Earnings Call: Q4 2020

Mar 23, 2021

Ladies and gentlemen, thank you for standing by, and welcome to the 2020 fourth quarter and annual Kingsoft Corporation earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question in the session, you need to press star one on your telephone. Please be advised that today's conference is being recorded. I'd like to hand the conference over to the first speaker for today, Ms. Francie Lu. Thank you. Please go ahead. Thank you. Ladies and gentlemen, good evening and good morning. I would like to welcome everyone to our 2020 fourth quarter and annual earnings call. I'm Francie Lu, the IR director of Kingsoft. I would like to start by reminding you that some information provided during the earnings call may include forward-looking statements, which may not be relied upon in the future for various reasons. These forward-looking statements are based on our own information and information from other sources which we believe to be reliable. Please refer to the other publicly disclosed documents for detailed discussion on risk factors which may affect our business and operations. Having said that, please allow me to introduce our management team who join us today. Mr. Zou Tao, our Executive Director and CEO, and Mr. Francis Ng, our Executive Director and CFO. Now I'm turning the call to Mr. Zou. Zou Tao. Okay. Okay, I'll do the translation for Mr. Zou. In the landmark year, we took advantage of the industry trend to expand our core businesses. Kingsoft Office Group seized the opportunity for online collaboration and brought high-quality products and services to a larger group of users. Meanwhile, online game business make continuous efforts to strengthen the R&D capabilities, maintaining longevity and vitality of core games, and achieve steady growth. We believe that the efforts will lay a solid foundation for our further penetration in the office service market and online gaming market. We achieve a solid growth in 2020, with our revenue up 28% year-on-year to CNY 5,594 million. The momentum continue in both office software and services business, as well as online games and other business, with revenue of the segment surging by 43% and 19% year-on-year respectively. In tandem with our strong revenue growth, our operating profit increased 83% year-on-year to CNY 1,855 million during the year. Now I'm turning the call to our CFO, Francis. All right. Thank you, Francie. Hi, everyone. Our office software and service business achieved outstanding performance, with revenue increased significantly by 43% year-on-year during the year. For government and enterprise business, Kingsoft Office Group is committed to accelerate the development within the Xinchuang industry and has assisted in the formulation of certain office application and services standards. In addition, Kingsoft Office Group has completed product adaptation with its developer partners and consolidated cooperation with other core hardware and software suppliers, which further optimize the office ecosystem development. Riding the wave of remote working, online collaboration has become the new core product strategy for Kingsoft Office Group, and a series of online collaboration products has been launched in 2020. In addition, Kingsoft Office Group has launched WPS Plus for micro, small, and medium enterprise. As a beneficiary of rising demand due to increased remote working amidst the pandemic, the market penetration and customer loyalty of WPS Plus cloud office services has significantly improved. Kingsoft Office Group's personal subscription business achieved outstanding performance during the year, driven by the rapid growth in number of WPS members. Kingsoft Office Group focused on expanding content and resources to promote organic growth for WPS members, and the key operational indicator of personal cloud services grew rapidly. Kingsoft Office Group also expanded channel for marketing to enhance the penetration rate of paying subscriber. In addition, WPS Office will feature as one of the