Phoenix New Media Ltd (FENG) 2015 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Phoenix New Media fourth-quarter and fiscal year 2015 earnings conference call. (Operator Instructions). I must advise you that this conference is being recorded today, Tuesday March 8, 2016. I would now like to hand the conference over to your first speaker today, the IR Director of Phoenix New Media, Mr. Matthew Zhao. Thank you. Please go ahead, sir.

Thank you, operator, and thank you and welcome to Phoenix New Media fourth-quarter and fiscal year 2015 earnings conference call. I am joined here by our Chief Executive Officer, Mr. Shuang Liu; our President, Mr. Ya Li; and the Chief Financial Officer, Ms. Betty Ho. For today's agenda, management will provide us with a review on the quarter and also include a Q&A session after the management's prepared remarks.

The fourth-quarter and fiscal year 2015 financial results and webcast of this conference call are available at Investor Relations section of www.ifeng.com. A replay of the call will be available on the website in a few hours.

Before we continue, I refer you to our Safe Harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in renminbi.

With that, I would like to turn the call over to Mr. Liu Shuang, our CEO.

Thank you, Matthew. Good morning and good evening, everyone. We ended 2015 on a solid note, with our quarterly results beating internal and external expectations across the board, even in volatile market environment. Recognizing the challenges that lay ahead, we have spared no effort in transforming our business in order to meet the evolving demand of this modern era and have shown solid success in staying in front of this change.

As a clear example, in the fourth quarter we grew our mobile app revenue by over 118% year-over-year. However, it was a challenging year for the entire Internet media industry in China. PC app revenues continued to decline and many companies began to downsize their Internet content operations.

With a weak macro outlook and the further transition of [production] for PC-based app on the horizon, we anticipate further softness in 2016. Though 2015 was a tough year for PC advertising, we still see plenty of room for future growth as we align our mobile app monetization initiatives with the development of our two core and complementary mobile applications, Yidian and Ifeng News. These apps are central to our strategy for building a business that exists at the core [strength] of technology, lifestyle and journalism.

In 2015, we made great efforts to further improve Yidian's targeting technology and integrate it into our overall business. What we did was be the platform that is completely new and innovative in the market, our interest-based news and information app which push content to users based not only on their selected interest, but also on their exhibited preferences.

By harnessing the power of big data, we open up limitless possibility to further customize the user experience, introduce high-value targeted apps and implement our targeting technology, the other part of our business, where it may be useful. Owing to the vast improvements we made to Yidian in 2015, we saw a number of average daily active users increase by four times to over 20m by the end of 2015.

Going forward in 2016, we still -- we will focus on utilizing Yidian's targeting technology and vast database of user information to roll out high-efficiency mobile advertising solutions. Though it will take some time to optimize the solution and ramp up the offering, we see interest-based targeted apps as the way of the future and believe that over the long term our early investment in this emerging trend will pay off handsomely and gradually to reverse the downward trend we have seen in overall combined app rates.

Our Ifeng news app differs from Yidian, but together they characterize Ifeng as a technology-enabled media and lifestyle company, with high growth potential and strong journalistic content generation capacity.

Like our PC-based website, our Ifeng News application are for high-quality in-house editorial content. They range across many interest-based verticals. In addition, the Ifeng News app also offers many new products and services which are specifically adapted to support users' content consumption and interaction over mobile devices.

In 2015, the Ifeng news app has live broadcasted over 100 news events through multiple formats, attracting 18m users and over 2.3b page views in total.

As the leading new media company in China, we continue to be a content powerhouse in Chinese society across a broad range of mediums and verticals. Ifeng Video progressed quite impressively and ranked number 3 among all comprehensive media platforms in China in terms of the number of daily unique visitors at the end of 2015, according to our iResearch.

For the fourth consecutive year we cooperated with our parent, Phoenix TV, in hosting an [NE] documentary award ceremony in mid December, recognizing the most talented filmmakers in this subsector, which demonstrates the strength and influence of the Ifeng brand.

We also introduced a new section, our homepage, entitled, [Warm] News. Unlike typical front-page news stories, Ifeng's warm news section identifies inspiring news stories that highlight positive aspects of humanity. The success of this page far exceeded our expectations and it has now attracted over 2b page views and great interest from advertisers.

In 2015, we made solid headwind in channel development and building strong user communities throughout the verticals, such as fashion, finance, automotive, among others. For example, Ifeng Finance currently has over $2.5m, to quote our various e-check accounts, making the largest financial media community on China's largest social media platform. Leveraging our strong financial community, we launched the Ifeng financial marketplace in 2014, which have now handled over RMB1.4b in transactions for third party financial firms.

