Cheetah Mobile Inc (CMCM) 2015 Q3 法說會逐字稿

Good day and welcome to the Cheetah Mobile third quarter 2015 earnings conference call. (Operator Instructions). Please note this event is being recorded.

I would now like to turn the conference over to Helen Zhu, IR Director. Please go ahead.

Thank you operator. Welcome to Cheetah Mobile's third quarter 2015 earnings conference call. With us today are Mr. Fu Sheng, CEO and Mr. Andy Yeung, CFO. Following management's prepared remarks, we will conduct a Q&A session.

Before we begin, I refer you to the Safe Harbor statement in our earnings release, which also applies to our earnings conference call today as we will make forward-looking statements. At this time, I would now like to turn the conference call over to our CEO, Mr. Fu Sheng. Please go ahead, Fu Sheng.

Thanks, Helen. Thank you everybody for joining our call today. This was another solid quarter for us. Mobile MAUs exceeded the 500m mark for the first time ever, reaching 567m users in September. Our total revenues also exceeded RMB1b for the first time ever, reaching RMB1.01b in the quarter.

This strong result was driven by our continued success in overseas mobile advertising business. During the quarter, overseas revenues grew 8.9 times year over year and accounted for 53% of total revenues and 77% of our mobile revenues, becoming a key growth driver of our total revenues and mobile revenues.

Additionally, I would like to highlight that we only launched our overseas monetization effort a year ago. And now we've very quickly demonstrated our capability to successfully monetize our global mobile traffic.

Strong topline growth and execution also [yielded] strong profit performance which results in us setting new records for non-GAAP operating income and non-GAAP net income in the quarter. Non-GAAP net income for the quarter was RMB143m, an increase of 138% year over year, and 24% quarter over quarter. Given our strong business momentum, we are confident that we are on track to meet and beat our 2015 target of reaching 600m MAUs, doubling our revenues year over year and making mobile and overseas revenues as a large majority of our revenue base. We also expect to obtain better anticipated profitability in 2015.

Looking ahead, we believe that it's very important for building a long-term sustainable business model. So going forward, we are beginning to take a more balanced approach towards user acquisition, user engagement, revenue growth and profits.

After building a strong matrix of utility apps and acquiring massive user base, we are increasingly focused on building a second layer of our products, through both organic means and strategic investment that can [higher] frequency of users and higher user-engagement levels.

In term of organically, Piano Tiles 2, a light, casual mobile game that we developed, reached the number 1 spot in the US and the number 5 spot globally as the most downloaded free game on Google Play in September.

For strategic investment, musically, our music-based [SNS] Company that we have invested in earlier this year was the number 1 most downloaded media and video app on Google Play in the US in September.

We believe content is key to driving continued user engagement. And we will introduce more content driver products through both ways over the coming quarters.

As we mentioned before, we believe data analytics is a key factor for our future success. More relevant content be it games, photos, music or apps, will lead to better experience for the user and better returns for advertisers. Today we can profile our users with more than 100 attributes and more than 100,000 keywords. And we have developed algorithms that help advertisers to better trafficking on the targeted audience on our platform. We are also developing tools to help advertisers to test, measure and improve their marketing offers.

While we will make some progress in data analytics, we still see much more room for improvement so data analytics will be the main key focus for us for the foreseeable future.

Moving to our mobile ad network development, we continue to work closely with leading internet players such as Facebook, Google, Yahoo and Twitter, to sell our ad inventory and explore innovative mobile advertising solutions such as video ads.

As an example, Yahoo highlighted our partnership as their [seventh annual] partner, discussing our integration of Yahoo's searching app. We are also pleased to have integrated Yahoo's Gemini native advertising platform globally across our top performance apps. In China we expanded our partnership with Tencent's GDT during this quarter.

More importantly, we are excited that since the launch of our own Cheetah ad platform in June, our direct sales team has added more than 500 global clients, such as Uber, Amazon, (inaudible) Booking.com and (inaudible) to the platform, which has resulted in over 1,000 offers daily. In addition to app and game developers, our ad platform is seeing growing demand from e-commerce, online travel and local service companies as well as Chinese advertisers promoting their products and services in the overseas markets.