second-level examination subjects in the National Computer Rank Examination, demonstrating significant progress in terms of awareness of our office software solution in China. Looking ahead, Kingsoft Office Group will continue to adhere to technological empowerment and user-oriented principle, aiming to drive office innovation for individual and enterprise user globally. During the year, online game business delivered a steady year-on-year growth, mainly attributable to the focus in product development and the stable growth of core premium games. JX Online 3 and other PC game of this JX series has achieved double-digit growth during the year. In the fourth quarter, online game business launched the anniversary expansion pack for JX Online III Mobile. Mobile game business recorded stable performance. Double Life World was launched in South Korea this year, and it won the Google Play's Best Innovative Games of 2020 award in South Korea. Online game business continued to enhance the influence of JX IP and make strong effort to expand its presence in the cultural and creative industry. JX Online III: The Adventure of Shen Jianxin in Chang'an animation series based on the JX Online 3, was released on Bilibili in October 2020 and was much welcomed by our gamers. Multiple film and television production based on the JX IP has been in process in 2020. Looking forward to 2021, online game business will continue to place its emphasis on the JX series to drive sustained growth. Meanwhile, we are also committed to invest in the R&D of new games genre and operation, aiming to enhance its competitiveness within the overall online gaming industry. As a financial result, I'm starting the Q4 using CNY as the currency. Revenue increased 8% year-over-year and 15% quarter-over-quarter to CNY 1,606 million. The revenue split was 53% for our online game and others, and 47% for office software and services. Revenue from our online games and other business decreased 5% year-over-year and increased 5% quarter-over-quarter to CNY 849 million. The year-over-year decrease was mainly due to the declined revenue from JX Online 3 as a large-scale expansion pack being successfully launched in the fourth quarter of 2019. The quarter-over-quarter increase was mainly due to the healthy growth of JX Online 3, partially offset by the decreased revenues of mobile games. Revenue from office software and services increased 38% year-over-year and 29% quarter-over-quarter to CNY 756 million. The year-on-year increase was primarily due to, firstly, the rapid growth of institutional licensing from enterprise and government users, and secondly, solid growth of individual subscription services driven by the increased demand for remote working and cloud collaboration. The sequential increase was mainly due to the strong revenue growth from the licensing business and subscription services. Cost of revenue increased 11% year-over-year and 8% quarter-over-quarter to CNY 259 million. The year-over-year increase was mainly due to the higher server and data storage costs associated with the increased user, as well as greater content costs associated with increased personnel subscription service of Kingsoft Office Group. The quarter-over-quarter increase was mainly due to the greater channel costs associated with the increased revenue of licensed games. Gross profit increased 10% year-over-year and 16% quarter-over-quarter to CNY 1,347 million. Gross profit margin kept flat with the fourth quarter of 2019 and increased by one percentage point quarter-over-quarter. Our R&D costs net increased 5% year-over-year and decreased 12% quarter-over-quarter to CNY 427 million. The year-over-year increase was mainly attributable to increased personnel-related expenses, and the quarter-over-quarter decrease was primarily due to the accrued bonus. Selling and distribution expenses increased 22% year-over-year and 25% quarter-over-quarter to CNY 278 million. The increases were primarily due to an increase in marketing and promotion spending of