Q2 2023 NetEase Inc Earnings Call
MS Margaret Qi Senior IR director of <unk>. Please go ahead ma'am.
Thank you operator. Please note the discussion today will contain forward looking statements relating to the future performance.
And are intended to qualify for the safe Harbor from liability as established by the U S. Private Securities Litigation Reform Act such statements are not guarantees of future performance and are subject to certain risks and uncertainties assumptions and other factors.
Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release.
In this discussion are.
General discussion of the risk factors that could could affect <unk> business and financial results is included in certain filings of the company with the Securities and Exchange Commission, including its annual report on form 20-F, and the announcements and filings on our website at home construction change the company does not undertake any obligation.
To update this forward looking information, except as required by law.
During today's call management will discuss certain non-GAAP financial measures for comparison purposes, only for a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results. Please see the 2023 second quarter earnings news release issued earlier today.
Note that certain financial information regarding cloud music will be discussing on this call have been prepared in accordance with IRS for additional information. Please refer to come you. This into interim report for the first half of 2023 as a reminder, this conference is being recorded in addition, an investor presentation and a webcast ripped.
This conference call will be available on net <unk> corporate website at IR E arc com.
Joining us today on the call from the agency management is Mr. William Ding Chief Executive Officer, and Mr. Charles Yang Chief Financial Officer will now turn the call over to Charles who will read prepared remarks on behalf of William.
Thank you Margaret.
Thank you everyone for participating in today's call before we begin I would like to remind everyone that all percentages are based on RMB.
Our total net revenues came in at RMB 24 billion, an increase of nearly 4% year over year and our net income attributable to shareholders increased by 56% year over year to RMB eight 2 billion.
Our longstanding franchises are still resonating well with our users and.
In the second quarter revenues from our fantasy westward journey Saga continues to grow year over year further impressed in the industry with this eyepiece longevity and sustainable popularity.
Westwood journey franchise recently celebrated its first anniversary since its commercial launch.
Games from our flagship series crafted on solid foundations and continue iterations every few months maintain their top tier positions and alluring charm in todays market, even after nearly two decades of operation.
In addition to these legacy titles, we are proactively cultivating an expanding array of long lasting franchises we.
We believe our recent portfolio additions such as AG Patchy and America blade point, showing similar popularity with potential longevity.
Continuing its successful street after more than a year of operation.
AG, partly achieved another record high for active users this summer.
Passing the peak it's reached during the Chinese new year period this year.
In the second quarter. It was the most downloaded game in China, which speaks to the game's strong reputation and user engagement.
Additionally, we have our sights set on long term success and we are deeply committed committed to fostering a thriving UGC ecosystem.
In June we successfully hosted our very first created conference and introduce a series of new incentives, providing even better support and reward for creators.
Furthermore, we've diligently upgraded our game editor by introducing a series of advanced components and interactive functions, such as NPC and clock editor. These.
These additions not only offer increased flexibility, but also push the boundaries of creative possibilities.
To build on the domestic popularity of AG Party our plan two launches in the global market is well underway. We went through our first round of testing outside of China in April which has given us valuable insights.
Our development team is working hard to optimize the game experience based on this feedback.
We plan to test <unk> in a few more regions, including Europe , North America, and Japan markets before we officially introduced AG party to worldwide audiences.
For now our ACA blade point, we proudly announced that we added another 10 million new users in the past year, reaching a new milestone of 20 million users in total after two years of operation.
To celebrate the games two year anniversary, we increased the Mary of captivating new content, featuring fresh weapons heroes and engaging gameplay features.
Most notably during its two year celebration America Blade point made some exciting move transitioning into a free to play model and debuting on the Playstation five to expanded accessibility to a wider audience.
Resulting in a remarkable surge in active users and being voted as police stations best New game in July .
Furthermore, the development of America play points mobile version is making steady progress.
We have a firm focus on preserving the games have core essence on mobile devices to further its reach to a broader audience in China and potentially globally.
The huge success, we have seen with our June new releases.
This mobile game and raising master has been very exciting for us and demonstrates our ability to once again set the bar for the MMO industry.
The expand John Rhodes to brands, new categories through first class content innovation.
Justice Mobile game is arguably the first game in the world to bring fresh real game experiences to users by leveraging machine learning technologies the.
The game has dominated both the iOS download and growth in charge upon its release in China.
Within a month Justice mobile game attracted over 40 million players, which is unheard of for any MMO game.