To better serve our diverse global user base and advertiser base, we are continuing to expand our global footprint and high global presence. Today, we have set up or are in the progress of setting up more than 10 overseas offices in order to further enhance our localized product and service offerings.

Lastly, I would like to say I'm very proud what we have been able to achieve in such a short amount of time. Cheetah Mobile has transformed into one of the world's leading global mobile internet companies in only three years' time. So I want to thank all our staff for their hard work and support in getting us here. But this is just the beginning of us. Looking forward, we have will shift our focus from globalization to localization, investing in key markets to further localize our product offerings.

Meanwhile, we will prioritize the enhancement of our user engagement and users by expanding our user acquisition. To do that, we will further upgrade our product portfolio, introducing more content-driven products. We will also work closely with our partners to build one of the best mobile advertising platforms for advertisers globally.

With that note, I will stop and hand the phone to our CFO, Andy.

Thanks, Sheng. Hi, everyone. 3Q is another strong quarter for us, both financially and operationally. Strong results were again driven by mobile and overseas operations.

As Sheng mentioned, we are still in the early stage of our growth and development. Our goal is to become a leading global mobile internet Company that provides the best apps for mobile users and one of the best mobile advertising platforms for advertisers globally.

Looking ahead, we will stay focused on building a profitable and sustained growth business model for the long term taking a more balanced approach toward user acquisition, user engagement, revenue growth and profitability.

Now, I will walk you through the details of our financial performance. All financial numbers are in RMB unless otherwise noted.

Total revenue reached RMB1.01b, an increase of 111% year over year and 16% quarter over quarter, driven by organic business growth, thanks to our growing mobile user base and strong demand for our mobile advertising services.

By platform, mobile revenues were RMB703m for the quarter, up 522% year over year and 26% quarter over quarter. As a percentage of total revenues, mobile accounted for 70% of our total revenues in the quarter, up from 64% in the second quarter and 24% in the third quarter last year. In September, Cheetah had more -- approximately 567m mobile MAU worldwide, a 66% increase from a year ago and 15% increase from June this year.

Internet revenue declined 16% year over year and 2% quarter over quarter in the third quarter, mainly due to the migration of internet traffic from PC to mobile in China.

By region, overseas revenues were RMB538m for the quarter, up 892% year over year and 25% quarter over quarter. As a percentage of total revenues, overseas revenues accounted for 53% of total revenues and 77% of mobile revenues in the quarter.

China revenues grew 11% year over year and 7% quarter over quarter, with strong mobile advertising revenue growth more than offset PC revenue decline in China.

By segment, revenues from online marketing services were RMB901m for the quarter, up 150% year over year and 20% quarter over quarter. Revenues for mobile advertising remained the key growth driver for the segment, accounting for 72% of segment revenue in the quarter, up from 21% last year and 67% last quarter.

In addition to our growing mobile user base, higher average number of apps per user and high frequency of use for our apps have led to more (inaudible) available to meet the growing demand for our mobile advertising services from advertisers.

Revenues from IVAS were RMB100m for the quarter, a decrease of 7% year over year and 9% quarter over quarter. The year-over-year decrease was primarily due to the suspension of our online lottery operations in response to regulatory change in China. The sequential decline was mainly due to the moderating trend in web games business in China.

Revenue from internet securities services and others was RMB9m for the quarter, a decrease of 16% year over year and flat quarter over quarter. The year-over-year decline was primarily due to the Company ceasing to promote subscription services in the strategic reorientation which started in 2011.

Moving to our costs and expenses. Share-based compensation expenses for the quarter were approximately RMB115m, compared to RMB57m in the third quarter last year and RMB56m in the second quarter this year. As we stated in the past, we will incur SBC expenditures this year, mainly due to the shares and options granted to our management employees for attracting and retaining talent, particularly in R&D area.

