Earnings Call: Q4 2017

Mar 21, 2018

Ladies and gentlemen, thank you for standing by, and welcome to Q4 2017 Kingsoft Corporation Earnings Conference Call. At this time, all participants are in a listen only mode. There will be a presentation followed by question and answer session. At which time, if you wish to ask a question, you will need to press star one on your telephone. If possible, just please ask your question in English, then in Mandarin. Please be advised that this conference is being recorded today, Wednesday, 21st of March, 2018. I would like to hand the conference over to our first speaker 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 2017 fourth quarter and annual results conference 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. I would like to translate for Mr. Zou first. The year 2017 has marked a year of great achievement for Kingsoft. Our flagship PC game, JX Online 3, continued to outperform the market, with revenue up 32% year-over-year. Kingsoft Cloud has further advanced its vertical businesses at a strong pace, with total revenue increase 81% year-over-year. The MAU of the WPS Office mobile version continued to grow and exceeded 145 million in December 2017. All these achievements have given us the strength and confidence to keep advancing in the online games, cloud services, and office software and services businesses in the future. Kingsoft recorded stable and healthy growth in 2017. We made a total revenue of CNY 5,180 million, up 35% against the previous year. Operating profit before share-based compensation cost increased 7% year-over-year to CNY 1,049 million. The fast development of all business segments in 2017 has set the stage for Kingsoft to grow its revenue notably and better capture the market potential in the coming years. Now I would like to turn the call to Mr. Ng. Thank you, Francie, and thank you, Zhou. Hi, everybody. Before I start, I would like to explain that the comparative figures are restated to reflect the reclassification between the continuing operation and the discontinued operation. Mainly the operation result of the Cheetah Mobile, which has been presented as a discontinued operation for the nine months ended September 30, 2017. From October 1 onward, we account our interest in Cheetah Mobile as an associate. That means that we equity accounted for Cheetah Mobile's result. In 2017, both Kingsoft PC game and mobile games delivered strong performance. The flagship PC game, JX Online 3, has maintained rapid growth for eight consecutive years, with revenue increased 32% year-over-year in 2017. Such outstanding performance ensures a successful launch of the JX Online 3 revamped version, laying a solid ground for the long-term development of the game. The quality upgrade and the brand-new game features of JX Online 3 revamped version has attracted great attention. Within 24 hours of its launch on December 29, the total number of users increased 43%, and the steady performance of JX Online mobile games in 2017 created condition for the enhancement and development of other upcoming JX mobile games product, helping maximize the IP value of JX Online. Together with Tencent, Kingsoft is going to launch three major JX series mobile games in 2018, including the Yunshang Yuyi, JX Online 2 mobile, and JX Online 3 mobile games. In the fourth quarter of 2017, Kingsoft achieved a breakthrough in licensed mobile games. From the cooperation with NetDragon, the mobile game Eudemon Online was launched on all platforms on October 18, and the gross billing exceeds CNY 100 million within 90 days of launch. This well-known game IP once again gained widespread acclaim among mobile games players. Kingsoft Cloud maintained a robust growth in 2017, with revenue increase 81% year-over-year. Kingsoft Cloud's performance has been highly acknowledged by the capital market. By March 2018, Kingsoft is expected to complete Series D financing, which amount to a total of $720 million, with post-money valuation reaching $2.37 billion. According to International Data Corporation China Semiannual Public Cloud Services Tracker Report first half 2017, published in November 2017, Kingsoft Cloud was ranked top three in the IaaS public cloud service provider in China. Kingsoft Cloud's video cloud business achieved remarkable expansion by applying its video cloud technology and service advantage. Game cloud business reported solid growth in both customer usage and revenue, with compound lift in multiple fields, including CDN, hybrid cloud, and network security. Government cloud and healthcare cloud business have progressed smoothly with the national footprint expanded during the year. Kingsoft Cloud also expanded AI technology application in its product services and launched new video technology, rendering video service quality improvement and cost saving for customers. In addition, Kingsoft Cloud