The progress we made in channel development demonstrates two advantages of being both a technology and lifestyle company. First, through building interest-based vertical communities, we bring our platform closer to the end transaction, along with integrated news services and many [high fee] transactions. And second, the big data enables targeting technology. Developed for Yidian, can be duplicated and implemented in our vertical channels to enhance the user experience and improve advertisers' ROI.

We also reshaped and solidified our business strategy to emphasize our strategic advantage into the emerging frontiers of news delivery, targeted app solutions and transaction-based lifestyle services.

Our [defined] strategy clarifies our mission to do things differently than others in the market, to provide different [yield values] with analysis from different angles, demonstrating different perspectives and deliver their different forms of technology. Striving to be different and stand out from among the ordinary provides us additional inspiration as we execute across our core growth strategy by innovatively uniting our strengths in journalism, technology and lifestyle.

Certainly, there will be challenges ahead as we work to build upon our core media DNA and proprietary content expertise to become an innovative technology leader in China's media sector. Nonetheless, we remain confident that with our cutting-edge technology, large and expanding user base and high-quality journalistic capacity, we are well positioned to grow our business and deliver sustainable long-term value to our shareholders.

With this, I'd like to turn it over to our CFO, Betty.

Thank you, Shuang. And thank you all for joining our conference call today.

As Shuang mentioned earlier, we are excited to have exceeded our guidance for the quarter and close out a challenging year. Ifeng total revenue for the fourth quarter came in at RMB430.8m, driven by the mobile advertising sales, with a year-over-year growth of 118.2%.

Adjusted net income attributable to Phoenix New Media for the fourth quarter was RMB44.9m or RMB0.62 non-GAAP net income per diluted ADS.

Now let me take you through our financial highlights for the fourth quarter of 2015 results. The amounts mentioned here are all in RMB, unless otherwise noted.

The differences between GAAP and non-GAAP are non-operating items, which are share-based compensation, loss from equity investments, gain on dispositions of subsidiaries and acquisition of equity investments, gain on disposal of an equity investment and acquisition of available-for-sale securities and impairment of equity investments.

Starting with revenues, net advertising revenues for the fourth quarter came in at RMB346.2m, which represents a year-over-year growth of 2.3%. It was mainly due to the 118.2% year-over-year growth in mobile advertising revenue, which was partially offset by the decrease in PC advertising revenues.

Paid services revenue for the fourth quarter was RMB84.6m, which represents a year-over-year decrease of 15%, which was in line with our expectations. Mobile value-added services revenue decreased by 15% to RMB59.6m. Games and others revenues decreased by 15.1% to RMB25m, primarily due to a decrease in revenue generated from web-based games on the Company's game platform.

Secondly, gross profit and margin. Adjusted gross profit for the fourth quarter of 2015 was RMB216.5m compared to RMB235.9m in the same period last year. Adjusted gross margin for the fourth quarter was 50.2% compared to 53.9% in the same period last year.

In terms of cost of revenues, adjusted content and operational cost as a percentage of total revenue increased to 26.4% as compared to 24.9% in the same period last year. It was mainly due to the increase in content acquisition costs.

Revenue-sharing fees as a percentage of total revenues increased to 10.8% from 8.1%, primarily due to the increase of sales of higher revenue-sharing products and the MVAS. Bandwidth cost and sales tax and surcharge as a percentage of revenues (inaudible) are the same as [they came through] last year at 4.6% and 7.9% respectively.

Thirdly, adjusted operating expenses for the fourth quarter increased to RMB185.4m from RMB176.5m in the same period last year. Our bad debt provision had been increased in the fourth quarter due to the increase of payout collectible days based on the weak macroeconomic and a few one-off specific bad debts due to the tightening of regulations from certain industries in the second half of 2015.

Adjusted operating income for the fourth quarter was RMB31.1m compared to RMB59.4m in the same period last year. Adjusted operating margin for the fourth quarter was 7.2% compared to 13.6% in the same period last year. The decrease was mainly due to the decrease in gross margin and the increase in mobile traffic acquisition expenses and bad debt provision, which was mentioned earlier.

Fourthly, GAAP net income attributable to Ifeng for the fourth quarter decreased to RMB41.1m from RMB46.9m in the same period last year. Adjusted net income attributable to Ifeng for the fourth quarter was RMB44.9m compared to RMB62.7m in the same period last year.

