Kingsoft Corp Ltd Adr

Good day and thank you for standing by. Welcome to Q4 2024 Kingsoft Corporation's earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 on the telephone with an automated message advising your hand is raised. Please be advised that today's call is being recorded. I would now like to hand the call to your host today, Ms. Li Yinan, IRR Director. Thank you. Please go ahead.

Thank you, Operator. Ladies and gentlemen, good evening and good morning. I would like to welcome everyone to our 2024 Fourth Quarter and Annual Results Earnings Call. I'm Li Yinan, the IRR Director of Kingsoft. I would like to start by reminding you that some information provided during the earnings call may include forward-looking statements. which may not be reliable in the future for various reasons. These forward-looking statements are based on our information and information from other sources, which we believe to be reliable. Please refer to the other publicly disclosed documents for detailed discussion of risk factors, which may affect our business and operations. Additionally, in today's earnings call, the management will deliver prepared remarks in both Chinese and English. A third-party interpreter will provide a consecutive interpretation into English. During the Q&A section, we will accept questions in both English and Chinese with alternating interpretation provided by the third-party interpreter. On-site translation is solely to facilitate communication during the conference call. In case of any discrepancies between the original remarks and the translation, the statement made by the amendment will prevail. Having said that, please allow me to introduce our management team who joined us today, Mr. Zhou Tao, our executive director and CEO, and Ms. Li Yi, our acting CEO. Now, I'm turning the call to Mr. Zhou.

Hello, everyone. Welcome to the 4th quarter of this year's software and all-year-round phone calls. This year's software will ensure high-quality software development, and a year full of results. In 2024, the company's overall performance was strong. In terms of revenue scale, profit capacity, and core operating indicators, the company has a high historical record. The annual total revenue broke 10 billion yuan, reaching 10.3 billion yuan, which is 21% of the total growth. The overall operating profit of the Group reached RMB36.46 billion, which is 64% of the total profit. The operating profit was increased by 26% in 2023 to 35%. Over the past year, we have insisted on technological innovation to continuously optimize products and services, improve market competitiveness and value for users,

Hello, everyone, and thank you all for joining KingSoft's 2024 fourth quarter and annual results earnings call. Looking back at 2024, this was a year in which KingSoft remained dedicated to a technology-driven strategy, drove high-quality business development, and achieved significant results. The group delivered strong overall performance, achieving record highs in revenue, profitability, and key operational metrics. Our annual revenue surpassed RMB 10.3 billion, making a 21% year-on-year increase. The group's overall opt-in profits reached RMB 3.646 billion, a significant 64% increase compared to the previous year. with the operating profit margin improved from 26% in 2023 to 35%. Over the past year, we remained committed to technological innovation, continuously optimizing our products and services to enhance market competitiveness and the user value, giving a strong boost to business growth and light a stronger foundation for long-term development.

I would like to introduce the performance of the fourth quarter of 2024. In 2024, Jinshan Office insisted on using users as the center, through continuous promotion of product functions and service systems, creating greater value for users, and achieving a double growth in user size and commercialization capabilities. In 2024, the total revenue reached 5.1 billion yuan, which is 12% of the total growth. In the fourth quarter, Now, I will walk you through the business highlights of the fourth quarter 2024.

In 2024, Kingsoft Office Group remained user-centric, continuously enhancing product features and services systems to create a great value for users. This approach led to growth in both user base and commercialization capabilities. Total revenue for 2024 reached RMB 5.12 billion, reflecting a 12% year-on-year increase. In the fourth quarter, revenue reached RMB 1.5 billion, up 17% year-on-year.

At the end of 2024, the WPS office PC segment has already surpassed 100 million in the domestic market. has officially launched a new version of the domestic office software. In terms of AI, we have released the WPS AI 2.0 version to provide a comprehensive AI supplement program to cover the diverse needs of individual efficiency and corporate organizations. We have deep cooperation with domestic large-model manufacturers to continuously improve the product experience of WPS AI. Currently, we have launched the WPS 0C, The core functions include smart writing, PPT generation, data analysis, information unlocking, document reading, and speed-up, cloud synchronization, and team cooperation. The deep integration of WPS0C and DeepSeq marks the transition of smart office tools from auxiliary tools to cognitive partners.

By the end of 2024, WPS Office PC has excited 100 million daily active devices in the domestic market, officially opening a new chapter for domestically developed Office software. Regarding AI, we released WPS AI version 2.0, providing comprehensive AI empowerment solutions that address the diverse needs of individual productivity and enterprise organizations. We are engaged in in-depth collaboration with domestic large language model manufacturers to continuously enhance the product enterprises of WPS AI. Currently, we have launched the AI Office Assistant. WPS Linxi with core functionalities including intelligent writing, AI PPT generation, data analysis, information retrieval, document reading and summarization, cloud synchronization, and team collaboration. The deep integration of WPS Linxi with DeepSafe signifies a paradigm shift in intelligent office tools from assistive tools to cognitive partners.