To help facilitate the discussion of the Company's operating performance, the following discussion will be all in non-GAAP basis which excludes stock-based compensation expenses. For financial information presented in accordance with US GAAP, please refer to our press release which is available on our website.

Non-GAAP cost of revenues for the quarter was RMB269m, up 145% year over year and 21% quarter over quarter. The year-over-year increase was mainly due to higher traffic acquisition costs associated with the Cheetah Mobile ad platform business, higher bandwidth cost and internet data center costs associated with increased user traffic worldwide and data analytics, as well as higher amortization costs from intangible assets resulting from our acquisitions. The sequential increase was mainly due to higher traffic acquisition costs associated with the Cheetah Mobile ad platform business.

Non-GAAP gross profit for the quarter was RMB740m, up 100% year over year and 14% quarter over quarter. Non-GAAP gross margin for the quarter was 73.4%, down from 77.1% in 3Q14 and 74.5% in 2Q15.

Non-GAAP R&D expenses for the quarter were RMB138m, up 15% year over year and 7% quarter over quarter. The increase was mainly due to personnel-related costs associated with attracting and retaining talent in mobile product development, data analytics and mobile app technology. At the end of the quarter, we had more than 1,400 R&D personnel. We will continue to invest in content-driven product development, data analytics, and (inaudible) in the future.

Non-GAAP sales and marketing expenses for the quarter were RMB375m, up 128% year over year and 11% quarter over quarter. The growth was mainly attributable to increased promotions for our mobile apps.

Non-GAAP G&A expenses for the quarter were RMB95m, up 194% year over year and 9% quarter over quarter. The year-over-year increase was due to the increased professional service fees, acquisition-related expenses and headcount associated with being a publicly listed company. The sequential increase was primarily due to the increased professional service fees and acquisition-related expenses.

Non-GAAP operating profit for the quarter was RMB131m, an increase of 154% year over year and 40% quarter over quarter. Non-GAAP operating margin was 13%, up from 10% in both 3Q 2014 and 2Q 2015. Our operating margin expansion shows that our -- shows the enhanced operating leverage in our business model.

Non-GAAP net income for the quarter was RMB143m, an increase of 138% year over year and 24% quarter over quarter.

Non-GAAP diluted earnings per ADS was RMB1.00, or $0.16, an increase of 133% year over year and 23% quarter over quarter.

To help facilitate a better understanding of our (inaudible) amortization of intangible assets resulting from acquisitions on our operating expenses, we have started reporting adjusted EBITDA since 1Q 2015. Adjusted EBITDA is a non-GAAP measure that is defined as earnings before insurance, tax, depreciation, amortization, [non-operating] income and share-based compensation expenses. Our adjusted EBITDA for the quarter was RMB169m, an increase of 117% year over year and 28% quarter over quarter.

Now let me provide you with our guidance. We currently expect total revenues for the fourth quarter to be between RMB1.1b and RMB1.16b, representing an 88% to 97% year-over-year increase.

Please note, this forecast reflects the Company's current and preliminary views and is subject to change. And with that, we conclude our prepared remarks for today.

Operator, we are ready to take questions.

(Operator Instructions). Jeff Hao, China Merchants.

Hi, hello, good evening. Thank you for taking my questions. (Spoken in Chinese). My question is regarding the competition in the overseas market. And we've seen that more and more Chinese companies are climbing up the global download ranking table recently. And will that affect the Company's strategy in terms of user retention and the monetization progress?

And in relation to that, can the management give us an update on your construction of your ecosystem? Maybe offer more examples other than the (inaudible)? Thank you.

Okay. (Spoken in Chinese). I'd like to answer your question in Chinese and Andy will translate for me.

Okay. (Spoken in Chinese).

Okay, so let me translate that. So in terms of competition, yes, there's more competition in the overseas market and we see [out of that] we get more competition. I don't think there's overall impact on our leadership position from those competitors. The main reason is because if you look at the benefit of user -- of staff reduction is pretty much over and it's very challenging for them to get new user there. So their new users are mainly coming from developed countries. And (inaudible) spend a lot of money on promotion overseas and trying to acquire users that way. [But look at international], India these places.