Notably it has drawn a massive groups of generation Z players, who have previously unfamiliar with the MMO genre.
Revitalizing the spotlight mmos within the Chinese game industry.
As a full run.
Memo load, we continuously explore new horizons of innovation that brings all new creative gameplay into the genre.
Justice Mobile game offers a more balanced game experience, which resonates well with younger generation, prompting players too willing to spend on cosmetic items the loss within the game.
Also by leveraging our advantage in machine learning technologies Justice mobile games development team will be significantly more efficient in producing new and frequent expansion packs that keep our game players Super engaged.
Turning on to raising monster.
The games June debuted in China. It has swiftly rising to the top position on the iOS downloads chart and claimed the number three spot on the top grossing chart.
This milestone launch marks. The addition of our second racing car game to our portfolio expanding our presence in this very popular genre.
With raising master, we pioneered China through proprietary Triple a standard racing simulator mobile game, introducing an authentic racing experience into the mainstream of China's gaming sphere.
Developing a stimulation racing game is no small feat.
Requires a deep pool of technical expertise such as understanding dynamic crash physics, aerodynamics and real world tracks. These.
These take years to build from the ground up.
This kind of undertaking requires a lot of dedication and passion for games as well as our strong commitment to bring this to life.
We have ambitious plans for raising monster in the global market.
About to commence overseas testing with a name to bring racing Masters authentic racing simulation experience to global mobile players.
Around the world.
Pat lenders, our next generation looters shooting mobile game has received positive reviews from players and achieved a number two position on the iOS download chart. Following its launch on June eight we.
We are dedicated to refining the game to fully unleash its long term potential.
At the end of June we also rolled out Harry Potter Magic awakened to the global market, including Japan, North America and Europe .
It's tough to download charts in more than 50 regions.
The game was well received by Harry Potter fans across the World and has been acclaimed for its world class design and authentic representation of the original IP.
Our most recent addition is tongue citied tightness team, which we launched just yesterday the game Pops the iOS downloads chart.
<unk> by the NBA Players Association Bank City dynasty marks our deputy into the self developed basketball game domain.
Duncan <unk> dynasty, less basketball fans build their dream team with all Star NBA legend.
<unk> dominate the court with real time command using strategic prowess and leadership skills.
Transitioning to our pipeline alongside the exciting titles mentioned earlier, such as America, <unk> mobile game antibody and raising masters for the international markets, where wings meet our open road adventure RPG, if counting down to its eagerly awaited 2000.
24 launched at.
At Gamescom 2023 held this week, where wings Mead unveiled a wealth of thrilling revelation, which is now capturing significant attention from players worldwide.
Set at the onset of the song dynasty at time of warfare, and turmoil, where wind meet allows players to embark on the journey as a mysterious sard men and immerse themselves in the heart pounding allure of our interactive open world.
Our dedication towards R&D underpins, our ability to continue to scale through consistent proprietary game launches.
Nevertheless, we remain committed to bring top quality worldwide games to Chinese market.
Since we introduced Minecraft to China in 2017, we have seen an incredible surge in its popularity within Chinese gamers community, where fans have embraced the opportunity to craft and explore their unique load as well as those of others limited only.
<unk> imagination.
Recently, we are very pleased to have renewed the term of minecraft license.
And our dedicated to continuously serving Chinese players in the long term.
In the second quarter, we are pleased to announce the establishment of a new game studio named Pink pool in Tokyo, which is being led by <unk>.
<unk> Taro Itchy Moura <unk>.
<unk> game industry veteran and longtime producer of the Dragon Quest franchise.
<unk> plans to leverage its diverse knowledge as an entertainment production company to deliver top notch entertainment experiences to users worldwide.
While it will mainly focus on developing titles game consoles Pink who will also venture into various forms of entertainment.
Equally exciting we've welcomed key minus zero entertainment to the <unk> family. The studio is located in Austin, Texas.
Headed by Rich Volvo.
An experienced game developer, who has less development on groundbreaking multiplayer and service based games such as Meridian 59.
Ultima online Star Wars, Galaxy's edge and Star Wars, the old Republic.
T minus zero entertainment is developing online multi player focused third person action game that takes place within a SIFI universe.
Now, let's move on to you without the company's net revenues resumed its robust growth trajectory following the pandemic impact earlier this year.
<unk>, a 26% year over year increase to reach RMB, One 2 billion led by strong performance in our learning services and online marketing services.
Our differentiated theme causes continues to drive year over year increase in our learning services revenue.