Adjusted net income per diluted ADS for the fourth quarter was RMB0.62 compared to RMB0.84 in the same period last year.

In terms of balance sheet items, as of December 31, 2015, Ifeng's cash and cash equivalents, term deposits and short-term investments and restricted cash were RMB1.21b or approximately $186.1m.

Let me briefly run through the key figures of fiscal year 2015. Total revenue for 2015 were RMB1.61b, compared to RMB1.64b in the fiscal year 2014, out of which the net advertising revenues increased by 3.1% year over year to RMB1.23b. This increase was primarily due to the 114.2% year-over-year growth in mobile advertising revenues, which was partially offset by the decrease in PC advertising revenues.

Paid services revenue decreased by 14.5% year over year to RMB382.7m. The decrease was mainly due to the decrease in revenue generated from mobile value-added services with telco operators and web-based games on the Company's game platform.

Total fiscal year 2015 adjusted gross profit decreased by 9.9% to RMB786.1m, which represents a 48.9% adjusted gross margin compared to 53.3% in the fiscal year of 2014. The decrease was mainly due to the increased revenue sharing fees and content and operational costs.

Non-GAAP operating income for 2016 was RMB113.3m compared to RMB290.8m in the fiscal year of 2014. Adjusted operating margin for 2015 was 7% compared to 17.8% in the fiscal year of 2014. The decrease was mainly due to the decrease in adjusted gross margin and the increase in mobile traffic acquisition expenses and bad debt provisions.

GAAP net income attributable to Ifeng for 2015 was RMB73.6m. Non-GAAP net margin for 2015 was 9% compared to 18.6% in 2014. Non-GAAP net income attributable to Ifeng for 2015 was RMB145.2m or RMB2 non-GAAP net income per diluted ADS.

Lastly, I'd like to provide our business outlook for the first quarter of 2016. We are forecasting total revenues to be between RMB290m to RMB305m, representing a decrease of 21% to 16% year over year. For net advertising revenues, we are forecasting between RMB245m and RMB255m representing a decrease of 9% to 5% year over year. For paid services revenue, we are forecasting between RMB45m and RMB50m, representing a decrease of 53% to 48%.

This concludes the written portion of our call. We are now ready for questions. Please go ahead, operator.

(Operator Instructions). Wendy Huang, Macquarie.

Hi. This is [Joe] asking questions on behalf of Wendy. Hi, management. Thank you for taking my call. And so I'm just wondering, so regarding your guidance, so you guided a pretty significant slowdown in the first quarter. And I noticed that your competitor, some other product sites have -- saying 2016 will be stabilizing for PC advertising and expect a flat year-over-year growth. I'm just wondering if you could comment on the advertising outlook and why your guidance is particularly weak in this regard. Thank you.

Hi. Thanks for the question. This is Ya. I'm going to talk about the advertising environment and the overall outlook first and Betty will fill out on the guidance.

From what we are seeing now, some key sectors for us remain very uncertain. In the fourth quarter the auto sector contribution remained stable compared to the third quarter, but it still is down from 32% contribution a year ago to just 26%, 27% contribution. I think in 2016, auto sector is the largest contributor for all the quarters, still seeing uncertain environment despite of the government incentive policy, but the overall macroeconomic condition remain uncertain.

And also the shift from PC to mobile advertising is causing some transitional friction and adds to the uncertainty. In addition, we're seeing fourth-quarter FMCG, like food, beverage and wine dropped out of our top-line contributing sectors because of the overall softness in their advertising budgets. We also see the same pressure for other, like video website in the fourth quarter for FMCG.

Another sector which was also among the top five was the medical services. Due to the government regulation, we are seeing very little, if any, medical services in 2016.

So I think based on these specific sectors which are among our top five sectors traditionally, we have to be more conservative. We know that in the fourth quarter we did beat our guidance by more than double digits for advertising. But due to these sectors and also the Chinese New Year caused lower visibility for the fourth quarter, as it always is, that's why we remain rather conservative.

I think Betty can add more.

Thank you, Ya. As for the guidance for the first quarter, specific to our advertiser space, which are mostly brand advertisers, we do see a quite soft first quarter, which is in line with our previous quarter. First quarter is always our weakest quarter. But looking ahead throughout the whole year of 2016, given the weak macroeconomics, we are quite confident that our mobile advertising will be continuously -- grow at a very robust rate, which will be in line with the industry if not better.