But we also have a strong presence in those countries. And we will also spend money aggressively for more (inaudible) in those countries as well. So I think in addition to that, you also will notice that we -- overall we have very large user base worldwide. And we're able to acquire user in terms of getting traffic and also full promotional activities and cross-promotional activities.

And so I think once -- our user base is multiple times bigger than those competitors, I think it's very difficult for them to overcome our leadership position there.

And secondly, in terms of the other product category besides the two, for example, (inaudible) the past few quarters, we've seen some Chinese competitors spend a lot of marketing dollars (inaudible) and therefore n a very short period of time they were able to grow their ranking on download and whatnot. But recently, as you can probably observe, their ranking has dropped significantly on the download charts. The main reason especially because it's very difficult to retain -- have a good retention rate (inaudible) product, if your product does not have -- inherently have a good product [trends] or (inaudible) uses to continue to use the product. And so still for that, we think that that will not pose a competition for us.

Okay. (Spoken in Chinese).

Right, so in terms of your question about the competition impact our ability to monetize overseas, I think you have a overseas -- if you think about it, we would actually strengthen our position with overseas market. If you look at our competitors, they don't really have a good monetization model at this point. So they're at least one or two years behind us in terms of monetization.

So we will obviously continue to focus on finding better ways to monetize our user traffic. The better we can monetize our user traffic, the better we can sustain and maintain our lead in those overseas markets.

(Spoken in Chinese).

Se regarding ecosystem, I think we will use -- one way to describe it is we will be all in to get it done. So we have [taken] advantage of the window of opportunity in a couple of years to accumulate a very vast user base of almost 100m users, mobile users. So we think by the end of the year, we will have achieved that goal of acquiring a very massive critical user base. So we will turn our focus increasingly on user engagement and we'll develop more products that have high frequency of use and high engagement level going forward.

So exact roadmap, probably not going to disclose it at this time but we look forward to some breakthroughs in the coming quarters.

(Spoken in Chinese).

So lastly I -- when we -- let me emphasize this one more time which is the past two years when our -- two years ago when we start to aim for acquiring a large massive user base overseas, very few people actually believed us. But we have achieved that, I think we're -- this year we will have almost [100m] user base.

And if you look at the monetization, when we started about almost two years ago, also there's a lot of questions about our ability to monetize our user base. I think in the past year or two we have demonstrated in our strong monetization capability in the -- so in the -- looking forward, we're going to develop more content-driven products and I think we are working (background noise) on the product development side.

Thank you.

Thank you.

(Inaudible) thank you.

Wendy Huang, Macquarie.

(Spoken in Chinese). So I have two questions. The first is about the margin outlook, so although you guided originally that the full-year net margin for this year would be just breakeven, however, for the past three quarters, we now get net margins all came in at double digits. So should we expect this strong margin momentum to continue for the fourth quarter?

The second question is about the global advertising market impact on your business. I think in the past few months, you cautioned the market about the global advertising slowdown's impact on your business, and your partners, such as Facebook. Given that Facebook released a strong quarter and also you just delivered a solid quarter, as well, how should we actually look at this kind of the potential impact from the global ad market? Thank you.

Thank you, Wendy. So I will take these questions. Yes, so in terms of margins, I think if you look at our first three quarters, it had performed better than we had expected, but as we have mentioned before, even though we have, one, invested (inaudible) we would have [part] this year, but it was worst-case scenario, both through less -- it was less competition but we actually were more disciplined in the way we spend money to promote our products. In addition to strong execution and topline growth, we do yield better than expected margins in the first three quarters. And that demonstrates the operating leverage that is inherent in our business model.

In the fourth quarter, I think similar type of outlook. We again -- we probably if things start to deteriorate in the competitive landscape drastically, we're probably expecting the similar-type trend going to the fourth quarter.

Now, looking forward to next year, as we mentioned, next year, we will continue to invest heavily in product development, as we have emphasized over and over that we're going to focus on product development especially in content-driven product rollout next year. And we hopefully would have some strong product rollout to show you guys in coming quarters.

