Cheetah Mobile Inc (CMCM) 2015 Q4 法說會逐字稿

Hello and welcome to the Cheetah Mobile Fourth Quarter and Full-Year 2015 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note this event is being recorded.

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

Thank you operator. Welcome to Cheetah Mobile fourth quarter earnings conference call. First of all, we are very sorry for our delay of the earnings call and also the earnings release. With us today are our CEO, Mr. Fu Sheng and our CFO, Andy Yeung. Following management's prepared remarks, we will conduct a Q&A session. Before we begin, I refer you to the Safe Harbor Statements in our earnings release, which also applies to our conference call today, as we will make forward-looking statements.

At this time, I will now turn the conference call over to our CEO, Mr. Fu Sheng. Please go ahead.

Thanks, Helen. In Q4, we had strong performance both on the mobile user growth and the monetization front, setting new records across a number of areas, including mobile MAUs, revenues and profit. For 2015, we reached and (inaudible) targets for growing our mobile and overseas revenue to account for the vast majority of Cheetah Mobile's overall sales. This enables us to complete our transformation into a truly global and a mobile Company.

Looking ahead, we remain firmly committed to building Cheetah mobile into one of the leading mobile platforms globally [and on] sustainable and a profitable basis. Our strategy is simple and clear. Using two apps as the main entry points for user acquisition further building content into our platform for user engagement and to leverage big data analytics, as our static differentiation, [which is serve] both our user and advertisers more efficiently and effectively.

Clean Master, CM Security and other utility apps has helped us acquire a massive user base and we continue to serve as main entry points of our user acquisitions. To leverage our massive user base of 635 million mobile MAUs, we intended to build highly [engaging] mobile platform with content rich apps that we are building out. In fact, our content strategy is already showing some promising results.

In February, our breakthrough mobile game app Piano Tiles 2 was reached (inaudible) number one most downloaded free game on both Google Play and on Apple App Store globally. In China, since integrating rich content and [personalization] new servers into our mobile browser, we have seen a significant growth in daily time spent per user to over 27 minutes.

And (inaudible) in our strategy is big data. Over the past year, we have made significant investment in big data analytics in order to better understanding and better serve our users. We believe with our data analytics can help us present more personalized content and information including advertising to our users. At the same time, we understand and respect our user privacy rights. Our overseas user data are stored on Amazon AWS and we follow [seriously] privacy regulations in US and Europe.

While we made good progress in data analytics so far, we still see much more room for improvement and data analytics will remain a key focus of our efforts and investment. Geographically, we will continue focus on the US and China for mobile monetization and (inaudible) for the user acquisition.

In addition to strengthening our partnership with Facebook, Google and Yahoo, we aim to further expand our user presence by building an R&D Center in Silicon Valley and under the leadership of the [tech veteran] Charles Fan, who recently joined us as our new CTO. In addition, we're strengthening our direct sales operations by [rescue] more local sales talents in US market. In India, while mobile Internet is still in its infancy, we see excessive growth and the market's potential [with it] become our largest MAU growth markets contributing over 8% of our total MAUs last quarter.

We aim to become a dominate leader there over the next few years through strategic partnerships with leading mobile companies like Micromax and Lava mobiles. In short, in 2015, we made solid progress in our mobile and global transformation. In 2016, we continue to focus on executing our strategy to remain a leading mobile platform globally and we want to do it profitable and sustainably, (inaudible) maintaining our leading operations team better utilize our marketing dollars and maintaining a balanced approach towards user acquisition, user engagement, revenue growth, and profitability.

For full of 2016, we target a 60% year-over-year increase in revenue growth and CNY1 billion non-GAAP net income; roughly [70%] non-GAAP margin. For [perfect] developments in 2016, our main focus will be using two apps as a main entry points for user acquisition and to build content into our platform for user engagement.

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

Thank you, Sheng. Hello everyone. Again, we apologize for the delays in releasing our earnings announcement today, also the delays in our conference call. We actually closed 2015 with a very solid quarter, both financially and operationally. For the full year 2015, we are pleased to report that we have successfully accomplished the ambitious strategic target that was set for last March, namely; exiting 2015 with more than 600 million monthly mobile active users, doubling our annual revenues, and making both mobile and overseas revenues a large majority of our total revenue. Overall, 2015 marked an important and successful milestone for our transformation into a leading global mobile Internet company, having a tap for more sustainable and profitable growth in the future.