As for the PC, I think we are still looking at a decline in rates, but the declining rate will be offset by the strong growth of our mobile advertising. Our mobile advertising revenue in 2015 has reached about 28% of our total revenue and we will see that it will be further increased throughout the 2015. So overall our net advertising revenue will be growing, actually better than the growth of 2015.

Okay. Thank you. That is very helpful.

Binbin Ding, JPMorgan.

Hi. Morning, management. Thanks for taking my question and congrats on a strong quarter. I was going to ask some follow-ups on your advertising business. So first, could you quickly share the mobile traffic and the revenue contribution between your online ad revenue? And I think Betty mentioned that in 2015, there's [28] of total ad revenue, so how about a revenue split and CapEx split for 20 -- for the fourth quarter of 2015?

The mobile and PC revenue contribution percentage for fourth quarter is this, Binbin. 35% contribution from mobile advertising. But overall it's 28% for 2015 compared to 14% for the 2014.

And for 2016, we think the mobile revenue growth will remain higher than the industry average. In 2015 we -- in the fourth quarter we grew by 118%. Overall I think we grew by also over 100% in 2015. In 2016 the industry expectation is also a high double digit, but we expect even higher growth.

The contribution of our mobile revenue in 2016 will also help by the mobile video monetization. In 2015 there was very little mobile video monetization. And also in 2016 we plan to invest more in our mobile traffic growth and product innovation. In addition, the mobile native marketing, which we have successfully applied to our PC advertising, will also help us to generate more brand advertising for the mobile properties.

And also we are enhancing our technology for programmatic ad selling so that we can sell more [on-field] ad inventories for our mobile properties. Add that together, we think that in 2016 we will see even greater contribution from mobile advertising.

And lastly, and if we -- our Yidian ZiXun strong mobile and revenue expectation, especially in the second half of this year, will also add to the overall growth of the mobile ad.

I don't know if that answers your questions.

Yes, it does. And also could you remind me the traffic contribution from mobile in the fourth quarter in 2015?

Traffic?

Yes.

Growth or--?

I mean just your split, the distribution.

Traffic growth overall is split -- I think it's 22% for our app and it's -- for the year over year for -- for the year 2015 over year 2014 it was 8%. However, it's [all] because our -- the lower growth on our WAP, WAP traffic but higher growth on our app traffic. So for the fourth quarter, the overall traffic was 33m. On the WAP side we revamped our -- the front page of our WAP site and also added more ad inventory and also changed some channel strategy. And, however for the app side, we had 22% growth.

And in 2016, as I mentioned, we plan to increase investment in both channel and promotions for our user growth, as well as the technology and product innovation for our mobile assets. Yes.

Got it. That's helpful. And also can you give us some update on the monetization of Yidian ZuXin? And as you mentioned, the user, the DAU has already exceeded 10m. Can you elaborate the Yidian's strategy to further acquire traffic and advertisers? And how should we expect the traffic -- sorry, the revenue contribution from Yidian to ramp up? Thank you.

Sure. Okay. Yes, in 2015, especially in the fourth quarter, we did announce that our overall mobile traffic for Yidian exceeded 20m, combining app and the WAP traffic. And it ranked number three according to the third party TalkingData weekly coverage ranking, after Tencent and Toutiao. And our traffic did increase 400% in last year.

In 2016 we will invest more in our traffic growth for Yidian ZiXun. And we think we will remain solid in the first tier of the mobile apps. Also the -- we position ourselves much more beyond just a news app. We look at the overall market size as more than 500m, including the mobile news consumption from the social platforms, from all the browsers and also from the WAP side combined, not just the mobile apps of the portals plus Toutiao.

So our search engine plus (inaudible) engine-based interest engine will provide useful information, more greater -- with greater reach and more value, beyond just the hot news. And also the technology addresses some weakness of the pure personal recommendation technology, allowing users to more conveniently express their interests and follow their interests.

For example, the -- today I think the world is also eyeing -- is looking at the AlphaGo competition against this Korean gold player. And we have, on our site, the AlphaGo is just one of the over 2.6m channels can be easily defined by any user, based on his or her personal interests. And this usage also allows our advertising solutions to have a better user profile and to better match the user, the consumer with the advertisers' target user group.

So on the monetization side, because of the traffic growth and the base, and also because of the unique technology and the big data user profile, we can have greater effectiveness and ROI for advertising solutions. By the end of 2015 we have built an advertising platform called (spoken in Chinese) -- [Ningshi] advertising platform. And also we have built advertising sales team of 100 people. We have seen some meaningful monetization already by the end of 2015.