But yes, in terms of probability for rapid growth of user acquisition, next year, we will take a more balanced approach, mainly because we already have a very large user base. We will continue to grow that user base, but perhaps not as aggressively as this year.

But we will try to [lead] some of those benefits into the profit line, but again, we will caution people to be too aggressive in margin expansion. We will be more aggressive in terms of margin expansion. We will, again, monitor our expenditure and investment to make sure that we have a long-term sustainable growth model. So, yes, I think generally, we are looking at greater improvement in margins next year.

Second part of your question, in which we have seen the outlook for the mobile advertising industry, yes, I think we have -- we have delivered very strong performance in the third quarter, and you look at Facebook and some of the global companies, they all have developed -- deliver fairly robust results in the third quarter.

But again, when we look at the fourth quarter, we do see quite a bit of uncertainty, and we want to be more pragmatic and prudent with our guidance. If you look at global economic conditions, outside US, I think in Europe, in emerging markets, right now it's pretty tough.

If you look at in China, I would not say the Chinese economy is very robust at this moment. So we will -- I think we will take a more prudent approach to looking at the market, and we do see quite a bit of uncertainty, especially given the fact that we are still growing at a very fast level. So any small deviation from expectation would have impact on our revenue growth.

So I think our guidance in terms of outlook for 4Q is I think prudent realistic and so that's how we look at the global (inaudible) market at this point.

Thanks, Andy. So you -- so you believe the spending focus will shift from the sales and marketing to R&D next year, right?

Honestly, R&D has shown some (inaudible) leverage. In the quarter, it was significantly below the top-line growth, but we'll continue to focus on R&D, and we will begin to start like have a more mature growth on our sales and marketing expenditure. But if you look at our quarter this quarter, we show the overall buying leverage in our business model despite sales and marketing expenditure going up.

So we'll probably spend a bit more on the R&D going forward. We will be a little bit more prudent with certain market expenditure. Overall, I think we will continue to see some returning of our operating leverage in our business model in the coming quarters.

Thank you.

Thanks.

Evan Zhao, Credit Suisse.

Hi. Good evening, Fu and Andy. (Spoken in Chinese). So two questions. One is about overseas game revenue strategy, because the Piano Tiles 2 has been progressing pretty well this quarter and has been contributing to these revenues numbers in a pretty decent way. So just want to hear more from Fu Sheng about what's the strategy in terms of developing game revenue in 2016, and will you be more like using an in-house approach or more like the investment or cooperation approach on that?

And second question is regarding the update from our Cheetah app platform revenue. What's the contribution at this point and how do we see the financial impact and gross profit margin of downloads? Thank you.

(Interpreted). For the first question, so regarding the -- our -- sorry. So regarding your comment on content strategy, I think the game market piece is one but is not the only one. I think obviously gaming is an easy, easy way to understand internal content development. As we have mentioned, we have been out in multiple other content-driven products, and other than games.

And so besides Cheetah -- at this time we won't disclose it, but as we roll out in coming quarters, it would help us to increase both visitor engagement and frequency of use. So that's in terms of our content strategy there.

The second question that you have about gross margins, impact of gross margin coming from Cheetah's ad platform business, I think if you look at our ad inventory, it still accounts for the vast majority, almost 90% of our online -- of our mobile advertising business.

But for certain that at the low-end platform itself has lower gross margins, mainly because we obviously are using part of the third-party [editing] in turn, so as we mentioned, last quarter, in that business, generally has around 20%, 30% gross margin, so we would have impact in terms of user acquisition cost as well traffic cost for the cost of revenues.

So if you look at overall, our (inaudible) is relatively stable, so I think last quarter to this quarter, we had 1% variations, which is within what we have mentioned to investors. We're expecting 74% plus/minus 1% for the first quarter, and that came in pretty much in line with what we expected. So obviously mix shift may happen, but I think still, given the organic business is still going to be the main focus for us, we would have -- we don't expect significant gross margin deteriorations in the coming quarters.