So our goal and coding cost of <unk>.
New rates have reached close to 70% demonstrating our user satisfaction with our cost content.
Online marketing services for your tower achieved record revenues in the second quarter nearly doubling comparing to the same period of last year.
This achievement can be attributed to the utilization of our proprietary Arab tourism, which has substantially elevated advertising precision and efficiency.
Notably it upgrades at nearly 90% accuracy rate intelligently targeting tagging kols and reduce the time required to produce advertising materials by 80% all the while enhancing user satisfaction.
For smart learning devices, we continue to invest in innovative technology and rolled out new products.
We were excited to launch <unk> Dictionary Pen X six pro model in August our first dictionary pen powered by our proprietary so year large language model, which is the first large language model designed specifically for the agitation sector in China.
X six pro offers highly personalized tutoring functions for students of varying ages and levels of learning progress flooring.
For instance, the platform introduces a digital human language coach named <unk>.
Echo engages users the interactive English Aro practice, which teaches students how to initiate a conversation express themselves naturally in a native manner and provide grandma analysis based on students submitted Texas through scanning.
Looking ahead, our focus on technological innovation remains our driving force, while we compile long term success across our business lines.
Turning to net is cloud music.
In the second quarter cloud music continues to enrich its music centric ecosystem and optimized the user experience.
<unk> in a thriving music community.
Total online music <unk> steadily climbed to $207 million for the first half of 2023, marking a 14% year over year increase.
Despite the industry wide slowdown.
Total revenues were RMB, one 9 billion remaining stable compared to last quarter. This can be attributed to a combination of strong growth in online music services driven by <unk>.
Revenues from subscription based membership and declining social entertainment services as we shift towards more sustainable development.
Regarding margins, we are making remarkable progress.
Our gross margin continues to improve in the second quarter, reaching 27% versus 13% for the same period of last year.
Cloud music also achieved positive operating profit for the first time.
In the first half of 2023.
We continuously enrich our music library to offer a comprehensive music selection for our diverse audience space.
In addition to the partnerships we established earlier this year with being music and Comex wave films, we were happy to announced our collaboration with the country's top pop singer, Chris Lee leading brand.
Using me and renowned measuring label Rice Entertainment.
Each represents a number of highly acclaimed international Popstar, including Jackson Wong.
Furthermore, we have also extended our collaboration with popular Korean labels, including Dreamer.
<unk> and J TBC.
Our collaboration efforts with copyright holders.
Have also proven to be successful in terms of digital album sales, notably the digital album I feel by the leading Korean Girl group detailed achieved over RMB 10 million in gross sales and 430000 copies sold after it's released in May.
We continue to empower and support independent artists.
By the end of June we were serving a growing community of more than 640000 registered independent artists.
In addition to our support programs for nurturing music talent.
We actively harness cutting edge technology to provide tools that aid in music creation.
During the second quarter, we introduced cloud music acts studio.
A voice synthesis software developed in collaboration with shopping a technology innovator in lifelike interaction.
This innovative tool office 12, natural seeming voices covering a variety of seeming styles and.
And provides musicians with resources in music creation.
Moving forward, we will continue to foster our music centric ecosystem.
Further grow our community.
<unk> to drive healthy long term monetization and margin expansion for Netease cloud music.
Now moving on to <unk> in.
In the second quarter, our private label brand continues to thrive by strengthening its portfolio with a focus on premium quality.
This coincided with a steady increase in <unk> revenues and significantly enhanced its profitability.
In particular the.
June 18th promotion yielded exceptional results.
Our products achieved strong rankings on best selling charting diverse categories, including pet food household cleaning products and office furniture across leading e-commerce platforms.
In Q2, we also introduced a campaign that highlights the production journey of some of our popular product.
Using short films, we showcased how much detailed attention goes into the making of some of these product which was heavily validated by our user community.
Looking ahead, we will persist in our dedication to explore and introduce to consumer great well crafted product under the <unk> brand.
In summary innovations through content production continues to be the cornerstone of netting and will be what propels our future growth.
Superior content products and services come from fresh ideas.
This contract form the heart of our company, where we will always strive for excellent manner.
Manifest through hard work and persistence to inspire the industries, we serve from games to music to education to retail.
Work to re imagine what is possible, creating value for our global community our employees and our stakeholders.
This concludes William's comment.
I will now provide a brief review of our 2023 second quarter financial results.