Now, I will walk you through the details of our financial performance. All financial numbers are in RMB unless otherwise noted. Total revenues grew by 92% year-over-year and 12% quarter-over-quarter to CNY1.13 billion in the fourth quarter. For the full year 2015, our total revenues increased by 109% year-over-year to CNY3.68 billion. This strong performance was again driven by our mobile and global businesses.

By platform, mobile revenues grew by 262% over-over-year and 14% quarter-over-quarter to CNY804 million for the fourth quarter. Mobile revenues account for 71% of total revenue in the quarter, up from 38% in the prior year period and 70% in the previous quarter. In December, Cheetah had approximately 635 million mobile monthly active users worldwide, a 61% increase from a year ago and about 12% increase from September 2015. For the full year 2015, mobile revenues grew by 423% year-over-year to CNY2.43 billion and accounted for 66% of total revenues in 2015.

PC revenues declined by 10% year-over-year in Q4, and 4% year-over-year in the full-year 2015. The decreases in PC revenues were mainly due to the migration of internet traffic from PC to mobile in China.

By region, overseas revenues were CNY616 million for the quarter, up 343% year-over-year and 15% quarter-over-quarter. Overseas revenues accounted for 54% of total revenue, and 77% of mobile revenues in the quarter. For the full year 2015, overseas revenue grew by 730% year-over-year to CNY1.84 billion and contributed to 50% of total revenue or 76% of mobile revenues in 2015, up from 13% total revenues and 48% of mobile revenues in 2014.

The increase was primarily driven by the growth of our overseas mobile user base and the rapid adoption of mobile advertising business in the overseas market. In December, 79% of our mobile user, mobile MAUs, were from the overseas market compared to 69% a year ago and 74% in the September 2015.

China revenues grew by 15% year-over-year and 10% quarter over quarter in Q4 supported by strong mobile advertising revenues, which more than offset PC revenue decline in China. For the full year, China revenue grew 20% year-over-year.

By segments, revenue from online marketing services were CNY1.03 billion for the quarter, up 131% year-over-year and 15% quarter over quarter. For the full year 2015, revenues from online marketing services grew 145% year-over-year to CNY3.24 billion.

Revenue from IVAS for the fourth quarter were approximately CNY89 million, a decrease of 35% year-over-year and 10% quarter-over-quarter. For the full year 2015, revenue from IVAS decreased by 1% year-over-year to CNY395 million. The decreases were primarily due to a temporary suspension of our online lottery operation in response to regulation changes in China and an overall softness of web game sectors in the Chinese market.

Revenues from internet security services and other for the quarter were approximately CNY12 million, an increase of 106% year-over-year and 37% quarter-over-quarter. For the full year 2015, revenues from Internet security services and other increased by 12% year-over-year to CNY45 million. The increases were mainly due to the sales of our air purifier products.

Now moving to costs and expenses; SBC expenses for the fourth quarter were approximately CNY99 million compared to CNY51 million in the same period last year and CNY115 million in the prior quarter. SBC expenses for the full year 2015 were approximately CNY315 million compared to CNY173 million in 2014. As we said in the past, we will incur higher SBC expenditure mainly due to shares and options granted to management and employees for attracting and retaining top talents, particularly in the R&D area.

To help facilitate the discussions of the Company's operating performance, the following discussion will be on a 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 fourth quarter were CNY299 million, up 113% year-over-year and 11% quarter-over-quarter. Non-GAAP cost of revenues for the full year 2015 were CNY934 million, up 132% year-over-year. The increases were primarily due to higher traffic acquisition costs associated with the Cheetah Mobile ad platform business, higher bandwidth and internet data center cost associated with increased user traffic worldwide and data analytics.

Non-GAAP gross margin for the fourth quarter was CNY834 million, up 86% year-over-year and 13% quarter-over-quarter. Non-GAAP gross profit for full year 2015 was CNY2.75 billion up 102% year-over-year.

Non-GAAP R&D expenses for the fourth quarter were CNY160 million, up 52% year-over-year and 16% quarter-over-quarter. Non-GAAP R&D expenses for the full year 2015 were CNY545 million, up 41% year-over-year. The increases were primarily due to increased headcount associated with the expansion of our mobile business. On a net basis, we added about 350 R&D staff in 2015.