Kingsoft Office Group in expanding the enterprise and government market. Administrative expenses increased 9% year-over-year and 21% quarter-over-quarter to CNY 142 million. The increases were largely due to the increased staff-related costs and professional services fee. Share-based compensation costs increased 107% year-over-year and 159% quarter-over-quarter to CNY 81 million. The increases were primarily due to the new grant of awarded shares to selected employees of certain subsidiaries of the company. Operating profit before share-based compensation costs increased 16% year-over-year and 63% quarter-over-quarter to CNY 641 million. Net other losses were CNY 111 million compared to net other gains of CNY 48 million in the corresponding period last year, and the net other gains of CNY 368 million in the third quarter of 2020. The net other losses in the fourth quarter of 2020 were mainly due to the recognition of losses on deemed disposal of Kingsoft Cloud as a result of the dilution impact of exercising of its employee options. The net other gains in the fourth quarter of 2019 was mainly due to the recognition of gain on deemed disposal of partial interest in a subsidiary. The gain in the third quarter of 2020 were mainly due to the fact that we recognized a gain on deemed disposal of Kingsoft Cloud of CNY 301 million as a result of dilution impact of issue of new share of Kingsoft Cloud. Finance cost was CNY 36 million compared with finance cost of CNY 4 million and CNY 37 million for fourth quarter of 2019 and third quarter of 2020. The year-over-year increase was primarily due to the issued convertible bonds in April 2020 with the interest rate of the equivalent market interest rate for a similar bond in the accounting treatment, which would not result in cash outflow but instead of the actual yield to maturity. We record share of losses of associate of CNY 21 million, compared to share of losses of CNY 402 million for the fourth quarter of 2019 and share of profit of CNY 12 million for the third quarter of 2020. Losses in fourth quarter of 2020 were mainly due to the losses recognized in Kingsoft Cloud, partially offset by the profit recognized in Cheetah Mobile. The losses in fourth quarter 2019 were mainly due to loss recognized in Cheetah Mobile. The profit in third quarter 2020 were mainly attributable to the gain recognized in Cheetah Mobile, which partially offset by the loss recognized in Kingsoft Cloud. Income tax expenses increased 46% year-over-year and 1,068% quarter-over-quarter to CNY 114 million. The increases were mainly due to the accrued withholding tax and higher operating profit we recognized in this quarter. As a result of recent discussed about, the profit attributable to the owners of parent, including those from continuing operation and the discontinued operation, was CNY 221 million, compared to the losses of CNY 99 million in the corresponding period last year and profits of CNY 667 million in the third quarter of 2020. Profit attributable to the owner of parent, excluding ESOP, which also including the debt from continuing operation and the discontinued operation, was CNY 266 million, compared to a loss of CNY 56 million in the corresponding period last year, and a profit of CNY 687 million in the third quarter of 2020. The net profit or losses margin, excluding the effect of share-based compensation, was 70%, -2%, and 49% of the three months ended 31st December 2020, 31st December 2019, and 30th September 2020, respectively. I am now on year ended 2020. Revenue increased 28% year-over-year to CNY 5,594 million. Online games and other make up 60%, increased 90% year-over-year to CNY 3,337 million. Office software and service make up 40% and increased 43% year-over-year to CNY 2,257 million. Gross profit margin increased three percentage points year-over-year to 84%. Profit to owners of parent, including debt from continuing operation and the discontinued operation, was CNY 10,045 million, compared to a loss of CNY 1,546 million for the year 2020 