.
The company's 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 in a couple of hours. Please allow me to introduce the management team who will join us today, Dr. Simon Leung, our Vice Chairman and Executive Director, and Ben Yam, our Chief Financial Officer. I will now turn the call over to Simon.
Well, thank you, Joseph. Greetings. Good morning, good evening, good afternoon, everyone. Well, it's been a while since we get together, and this is going to be a new experience because we're going to be using some new technology. So I hope you're going to enjoy the experience. What I will do is start out is actually to recap what we closed last year with, and then we kind of take you through what happened in Q1, and then give you a very brief outlook on the rest of the year. Then we'll open it for question and answer. Starting with the education for 2015, quarter four, we did talk about the commercialization of some of our product in China, so that's why you start to see revenue coming in.
We also did say we will continue to invest into new technology, whether it's through acquisition or organic growth, or partnership, which is actually a very important theme for us, in 2016. Then we also talk about starting working on 3D and VR content, because that is the future. Then we also indicated we expect significant growth in revenue and also market share gain in our education business. Just to level set the fiscal year, we also did point it out, with the acquisition of Promethean, a larger portion of revenue will be in education. Then the seasonality of the education market worldwide is actually with Q1 and Q4 being the low season, and Q2 and Q3 being the peak season.
I think when you look at the result and also listening to us talking about the outlook, you will get a sense of how that impact us QoQ. A quick one on gaming is actually we have done very well in our online version and also our expansion in terms of international presence. More importantly is the trend of the O2O implementation, which is online to offline, and we call it e-sport. You will see some of the interesting activities or encouraging activities in 2016. With that, let me turn into Q1 2016. Again, I'll start with education. We are very happy to report that we have a significant growth in our revenue in Q1, mainly driven by the education business, which is something we indicated in the last quarter.
We have share gain across the world, across the market, mainly in the interactive display panels, which is actually the direction and the trend worldwide. A lot of countries are moving from whiteboard to panels, which is actually work into our strength. On the product side, we launched a new version of ClassFlow, which is our basis to grow our community. We have officially, since we launched, 500,000 registered teachers on the network. If you think about how they connect to the student and then to the parents, we are talking about the opportunity to connect a very significant community. So we are on track to our goal, which is actually to build the world's largest global learning community. Continue with the highlight, we did talk about a lot of wins. If we don't win, we won't gain market share.
Also very encouraging is actually we also open up new markets, like Turkey, like Myanmar, like India, which will fuel the future growth of our business. In mature market like the U.S., we are doing a lot of large rollout. Miami-Dade County being one, Cypress-Fairbanks being another one. These are talking about thousands of panels and system being rolled out. We've seen very good growth in the U.K. Just for fun, we also sold our first product to the Queen, which is the Buckingham Palace, for those of you who's interested in that, you may want to take note. You cannot grow without the right kind of product. So I'll spend some time talking about product for Q1, which will continue to be the theme for 2016. One of the big development effort, it will be in the 3D VR and AR.
Even though we say VR, we are working on both VR and AR. We developed a VR classroom, which can be deployed in a lot of classrooms around the world. I think will help impact how kids learn. We are very excited about that. I did talk about a new release of ClassFlow earlier with enhanced usability and also functionality. Last but not least, is actually our new product, a new panel, which is what the market demand. We launched it in January in the Bett Show in London. Continuing on virtual reality. As you heard me talking about our strategy in the education business, I think we should more talk about it as more learning, because education is a part of learning. Our model is actually the partnership model. We want everything to be open so we can provide the platform to all partners.
The virtual reality platform is no different from any other platform that we have developed. It's one of the world's first open platform that is being developed, and we will open it up for our partners so they can innovate on that platform. We are on the way of creating and establishing the world's largest 3D content library, which is actually work to our strength. We also developed some tools, leading by an editor with various scenarios and access to 3D content library to allow developers and partners to innovate and create services and apps. Even more so, we can put this into the hands of teachers and students so they can design their own curriculum or their own lessons themselves. This way we can help fuel the industry growth. We are very excited about that.
Last but not least, we have established a physical VR experience center in our headquarter in Fuzhou. It's about 200,000 sq ft actually, showcasing all the different technology, both VR and AR. As we speak, there's a lot of capability going in. You're more than welcome to come visit us and experience this firsthand. Turning to gaming. Again, a remarkable Q1. Very strong growth at the back of our online gaming, which is our pocket version. I think we figure out how to do mobile and make it sustainable. Our pocket version is part of our PC game, so we can leverage the asset that we have and help to grow our revenue per user. Our new game, Calibur of Spirit, continue to perform very well.
Ben is going to tell you a little bit more about the financials, but I can tell you, it's actually 1.7 million DAU, is something that we all can be very proud of. Also, we are on track to develop brand-new online games for our famous game, Eudemons, and also that will be target to be launched later on in 2016. Last but not least, we always talk about our three-prong strategy to grow: organic growth, partnership, and acquisition. We have been and continue to be very active in that area. We have acquired Cherrypicks Alpha. The reason we bought them is actually in two area. They have a lot of good capability and IP in augmented reality, which is the continuation of virtual reality. We are very excited to bring all of Cherrypicks into the NetDragon family.