All right, cool, great. Thank you, Fu Sheng. Thank you, Andy.

Thank you, Evan.

Henry Guo, Summit Research.

Thanks, for taking my question. (Spoken in Chinese). So my question, I have two questions. The first question is about the guidance, the Q4 revenue guidance. Could Andy provide more colors in terms of the different business segments, in terms of the Q4 top line? And also, that same question is regarding the mobile advertising, so can you guys provide the breakout of domestic advertisers and international advertisers? Thank you.

Okay, so I think we've done a guidance, we guided to RMB1.11b to RMB1.16b and obviously, we already are almost halfway into the quarter, so we have (inaudible) early part of the quarter how it's been performing. As we have mentioned before, online marketing services, particularly the mobile area of the business, will remain the key driver for our growth, and we don't see that changing in the fourth quarter. So we do expect mobile revenues and overseas revenues to remain the key driver for our revenue growth in the fourth quarter.

If you look at on the PC side, which is mainly in domestic China, the PC business, both in terms of games and also in terms of online marketing services, do experience some weakness in China, and that has also to do with our Internet users in China moving quite rapidly from PC to mobile. And so if you look at that trend, trend line, we expect the trend to continue.

So in terms of mobile games, we will continue to experiment with the mobile game operation. We are very happy with the success of Piano Tiles 2, so but still, I think if you look at our overall chart of our business, it will be coming from mobile, mobile first, and then -- and that within mobile is driven by our overseas operation.

And we also expect mobile advertising in China to be also very robust, but mobile on the PC side, I think both in terms of online marketing services and in terms of games will be [weak]. And as mentioned, we saw some decline in the third quarter. We expect that to continue in the fourth quarter and regarding guidance detail.

In terms of the second question, which is -- sorry, can you repeat the second question?

The mobile advertiser breakout in terms of --

We don't break down advertisers in terms of domestic, overseas. I think that's too granular detail that [sometime] obscure what's happening. But what we can say is that in China, we do have a very strong direct sales team that have -- sells mobile advertising services in the (inaudible) platform in China, beginning to operate that service like TDD and whatnot. So we have a long history and strong sales team in China.

Overseas team has done a wonderful job, but it's still [to] mention, if you look at -- since we launched the product, we have added more than 500 advertisers onto the Cheetah mobile ad platform, and now we have more than (inaudible) campaign on a daily basis.

So I think that will continue, as well as especially we have strengthened our offering overseas. We also increasingly localize some of the products and services, including open up offices in overseas market, and so we do expect that our sales force contribution will continue to rise in our overseas sales operation.

Great. Thank you.

Thank you.

Thomas Chong, Citigroup.

Hi. Thanks for taking my questions. (Spoken in Chinese). [To] basically ask one question, the question is about the breakdown in terms of the user base and advertising revenue coming from Clean Master, CM Security and other applications. Thank you.

Hi, Thomas. Well, thank you for the questions, but as we mentioned before, we would not break our revenue down or users down into products but especially MAUs, and the main reason for that is that, as we mentioned before, we account for monthly active users and it's defined as a per-device basis. So a user could have multiple applications on a handset, and that's only counted as one user. In fact, if you have a look at the trend over the past year or two, we are seeing that the number of applications per MAU is rising over the last couple years.

Today, we have more than 1.4 apps per MAUs, so it's really difficult for us to say X user is coming from Clean Master or Y user is coming from CM Security. The long and short is that obviously Clean Master remains our largest applications with an internal base, but in our CM Security, it has raised very quickly, and it has achieved very quick results.

I think if my memory serves me right, it is actually growing faster than Clean Master when it was only 2.5 years old. So that's in terms of user base, but we also have a number of very [significant] quarters where we have launches (inaudible) product.

In terms of monetization, it's the same thing. We don't usually break down by products within segments and whatnot. But what we can say is that for certain, there is some correlation between the user, user traffic, user engagement in terms of their ability to generate mobile advertising revenues.