We have adjusted the member structure, the member system through the traditional function and AI function, the joint development of the service, and the continued improvement of the pay transfer rate. The number of domestic annual personal pay users has reached 41.7 million, which is 17.5% of the total growth.

We have adjusted our membership structure, leveraged the synergistic development of traditional features and AI-powered value-added services within the membership system to continuously drive and pay the conversion. The calculated number of annual paying individual users in domestic reached 41.7 million, representing a year-over-year increase of 17.5%.

and corporate customers. WPS365 has been upgraded, including WPS Office, WPS Collaboration, and WPS AI Business Edition. Successfully opened the three major capabilities of WPA, Collaboration, and AI, and realized a temporary AI office. At the same time, our JinShan Business Office model released the WPS AI Business Edition to provide smart support for WPA customers. WPS software business WPS365 underwent a brand new upgrade for institutional and enterprise customers.

It now includes WPS Office, WPS Collaboration, and WPS AI Enterprise Edition, integrating document management, collaboration, and AI capabilities to enable one-stop AI-powered office solutions. Additionally, we launched the Kingsoft Government Office Model based on which the WPS AI Government Edition was released offering intelligent solutions for government applications. For WPS software business, we advanced software legalization and documents adoption, empowering government and enterprise in digital transformation. We strengthen our presence in tech industry like government finance, engineer, and telecommunications. In addition, the client built a secure, self-sufficient digital office in the field of information technology application innovation.

We adopt a different localization strategy based on the guidance of overseas users to move from the mobile end to the large screen. By differentiating the function, attracting users to realize the payment transformation, the annual overseas personal income of WPS is 180 million yuan. WPS Office PC version overseas monthly equipment has reached 27.62 million. Overseas accumulated annual payment of individual users has reached 1.74 million. It is the foundation for the development of international business.

Based on the work habits and the payment performance of users in various overseas regions, we have adopted different localization strategies. We are maintaining our strongholds in the mobile sector. We have guided overseas WPS users to transition from mobile devices to large screens. By offering Differential-Aided, Value-Aided features, we are attracting users to convert to paid subscriptions. Throughout the year, Overseas WPS Personal Revision reached 180 million, like the foundation for development of our international business.

In 2024, the game business will achieve outstanding growth under the overall guidance of the gold strategy. The number of new users will be high. In 2024, the total revenue will reach 5.2 billion yuan.

In 2024, in line with our premise strategy, the online game business achieved outstanding growth, with new user acquisition reached record highs. Total revenue for 2024 reached RMB 5.2 billion. a significant increase of 31% year-on-year. In the fourth quarter, revenue reached RMB 1.3 billion, representing a 26% year-on-year increase. In the fourth quarter, revenue reached RMB 1.3 billion, representing a 26% year-on-year increase. In the fourth quarter, revenue reached RMB 1.3 billion, representing a 26% year-on-year increase.

In the fourth quarter, revenue reached RMB 1.3 billion, representing a 26% year-on-year increase. In the fourth quarter, revenue reached RMB 1.3 billion, representing a 26% year-on-year increase. In the fourth quarter, revenue reached RMB 1.3 billion, representing a 26% year-on-year increase. In the fourth quarter, revenue reached RMB 1.3 billion, representing a 26% year-on-year increase. In the fourth quarter, revenue reached RMB 1.3 billion, representing a 26% year-on-year increase. In the fourth quarter, revenue reached RMB 1.3 GX Online 3 achieved seamlessly the cross-platform integration for the Boosting Player in Sous-des-Essences since the launch of GX Ultimate.

This class IP has been revitalized, surpassing 10 million monthly active users. As a long-standing masterpiece in gaming industry with a 15 years history, GX Online 3 remains deeply rooted in cultural enrichment, striving to transform the product into a new virtual for the traditional culture and inspire the younger generation to connect with their cultural heritage.

World of Swords, as a masterpiece of martial arts, continues to run steadily and is deeply loved by players. Swordsman 0, released in 2024, as a classic masterpiece of Swordsman, rewrote the 24-year history of the game, and will be released in the first half of 2025 to bring new experiences to players.

World of Swords' origin as a lexing of Lusatian classics continues to operate in stabling and maintain a dedicated player base. The Fate of Swords Zero obtained its game approval in 2024 as a next-generation masterpiece in the JX series. It promised to deliver a fresh and exciting experience for players.

In the past few years, we have also achieved a historic breakthrough in the 2D circuit. The 2D design game is now in full swing. Despite facing challenges at the beginning of the game, we continued to polish the product details and interact with players to achieve the goal of developing a new circuit.