Non-GAAP sales and marketing expenditure for the fourth quarter were CNY500 million, up 175% year-over-year and 30% quarter-over-quarter. Non-GAAP sales and marketing expenses for the full year 2015 were CNY1.46 billion, up 155% year-over-year. The sequential increase in sales and marketing expenditure was primarily due to the spending on promotional activity for our mobile business, particularly the global promotional activities associated with the launch of our Piano Tile-2 part.

Non-GAAP G&A expenses for the fourth quarter were CNY46 million representing a decrease of 3% year-over-year and 5% quarter-over-quarter. The decreases were mainly due to lower professional service fees. Non-GAAP G&A expenses for the full year 2015 were CNY270 million, up 95% year-over-year. The year-over-year increase was mainly due to increased professional fees and headcount associated with being a publically listed company.

The company recognized an impairment losses of goodwill and intangible assets of CNY13 million for the quarter of 2015 and CNY50 million for 2015 respectively. The impairment losses were primarily associated with our online lottery business. The lottery business was temporarily suspended in response to regularity changes in China.

Other operating income was CNY60 million for the fourth quarter 2015 and CNY98 million for the full year 2015 respectively. Other operating income primarily consisted of government grants, subsidies and financial incentive that the Company receive for its operations that fell outside the scope of R&D project subsidies.

Non-GAAP operating profit for the fourth quarter was CNY175 million, an increase of 66% year-over-year and 7% quarter-over-quarter. Non-GAAP operating profit for the full year 2015 was CNY522 million, an increase of 104% year-over-year.

Non-GAAP net income for the fourth quarter was CNY156 million, an increase of 88% year-over-year and 9% quarter-over-quarter. Non-GAAP net income for the full year 2015 was CNY492 million, an increase of 104% year-over-year.

Non-GAAP diluted earnings per ADS for the fourth quarter increased by 84% year-over-year and 9% quarter-over-quarter to CNY1.09 or $0.17. Non-GAAP diluted earnings per ADS for the full year 2015 increased by 92% year-over-year to CNY3.45 or $0.53.

Adjusted EBITDA for the fourth quarter was CNY213 million, an increase of 62% year-over-year and 6% quarter-over-quarter. Adjusted EBITDA for the full year 2015 was CNY669 million, an increase of 100% year-over-year. Again, we remind everyone, adjusted EBITDA is a non-GAAP measure that is defined as earnings before interest, tax, depreciation, amortization, other non- operating income and share-based compensation expenses.

Now, let me provide you with our first quarter revenue guidance and full year 2016 outlook. We currently expect total revenues for the first quarter to be between CNY1.08 billion and CNY1.1 billion, representing a 61% to 64% year-over-year increase. The implied sequential decline in revenues in the first quarter was expected mainly due to two factors.

One, seasonality, with 90% of our revenue coming from online marketing services, our overall revenues are subject to seasonal fluctuation. Revenues from online marketing services are typically higher in the fourth quarter and much weaker in the first quarter of each year, particularly in the US and China, the two most important mobile markets for us.

And two, more than expected seasonal fluctuation in revenue generated from our largest third-party advertising platform partner. However, as Sheng mentioned earlier, we have implemented a number of initiatives to strengthen our direct sales network globally, particularly in the US. In addition, we also will streamline our operation (inaudible).

We will be more focused on optimizing our marketing spending in 2016. We expect this initiative to pay off beginning in the second quarter. As such, for the full year 2016, we'll target to achieve 60% year-over-year increase in revenues and CNY1 billion non-GAAP net income. As Fu Sheng mentioned, that's about 70% non-GAAP net margin or almost 4% margin expansion that we're trying to achieve in 2016. Please note that the forecast reflects the Company's current and preliminary view and is subject to change.

Finally, the Board has also announced a share repurchasing program. On March 16, 2016, the Company's Board of Director approved a share repurchasing program whereby the Company may purchase its share or ADS with an aggregated value up to $100 million over the next 12-month period. So with that, that conclude our prepared remarks for today.

Operator, we are now ready to take questions.

(Operator Instructions) Jeff Hao, China Merchants.

Hi, thank you for taking my question. (interpreted) So, my first question is about overseas competition landscape. We've seen that a lot of Chinese firm have achieved a very good progress in terms of user acquisition and monetization in overseas markets, especially in tool app category, also especially in the emerging markets. So, can the management comment on your views on the competitive landscape and will this issue impact your profitability for this year? And I have a follow up.