was the first to obtain authentication of CSA STAR tech for both IaaS and PaaS in the security enhancement, amplifying Kingsoft Cloud's leading position in cloud securities construction. WPS Office achieved stable and healthy development in 2017. Both online marketing and license business saw steady increase in revenue. Not stopping here, Kingsoft launched My Office for individual users, improving the office experiences for them in all dimensions. In December 2017, the MAU of WPS Office mobile version exceeded 145 million, while the MAU of WPS Office PC version also hit a new record with the national MAU rose to about 100 million. In addition, through offering exclusive and high-quality content, the number of premium members at the end of December nearly quadrupled, comparing with that at the beginning of 2017. WPS deeply rooted in office software industry and continued to optimize and develop new feature aiming to provide users with better customized office experiences. Therefore, WPS was awarded the 2017 Xiaomi AMI award for the most scalable APP, and the 2017 Mixwell award for the most popular office management APP for the year in the fourth quarter. in May 2017, Beijing Kingsoft Office Software Inc. has officially filed an application to China Securities Regulatory Commission, CSRC, for an initial public offering and listing on the ChiNext board of the Shenzhen Stock Exchange. The application process has been well on track. As for the financial result, I'm starting from the Q4 using CNY as the currency. Revenue increased 7% year-over-year and 6% quarter-over-quarter to CNY 1,381 million. The revenue split was 54% for our online game, 29% for our cloud services, and 17% for the office software and services and others. Revenue from our online game business decreased 8% year-over-year and increased 1% quarter-over-quarter to CNY 751 million. The slight year-over-year decreases reflected the mature life cycle of JX Online 1 mobile game, partially offset by the revenue growth of JX Online 3 with constant content and function upgrades. ADPCU for the group online game decreased 40% year-over-year and kept flat quarter-over-quarter at 900,000. APA for the group online game decreased 4% year-over-year and 2% quarter-over-quarter to 4 million. The decreases reflected the natural declining life cycle of the group's older games which were partially offset by the launch of new mobile game in the fourth quarter of 2017. The revenue from cloud services increased 57% year-over-year and 12% quarter-over-quarter to CNY 402 million. The increases were mainly driven by the robust customer usage, especially from the mobile video, mobile game, and internet sectors. Revenue from office software and services and others increased 4% year-over-year and 15% quarter-over-quarter to CNY 227 million. The increases were largely due to the increased scale of WPS Office to government agencies. As a result of the increased user engagement driven by the continuous optimization of product and services. Cost of revenue increased 43% year-over-year and 10% quarter-over-quarter to CNY 612 million. The year-over-year increases was mainly due to the higher bandwidth and IDC costs resulting from the increased customer usage of cloud services. The quarter-over-quarter increase was largely due to greater sharing costs associated with the new launch licensed mobile game, as well as higher bandwidth and IDC costs associated with the increased usage of cloud services. Gross profit decreased 11% year-over-year and increased 3% quarter-over-quarter to CNY 769 million. GP margin decreased by 11 percentage point year-over-year and one percentage point quarter-over-quarter to 56%. Our research and development costs net increased 25% year-over-year and 13% quarter-over-quarter to CNY 401 million. The increases were mainly due to the higher staff-related costs. Selling and distribution expenses increased 64% year-over-year and 13% year-over-year to CNY 174 million. The increases were primarily attributed to increased marketing and advertising activity for online games. Administrative expenses increased 58% year-over-year and 25% quarter-over-quarter to CNY 79 million. The increases were mainly due to the increase in staff-related costs and higher professional service fees. Share-based compensation costs increased CNY 672 million year-over-year and decreased 31% quarter-over-quarter to CNY 51 million. The year-over-year increase was primarily due to the new grant of our awarded shares and options to selected employees, as well as an increase in the fair value of our awarded shares and option of certain subsidiaries. Operating profit before share-based compensation costs decreased 54% year-over-year and 16% quarter-over-quarter to CNY 189 million. The margin of operating profit before share-based compensation costs decreased by 18 percentage points year-over-year and three