and 2019, respectively. On the balance sheet, we have cash and bank deposits of CNY 14.1 billion at year-end of 2020. Now remember that we have approximately CNY 400 million, which will be recorded in the short-term deposit, which is basically very similar to the bank in cash. Adding the two together, we have approximately about CNY 80 million at year-end. Net cash generated from operating activity, including those from continuing operation and the discontinued operation, was CNY 2,991 million. Capital expenditure, including debt from continuing operation and the discontinued operation, was CNY 684 million and CNY 1,362 million for the year ended December 31, 2020 and December 31, 2019, respectively. Amid the turbulent economic environment and global COVID-19 pandemic in 2020, we still managed to achieve a solid performance. Looking ahead, we will continue to focus on our office software and service business, and continue to deepen our online, collaborative and cloud office strategy, aiming to improve the industry's ecological development and our core competitive advantage. Regarding our online game business, we will continue to maintain the solid development of our core games while bringing new game genre to further strengthen our development in the online game business. We remain confident of a robust operational outlook and sustained growth for 2021. That ended my brief introduction and I hand over the floor for question and answers. Thanks, Francis. Operator, we are ready for the Q&A session. Thank you. Yes, ladies and gentlemen, we are now in the question and answer session. For your questions, please press star 1 on your telephones and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. If you could ask your questions in Chinese, please follow it up in English. Once again, please press star 1 for your questions. First question comes from the line of Milan Jiang of Citigroup. Please go ahead. 我这边两个问题。第一是关于游戏那边，可不可以给我们更新一下，就是今年游戏的一个整个发行的计划，就大概的时间表，在发行端的话，大概就会选择是自己发呢，还是会交给一些行业伙伴发，背后的考虑是什么样的？第二个问题是关于WPS，可不可以说一下在政府企业侧，我们今年大概的一个增长趋势是什么样的？因为去年的时候有一些新冠的影响，整个招标会慢一点，今年我们那边会不会看到一些加速呢？然后我自己翻译一下吧。Thank you very much for taking my question. The first question regarding online game business. Can the management update the pipeline and the timetable and also the publishing decision, whether we are doing a self-publishing or whether we are licensed to third party. And secondly, on the WPS business, can you comment on the government and the enterprise business? What kind of growth trajectory we will see for 2021, given 2020 there is COVID impacting some tendering work, so what kind of growth trajectory do we think for this year? Thank you. 我来回答。游戏，我答，WPS他。对，我来回答第一个问题，这个游戏今年的整个计划。分几块，第一块就是我们自研自发的，包括我们5月份会发布的《剑侠情缘3》的怀旧版，这里头包含了PC端和移动端，是一个多端打通的版本。然后，原计划上半年发的《剑侠世界3》我们调整到了今年9月。这是我们自研自发的。然后我们还代理了发行网龙的《魔域3D》版本，就是我们17年发过它的2D版本，3D这个版本目前的计划详细的时间可能还没出来，但是大体也是放在下半年。还有我们投资的并且共同开发的《卧龙吟2》，这个是给腾讯发的，计划也是在七八月份左右。还有我们代理的《最终FFBE2》，我们已经在今年年初已经拿到版号了，但是具体的上线时间从现在来看也会放到Q2、Q3的样子。当然还有一款我们叫《武林闲侠》，暂时这么命名的。这个大概率我们会跟第三方合作来发，时间表差不多也会在今年六七月份的样子。这是目前主要我们今年具备发行条件的产品的大体的安排。但是具体的可能还是会随着合作方或者产品的具体的成熟度，可能还会稍作微调，但是大体上是这么一个计划。第二个问题。先翻译一下第一个。 OK, good. I will translate for Mr. Zou first. Regarding the game plan and pipeline for 2021. First, we have the self-developed and self-published games that include the JX Online III Mobile Nostalgia Version, and also the JX World 3 mobile game. Originally we planned to launch that game in the first half of this year, but now it may be delayed to September of 2021. Secondly, we have the licensed mobile game, 魔域 3D version. This one we plan to launch the game the second half of this year. The 魔域 2D version, we launched that game in 2017. Thirdly, the 卧龙吟 2, this one we are cooperating with Tencent, and this game we plan to launch in July or August of 2021. Also we have another licensed game, it is called FFBE2. This one we already got the license approval early this year, and now we plan to launch the game in the second quarter or the third quarter of 2021. Lastly, we have a game that is called 武林闲侠, for the tentative name of the mobile game. This one we plan to cooperate with a third-party partner. This one we plan to launch the game in June or July of 2021. So far, these are the major game projects that we have for 2021. But the detailed timeline will depend on our partner and also the maturity of the game development. Thank you. 