Given the limited time on today's call I will be presenting some abbreviated financial highlights. We encourage you to read through our press release issued earlier today for more details.
Total net revenue for the second quarter were RMB 24 billion or USD, three 3 billion, representing a nearly 4% increase year over year.
Total net revenues from our games and related value added services were RMB $18 8 billion up nearly 4% year over year.
The growth was primarily driven by increased revenue contribution from mobile games, including our strong legacy titles, such as fantasy westward journey series and our newer games such as <unk>.
Net revenues from our mobile games accounted for approximately 74% of our total net revenues from online games operation.
<unk> net revenue were RMB, one 2 billion a year over year increase of 26%.
Similarly, due to increased revenue contribution from lending services and online marketing services.
Net revenues from cloud music were RMB, one 9 billion, an 11% decline compared to the same period last year.
As explained last quarter. This result reflected declining revenue of social Entertainment services as we adjusted our focus to improve profitability in a sustainable manner. We introduced multiple measures to enhance the listening experience of more dedicated music fans.
Lowered the revenue sharing ratio to broadcasters and agencies as well as reinforce risk controls and additional lines streaming function optimization.
Net revenues for innovative businesses and others, while RMB, two 1 billion up 10% year over year with a balanced approach to topline growth and margin expansion.
Our total gross profit margin continues to grow reaching close to 60% in the second quarter compared with 56% in the second quarter of last year.
Looking at our second quarter margin in more detail.
Gross profit margin was 67, 4% for our games and related value added services sector compared with 64, 9% in the same period of last year.
The growth was primarily driven by the termination of certain licensed games with comparatively lower gross margin.
Our gross profit margin for <unk> was 47% compared with 42, 8% in the same period of last year.
The increase mainly resulted from increased revenue contribution from its learning services and online marketing services, which carry higher margins.
<unk> margin for cloud music continues to improve in the second quarter climbing to 27% versus 13% in the same period, one year ago, the quarter over quarter and year over year increase in cloud musics gross profit primarily resulted from the growth of membership services.
And continuous cost optimization initiatives.
For our innovative businesses and others gross profit margin was 29, 5% compared with 25, 8% in the second quarter of 2022.
The increase was primarily the result of margin improvement in the inkjet.
Total operating expenses for the second quarter were RMB, eight 3 billion or 35% of our total net revenues.
Taking a closer look at our expense component, our selling and marketing expenses as a percentage of total net revenues was 13, 6% in the second quarter and remained relatively stable year over year.
Our R&D expenses as a percentage of total net revenue also remained stable year over year at 16, 3% in the second quarter.
As an innovative content and technology driven company, our commitment to investing in content creation and product development is ongoing.
We are also seeing leverage in our R&D investment in the longer term.
Our other income was RMB, two 8 billion for the second quarter.
Increase was mainly due to the mark to market value of precision of certain publicly traded securities in our investment portfolio during the quarter as well as higher unrealized net FX exchange gains.
As per actually applicable accounting standards, we are required to reflect these fair value changes.
Effective tax rate was 8% for the second quarter of 2023.
The lower effective tax rate for the second quarter was mainly due to tax benefits recognized in this quarter.
As a reminder, the effective tax rate is presented on an accrual basis and the tax credit differ what each of our entities at different time periods.
Pending on applicable policies and our operations.
Our non-GAAP net income attributable to our shareholders for the second quarter totaled RMB 9 billion are U S dollar $1 2 billion.
non-GAAP basic earnings per ads for the quarter was U S. Dollar $1 93 are U S dollar what 039 per common share.
Additionally, our cash position remains strong with net cash of approximately approximately RMB 99, 6 billion as of June 30, as compared with RMB 95, 6 billion as of the end of last year.
In accordance with our dividend policy. We are pleased to report that our board of directors have approved a dividend of U S. Dollar 0105 per share all U S dollar 0.525 per ads.
Lastly on our current <unk> dollars 5 billion share repurchase program starting in mid January of this year approximately $6 1 million Aes has been repurchased as of June 30th.
It'll cost of approximately U S dollar $536 million.
Thank you for your attention we would like now to open the call to your question.
Question on <unk>.
Later, let's move on to the Q&A.
Yes.
Thank you.
Wish to ask a question. Please press Star then one on your telephone and wait for your name to be announced.
If you wish to cancel your request. Please press Star then two.
If you are on speakerphone, please pick up the handset to ask your question.
The benefit of all participants on today's call. If you wish to ask your question to management in Chinese. Please immediately repeat your question in English.
