Earnings Call: Q3 2018

Nov 12, 2018

Earnings release

Ladies and gentlemen, thank you for standing by and welcome to the Q3 2018 Kingsoft Corporation Earnings Conference Call. At this time, all participants are on a listen-only mode. There will be a presentation followed by a question and answer session, at which time, if you wish to ask a question, you will need to press star one on your telephone keypad. I must advise you that this conference is being recorded today, 12th of November 2018. I would now like to hand the conference over to your speaker today, Ms. Francie Liu. Thank you. Please go ahead. Thank you. Ladies and gentlemen, good evening and good morning. I would like to welcome everyone to our 2018 third quarter earnings call. I am Francie Liu, 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 joined us today. Mr. Zou Tao, our Executive Director and CEO. Mr. Francis Ng, our Executive Director and CFO. Now I am turning the call to our Executive Director and CEO, Mr. Zou Tao. I will do the translation for Mr. Zhou. We realized a steady growth in the quarter with Kingsoft Cloud and WPS Office enjoying a good performance. Due to the unfavorable environment of China's mobile game market at present, the performance of our existing games has been under pressure this year. Our revenue was RMB 1,537.7 million in the third quarter, up 18% year-on-year and 14% quarter-on-quarter, showing the stable financial performance of the company. In the third quarter, the Kingsoft Cloud and office software and services and others businesses continued to deliver healthy growth, up 68% and 29% year-on-year respectively. Now I will turn the call to our CFO, Mr. Francis Ng. Thank you, Francie and Mr. Zhou. Hello, everybody. Sorry. Our flagship PC game, JX Online 3, and our major mobile game, JX Online 1, both achieved a stable performance during the third quarter. The JX World 2 mobile game released on the iOS platform in July, enriched our product portfolio, and we also make good progress in the brand development. The new expansion pack released in July for JX Online 1 mobile game continued to attract players' attention and kept the vitality of the games. On August 28th, we celebrated the ninth anniversary of the JX Online 3 at the National Aquatic Center in Beijing, attracting a record number of viewers. The new comedy animation, JX Online 3: Xia Gan Yi Dan Shen Jianxin, was a popular release. In September, JX Online 3 presented the design and exquisite details of its costume at Paris Fashion Week 2018, which showcased the beauty of contemporary Chinese style to the world. Our first theatrical play, JX Online 3: Night Fantasy, was staged in Chengdu in October. On November 7, The Legend of Shou and Starry 4 was officially released. The game is expected to further diversify our mobile game portfolio and bring new experiences to players. We are also planning to launch JX Online 2 mobile game in spring 2019. In addition to the growing business of all cloud services among key video cloud clients, Kingsoft Cloud provide enterprise clients with comprehensive cloud-based industry solution by integrating innovative technology such as big data, artificial intelligence, blockchain, and IoT to meet their needs. Kingsoft Cloud has made progress in government, finance, healthcare, manufacturing, and Internet of Vehicles, et cetera. Kingsoft Cloud won the bid for the Beijing e-government cloud phase 3 projects and began to establish the SaiSinTong project, a one-stop government service platform. Kingsoft Cloud also signed service contract for advanced cooperation with Huatai Securities, Xingtai City, and Angang and Great Wall Motor. In Xingtai City, Kingsoft Cloud Smart Health project was launched. Jinggang Cloud, the industrial cloud platform jointly built by Angang and Kingsoft