So, obviously, Clean Master and CM Security, those are large applications that also have some very large contributions to revenues. But we also have a very diversified product portfolio, so if you look at our (inaudible) browser, launcher, they all have achieved critical mass and we have (inaudible).

Thanks, Andy.

Thanks, Thomas.

Wendy Huang, Macquarie.

(Spoken in Chinese). So my question is Tencent related. So recently, you announced a Board change and adding one person from Tencent. Does that mean there will be more collaboration between the two companies? And in your prepared remarks, you mentioned your collaboration with Tencent, Guang Dian Tong, GDT system. So beside the GDT, Tencent also recently released some additional advertising products and inventories. Should we expect more actually collaboration between the two companies on those things? Thank you.

(Interpreted). So thanks, Wendy, for your questions. In regard to our announcement today in the change of Board composition, I would just make a clarification. Tencent did not have -- didn't add a new Board member to our Board of Directors. In fact, it's a replacement. Previously Mr. Peng also from Tencent was with our Board of Directors, but he has left Tencent.

And so Tencent replaced that with Mr. Li. So in that sense, the Board composition in terms of Tencent remains two board seats, so there's no change in number of Board seats from Tencent.

So, in fact, for GDT obviously, we have expanded our cooperation with Guang Dian Tong over the past quarters. In fact, in the quarter, we have raised a cap number between our transaction with Tencent, mainly due to their (inaudible). So Guang Dian Tong, GDT, obviously by now is a (inaudible) proved that they are one of the better-quality Internet platforms in China, and also our expanded business with them also indicates how strong our advertising quality is in China.

So we certainly would look forward to expanding our cooperation with Tencent and Guang Dian Tong, but even though they are shareholders, we obviously look out for the interest of our broader shareholders other than just Tencent. And so that's how it's going from -- always looking out for the interests, that point of view.

So we will continue to look forward to working with Tencent and Guang Dian Tong. We will also continue to work with other advertising platforms in China. So still, if -- Guang Dian Tong is still one of the best advertising platforms in China, so we will look forward to expanding our partnership with them.

(Spoken in Chinese). So my question is actually more coming from whether you are working with Tencent other than the existing Guang Dian Tong system, because we noted that recently, Jingdong actually also expanded their cooperation with Tencent beyond the Guang Dian Tong.

(Interpreted). Right, so for Tencent, obviously, we'll continue to look forward to working with Tencent in the areas, so if you look at advertising, we also used Tencent's app store to help more our apps, for example, and we will continue to look for -- explore other ways to expand that partnership, for sure.

In terms of in particular JD, how they're working with Tencent, we don't have much comments on that.

So let me just talk a little bit about our revenues diversification. So to compare a year ago or two years ago, when we first did our IPO, and our customer concentration has declined significantly in China. Tencent, for example, even with expanded cap limit, it's RMB240m for 2015, it will represent a small portion of our overall revenue.

In fact, our reliance on [DAT] in China have declined significantly as we grow our mobile business, and so I think going forward, we'll continue seeing that trend. Obviously, we would love to continue to expand and cooperate with Tencent and other key players in China, but I think that the revenue contribution as a percentage of our overall revenues would continue to moderate.

(Spoken in Chinese). So you just mentioned that the DAT's contribution to your business has been decreasing, but I just wonder if you can just give us a rough ranking among those three regarding their revenue growth contribution to your business. Thank you.

Wendy, thanks for your follow-up, follow-up questions. I think what we would say is that we would not break down particular customer contributions at this time. If any of those customers exceeds a certain threshold, we will disclose that in our annual report.

But as we mentioned before, overall, for the DAT customers, the concentration is not in that ranking, so the large customers in China, their contribution to our overall revenues continued to moderate, even though we continue to see growth from those customers.

That's a trend, but we won't break out the revenue contributions or the ranking of the revenue contributions amongst those players at this time.

So thank you for the questions. Let's see if there are some other questions here from our other callers.

Thank you all for joining us today. If you have any questions, please do not hesitate to contact us. Thank you. Bye.

Thank you. Bye.

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.