好，我来回答你关于WPS的问题。你刚才问到，可能是政府方面，最主要是信创。今年的步伐跟去年比较。你提到，去年的话，可能因为疫情，所以会比原来的那一慢。那么在2021年的展望是怎么样？首先第一个，我们今天我也参加了办公的董事会。上面也听取了他们管理层的对于今年跟明年的汇报。但是在上面的话，我们还有一个问题讨论过，因为办公他们自己也是一个上市公司，那我特意问过他们对于他们指引方面，他是怎么去做。那么他们很明确表示，他们为了避免后面的一些问题，他们是坚守不对于未来的数据作出指引。所以我们就说我们在控股母公司里面的话就变得有点尴尬，因为尽管我可能知道，可能不知道，也很难在集团层面上面，对比子公司、上市公司自己本身作出更多的披露。但是整体而言的话，我可以跟大家讲一个大概的方向，跟我们的看法。一，我们认为信创的东西，我们还是非常有信心，因为这个是不会走回头路，但是它的到底政府采购方面的进程有多快的话，可能不是某一个单一企业可以影响到这个速度的，最主要还是由政府那边去推。那么这个是一点。另外一个方面的话，我想讲一下，我们也可以跟大家介绍，去年在信创办公领域方面的话，我们的market share，市场率，当时的目标希望维持龙头在90%，那我们最终是达到94%，在2020年。而这个势头的话，在今年我们是非常有信心保持的。所以简括而言的话，我们不对办公，2021年的话作出具体的指引，但是我们对于信创的信心，包括我们对于我们保持龙头这个信心的话，是充满信心。好吧。 OK, I will translate for Francis. Regarding the question on the WPS, the Xinchuang project development. For 2020, you mentioned that due to the COVID, our development was slower than expected. But for 2021, I recently also joined the Kingsoft Office Group board meeting, and discussed on the 2021 plan with their board. Because KSO is also an independent listed company, so to avoid future issues, they explicitly stated that they are not going to give out any future financial guidance. As the parent company, we do not want to disclose more than what Kingsoft Office disclose to the market. But I do have two things to share with you. First is that we are very confident on the development of the Xinchuang project. This is not going backwards but how fast the development is not controlled by any one single company, it is more government driven project. Secondly, last year our target for the Xinchuang projects, that we want to get over 90% of the total market share in this project, and eventually our actual market share was close to 94%. This trend will continue in 2021. We want to continue to maintain the leader in terms of the market share of this project. Thank you. 好的，谢谢。 Thank you. Our next question is from the line of Jefferies. Your line is open. Please go ahead. 谢谢能接受我的提问。这边有两个问题，第一个问题是我们怎么看今年手游的一个竞争格局？第二个问题是公司未来会怎么考虑使用现金，会不会考虑一些M&A，潜在的考虑的收购的公司会有哪些？然后我自己翻译一下。The first question is how should we see the competitive landscape of mobile games in 2021? The second one is how are we going to use the cash? Is there any possibility of M&A activities? And what are the potential targets? Thank you. 还是我回答第一个吧。我来回答第一个问题，就是怎么看今年的游戏格局。我是这样认为，可能单从今年，我说未来吧，可能会更好一点。我自己的理解有几个方面吧。第一个叫做渠道的多样化，这个也很好理解，其实我前面几个周我也谈过类似的观点。第二个其实叫做产品的精品化。大家也可以看到，从去年陆陆续续上线的游戏，整个制作工艺水平整体来讲是越来越高了。我觉得这也符合这个行业的发展趋势，一般都是先从无到有，然后才从有到精。第三个我觉得，应该说在过去几年已经呈现，未来还会继续呈现的，其实叫做逐渐头部化。一些头部产品在同品类里面占的比例以及占的用户，应该说用户越来越聚拢在头部产品上。当然我们的剑网3过去这些年也是这种效应，在武侠这个PCRPG这个领域。第四个我是觉得，依然还是对整个行业来说，创新的要求是越来越高了。这个从另外一个角度讲，就是同质化产品，其实相比PC时代，由于移动时代的这个信息传导的效率更高，我觉得同质化产品如果没有创新，同质化产品的竞争应该说会越来越弱，所以迫切要求整个行业需要不断地去创新。这就是我对整个游戏行业未来的总体趋势的一个判断。 Okay, I will translate for Mr. Zou. Regarding the question on the mobile game competition landscape for this year, I would like to comment a few points of my understanding for the game competition landscape in the future. The first one is the multiple channels development on the game distribution. The second one is the shift of the competition to more core and premium games. We noticed that in the last year, the quality of the mobile games are becoming better and better on the mobile game development. There is a shift to more and more core and premium mobile games overall. Thirdly, I think that in the past years, this happened in the past years, and this will also continue to happen in the future, is that the mobile games are more, or the users of the mobile games are more focused on the first tier products. The market share of the first tier products are becoming larger and larger, and the users and the gamers are more focused in the first tier game products. Lastly, I think that there is a requirement for the innovation of the mobile game development. We think that in the future there will be more innovation in the mobile game development. Thank you. 