(interpreted) So, thank you for your question Jeff. Overseas competition is a hot topic these days. In fact, we are glad that Cheetah Mobile have not only been successful overseas, but now have become a model for other Chinese companies, when they look for a business opportunity and to a great extent that is a recognition our model success -- success of our model.

(Interpreted) Right, so, we do see a lot of competitor copying our business model. We think that there is two type of competition. The first type is that they would initially use a vast amount of money to spend on sales and marketing expenditure to try to acquire users very quickly. The example of that would be some company like [Apple].

Yes, initially they are very successful, using their channel to acquire some sizable number of user download and [traffic] acquisition. But that's not sustainable model. So as we have seen it in [over past] few quarter, we have (inaudible) the user activities or user acquisition for Apple is declining. So as such, we don't think that, just by spending a lot of money in sales and marketing to acquire user is a long-term sustainable model.

(Interpreted) Right. So another type is that they just totally, completely copy our business model and [it's true] that for small-sized players, it is much easier to copy our overall product and business model. I think an example of that will be 360 Security. I think they enjoy some earlier success.

(interpreted) Right, so certainly like; they are successful to reach level and of scale. But one thing (inaudible) very difficult for them to reach the scale and our level. So, I think if you look at some of the way they monetize it, they just basically work with only third party like basically monetize the traffic and if you look at the geographic distribution, generally they would target certain market and try to achieve some scale in those markets. But really, a product to achieve, the global reach, the scale that we are, operation that we have will be quite challenging, I think.

(interpreted) So, certainly we obviously pay a lot of attention to competitive landscape and once they -- once our (inaudible) competitor crosses a threshold that we think we need to respond, we will respond very aggressively. In fact, I think we have a number of countermeasures that we'll aggressively pursue to make sure that we remain the market leader in our respective markets.

(interpreted) Finally, I think [important] for us to move beyond a simple business model this year. We look again like our strategy for it this year in fact very simple and straight forward. We will continue to use [two] applications as the main entry point for our user acquisition. But we'll [contribute] deal content into our platform for user engagement and also leveraging big data analytics to really differentiate ourselves from our competitor. I think this year we'll make more significant progress on both fronts, both in terms of our content strategy and also our big data analytics.

(interpreted) Alright, so if you look at Cheetah Mobile today, there is incalculably product development in big data analytics in content, [spending] of content products. I think we are at least a couple of year ahead of our competitor. I think their understanding of those markets, still probably at least a couple of years behind us.

(interpreted) So, I think if you look at the global (technical difficulty) market, I think it is a large enough market for a number of partner. We have not seen a material impact on our user base on our revenues at this time. I think the softness that you may see in the first quarter guidance, which indicated sequential decline for the first time is mainly due to not only seasonality but also some declines in one of our largest third-party advertising platform partners where we see significant sequential moderation in sales there. We don't see any structural changes in overall markets or in the competitive landscape.

(interpreted) Thank you.

(interpreted) So, my second question is about content-driven product. Management mentioned in last quarter that there may be some breakthrough in one or two quarters. So, can management give us some updates on development of content-driven products and if there can be some examples; that would be great. Thank you.

(interpreted) so I think, when we talk about content I think maybe we could use some example of the recent product that we have launched. First one is our light, casual game, our Piano Tile 2. It continues very, very well globally, very well received by user. It was I think number one on both iOS and Google Play in February, so that is one example.

(interpreted) Right, so another one that we have mentioned before, what we call personalized content. This product, as we mentioned on the prepared remarks; in China, this product have user engagement levels, on a daily basis, on average use it for almost 30 minute per day. So, we also have beginning to (inaudible) of products in some of the overseas markets. I think in the second quarter, we'll have more wider roll out of those products in the second quarter.

(interpreted) Thank you.

Evan Zhou, Credit Suisse

Hi, good evening Fu, and thanks for taking my questions. (interpreted) Question is regarding the performance of the legacy two core product CM Security and Clean Master. Now we've seen some recent slight drop in the (inaudible) ranking in Google Play and all the other major ranking. So, just wanted to pick -- what is your thoughts regarding that and how do we see the kind of the overall lifecycle for these two key products? And also, how do you think about balance between the investment in user acquisition versus the [delivery] of profit in 2016. Thank you.

(Interpreted) So, well, thank you for your question Evans. This is a very good question. I think if you look at our scale today, we already have more than 600 million monthly mobile active users, in fact 635 million and I think as we set the target last year (inaudible) that's very ambitious target. But given the critical mass that we already have acquired, I think we don't want to make pursuing a high MAU as our target or goal this year.