Cloud, also went online. Kingsoft Cloud cooperated with Great Wall Motor to advance the Internet of Vehicles project. Looking forward, Kingsoft Cloud will continue to expand its market share of the all-cloud services, extend its ecosystem to the enterprise-level market, and support the overseas expansion of its clients. WPS Office maintained a steady year-over-year growth during the quarter. Benefiting from the user-friendly features and high-quality content, the number of paid members increased rapidly along with the membership value-added services. WPS Office won a number of bids to provide office software products and services to some key government departments in this quarter. WPS Office provided a secure edition of WPS Drive to the Ministry of Justice, facilitating its use of all WPS Office products on the cloud. WPS Office also became the exclusive office software provider on the procurement platform of the State Administration of Taxation. We continued to invest in R&D in the third quarter, advancing the practical application of AI. The smart writing robot program of WPS Office was among the first batch of national AI innovation projects. With persistent effort to drive innovation in technology and reach professional experience of the industry, WPS Office chaired the Smart Writing Industry Alliance in China. In the future, we will increasingly apply AI technology in our products and services and add more AI-based solutions in our portfolio. I will now discuss the Q3 operational and financial results using CNY as the currency. Revenue increased 18% year-over-year and 14% quarter-over-quarter to CNY 1,538 million. The revenue split was 44% for our online games, 39% for cloud services, and 17% for office software and others. Revenue from our online game business decreased 9% year-over-year and increased 17% quarter-over-quarter to CNY 678 million. The year-over-year decreases are primarily reflected in a decrease in revenue from the existing game, which was partially offset by the revenue contribution from the newly released mobile games. The quarter-over-quarter increase was mainly due to the revenue contribution of JX World 2 mobile games, which was launched on the iOS platform in July 2018, reflecting our continuous effort on diversifying and expanding mobile game portfolio with introducing high-quality mobile games. Daily average PCU decreased 16% year-over-year and 9% quarter-over-quarter to 700,000. APA for the group online game for the third quarter 2018 decreased 16% year-over-year and increased 5% quarter-over-quarter to 3.4 million. The year-over-year decreases in the average daily PCU and APA were largely due to the natural decline life cycle of the existing game, which were partially offset by the release of the new mobile games. Revenue from the cloud services increased 68% year-over-year and 29% quarter-over-quarter to CNY 603 million. The healthy increases were mainly driven by the solid increase of our customer usage from the mobile, video, and Internet sector, which demonstrated that Kingsoft Cloud has been sticking to fulfill the consumer needs and integrate innovative technologies, thus further solidify competitive advantage in particular industry by providing the advanced products and reliable services. Revenue from the office software and services and others increased 29% year-over-year and decreased 14% quarter-over-quarter to CNY 256 million. The year-over-year increase was mainly due to a rapid growth from the value-added services of WPS Office Personal Edition, which reflected the increased user engagement and stickiness with the more practical functions and premium content provided. The quarter-over-quarter decreases were primarily due to the seasonality of the sales of WPS Office Enterprise Edition and online marketing service of