So in 2016, we do see those performance-based ad sales and also brand ad sales for Yidian to increase tremendously because of all the scale and the unique technology of Yidian.

We do have an outlook for the Yidian advertising revenue. We think [comfortably], we think that we should easily deliver over $100m gross revenue for the year. However, we will have better visibility, I think, towards the end of second quarter as we will open up our advertising platform and also we will also generate more brand advertising to validate our own advertising plan and also marketing solutions.

Okay. That's very helpful. I'll get back to the queue. Thank you.

Thank you Binbin.

Natalie Wu, CICC.

Hi. Good morning, Shuang zong, Ya zong, Betty -- Matthew and Betty. Thanks for taking my questions. Actually your fourth-quarter (inaudible) is strong. And the advertising revenue, actually it's over 10% more than your -- the guidance you gave in mid November. So just wondering if there are any unexpected situation that happened in the month of December that led to the surprise.

And how should we see the PC and mobile advertising revenue growth in 2016? I will have a very quick follow-up question.

Okay. Thank you. I think we just actually did better than we -- than our guidance. We did give a conservative guidance due to a couple of factors.

First was the economic outlook uncertainty. Secondly is we were still at the transitional period of our internal advertising sales team restructuring. And thirdly, I think it's also the -- I would say the -- some of the sectors, especially when we had our field visits, and also when we communicate with our peers in portal and video companies and we heard more negative feedback, then later actually we delivered the results. So I would say there was just -- it was just better execution and also more conservative attitude we had when we gave the guidance.

So will the first-quarter guidance--?

And for 2016, I think -- yes the PC advertising revenue still contributed 65% in the fourth quarter of our advertising revenue. And it's still very important, I think, for our overall revenue growth. I think lastly we only had 3% in advertising growth due to a double-digit decrease in our PC revenues, which is, I think, slightly less, I think, than our peers.

You should also see we continued to see better performance of our PC, in the way that the PC will continue to decrease year over year but at a lower rate than our peers. I think there are a couple of factors allowing us to have this expectation.

First, our PC traffic remains relatively strong compared to our [PCs], because of our media gains, because of our original content production and because of our overall influence, especially among the PC users, the higher-end users rather than the lower end who cannot afford or who could not afford or who do not have the habit to use PC. So there's a stable traffic allows -- or a better, a slower decrease in PC traffic is our advantage.

Secondly, we are trying to increase both technology-based advertising solutions and also leverage our native marketing solutions. In technology we are applying the [BFC] technologies to better utilize our enormous ad inventory, and which you can see actually also from the fourth quarter we had a greater number of advertisers. Of course we have increased both advertisers from PC and mobile, but that smaller advertising clients actually will be helped through our technology enhancement.

And on the native marketing, native brand marketing side, it addresses greater issue because the targeting ad technology only addresses the users' match with the advertisers targeting consumer. However, most of our readers will ignore our -- the advertising, the ads. But the content marketing actually changes the dynamic by delivering ad content itself. So it's more effective. So native marketing will allow us to continue to take some significant advertising budget from the major brand advertisers.

In the last quarter, in fourth quarter we see some great examples, like our advertising, native advertising campaign for BMW and also for Huawei Mate 8 launch. And I think these, combined with the native marketing with technology-based BFC selling, we are confident that our PC advertising revenue will still be healthy in 2016. But overall the focus will still be on growing the mobile traffic and mobile monetization.

Yes. So your PC revenue actually declined around 15% in 2015, if my calculation is right. So just wondering, are you -- you said that PC revenue will stay at the same healthy pace. So do you mean that the revenue decline in 2016 will be much narrower than the 15% decline in 2015?

Yes. We think our -- our internal expectation is it will decrease at a lower rate, not only compared to 2015 and also compared to the industry average.

Great. Thank you. My next question is about the top five industry among your advertisers in the fourth quarter of 2015. What kind of [trends] you have noticed or expected to happen in terms of advertiser spending, maybe in different industries, also amid the PC transformation to mobile.

Okay. Yes, the top-five sectors I think are the auto, e-commerce, financial service, communication equipment and services and also Internet services. And the difference from a year ago was the FMCG, or food, beverage and wine, dropped out of the top five, as I mentioned, because of the economic condition. And also the medical services dropped out of top five because of regulatory change.