好，我来回答第二个问题，就是你问到我们怎么样用我们账上的现金，跟着M&A方面的一些考量。首先第一个，我想跟您介绍一下，我们现在手头的资金是相当充裕，那么我们会今后的话，重点发展以我们的企业级应用方面SaaS的一个方向，包括了即时办公、云化的一些科技。因为大家知道，现在这一轮的中美科技的竞争，尤其是会引发对于我们本土的一些核心科技的发展。那么金山正正好在占比较有利的位置，所以我们会利用我们手头上面的资源，包括我们在过往的一些研发、一些核心的软件，跟SaaS方面的人才跟技术。我们举个例子的话，我们其实已经是起步，在我们的那个，比方说是武汉战略，在我们武汉里面会建立一个有相当规模的R&D中心。然后在海外方面的话，我们也是会以这一方面这个领域里面去思索，哪一方面是跟我们战略方面协同的话，那我们都会去考量。好吧。 OK, I will translate for Francis. Regarding the question on how we use the cash and the merger acquisition consideration. I want to clarify that we do have a good level of cash on hand, and we would like to invest it in the direction of our core business, which include the online collaboration and the cloud direction. In the recent U.S. and China competition on technology, we do see that there is high demand in the domestic core technology development. Kingsoft are actually in a very good position in this direction. We would like to invest more in the core tech products and also in the SaaS direction. We also have a Wuhan strategy. We are building a large scale R&D center in Wuhan as well. Our merger acquisition plan is also closely related to our strategy. We would like to consider the potential merger acquisition opportunities alongside with our core strategy of the business. Thank you. 非常感谢。 Hi operator, we are ready for the next question. Yes, our next question is from the line of Yang Linlin of GF Securities. Your line is open. Please go ahead. 管理层好。我有两个问题，一个是关于剑网3，因为剑网3从19年下半年开始收入回升之后，我们看到在20 Q4也是环比增长的，后续的增长怎么看？主要的驱动因素是什么？然后第二个问题就是关于我们的几块业务，能不能给我们一些指引，就是在今年的增长情况。然后我自己翻译一下，就是the first question is about 剑网3。剑网3 has increased in the fourth quarter on quarter and since it rebounded in the second half year of 2019. What about the 2021 and future growth? What is the driver? The second question is about the guidance. About the guidance, about our three business, such as the gaming business and the WPS and Kingsoft Cloud in 2021. Thank you. 还是我回答第一个问题。您刚才问到剑网3，自从19年Q4发布资料片有强劲的增长，未来的驱动因素是什么？这个问题其实我在前几个Q，有一次我系统地讲过。我个人并不认为19年Q4到2020年这种增长是一种很特异的现象。我个人是觉得，应该说是从我们12年开始，就是我们09年发布的，到12年开始，经历过将近两年左右的研发运营的磨合，我们逐渐掌握了，或者说固化下来的整个剑网3在过去十几年的运营思路，其实都是如此的。简单介绍，可以理解就是每年我们通过三个资料片，基本上你可以理解成是四个月左右就一个资料片的形式，推出我们新的玩法、新的门派等，应该说叫新内容，得以持续地去拉动或者稳定用户。我们一直延续到了17年，然后到18年，我也解释过，18、19年我们重点精力是更换了游戏的引擎，或者叫升级了游戏的引擎。所以大家看到了18、19年那两年，剑网3似乎表现得跟17年之前有点不太一样。主要原因是我们那个引擎是03年开始写的，09年上线的。所以到了17年到18年的时候，已经过去十几年了。所以我们认为这款游戏还有很长的生命周期，我们必须要下决心，把整个产品的引擎或者叫底层做一次全面的升级。事实上，通过18、19年的升级，到19年Q4，我们重新回到17年之前的这种运营模式，包括过去的这个20年，一年三个资料片，推出新门派、新内容、新玩法的这种方式，在20年再次验证是非常成功的一种，依然是很成功的这种方式。所以，我想表达的意思并不是说20年做了一些很特殊的事情。当然，至于门派、玩法肯定是每年都不一样，但是在策略上，其实在过去十年我们都没有本质上的改变。这是游戏本身。第二个，我也可以再介绍一下，趁这个机会。剑网3这款游戏，我们不仅仅是在这个游戏里面通过一年三个资料片不断地持续拉动用户，实际上我们这么多年一直坚持了包括像电竞方面的剑网3竞技大师赛，以及在动漫、电影、网剧、小说，应该说各个领域的积极拓展。所以我也说过，剑网3在我们看来，这个用户他在不在PC上玩，不是取决于他是不是流失的关键要素，只要他还在关注我们的大师赛，关注我们的电影、电视、网剧、动漫、小说，我们就认为这个用户依然还在。所以，这个在我们自己的叫法里，这叫剑网3的一个圈子，或者说剑网3的生态圈。所以我们过去十几年是致力于整个剑网3生态圈的这种打造和经营，它绝对远远超出了一个普通的PC端游的经营的说法。所以，以上就是最核心的两点，简单说，游戏内我们恢复了一年三个资料片、每四个月一个资料片的持续拉动和稳定用户的这么一种方法。第二个，我们持续在进行整个剑网3生态圈的经营。所以这两点，我想它是过去我们近十来年成长的核心驱动因素，也会是未来驱动这款游戏继续发展的核心因素。除了这两点之外，如果在21年要说有什么新的驱动因素的话，其实我在刚才回答第一个提的问题的时候就谈过，其实我们今年还会去在五月底发布剑侠情缘3的经典版。这里头我就解释一下，这个经典版其实最核心的也是这么多年陆陆续续，我们有很多用户，其实在不同的特定的历史时期，尤其是早年，因为各种原因中断了游戏的这种体验，然后事隔多年后，我自己的理解是，他们也相对来讲变得有时间了，也相对来讲还是想重新回来体验剑网3。但是剑网3已经从09年发布到现在12年了，中间确实已经有很多内容随着不同时代的版本的更新，使得他们有这种陌生感。所以在这种前提下，我们计划在今年推出怀旧版。它本质上并不能完全算是一个新游戏，你可以理解成是围绕我刚才讲的那两点。说白了，这么多年它依然在我们剑网3的生态圈里头，虽然过去三年、五年，他可能都没有玩我们的游戏了，但是他们一直在关注我们的游戏，在看我们的比赛，在看我们的网剧，在看我们的小说，看我们的动漫。但是今天他可能想重新回来体验一下我们的游戏。是今年剑网3除了传统的那些手段之外，跟以往最大的一个区别点，或者说我们自己认为叫做新的一个增长方式。这个我不知道我应该讲得够清楚了，好吧？那个翻译翻译一下。