percentage points year-over-year to 14%. Net other loss of CNY 27 million were recorded as compared to net other loss of CNY 141 million for the fourth quarter 2016, and net other gains of CNY 5 million for the third quarter 2017. The losses in the fourth quarter of 2016 were mainly due to the additional provision for impairment on the carrying value of the investment in Xunlei and 21Vianet, as they have further decreased the market value in the fourth quarter. Share of profit associated of CNY 16 million were recorded, compared to share of losses of CNY 2 million and CNY 3 million for fourth quarter 2016 and third quarter 2017 respectively. Cheetah Mobile has been accounted for as our associate since 3rd October 2017, and its profit increased substantially on year-over-year and quarter-over-quarter basis, primarily resulting from the improved operating profit. Income tax credit was CNY 5 million, compared to income tax expenses of CNY 60 million and CNY 45 million for the fourth quarter 2016 and third quarter 2017 respectively. The significant decreases were primarily attributable to the specific deferred tax asset being recognized in the fourth quarter of 2017. Gain on deemed disposal of subsidiary of CNY 2,224 million represent the deemed disposal gain as a result of the delegation of voting right in Cheetah Mobile Inc. As a result, our profit to owner of parent increased 847% year-over-year and 938% quarter-over-quarter to CNY 2,475 million. Profit to owners of parent, excluding ESOP, increased 760% year-over-year and 718% quarter-over-quarter to CNY 2.5 billion. I am now going to the full year 2017. Revenue increased 35% year-over-year to CNY 5,181 million. Online game make up 60%, increased 23% year-over-year to CNY 3,120 million. Cloud services make up another 26%, increased 81% year-over-year to CNY 1,333 million. Office software and services and others make up the remaining 14% and increased 32% year-over-year to CNY 729 million. GP margin decreased eight percentage points year-over-year to 58%. Gain on deemed disposal of a subsidiary, Cheetah, amount to CNY 2,224 million, and the profit of owner of parents was CNY 3,202 million and minus CNY 207 million for the year 2017 and 2016, respectively. Of course, the minus CNY 270 million for 2016 is due to the significant provision impairment for Xinyi and ChuanLe Internet in 2016. Our balance sheet, we have cash and bank deposits of CNY 8.5 billion at the end of 2017. Net cash generated from the operating activity increased 36% year-over-year to CNY 1,890 million. Capital expenditure was CNY 722 million and CNY 1,023 million for the year ended 2017 and 2016, respectively. The strong performance of all business segments in 2017 has boosted our confidence in the prospect for the business development and revenue growth in coming years. Looking ahead, we will continue to maximize the brand value of JX Online and focus on the upcoming launches of our major mobile game titles, including Yun Shang Yu Yi, JX World II, JX Online 3 Mobile. Kingsoft Cloud, we devoted greater effort into developing the AI field, consolidate our leading position in the internet area, and further penetrate in the more vertical industry and actively expand it into overseas market. We will also continue to enhance the WPS technology and product innovation, incorporating the AI features, cloud computing function, in order to provide better and more productive solution for its user. Meanwhile, we will also set our eyes on the global patterns, seeking to broaden our international reach by capitalizing on WPS competitive edge in the mobile area. We believe that we will maintain strong growth momentum and achieve more breakthrough in 2018 and onwards, and we will mark Kingsoft's 30th anniversary with a triumph performance. This concludes my presentation on the 2017 full year and fourth quarter results. I will now hand over back to the floor for questions. Operator, we are now ready to take questions. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. If possible, please ask your question in English, then in Mandarin. We will pause for just a moment to compile the Q&A roster. We thank you for your patience. Your first question comes from Credit Suisse from the line of Thomas Chang. Please ask your question. Hi. Good evening. Thanks, management, for taking my questions. I have three questions. The first question is about 2018 revenue and margin outlook. Would management provide some color about the respective business segments growth rate for this year? If possible, is there any chance that we can also get a sense of how we should think about the 2019 outlook as well? On that regard, may I also get some color about the timing on release of the three mobile games, in particular JX3 Mobile? My second question is about WPS. I noticed that, I think in this set of results, we talk quite a lot of different achievement for WPS. Is there any color about the date of listing in Mainland? Is it sometime this year? My third question is about the online games market. Given the fact that we see a lot of users are going to play the PUBG games, how should we think about the mobile games outlook for this year and next year across the industry? 