The other one is actually a technology called starbeacon, which will be able to support all our online and offline implementation, allow us to do proximity marketing, which is actually something that we need for esport. We will continue to look for technology that will help us to grow, not only in learning but also in gaming. Last but not least, we invested into a technology company which is based in Toronto, Canada, that has a wonderful technology, which is actually in the area of holographic transmission. We saw the technology. We believe we can apply this across all our businesses in NetDragon, so we decided to invest into it. At the same time that we have agreed to create a joint venture with them in Asia Pacific. You will hear more about this tomorrow, probably about 24 hours from now.
With that, I am going to turn the stage over to Ben Yam, our Chief Financial Officer, and he is going to take you through the numbers in detail.
Thank you, Simon. As Simon mentioned, we are excited to report a quarter with remarkable revenue growth. In the quarter, our revenue was CNY 571 million. It was up 132% QoQ. We basically achieved impressive YoY growth across the board on all metrics. Gross profit for the quarter was CNY 346 million, was up by 10.9% QoQ and 67.2% YoY. Revenue for the games business was CNY 284 million, up 26.6% YoY. Revenue from the education business also grew very significantly and was CNY 279.9 million, was up 33.4% QoQ, and it was a 27 times increase YoY. Adjusted segmental profit from the games business was CNY 107 million, up 5.5% QoQ, and 153.4% YoY. The large increase was driven largely by the success of our new games, including Calibur of Spirit, as well as Eudemons Online pocket version. Adjusted segmental loss from the education business was CNY 146.5 million.
It was an increase of 12.3% QoQ as we continue to invest heavily into the education business. On a consolidated basis, our Non-GAAP operating loss was CNY 111.8 million. It was up from CNY 8.2 million in Q4. I am going to talk a little bit about this operating loss because the increase is actually attributable to factors that we can see on slide 16, where you can see the bridge between the operating loss for the two quarters, mainly Q1 versus Q4 of last year. In a nutshell, the increase in operating loss is due to several factors, and a couple of them is largely unrelated to the core operational performance of the business. One of the factors is that the CNY 22.9 million increase in the operating loss of Promethean in Q1 compared to Q4.
This increase is something that we have expected because the first quarter is a traditional off-season for the education business. Further, because we are consolidating three months of Promethean financials in Q1 versus only two months in Q2. As we go into the second quarter, which is the peak season in the international education markets, we expect a very significant uptake in both top line and bottom line. In particular, because of the strong revenue traction that we are getting in Q2, we are on track to reverse the operating loss position of Promethean in Q1 into an operating profit in Q2, and that is excluding exchange difference and potentially some one-off items. If you look at the chart, there are a couple of other items that contributed to the loss differential.
You can see that there is a much higher government grant income in Q4 last year compared to Q1. Government grant is something that is bound to fluctuate from quarter- to- quarter, and the CNY 45 billion differential that you can see in the chart is very significant and contributed to a big part of the operating loss this quarter. Also you can see that there is a 35.3% increase in the net exchange loss. This exchange loss is predominantly attributable to currency fluctuation exchange as we translate our financial statements from local currencies into our functional currency. Again, this is unrelated to the core operational performance of the business. A word on the cash position, finally, is as of March 31st, our cash equivalents and liquid investments is at CNY 1.43 billion.
With that, I am actually going to turn back to Simon, who is going to give us a conclusion or an outlook as we go forward.
Yeah, thank you, Ben. I figure I will give you a quick outlook on the theme for the rest of the year. I think from a revenue, financial standpoint, you will continue to see strong revenue growth both in China and also in the international market. I think in terms of bottom line, is that we will continue work to improve it. Ben already gave you some indication on what is going to be coming. The other factors will be some of these integration synergy will kick in terms of cost. We are very confident that we are moving in the right direction from a financial standpoint. The other point I want to make is that we will continue invest heavily into technologies and in content, because this is actually absolutely critical for our growth, not only in China but worldwide. We will continue expanding to geographies.
We will also leverage the One Belt, One Road initiative, to help us to go into some of these other countries, in terms of education is concerned. Very quickly on gaming, we will continue to leverage the excellent growth that we have been seeing in Calibur of Spirit, both on the online and the mobile standpoint. I think you will also see significant development in our 3D VR gaming offering. Last but not least, you will see some activities in the esport area, which is our O2O implementation. With that, I am going to pause and hand the stage back to Joseph.
Thank you, Simon. Operator, if you can start the Q&A session, please. That would be much appreciated.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or the hash key. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. 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. There are no questions at this time, sir. Please go ahead.
Hello?
Sorry, operator, can I just confirm? Did you say there is no questions?
Yes, sir. There are no questions at this time. Please go ahead.
Okay. Well, in that case, well, thank you so much because this is probably one of the quickest earnings call I ever attended, but it is okay to set a record. Thank you so much. I think I will see some of you tomorrow at our event in Science Park in Hong Kong. Thank you so much.
Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you all for participating. You may all disconnect the lines now.