好的. I'll translate for Mr. Zou. Regarding the question for the growth driver for JX3 PC game. We think that there is a strong growth for JX3 PC game since the expansion pack was launched in the fourth quarter of 2019. But I believe that the growth in 2019 and 2020 is not unusual. The game was launched in 2009, and ever since 2012 to 2017, the game has experienced a strong growth in the past years. Our plan is that we launch three expansion packs every year. Basically one expansion pack every 4 months, and we provide new game content in each expansion pack to continuously attract the gamers to play this game. In 2018 and 2019, we did an upgrade on the game engines because the game was developed in 2003 to 2009. Because we think that there will be a long life cycle for this game, we think that it is quite important for us to do a complete upgrade on the game engine for the game to continue to grow in the long term. In 2018 and 2019, in those 2 years, the game performed differently from the previous strong growth in the previous years. But ever since we have done the upgrade on the game engine, we started to launch expansion packs again in the fourth quarter of 2019, the game started to grow again quite successfully. We prove ourselves in 2020 that the three expansion packs launching plan is still quite a successful strategy for JX3 PC game. I want to clarify that we didn't do much special things in 2020. Even though the content is quite different, we upgrade the game content in each expansion pack, but our strategy actually stayed the same for operating this game. Another thing I want to state is that other than the in-game content upgrade for the JX3 PC game, we also did a lot of other things for this game in the past years, which include the animation, include the online competition, and also the TV fiction, and we did a lot of things around the JX3 PC IP. Whether the gamers are still playing the game is not the only factor to decide they are still a gamer for JX3. If they still follow our animation or TV or online competition, then we consider that these gamers are still in our circle, in our JX3 ecosystem. In addition that we are going back to the extension pack launching schedule in the future, we are also going to continue to focus on the operation of our JX3 ecosystem for this game in the future as well. In addition to these two factors, for 2021, another special thing that we're going to do for JX3 PC game is that we are planning to launch a JX3 Nostalgia Version by the end of May this year. This game is not a new game, it is actually a game that is targeted to a lot of the gamers that I mentioned earlier, that they might stop playing the game sometime in the past, but they still follow our IP, and now they may have more time, and they may want to play the game again in the future. But since the game has been operating for a long time in the past, we did a lot of updates for the game. We do plan to launch a nostalgic version for these types of gamers so then they can come back and play the game again. Thank you, and we're ready for the next question. 我回答第二部分。对，好的。关于那一个，问一下那个指引，问到就是说游戏、办公跟云。首先其实我回答第一个问题的时候回答过，就是说我们现在有点尴尬，因为我们前年办公那个分拆成为A股上市。去年的话我们那个云也在那一个NASDAQ那个上市。所以就是说问到我们对于这几个子公司的指引的话，我只能从一个很大方向的分享一下，就是说我们的一个掌握。具体的那个内容的话，我们不能够超越它。那么云方面的话，他们其实自己也有自己的一个发布会，所以他们可能会在细节方面讲得更多。但是我知道跟办公差不多，他们对于指引方面的话，可能没有办公那么严格，就是说一点不给，但他可能也是按每个季度去对它top line，就是说收入方面给出一个范围。跟其他美股公司一样，对全年的包括对利润的那一个，他们是没有指引的。但是我可以跟大家分享一下，因为大股东也是非常关注的，这个很重要的一个associate company。云方面的话，我们其实是非常满意它在2020年的表现，不管在它的上市的表现，股价的表现，尤其是在业务方面的话，我们是更关注。第一，他们收入方面的话，可以说是在去年整个云行业里面都是领先，超越了它给大家的预期，有60%多的成长，连续前几年的话都超过100%，去年有60%多。那么这个是第一点。第二点的话，它也在利润的margin方面的进步，也是令到我们非常兴奋的。第一，其实已经很多个季度的话，毛利方面都是有进步。那么在去年的话，我们也留意到它进一步有进步，在它的管理费用方面的话，也体现了它一个经营的规模效应。在它的成本控制方面，在CDN、节点跟一些投资各方面的话都是非常突出。得到一个结果的话，他们的EBITDA到年底的话，差不多已经是break even了，也是提前完成了他们这方面的任务。在2021年，今天我其实也有参与他们的董事会的讨论，我们也看到他们是信心满满，在2021年还是依然保持一个行业上面的高速增长。在利润方面的话，进一步有所进步。然后再加上它在金融行业方面，他们在一些健康方面的话，表现都是相当好，除了他们在已经领先的CDN视频方面。所以可以说云方面是2020年表现很好，所以他们股价翻了三倍。在2021年，我们依然对它是非常充满信心。这个我没有对它的那个数值上面做出指引，但是从方向上面的话，我们可以分享我们对云的看法。第二个就是在办公，刚才我所讲过了，其实我们对于办公在2021年的进程也是充满信心。这个团队非常强，在信创这方面的领域依然会保持绝对的龙头地位。至于增速有多快，我不能超越他们讲，包括信创，刚才也讲过，我们不能说一个企业影响不到政府方面对这个推进的行为。但两个方面，我们认为信创不会后退，第二，我们依然保持龙头。那么这个是对于办公方面的说法。那么对于游戏方面的话，刚才周总也介绍过我们在2021年的游戏pipeline，也介绍过我们龙头的那一个剑3，包括刚才我们也提到一个怀旧版，多屏的那一个。所以游戏方面，我们也是依然充满信心，在2021年依然会保持一个良好的增长。我相信这个增长的话，应该不会比2020年的top line的增长为小。