谢谢管理层。我第一个问题想问一下，我们看18年的收入跟OP margin，会不会有什么guidance可以分享一下，尤其是在revenue那边，我们游戏、云跟WPS的增速近一年大概是什么情况？然后如果是看19年，也想多了解一下，我们怎么看一个中长期的revenue trend。另外手游方面，JX3有没有一个大概的时间段，我们什么时候可以看到official launch。第二个问题，就是WPS在内地上市的时间，会不会有一个时间大家可以estimate。然后最后一个，就是PUBG游戏对整个行业的影响，谢谢你。 [Foreign language] I'm going to answer Thomas' question one by one. But as I noticed that it related to several areas. First of all, I answer the easier question first. You talked about the WPS listing process, whether it will be launched in 2018. While we actually are in the process, we are not rightfully to comment on the details of the WPS listing procedures, we all know. But I can share with you that they are on track, and it's highly likely, and it's very highly unlikely that they will not be listed in 2018. So we expected that the listing will be in 2018. Unless anything that beyond our knowledge at this point of time. The second question, you asked about the timing of the JX3 game launching. We actually said in the last two quarter, and I actually personally talked with you, Thomas, we decided not to comment on the detail launching time for our mobile game from this year onward, because we have been suffering from the expectation gap in the previous year. I can tell you that the three mobile game, including the 云裳羽衣, JX World II mobile game, and JX3 Mobile game, are on track, and you could expect that they will be launched in 2018. We are not going to comment on the exact detailed timing of the launching of those games. You asked about the impact of 吃鸡 on our mobile game. I defer that to Zhou Zhong, because he is a game expert. Also you talk about the overall outlook. Now, how about I let Mr. Zhou comment about the impact of 吃鸡 on our mobile game and the mobile game trend onward. 周总，你先回答一个问题，他有一个问到就是说最近吃鸡游戏，对，就是他说会对我们的 mobile game 的影响怎么样，你先回答这个问题。去年下半年，这个问题问得很好。去年下半年以来，吃鸡游戏无论是在PC端还是在移动端，应该都是市场上的一个热点。准确讲，对整个无论是PC游戏还是对手游，都产生了实质性的一些影响。主要是分流了很多，或者说挤占了很多玩家本身的游戏时间，无论是在PC上还是在移动端。第二个，它影响的品类其实也如此，无论是PC端的MMO，还是其他类型的游戏吧，都有一定程度的影响。至于具体的，对不同游戏的影响的程度是不太一样的。据我们的观察，像对那种本身单局时长比较少的，相对来讲MOBA类的影响程度会高一些，然后对这种相对重度一点的游戏，影响的程度相对会低一些。这是我们对吃鸡游戏去年以来对这个行业的影响的一些看法。 Okay, I'll do the translation for Mr. Zhou. In the second half of last year, in both the PC and mobile game, the PUBG game became very hot in the market, and it has made an impact for both PC and mobile games. Especially taking the players' time away from other types of games on both PC and mobile sides. Also, it has an impact on the different genres of game, including MMORPG and other types of games. But the level of impact is different for different genres of games. We believe that it has a higher impact on MOBA-like type of games. But for the heavy PC games, the impact from PUBG game is relatively lower than the other types. Thank you. Okay. Thank you, Francie. Hi, Thomas. You also asked about the 2018 revenue and margin outlook. Let me briefly talk about this question. I understand that all of the participants in this call are very eager to know about that. As usual, I will not give the exact number, but I give you the trend. Let me talk about the easiest part first, the WPS revenue growth. They are on a very solid track, as I mentioned earlier, that they are now already on the track on its IPO. So we don't see any headache in front of us in 2017 and 2018. In fact, we would expect a higher growth further down the road after it completes its IPO process. So, in 2018, we will expect that they will continue to track on a very healthy growth. You could expect that will be 40% plus for the WPS growth on the revenue in 2018. For the Kingsoft Cloud, I also updated the market that after the recent financing, we actually revisit the market situation and our internal strategy on Kingsoft Cloud. Remember that at the early of 2017, the company actually guided the market that we will continue on a high growth, expecting to delivering a triple-digit growth in 2017 and 2018. But actually, in the last two quarters, I have already updated that since we have been going on a fast track, investing quite a substantial amount of money in the market for a number of years, and now we also noticed that we rank about the top three in the cloud market. We are focusing on excel our services quality. We will continue on a high-speed growth, but will not be 100%. 