Please limit your questions to one at a time.
We wish to have follow up questions. Please rejoin the queue.
Yes.
Your first question.
Comes from Alex <unk> with Morgan Stanley .
Please go ahead.
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Can management elaborate how they took this mobile leverage AI to boost revenue and user engagement and how they took this mobile became the first one.
All of this kind in China to adopt AI and can management also share some of the difficulties and expectations of this game into the future. Thank you very much.
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We adopted <unk> technology in programming in classic declining I think most importantly, we changed think about designing games. So im just gain plus eight.
Making gains plus AI to AI, plus gain which means that when we added both beginning design. The game, we start thinking AI will be able to hull.
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<unk>, which gave.
Use it very immersive strong open world experience. So far what we are seeing our youth is happening.
Have been highly attracted to the game.
And.
We saw very strong stickiness and engagement to the game and it has all the data I think that enjoyment.
Cash flow from the gain gain has voluntarily.
While a tiny voluntary threat.
Promotion of our game within the gaming community and it will be able to attract many gamers who are traditionally not MMO game players and other thing I wanted to add on here is that.
Applying AI technology into our game development is not something that can be achieved overnight, we start thinking about AI.
As far as chip back in 2016 2017, when we sell Alpha Gal, that's allowing me like AI will have a profound impact on gaming.
Out of that fund so I think what the results seen to date is the accumulation of all the investments and dedication we have put into.
AI research and AI development in gains thank you.
Yeah.
Next question please.
Your next question comes from <unk>.
<unk> Bye with TICC. Please go ahead.
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And any possible after the session with marketing in this potential innovation, we can do.
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The team of developers and designers.
The team on that we would chose all the team members, who are hardcore and basketball players.
So all of them have a passionate about possible and they want to create the best possible gain.
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For this game will hopefully become the dominant player in this category.
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Thank you Nick.
Your next question comes from Richard <unk> with HSBC. Please go ahead.
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What's the rationale behind the change of narrow couple eight point to free to play game and how is the reception in terms of in game item sales paying user base and how would this change the game performance trajectory going forward. Thank you.
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Thank you.
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Your next question comes from.
<unk> with UBS. Please go ahead.
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Hi, Jonathan.
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On the domestic pipeline and congratulations on the band how win.
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We look forward to more color on the game in games comp can management share more color on the status R&D status of the game what are the potential launch timing that we're looking at.
And what is the games differentiated marketing positioning compare with justice small bulk of them both seems to be open world.
And Marshall our base.
RPG game. Thank you.
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The experience and hopefully we'll be able to launch it by the second half next year second quarter second quarter next year.
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Thank you.
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Yeah.
The next question comes from Lincoln Com with Goldman Sachs. Please.
Please go ahead.
Yeah.
Is it going to differ with you on our courses.
Typically sometimes.
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With that when you tie them into English.
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Two quick <unk>.
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Finishing those electrical.
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Sure Keith.
A woman with Barclays.
Barclays.
So we always see with a number of total orders.
So thank you management for taking my question.
So my question is about the.
You can tie back here.
Okay.
So in the past 12 months, we have seen very successful launch of a key part of your original Monster and also recently punctuated by Matthew.
Those are relatively.
It came from.
In the past so how should we conclude and understand the success.
Learning.
From these schemes and after the <unk>.
Throughout all these different pipe.
No.
Companies on the development operational strategy have any new change are a priority.
The future, especially for those leisure party car racing or even like a shooting type of games.
Right.
Okay.
Absolutely.
Putting a lot of movement.
<unk>, yes.
Hum.
Yes.
Yes.
No.
Tom you kind of our normal bookings so soon.
Once again, thank you.
More normal.
The issue with <unk> Loomis of Homelink Hello.
So by the summer.
One issue that channel pick them.
One parcel in San Antonio.
Punching nuts.
Okay.
Are you seeing.
Have have optimism.
Our tissue.
Shoot toward the embargo policy each.
Sure.
So what's your climate ambition.
C J.
Okay.
Uh huh.
Internet company as a content provider, we keep our innovation stay at and we continue to invest.
And have any R&D.
The second thing that caused us some cost of adult bumped the asset with putting in R&D and in developing and but it will be there.
Data is audit process.
<unk> made it too, but we will continue to work hard never gave up and we wanted me.
Our gaming usage continued great game content, our innovation and dedication geology.
Yes.
Your next question comes from Kenneth Fong with Credit Suisse.
Please go ahead.