And also another thing was also among our top five is -- or number six was real estate. The last year we no longer consolidated real estate. So when we compare 2015 against 2014, actually we need to keep in mind that there was maybe a 5% factor caused by not consolidating the real estate advertising revenue.

The Internet services, which ranked number five in the fourth quarter of 2015, refers to the new economy companies, like the sharing economy, like Uber-like companies. And also the communications equipment and services, clients includes mobile operators as well as -- or more importantly, the mobile device manufacturers. That also reflects the growing demand for mobile services.

Financial service also ranked number three in fourth quarter. It's due to iPhone's unique user profile and also the increase in online financial service demand for the targeted users. And auto sector, I mentioned earlier, it remained stable compared to a quarter earlier, but it did drop from 32% to 26% a year ago. And that also hurts us because auto sector is the number-one contributor for our advertising revenue.

I don't know if I answered all of your questions. Thank you.

Great. Thank you.

[David Li], [Guoyuan Securities].

Hi. Good morning. Can everyone hear me?

Yes. Yes, David.

Okay. Good morning, Shuang zong, Ya zong and Betty and Matthew and (inaudible). First I want to congratulate. Our mobile product received an amazing growth rate. So I have two questions here. First, I want to know the price -- [average] price level compared to the other competitors who sell products, such as [Nets], Tencent and Sohu.

Okay. Thanks for the question. Are you referring to the mobile average or the PC?

Mobile.

Mobile. Okay. I think mobile is a little bit difficult to compare. First I think that we can only compare the published rates. However, each published rate probably has a different app position. Unlike the PCs all on the top banner, mainly it's the in-stream ad. Each different news app has ads at different location within the news stream and also has different number of locations so it adds to the difficulty to the -- to have a comparison.

However, if we look at the launching or the loading page prices, (spoken in Chinese), then we believe that we have a very strong or high -- among the highest [CTM] rates. So the [CTT] rates, it doesn't just really tell us too much information. But one factor contributed to our mobile -- strong mobile revenue growth is of, first, the increase in mobile traffic. Secondly, the increase in our mobile ad inventory. In the third quarter we mentioned that we increased our mobile ad inventory for both the app and also the WAP properties. And the better -- I think the better cooperation between our advertising team and sales team and our content team helped to provide better advertising solutions for -- to adjust to advertisers' needs.

Going forward I think we see the pricing for our mobile properties to -- mainly through adjustment of the ad inventory, rather than a simple change of the rate for our fixed ad inventory. So the ad inventory will be increased -- increase and adjust the inventory itself rather than adjust the rate itself, is the strategy for our -- the beginning of 2016.

And we do see the demand for mobile advertising and also the shift from PC to mobile advertising continued to be strong. And also all the peers, plus our own revenue growth in 2015, I think testifies the effectiveness and the strong demand for mobile advertising. That's why we continue to see a very high growth rate for our mobile traffic. And that's also the reason we're investing more in our user acquisition for mobile in 2016.

Okay. So how big is the potential of the mobile product monetization? So how about the growth of figures in the future, in three years or five years?

We think in two or three years our mobile revenue contribution will certainly exceed our PC advertising contribution. And also we -- I think Betty mentioned that our mobile revenue growth this year is targeted at a greater rate -- growth rate than our peers.

Okay. So here's my second question. So as we know, Phoenix New Media has reduced staff during the second half of last year. So I want to know the progressive situation now, and what will be the impact to the financial result in 2016?

Well, yes, we have done a restructuring during -- around September last year. It has been stabilized and actually the cost saving will be reflected in 2016. And actually the staff we have around now is about 1,500 currently.

Yes. And if I may add more, I think that, in the end -- by the end of 2015, we actually are, I think, almost kept our original headcount plan. But maybe from this year it's shifting from PC-related headcount to mobile and the product-based advertising-related staff.

So it's a shift in our -- in structure and of our organizational headcount distribution in order to embrace this macro trend from PC to mobile, and also to carry out our internal plan to make our content and audience younger and to make our products stronger, and also to provide more lifestyle and consumption content, rather than these too serious hot news.

Of course we'll remain strong with that, but we'll add more to increase the younger and more entertaining audience. So I think that's the motive behind the restructuring. And also, in fact, we did achieve that goal.

Okay. Thank you.

(Operator Instructions). There are no further questions at this time. I would now like to hand the call back to today's presenter. Please proceed.

Thank you, operator. We have come to the end of our Q&A session and our conference call. Please feel free to contact us if you have any further questions.

Thank you for joining us on this call. Have a good day.

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.