(interpreted) So, I think if you look at our focus this year, we have shifted a little bit from focusing on the quantity of user growth into more the quality of the user growth and engagement. We know that some investor also have concern regarding the time user spend on a [tool] applications and as we have mentioned all along that we have a strategy over time to convert our user our user into high engage product. And this year, our main focus would be improving that user engagement level and the time spent that they have on our application and so content would be a major driver for that. And so that's how we look at the quantity versus quality of growth of our user base.

The second part is that, regarding the modest decline in our ranking on App Annie's, I think there is couple of things that we want to mention here. One is that, we have very -- right now, as we mention, beginning in 2014 -- late second half of 2014, we have a strategy to pre-install our applications in some of the handset with some OEM, and that now have become a very important channel for us, especially in the [emerging] market. We acquire, almost on a daily basis 700,000 new users every day through [preservation], the number that not show up in App Annie's. And so I think overall, our user acquisition would be maintaining a fairly healthy pace this year.

(interpreted) So, the same popular question which is, old users -- old products versus new products and how [we promote] new product? I think, as we mentioned before, like this year our focus will be on the quality of the user growth and the main focus would be on content product and overall, if you look at our target this year, for example, we have -- again, like we moved the overemphasis on MAU growth and then also we set a fairly realistic target of about 60% year-over-year increase in revenue.

The main reason is that we want our product team to go back to basic; focused on product, focused on user experience. And if we do use marketing dollar to promote products, we will promote our new products and new content and let our older product to grow relying mainly on [organic traffic] and the word of mouth and I think we have strong product and very good brand and user review. I think those older product will continue grow organically.

(interpreted) Questions regarding the R&D spending and operation plan, I think we've been recently launching the R&D center in US and also hired a new CTO and just wondering which are the major R&D areas that we'll be focusing on? Is it more related to the fundamental technology or product-driven enhancement and how do we see the kind of the R&D spending trend in 2016 [down the road], thank you?

Okay, thank you for your question. Your question is very professional. (interpreted) Right, so your question is very professional, very good questions. I think when we talk to some of (inaudible) industry, a lot of time they only see one dimension of our Company, which is our user number, user growth, MAU growth. But we also actually have still a very strong R&D team. Overtime, we have now close to almost like 2,000; 1,600 people that is in R&D department and those folks have developed very good strong skill in developing new products. So I think, compared to our competitors, we have a much stronger R&D [department teams]. I think that will make a big difference in our competitive landscape.

(Interpreted) Right. So, as I believe that, if you look at the mobile market today, I think you will see that user would use less search to seek out information, but rather they would enjoy the benefit of smart content delivery, the more personalized content will be delivered to mobile user. So, this is area that we're seeing a lot of opportunity there. So if you look at what we have done, we also have hired Charles Fan, a very experienced, a veteran in the tech industry in Silicon Valley to become our CTO and leading our global effort in some of these (inaudible) in R&D.

(interpreted) So I think, if you think about it, right, if we only deliver -- if we're only focusing on two applications, we probably don't need a very big team, only a few people probably can develop two application, but if you think about, if we want to use big data to help us to deliver and personalized content, I think that's huge, there is some technical difficulty following that there.

I think, this is an area that we have some experience and we'll continue to focus on it and I think there is some expertise that we can utilize in Silicon Valley and that's why, we're including a global R&D operation. So I think, we'll really translate that into competitive advantage for us, again like, we utilize big data analytics to develop personalized smart content delivery application. I think that will make us really competitive in marketplace.

Wendy Huang, Macquarie

Thank you. (interpreted) My first question is, Cheetah originally were spun off from the Kingsoft Group. So within the Kingsoft Group there was also other fast growing business such as Kingsoft cloud. So is there any collaborations that Cheetah can have with other sister companies to generate more synergies in the future? And the second is about the global advertising markets such as (inaudible) and also the personalized recommendation [actually on] the life has changed a lot. So what a kind of the (inaudible) or issues that Cheetah will focus on to address in the next one year and also what kind of resources that Cheetah expend to devote to address this issue. Thank you.

(interpreted) Hi, Wendy. Thank you for your question. I think when we look at our relation with Kingsoft, I think that one of the very important contribution that Kingsoft have is that, they were very smart to allow us to maintain independent, operating independently from other product operation. So, if we look at our cooperation with other part of Kingsoft Corporation, they are always (inaudible) transactions that are based on normal commercial terms. So, I think over time, you would see, they will continue to provide more, (inaudible) less influence on Cheetah Mobile. I think that is a good thing. I think as publically listed companies, we always maintain our independence.