Hi, Thank June Charles Margaret greenhouse as it is a word he wouldn't you go up against.
Yes.
When you go into sequencing mode either.
We'll kind of see.
<unk>.
<unk>.
Sure.
When you go to most south London.
Austin, Yes, docomo sooner.
What do you find yourself.
Thank you for taking my question and congrats for the very strong set of results.
Question about the gross profit margin.
What's the game business and overall business gross profit margin outlook for second half of 2024.
We see strong performance of our self developed titles and continuous channel optimization.
Thank you.
Okay. Thank you Ken it's Charles.
Interest of time, let me answer this question directly in English.
As you have.
Rightfully put.
That is prioritizes, our R&D resources and attention to self developed proprietary games, which would yield relatively speaking much higher margin.
<unk> licensed games.
In the first half of this year, we continue to enhance our game services related GP margins largely because.
The termination of certain licensed games.
As well as very strong performance of our <unk>.
Self developed legacy games, such as <unk> as well as new games such as <unk>.
In the second half as you can.
As you can already tell that we launched multiple new exciting very very strong performing games in June so the trajectory of of of.
More self developed games contributing to higher margins is somewhat sustainable.
Thank you.
Next question please.
Thank you. This question comes from Natalie <unk> with <unk> International. Please go ahead.
Oh, yes.
Yes.
Gotcha.
Thank you.
Sure.
Okay.
Thank you Tom.
Oh wait.
This is how did you do that.
That's okay.
Hello.
I told you.
Well.
No.
Thank you Mike.
Okay.
Sure Christian.
No.
Thank you Tamara.
Thank you.
No go ahead.
Sure. Thank you Pasha Vishal Shaw without that.
You bet Dan.
Yes.
Okay.
Hello, gentlemen.
Sure Sean.
Thanks for taking my question My question is related to.
Okay.
Thank you Ken.
Updates.
Closing.
Subtle in the mountain with Rocky Mountain regions will be the focus.
<unk> expansion.
Hum.
Wondering if you can give us an update on opioids.
The overseas.
Pension plan.
Bouncing Shlomo.
Charles mentioned that Nabokov, transocean and carpet tiles.
Our prepared remarks.
Just wondering.
Yes.
Yes.
Our ratio.
Oh.
These kind of debt.
In this regard.
And lastly, just housekeeping.
It's robin.
Fourth quarter.
Thank you.
Hey, how are you.
Won the way Joe Johnson the systems.
Yeah.
Now part of <unk> you.
I can tell you it sounded.
So much has.
<unk> huge.
We also council.
Please.
Yeah.
<unk>, leading Suriname.
No.
Hello, This is home tissue.
So you almost I apologize.
So June two.
Gone down on Omidria.
The strategic counsel.
So some of it.
Shall I E.
Permian is insulin on board.
Yes.
It sounds you have quite a few.
Frankly, it's inquiries Ccs.
Yeah.
Okay. So intense.
In terms of geographical focus.
No Matt.
North America, and Europe , and Japan and Korea.
Yep.
In terms of.
The market that are different in a sense that in the China market mobile game is there is a mainstream.
Place, whereas in overseas market console and PC games after the mainstream.
Thirdly in terms of the wrong a lot, but they are public.
As long as the public China, probably did not apply for a liquid market.
Other along with our.
It is a topic that we are studying our stance and we spend a lot of time evaluating and I'm sure that one very soon we'll be able to and to introduce that.
To the to the to the world.
Right.
The right answer the right answer thank you.
And Natalie for your second part of the question overseas games revenue well sinks.
Since the.
Strong performance of AG Party.
<unk> Q4, and year end of last year. The overseas revenue percentage has slightly declined to a single digit from previously around 10 ish. So.
But again the primary reason of that percentage mixture change is mainly due to the strong performance of certain of our new games.
Launched mostly in domestic market now with justice mobile and raising masters.
Tom.
<unk> launch in June we would expect my.
Domestic game spectacularly domestic mobile games in the second half to continue to grow outgrow faster at a faster rate than my overseas game revenue.
Thank you. Thank you.
Yes.
Your next question that comes from.
No I think this will all kind of got for today.
Okay.
I think thats.
By the time, we've got for today, though maybe this conclude our question and answer session.
So thank you once again for joining us today, if any further questions. Please feel free to contact us directly.
Ed.
Enter financial communications, Thank you and have a good day.
Thank you. The conference has now ended you may now disconnect. Your line. Thank you.