100% is no longer the target for the team. Instead, they will be improving its quality of services, penetrating in various areas. In terms of growth, you could also expect that given the cloud market in general is a relatively new market, experiencing high growth as an industry. You could expect that Kingsoft Cloud will still maintain on a relatively high growth of around 60% in 2018, I would say. For the game, we expected that, as we discussed earlier, there is a number of major mobile games on the timeline in 2018. Of course, the overall growth of our gaming revenue depends on the exact timing and popularity of those games. A few things, we have very strong confidence on the quality and popularity of the pipeline, in particular, JX Online 3 Mobile. Also, judging from the testing data, we also have a very high expectation on the JX World II mobile games. Also, we see very good data on the Yunshang Yuyi. From the past experience, it's really difficult to give a very accurate estimate for gaming revenue, in particular for the mobile game. Before its launch, even though we have high expectation, we do not want to put it on the exact number guidance. In 2018, we would like to put a relatively prudent growth on the revenue. I would say it will be higher than the growth in 2017. We now wanted to be a little bit more conservative on the number giving out as a guidance, but the upside could be quite significant. In 2017, as you can see that our overall gaming revenue growth is 23%. We expected that on a prudent basis, it will probably achieve a higher percentage growth on our gaming revenue. Having said that, the overall revenue for Kingsoft Group, we will expect it to also be on a very good track and higher than the growth rate in 2017. Thank you. Thank you, Francis. May I ask a quick follow-up question about the margin? For the margin, yes. Start from the easier part for Kingsoft WPS Office. Apart from the very healthy growth on the top line, the operating margin for WPS will also be very solid. Probably, you could expect it as slightly increased, but it would not be too much, as the management plan to actually actively invest in improving a certain area. You could expect that will stay flat with a little bit upside, slightly higher than 2017. Still in the mid-20 mark. For Kingsoft Cloud, the only thing that I can tell you is that the operating margin in 2018 will further improve from 2017. For the game, as you could see that if we could deliver a higher growth than 2017 in 2018, the margin will also see an improvement, because you could see that actually the revenue is actually contributed from two sides. One is the PC JX Online 3. It is a self-developed and self-published mature game, so it will be high profit margin. Also from the mobile game, the self-developed mobile game, we act as a CP. We will get the profit sharing from the platform. An increase in the revenue number will also mean that we will significantly increase the operating margin because the cost will not be significant as the game are being published by the third party. Of course, there is a small part of revenue. If you could remember that we still have a small publishing team. Those margin will be thin, and in 2018, we still expected the team are developing, laying the groundwork, and we do not expect a high operating margin from the self-publishing game. But the number of that, we are not putting a high number of that there. It will not account for a major portion of our total game revenue. It will be a minor portion. So overall, the gaming operating margin will further improve from what we achieve in 2017. Okay. Thanks, Francis. Hi, operator. We are ready for the next one. Yes, your next question comes from CICC from the line of Liping Zhao. Please ask your question. Good evening, Francis and Frank. Thanks for taking my question. I have two questions here. One is related to JX IP. We know that you launched the revamped version of JX Online 3, I think in the end of 2017, and also you launched the JX World II in the beginning of this year. May I know the updates about these two games, especially with the gross billing levels for these two games? Do you have any other initiatives on the JX IP, for example, the TV series or animation or other kind of exploration? My second question is about WPS. I noticed that the revenue growth in the fourth quarter for WPS business division seems slowed down. May I know what is the reason behind? 第一个问题是关于剑侠IP的，我先回答后半截。我们的剑侠的电视剧、电影，包括一些动漫，其实这几年我们一直都在做，只是处于不同时期。我们的动画将在8月份，剑网3的一个番外篇的动画，会陆续在暑期上线。如果不出意外，我们的电视剧应该也会在下半年开始拍，剧本前前后后准备了3年多。所以关于这个IP的拓展，应该说一直都在做，我先介绍这么多。另外谈到剑侠3重制版，以及剑侠世界2。目前我们肯定没有办法去跟大家公布我们的流水数据。这个没办法说。剑侠世界2，其实我们目前应该准确点，还是处于一个调整阶段，因为它只是在小米平台以及在相聚自己的官网平台做了不算太大规模的一个发行。我们还在调整这个数据，我们会根据调整完的情况，会在全渠道，包括iOS，才会正式地去发。这是第一个问题。下一个问题关于WPS的增长，在Q4跟去年的增长。 