因为我们其实在发行方面的话，周总刚刚没讲，在前几期的讲过，我们也有一个发行的团队，现在应该也过百人了。那么在2021年，陆陆续续刚才也介绍过几个，是我们发行的游戏。所以在2021年，我认为在收入方面的话，会保持一个不比2020年差的增长。但是在利润方面的话，我觉得绝对额方面，肯定是会有进步，但是这个进步的话，可能会略低于我们收入的增长。为什么这样讲呢？今天其实四个董事会，很忙，游戏的那一个董事会也是安排在今天。所以我跟周总基本上四个董事会都参加。在游戏方面有两点，我会跟大家分享一下。第一，他们也重新审视过他们的战略，所以他们在人员的incentive工资方面的话，其实在2021年会有一个比较显著的提升，这是一点。第二，刚才我们也讲过了，除了在我们剑3跟PC端的新英雄方面有一个很稳健的增长在手游方面，除了自研之外，还有我们去发行的。所以在量方面会大。但是发行的呢，其实我在上一期也讲过，我们要是发展的游戏的金额越大，在前些年份的话，可能会摊薄了我们的利润率。因为在前期的发行的话，我们一定就要关注，我们要下功夫，要去做好发行的效果。所以这方面毛利的话，应该还没到成熟，或者是比我们自研自发的游戏要低很多。所以在operating margin，游戏经营利润方面，这个增长是会比我们的那个收入增长会慢。所以这三点的话，就是说这三公司大概是这个情况。Francis，麻烦你帮我翻译一下。 Okay, I'll translate for Francis. Like I said earlier that Kingsoft Office and Kingsoft Cloud are both independently listed companies. As the parent company, we could only share on the overall picture and direction for these two businesses. For detailed guidance, they will also give out their specific guidance for 2021. I know that Kingsoft Cloud also shares their quarterly guidance like the other U.S.-listed companies. We are also a large shareholder for Kingsoft Cloud, and they are an important associate company to us. We are quite satisfied with their 2020 performance in both their financial performance and also in their share price performance. Their revenue growth was over 60% last year, which outperformed their original guidance. Their profit margin also improved due to economies of scale and also their control in cost, including CDN and also their adjusted EBITDA, which break even by the year end. For 2021, we also remain confident with their future performance. We believe that they will continue to maintain a relatively high growth rate in terms of revenue and then their profitability will continue to improve. Their financial cloud and also healthcare cloud will also continue to improve. In addition to their strong growth from the video cloud sectors. Their share price grew three times in the past year. We are also confident with their future performance. The same thing applied to Kingsoft Office. We are confident with their 2021 performance. The team is very strong in the Xinchuang project. We are going to continue to maintain our leading position in this project. But like I said earlier, the project itself is not dependent on any single company, so it is more government-driven. But we believe that this project will not go backward, and we are going to maintain our leading position in the project. Thirdly, for the game business, Zou Zong already mentioned the 2021 game pipeline. We are confident with the future game performance. We have JX3 Nostalgia Version, and also we have a number of mobile games to be launched in 2021. We are quite confident with the revenue growth for the game business. We believe that the growth will not be less than what we had in 2020 in terms of the top-line growth. We also have a publishing team for the game business. Now we have over 100 people in this team. In 2021, we also have a number of published games in this business. The revenue will continue to grow. Regarding the profitability, we believe that the absolute dollar terms will continue to grow, but the growth may be less than our growth in revenue. This is because in 2021, the salaries will improve significantly for our game employees. Also for the published games, if the number of published games increase, the revenue will increase. But this will somehow dilute our profitability because we will encounter initial costs for publishing games. So the gross profit margin of the publishing games may be less than the self-developed, self-published games. Thank you. 不好意思，我想有一个问题想跟进一下，就是刚才提到说我们并购的这一块，我不知道有没有时间表。 Do you have any time schedule about the M&A? 是竞争办公的吗？什么时间表？没听到。并购。并购的那个我们没有个时间表，没有。我们会密切关注。 We will closely monitor, but we do not have the specific timeline for the merger and acquisition. Thank you. We will now conclude our presentation for today. Thank you. 谢谢。 Thank you. Ladies and gentlemen, that concludes the conference for today and thank you for participating. You may all disconnect.