WPS Office Personal Edition. Cost of revenue increased 51% year-over-year and 25% quarter-over-quarter to CNY 843 million. The increases were primarily due to higher bandwidth costs and IDC costs resulting from the increased customer usage of our cloud services. Gross profit decreased 7% year-over-year and increased 3% quarter-over-quarter to CNY 695 million. The GP margin decreased 12 percentage points year-over-year and five percentage points quarter-over-quarter to 45%. The decreases of the gross profit margins were largely due to our change in sales mix. Our net research and development costs increased 45% year-over-year and 19% quarter-over-quarter to CNY 515 million. The increases were mainly due to the enhanced R&D investment as we engage in enhancing user experience and enriching products and functions. Selling and distribution expenses increased 48% year-over-year and 45% quarter-over-quarter to CNY 228 million. The increases were primarily due to the increased advertising and promotional spending on online games. Administrative expenses increased 82% year-over-year and 8% quarter-over-quarter to CNY 115 million. The year-over-year increase was mainly due to increased staff-related costs and professional service fees. We have had several self-owned properties put to use since early 2018. Share-based compensation costs decreased 32% year-over-year and 2% quarter-over-quarter to CNY 51 million. Operating losses before share-based compensation costs was CNY 133 million, compared to operating profit before share-based compensation costs of CNY 225 million for the third quarter 2017, and CNY 65 million for the second quarter of 2018. Net other losses were CNY 83 million, compared to a gain of CNY 5 million in the corresponding period last year, and losses of CNY 74 million in the second quarter 2018. The losses in the third quarter and second quarter of 2018 were mainly due to the recognition of foreign exchange loss in corresponding quarter. Income tax expenses decreased 36% year-over-year and 49% quarter-over-quarter to CNY 29 million. As a result of the reason discussed above, loss attributable to owners of parent was CNY 59 million, compared to a profit attributable to owners of the parent, including that from continued operation and a discontinued operation of CNY 238 million for the third quarter 2017, and CNY 101 million for the second quarter 2018. Loss to owners of parent excluding eShop was CNY 22 million, compared to profit attributable to owner of parent exclusive of eShop, including that from continued operation and a discontinued operation of CNY 307 million for the Q3 2017, and CNY 139 million for the Q2 2018. Our statement of financial position, we have cash and bank deposits of CNY 9.9 billion at September 30, 2018. Net cash generated from operating activities, including that from a continued operation and a discontinued operation, was CNY 6 million, CNY 624 million, and CNY 265 million for the three months ended September 30, 2018, and September 30, 2017, and June 30, 2018, respectively. Capital expenditure, including that from continued operation and a discontinued operation, was CNY 532 million, CNY 177 million, and CNY 254 million for the three months ended September 30, 2018, September 30, 2017, and June 30, 2018, respectively. Our operation remains generally stable with good momentum for growth in the third quarter. Faced with some unfavorable factors, our overall profitability might be under a bit of pressure during the remainder of the year. Looking ahead, while we continue to pull forward with steady operations, we will focus on bringing the advantage of our integrated cloud services and our office software and services business into play. With the debut of our flagship mobile games next year, the continuing growth and development of Kingsoft Cloud and WPS Office, we believe the overall performance will improve. Thank you. Hi, operator. We are now ready for the Q&A session. 