I will do the translation for Mr. Zhou for the first question. For the JX IP, we do have other initiatives planned for our JX IP, including TV series, movie, animation. We do have an animation plan that will take place in the coming August of this year. Also we have TV series planned for the second half of this year. The content for the TV series has been prepared for over 3 years. For the JX Reloaded version that was launched by the end of last year, we are currently not disclosing the growth billing information yet. Also for the JX World II mobile game, we are still doing more adjustment to the game. The game has been launched in a small scale on Xiaomi platform only. So going forward, after we make more adjustment, we will launch the game in the bigger scale on iOS platform as well. Thank you. Guangyue, let me turn to the second part on the WPS growth. You said that it seems that the number is lower than, but in fact, I just double-checked that the revenue for the WPS is slightly higher than the 2014 full quarter. I have no further specific comment on that. But in fact, we had deliberately cut the inventory on the value-added service segment in order to improve the user experience. So we are putting less advertisement in the WPS in 2017 as compared to 2016. Okay, thank you. Operator, we are ready for the next question. Yes. Your next question comes from the line of Joyce Zhu of Citibank. Please ask your questions. 周总好，Francis，Francis你好。我想问的一个问题，一个是在WPS上面，想问一下我们的WPS之前想要做的一些云的initiatives，现在进行得怎么样了？如果在明年或者是在中长期看，我们现在的投入会在什么规模？整个WPS的margin是不是未来几年还是在20%这个水平上？我的第二个问题是有关于游戏的，我们的发行业务的，因为我们其实现在魔域这个游戏发行得还不错，想问一下今年2018年或者19年，我们现在有没有什么在pipeline里面的，我们自己比较看好的游戏跟IP，可不可以分享一下？ I will translate my questions. My first question is on the WPS, as the WPS previously launched a certain kind of strategy to embed more cloud-based unit functions. I wonder what kind of investment scale we should expect for that initiative, and will it impact the overall margins for WPS in 2018 or 2019? My second question is related to the licensed game, the Kingsoft Seasun publishing business. I wonder if we have any new games in the pipeline which company can share with us. Many thanks. Okay. Now let me answer your question on the investment and the initiative of WPS on cloud area. Cloud is definitely a globalization. Cloud and other is the future area for WPS development. But as I mentioned earlier, in 2018, we expected that the margin will stay at mid 20 with a little bit improvement from 2017. Going onward, we do not expect that it will stay in a low mid 20 area. It's likely that if we work more on the monetization, we could expect that to further improve the margin on our WPS. This is your first question. I'll do the translation for Mr. Zhou. Since last year we published the Eudemons Online mobile game. This year we have two major areas for the publishing business. The first one is we want to stabilize the revenue from Eudemons Online mobile game. The second one is that at the right time, we will also publish new games. Now, we don't want to disclose too much information because we are still in the detailed discussion with the game's developers. But later, when we are more ready, we will disclose the new publishing game information. Thank you. Operator, we're ready for the last question. Thank you. Yes. Your next question comes from Macquarie from the line of Wendy Wong. Please ask your question. I have three questions. First is a follow-up on the Eudemon. Since Eudemon's launch on October 18, you mentioned that the gross billing actually surpassed CNY 100 million after just 19 days. What is the current monthly gross billing for this game? Also, what kind of revenue share can Kingsoft get from this game? Second is, your cloud business adjusted rate is $720 million. What is the current cash burn rate for the cloud business? Lastly, can you remind us the profit you generate from the WPS in the fourth quarter? Thank you. Wendy, thank you for your question. Your first question is about the Eudemon numbers, both the revenue and also the profit sharing. First, I can tell you that the game is a very successful game. The profit revenue is meet and exceed our expectation. But I could not tell about the commercial secret on the profit sharing ratio and the exact number for a particular game. Second, you asked about after the latest round of financing of the cloud, what is the cash burn rate and how much can we sustain the development? Again, I can also share with you that I already mentioned about our guidance on the cloud revenue growth in 2018. It will not be 100%, but it will remain on a relatively high growth of around 60% growth in 2018, we could expect. I also mentioned about that while I did not disclose the exact number, but I can also tell you that the operating margin is also improving. Given that the cloud business is a very strong financial position at the moment. Unless anything that is beyond our anticipation at the moment, the cloud business can run for a relatively long time with this cash on hand. The WPS Office, we didn't disclose the exact profit numbers. But as I said, in 2017, the profit margin for WPS is around at this mid 20s for 2017, but we did not disclose the quarterly number for the second-