(interpreted) So, of course, overall we continue to work very well with Kingsoft and their operation there. For example, going forward, we are going to utilize Kingsoft Japan to be part of our expansion working with Japan. And that is an agreement that have been reached between us and Kingsoft Corporation on that. So, I think you will continue to see in certain area we will work very well with Kingsoft to benefit both company. But generally, we always have arm's length transaction with our parent company.

(interpreted) Right. Your question about the global advertising in market was fairly (inaudible). So, if you look at some of the softness in first quarter in our guidance, I think as we mentioned before, (inaudible) some of the greater than expected seasonality or softness coming from one of our largest, I think, platform partners, Facebook. So I think if you look globally, that's how we look at it.

One of the key area for us for investment in the South East, in the direct sales market with a direct sales team. We initially go overseas. This is an area that we will be happy to (inaudible) selling, advertising in developed market like US and Europe is more complicated or more complex than most people would think. So, this is an area that we will continue to invest in. As we mentioned, we have a number of initiatives to expand our direct sales network in US and we think that probably in the second quarter or third quarter, we'll see some concrete results coming from those efforts.

(interpreted) My first question is about India market expansion. So, what's your thinking out there and what kind of investments size and what kind of partners are you looking in the India market? And second question is about the (inaudible) database recently talked. So was the intention of (inaudible) to actually increase our IR of the advertising platform in the future and also to kind of reduce (inaudible). Thank you.

(interpreted) So, quickly answering that question, I think you are referring to the announcement that we made we have formed sort of like an alliance with (inaudible) to share information on potential threat to smartphones and I don't think we're collecting viruses. I think we're trying to collect information on potential threat to smartphone and share that with the industrial player.

I think that's a pretty normal good industry practice, where different security firm will share what they know about different viruses and share information to help (inaudible) so that's the purpose of that announcement and that agreement, which is working with other industry players to provide better security software [concept]. So that's the second part of question. I think the first part of the question, (inaudible).

(interpreted) So, I think your question is about, our investment strategy, particular in India. I think the overall point of view that we have about investment is that, investment have to be considered case-by-case basis, and you have to make clear (inaudible) for us and we are also very mindful of valuation. Obviously, you know some of our competitors, for example, a company called 360 went overseas and acquired Opera for a very happy valuation of CNY1.2 billon, but almost like to $200 million in net debt. That's a pretty happy price the way look at it, because we actually have studied this case for more than a year now -- almost a year now, and then we cannot use the Asia valuation to make acquisitions overseas.

We have to make sure that each valuation, each investment, valuations make sense to us. So for India, our view is that India is a very attractive long-term market. India has a lot of potential, but it is also market that have limited (inaudible) at this point. So, we are mindful of that. Given the market view, very early in this evolvement, I think we will continue to rely on organic growth in India and only use investment as a supplementary strategy, that not going to be (inaudible) our effort in India. But yes, opportunity percent itself, no small investment that makes sense to us. We will make that investment, but again you have to consider in the context of our overall strategic goal in India and also in term of reasonable valuation that make sense to us. Currently, if you look at our balance sheet, we have almost $300 million in cash and we can certainly have the capability to raise more funds if we need to make investment. But, I think at this point we've pretty comfortable with our cash funds and also our position in market right now.

Thank you. And as there are no more questions, I would like to turn the call back over to management for any closing comments.

Yes, before we end the call, just want to -- just in case, due to an earnings release, we actually also have made another announcement in addition to just our fourth quarter earnings. As we mentioned before, our Board of Directors have announced a share repurchasing program. And so, I just want to provide little bit more details of that to the investor, before we close out the call today.

Our Board of Director has authorized purchased of up to $100 million worth of our share (inaudible). If you look at our Board of Director's decision, it's our strong belief that our Company is in very strong position and our share is undervalued and demonstrate our confidence in the longer term business prospects for our business. So just in case, people have not noticed that on our earning call or in the press release, I just wanted to mention that. So, Helen?

Thank you all for joining our conference call today. If you have further questions, please do not hesitate to contact us. Thank you, bye.

Thank you, the conference call is now concluded. Thank you for attending today's presentation. You may now disconnect.

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.