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 keypad and wait for your name to be announced. If you wish to cancel a request, please press the pound or hash key. You may prefer to ask questions in English or Mandarin. The first question comes from the line of Thomas Chong from Credit Suisse. Please go ahead. Hi. Thanks management for taking my questions. I have a couple of questions regarding different business segments. First, on Kingsoft Cloud, we see the momentum is very strong. Just want to get a sense about 我们应该如何看待2019年的竞争格局，以及传统板块何时会开始贡献收入？我的第二个问题是关于WPS，管理层能否给我们一些关于WPS在2019年Q3的To C和To B收入的breakdown，以及对2019年的展望？最后，关于在线游戏收入，是否有关于《剑侠情缘3》手游版的上线时间表？谢谢。 Thomas，你想问问题吗？好的，谢谢管理层。第一个问题想问一下金山云那边，看到那个增速非常好，也想知道我们应该怎么看2019年整个的momentum，大概是怎么样？尤其是我们从传统的板块，比方说金融、制造业那边，什么时候可以有一个收入的贡献。第二个问题想知道一下从WPS那边，To C跟To B在Q3的占比大概是怎么样？然后我们应该怎么看2019年WPS增长的momentum。第三个就是游戏方面，就是《剑侠情缘3》的手游版会不会有一个时间表，是不是在春节之后我们就可以预期它会推出了。谢谢你。那我说中文，你来翻译好了。 OK。 Hi Thomas，我用中文说吧。首先第一个，你讲到云的竞争态势在2019年。我们看到现在我们在云方面的话，增速还是保持一个非常健康的增长的态势。那么我们预期在2019年，我们将会保持一个也是同样相对健康稳定的增长的速度。至于行业上面的话，我们看到整个云的行业，使用公有云服务已经越来越受欢迎，尤其是在互联网方面的，尤其你看到视频云的话，这个增速还是保持非常强劲的态势。我相信在2019年及以后，在其他的传统行业利用公有云服务的话，与我们前期所预料的一样，将会进入一个加速的时候。我会帮Francis翻译。关于2019年云业务的竞争格局，目前我们在云业务方面保持非常健康的收入增长势头，我们相信这种势头将继续延伸到2019年。至于整体的公共云服务，在互联网相关领域越来越受欢迎。例如视频云，视频云的增长仍然非常强劲，所以我们相信2019年云业务的增长会继续。谢谢。你第二个问题问到WPS To B跟To C的比例。那么这个其实我们在上一个季度的话已经是跟大家介绍过，我们非授权收入的增长的速度，是比授权，就是license sales的速度要快。所以我们这方面比例的话，会员增值服务，包括一些精品化会员、广告，加起来的话，是比我们在政府跟企业PC端的授权业务，其实已经超过了，在上两个季度已经。那么现在还是保持一个这方面的趋势。所以To B跟To C现在更往To C的方面去靠，我们把增值服务都化为To C的业务来算。当然To C里面的话，我们也不排除一些中小企业会用到我们的一些会员的那个服务，但是这个我们现在并没有这样统计，我们还是分开license sales跟增值服务来这样算。 [Foreign language] So the trend is the same in this quarter. So the To C revenue is greater than the To B revenue contribution. The To C revenue includes all the value-added services, but it may also include the mid to small enterprise services that we provided. But right now, we generally split our revenue for WPS into license sales and value-added services. If we count all the value-added services as the To C revenue, then the To C revenue is definitely greater than the To B revenue. Thank you. 关于这个比例，我补充一句，差不多多是不少了。To C要比license sales差不多翻译成是两倍的license sales。差不多1/3是To B，2/3是增值服务，value-added service。 For the current ratio between the To C and To B revenue for WPS, the To C revenue is much higher than the To B revenue contribution. Almost doubles the To B revenue. About 1/3 of the revenue for WPS is from the To B business, and 2/3 of the revenue from WPS is from the To C revenue. Thank you. Thank you. The next question comes from the line of Liting Zhou from CICC. Please go ahead. 周总好，Francis，Francie晚上好。我这边有两个问题，第一个是关于游戏的，首先想问问看最近推出的《仙剑四》表现怎么样？然后我们这边流水预计能到一个什么水平？然后和腾讯的分成比例是怎么样的？游戏这边还有一个稍微大一点的问题，我们感觉最近市场里面推出的游戏都很难出现那种特别火的爆款，会不会影响我们后续游戏推出的节奏？然后第二个问题是关于WPS这边的，就是WPS 1Q、2Q的增长都有接近70%，然后这个quarter只有30%左右，想问问看背后的原因是什么？因为感觉季节性没有说那么强。另外一个想问问WPS上市的时间表是怎么样的？然后我自己翻译一下吧。Good evening, management. I have two questions here. The first one is related to the gaming sector. How is the Legend of Sword and Fairy 4 performance in past week? What is our projected gross billing? I have a general question on the game industry as well. Because recently the game launched seldom has any flagship games, whether this will impact our pipeline in the future? My second question is related to WPS growth. Last quarter, the WPS growth is around 70% year-over-year, but this quarter has slowed down to around 30%. What is the reason behind it? What is the current timeline for WPS IPO? Thank you. 《仙剑四》我来讲吧。第一个问题，在11月7号正式上线。从目前的数据来看，应该说是很好地达到了我们的预期。但是要谈到具体的流水多少，包括分成比例，这些我们其实是不方便对外披露的。好吧。第二个你谈到就是说可能对于今年，就是18年上线的游戏没有很明显的一些爆款，是否会影响到我们后续产品的节奏？这一块来说，说实话，当然我们今年确实一再拖期，但总体来讲，我们还是按照我们自己的节奏去推出我们的产品。包括我们跟腾讯一起，严格地按照我们所期望的数据指标来调整或者测试我们的游戏。好吧。WPS这个我来回答。 I will translate for Mr. Zhou. For the Legend of Sword and Fairy 4 game that we launched on November 7, based on the current data, the game has well met our expectation, but regarding the detail of gross billing and also the revenue sharing arrangement, this information we have not disclosed them yet. Also for the other question, that in 2018, there are less flagship games launched in 2018, whether this will affect our launch for the other mobile games. This year we have been delayed a couple of times for our mobile games, but right now we are still strictly sticking to our plan and we are still adjusting and testing the mobile game together with Tencent. This does not have much impact on our own pace. Thank you. OK，我来回答一下关于WPS的问题。第一个，就是说立婷提到了我们三季度的WPS增速有所放缓，主要的原因当中是含有季节性的因素的。三季度然后我们在广告投放方面的节奏，我们也是刻意有控制。在license方面的话，我们确实是有一个小部分的大单子，要推到Q4去确认。因为验收的一些问题，时间方面就是推后了一点。所以就是以上的原因。我们相信WPS在几年内是会能够deliver我们之前跟大家讲的那个非常亮丽的sales增长。那么后面的问题是关于WPS上市的时间。这个因为它还是在排队的阶段，所以我们也不能太多。目前我更新一下状态，还是在排队的阶段，我们也补交了一些半年报的材料。好吧。 I will translate for Francis. The revenue for WPS slowed down a bit in the third quarter. This is due to both the seasonality factors and also our intentional control on our monetization in the advertising revenue, and also one of our big contract sales that we need to confirm and book later into the fourth quarter. But overall, for 2018, we will definitely meet our previous guidance on the WPS revenue growth. Regarding the IPO plan, right now we are still in the queue, so we do not have many comments on the details. We just sent in the mid-year 2018 financial results. We are still in the queue. Thank you. 好的，谢谢管理层。 Thank you. The next question comes from the line of Alex Liu from China Renaissance. Please go ahead. 谢谢管理层。我有两个小问题，第一个是关于游戏的。因为我们看到剑网2的时间其实是往后拖了一些的，所以其实想听一听管理层对于这款游戏，在可能有些打磨之后，它的受众的目标或者它的玩法上的一些变化会是怎么样的？或者说我们现在相当于可能往后推的这个想法，是不是说我们对这款游戏的预期可能会更高一些？然后也想问一下，这款游戏的上线时间和剑网3这个手游比的话，次序是什么样的？这是游戏。第二的话就是想问一下，我们现在对股票回购有没有一些考虑？谢谢。I'll translate myself. We noticed there has been a delay for the JX Online 2 mobile. Just wondering after the repolishing of the product, what is the sort of target audience for JX Online 2 mobile versus the potential launch of JX Online 3 mobile, and whether the delay may imply that we actually have a higher growth target for this title, and whether this delay will be meaning that JX Online 2 will be happening perhaps later than JX Online 3. My final question is on whether the management are thinking about doing some stock repurchase. Thank you. 我来回答第一个。游戏的问题，我来回答。剑侠2手游确实是拖了好几次时间表。这个本质上有两点。第一点，确实整个今年的游戏形势发生了一些很大的变化，尤其是对比前几年的RPG这个市场，我们也是根据市场上发生的这些变化，和腾讯一起做出相应的一种调整。这是第一个。第二个，大家或多或少应该都知道，整个游戏行业的监管在加强，甚至说大部分游戏连版号都拿不到。而我们的剑网2手游是有版号的。所以我们也是在这种特殊的一个行业背景下，我们会觉得既然我们拥有版号，这其实对我们来讲是一个比较有优势的条件，我们肯定力求希望把这款产品打磨到一个更高的高度去。我相信大家也应该能够理解这种行为。所以综合这两方面的因素，我们一拖再拖，这个也很抱歉，但总体来讲，说通俗一点的是想既然手里有好牌，我们还是希望尽可能打得好一点。这是通俗的一个表达。至于它跟剑网3的排期，是毋庸置疑的，是肯定会先上剑网2，然后再上剑网3。我觉得这个顺序是不会改变的。 I translate for Mr. Zhou. The JX Online mobile game has been delayed for several times this year, and this is mainly due to two reasons. The first is because the overall game market in China experienced a lot of changes this year, especially compared with the previous years in the RPG game market. Together with Tencent, we adjusted our launch time accordingly. The second reason is that the government control in the game market is much stricter this year, and a lot of the games are unable to get the license. But we have the license for the JX Online 2 mobile game. We want to take advantage of this license, and then we want to polish the game to better quality and better level. Due to both reasons, we have been delaying the launch of the JX Online 2 this year, and we apologize for that. For the JX Online 3 mobile game, regarding the order of the launch for JX Online 2 and JX Online 3 mobile games, we will definitely launch JX Online 2 mobile game before JX Online 3, and this order will not be changed. Thank you. 我来回答一下share buybacks的问题。其实这个问题问得非常好，今天开董事会的话，我们也是花了相当时间讨论各方面的策略，包括股票回购的计划。那么整个来讲的话，董事会决定的话，我们会密切留意市场变化，在我们依然保持现金为王，有充分的子弹去用来拓展我们在云、WPS快速的业务之外的话，我们也会紧密地观察市场的情况，在合适的时候，董事局会很快地反应。 I will translate. 好的，谢谢。 For the buyback, it is a very good question that we made a lot of discussion in the board meeting this afternoon, including the buyback plan. We will be closely monitoring the market changes in the future. We want to maintain a good, strong cash level so that we have enough cash to invest in the cloud businesses in the future. At the same time, we will closely monitor the market changes, and at the appropriate times, we will make the move closely with the market changes. Thank you. Thank you. The next question comes from the line of Hillman Chan from Citigroup. Please go ahead. 管理层你们好，谢谢让我提问。我想追问一下关于这个游戏JX2跟JX3，想问一下我们最新的一轮的测试表现是怎么样的，比方说用户留存率，还有付费的参与度是怎么样？然后在这两个游戏真正的公测之前，我们还会有下一轮的测试吗？还是说现在已经是最后一轮的测试？然后他们变现的model是时长吗？还是用道具收费来算的？除了这个以外，我还有另外一个游戏的问题，就是Final Fantasy现在的时间表是怎么样？谢谢。让我自己来翻译一下。So thank you management for taking my question. I want to also follow up on the two game mobile JX2 and mobile JX3. I want to have more color on the latest round of beta testing in terms of the user retention, also the paying ratio, as well as do expect more rounds of beta testing before commercial launch of these two titles. Lastly, on the monetization models of them. On another title, Final Fantasy, could management share the timeline with us? Thank you. OK。第一个，剑侠2和剑侠3经过这几轮测试的数据，应该说在某些数据指标上肯定已经是圆满地达到了我们的预期，但在有些数据指标上显然我们还在继续打磨，否则的话，我们肯定就上线了。这是一个。第二个，是否还会再测？我觉得剑侠2也好，剑侠3也好，在最终上线之前，依然会按照我们跟腾讯的那种测试标准，剑侠2至少还有一轮，剑侠3可能还会有1到2轮。然后变现手段，这两个游戏不是像剑网3端游一样的这种靠点券卡的，它总体来讲还是靠道具收费的这种形式。只不过道具的种类，包括道具的收费的尺度，应该根据它的玩法的不同还会有具体的差异。好吗？ Thank you. 那三个产品最终算什么时候上？实话实说，我们跟Square Enix签了产品的中国区的授权，但是目前受中国关于游戏管理的限制，我们目前还没拿到版号，所以我们没有办法有确切的上线的时间。 I'll translate for Mr. Zhou. After several rounds of testing for JX Online 2 and JX Online 3 mobile games, in some areas, both games have met our expectations, but in some other areas, we still need to further polish the game. Together with Tencent, we will continue testing for both games. For JX Online 2 mobile game, we'll have at least another round of testing before the commercial launch. For JX Online 3 mobile game, we'll have another 1 to 2 more rounds of testing before the commercial launch. For the monetization of JX Online 2 and JX Online 3 mobile game, unlike the PC game, both games will be monetized based on the virtual item. For the Final Fantasy, we got the license to distribute the game in China, but because of the government control on the game market, we haven't got the license approval for this game yet, so we don't have any comment on the timeline for the game launch. Thank you. 好的，谢谢。 Thank you. The next question comes from the line of Wendy Huang from Macquarie. Please go ahead. Thank you. I just have two housekeeping questions. One is about your JX3 PC. I just wonder what the current schedule or thinking behind the launch of the JX3 PC expansion pack. Secondly, the sales marketing cost increased in Q3 despite the effect of the light game launch. What was the reason behind that? Also, how should we think about the sales marketing cost in Q4 in 2019? 我自己翻译一下。第一个，我就想问一下《剑三》的端游新版本的更新，之前好像是有一些审批和牌照的问题，我不知道这个问题是解决了吗？然后最新的会是什么时候上线？第二个就是关于营销费用，三季度由于监管环境以及各种原因，对于你们来说也是一个游戏的一个淡季，但是营销费用还是上升了，所以想了解下四季度以及2019年的营销费用大概是怎么预算的。谢谢。我来回答吧。正如你所说，剑网3端游，因为要上新内容和新玩法，所以也在配合监管部门的一些审查。应该说在积极地配合。我们有信心在近期这款产品能够顺利上线。好，第二个，关于营销费用的上升，总体来讲，因为今年尤其是剑网3的推广上，虽然整个端游在收入上我们也谈过，受重置版没有新内容的影响有所下降。但是应该说剑网3本身的一些受众群体，我们围绕他们在大师赛，包括在每年的828，包括在动漫舞台剧等各方面的展开，我们并没有停止。所以相应的费用上有一定的体现。但是反过来，我们通过这些，给我们以很大的信心，在于通过大师赛的举办，通过我们动漫的推出的受欢迎程度，通过我们舞台剧的首映，我们有信心相信剑网3这个品牌的影响力其实是有增无减的。这使得我们对于未来推出这个剑与远征，或者说保持剑网3端游一个长期稳定的运营，应该说依然有很强的用户基础，这也是我们的信心。所以在明年，当然无论是动漫也好，还是舞台剧也好，还是大师赛等等其他的一些具体的展开的阶段性的不同，可能跟今年也会略有不同。但是总体来讲，关于围绕剑网3的剑与远征这个IP，在营销宣传继续扩大这个IP影响力的方面上，我们还会持续地保持一个合理的投入。好吧，我来补充一下周总，好吗？我补充一下周总刚才所讲的那些具体的，围绕着我们要展开、要维护、要加强我们剑侠的品牌的形象，我们在三季度里面分别做了剑3的八周年的庆典活动，所以这边花了一部分的营销费用。另外还有一点我想补充一下，我们《剑侠世界2》是跟小米联合运营的，所以在这个推广费方面我们也出了相当一部分的推广费在《剑侠世界2》里面。所以这两点我补充一下周总所讲的。 Okay, I will translate for Mr. Zhou and Francis. For the JX3 PC game, we do plan to launch new content, new expansion packs. We will definitely work closely with the government to get the approval, and we are confident to launch the new content in the near future, in the near term. For the JX Online 3, we have been investing in the sales and marketing this year. We have been extending the brand influence of the JX IP. We did a lot of things. For example, on August 28th, we had the anniversary event for JX Online 3 PC, and also we had the master competition. We launched a new comedy animation show, and we also launched the theatrical play for the JX Online 3. We did all these things to keep extending the IP impact, the IT influence on the users. We will continue to invest in the brand development in 2019 as well, which includes the master competition, the comedy animation, also the theatrical play for the JX Online 3 PC game. Also, Francis added that in the third quarter, the selling and distribution costs increased because we hosted the eighth anniversary event for JX Online 3 PC game. In addition to that, we launched JX World 2 mobile game in the third quarter. For this game, we worked together with Xiaomi to co-distribute the game. We also have to stand in the selling and distribution in distributing the JX World 2 mobile game. Thank you. Thank you. 不好意思，我可以再追问吗？Hello？你先讲。我想再追问一下，关于端游的新版本，我想了解一下这次遇到的问题，是一个个别的问题，还是说以后我们可能现有的游戏，不管是PC还是mobile，以后的新版本的一些更新都要可能面临更加严格的监管。想了解是一个个案，还是说以后可能所有的游戏都会面临一个类似的问题。 I was just wondering whether the regulatory incident we actually had for the JX3 PC is just a one-off incident, or we should expect a similar tightening for the future updates of the existing titles as well. Thank you. 我解释说明一下，可能有些概念混淆了。其实在中国游戏，无论是过去还是现在还是未来，关于上线的内容的审查这块，其实是从来没有变化的。其实过去也一样，不是说今年、去年、前年，都是。你每个版本只要有新的一些内容和玩法的改变，都会有国家相应的部门进行审查。我觉得这块并没有改变。我们刚才谈到的是，现在跟过去的最大的区别并不是这种审查上，而是说国家相关的部门在相当长的一段时间之内，它会停止版号的发放。这才是刚才谈到的对整个行业，去年包括明年可能在相当长一段时间会造成的影响。至于游戏新内容的审查，其实这么多年就从来没有变过。当然至于它未来会不会审查得变得更严格呢？我们现在不好去评论。但是我们信心在哪呢？说实话，我们认为我们的剑侠情缘，尤其是剑网3，它无论是在哪个维度来看，其实都应该是符合了当下主流的核心价值观的，所以应该不会有什么样的风险吧。这是我个人的观点。但是可能对于一些海外进口的一些产品，甚至说一些比较创新型的品类，可能会面临着更严格的一些审核的过程吧。我不知道我有没有讲清楚。 Okay. translation for Mr. Zhou. I would like to clarify that we have always needed to get approval for the new content for launch of the expansion pack for both PC and mobile games. This requirement is the same in the past, present, and also in the future. The approval requirement has not been changed for the expansion pack or the new content for both PC and mobile games. What has changed in the recent term is that the government has halted granting the license approval to new games. In the future, whether the government will become stricter in approving the game content, that's the question that we have to consider. For the JX PC game, we are confident that this game complies with the mainstream requirement in the China market. It has less risk in not getting the approval for the game. Once the government becomes stricter, it might be more to the overseas imported games or to the other more innovative categories of the games, but not to JX3 PC-type games. Thank you. Thank you. Hi, operator. Please go ahead. This will conclude our presentation today. Thank you. Thank you, ladies and gentlemen. That concludes the conference today. Thank you for your participation. You may all disconnect your lines now. Thank you.