In 2024, our long-term efforts in the anime game genre achieved a historical breakthrough, where the anime shooter game Snowbreak! Continent Zone faced initial challenges upon its release. However, by accurately understanding player needs, continuously refining product details, and engage deeply with the community, We have assuredly achieved our goal and is with a new general.

We face the global market. The science-fiction mecha, the flagship system, and the decoder are planned to be launched in the first half of 2025. They will further enrich our game products and open up new paths. The new mobile game of the classic swordsman series, Swordsman Love Zero, will also be released in the first half of the year. Our flagship sci-fi Metroid game, Metroid Break, targeting the global market is set to launch in the first half of 2025.

further diversifying our game portfolio and opening up a new genre. The new mobile game from the classic Solid series, The Fate of Sword Zero, will also be released in the first half of the year, aiming to build up the lexing of wuxia culture within the established genre. Meanwhile, the flagship version of GX Online 3 will focus on optimizing core gameplay, enhancing environmental texture, and refining atmospheric elements fighting a new benchmark for PC game graphics and redefining the virtual experience for players.

In the near future, we will continue to integrate core products and technologies to meet the needs of users and promote high-quality business development. Jinshan Office will deepen the application of AI technology in the field of office to strengthen the core competitiveness of RPS365 in the business cooperation field, and to promote globalization. Game business will continue to implement a high-quality strategy, expand the new track, face the whole platform and globalize the market, and strive to create high-quality games that are deeply loved by players. We will insist on technical success, focus on product and service innovation, and help our customers, shareholders,

Looking ahead, we will continue to iterate on our core products and technologies to meet users' needs and promote high-quality business development. Kingsoft Office Group will strengthen WPS 365 collaboration capabilities deep in AI adoption in office productivity, and expand the global market reach. Targeting the entire platform and the global market, online game business will continue focusing on premium and into new general and strive to create high quality games that are deeply loved by players. We will adhere to technology empowerment, focus on product and service innovation, and create a long-term value for our customers, shareholders, and employees. Next, I would like to invite Ms. Yi to introduce the financial performance for the fourth quarter and annual. Thank you.

Thank you, Zozo and Elan. Good evening and good morning, everyone. As for the financial results, I'm starting for Q4, use RMB as the currency. Revenue increased 21% year-on-year and decreased 4% quarter-on-quarter to $2,792 million. The revenue split was 54% for office software and services and 46% for online games and others. Revenue from the office software and services business increased 17% year-on-year and 24% quarter-on-quarter to $1,501 million. The year-on-year increase was mainly attributable to WPS 365 and WPS individual business of Kinsoft Office Group. The increase of WPS 365 business was primarily due to the increased number of paying enterprises supported by the enhanced AI and collaboration capabilities, as well as the replication of typical industry solutions. As for the WPS individual business, the revenue increased as a consequence of enhanced user experience and improved the commercial risk, streamed by the enriched membership benefits and the wide adoption of AI-powered features. The quarter-on-quarter increase mainly reflected a seasonal increase in WPS software business, along with the sustained growth of WPS individual and WPS 365 business. Revenue from the online games and other business increased 26% year-on-year and decreased 24% quarter-on-quarter to $1,291 million. The notable year-on-year increase was mainly attributable to, first, the solid performance from GX3 Online. As the launch of the GX3 Ultimate in 2024 further boosted players' engagement, second, The revenue contribution from the animate gains, no break, contaminated zone, driven by the continuous content upgrades. The quote-on-quote decrease was mainly due to the release of less commercial content in certain gains. Cost of revenue increased 9% year-on-year and decreased 2% quote-on-quote to $449 million. The year-on-year increase was primarily driven by higher China costs, the grid server and bandwidth cost, all of which were associated with the business growth of KeySort Office Group. Gross profit increased 24% year-on-year and decreased 5% quarter-on-quarter to $2,343 million. Gross profit margin increased by 2 percentage points to 84% year-on-year and keep the flat quarter-on-quarter. Research and development costs increased 7% year-on-year and decreased 50% quarter-on-quarter to $730 million. The year-on-year increase was primarily driven by increased headcount and rising AI-related expenses to support the development of AI and collaboration capabilities of Kingsoft Office Group. The quarter-on-quarter decrease was mainly due to reduced accrued performance-based bonus. Selling and distribution expenses decreased 10% year-on-year and 7% quarter-on-quarter to $340 million. The decreases were mainly due to decreased market expenditures related to online games business, partially offset by increased promotion efforts on products and services in intelligent office of consort office group. Administrative expenses decreased 11% year-on-year and 8% quote-on-quote to $153 million. The year-on-year decrease was mainly due to the high base in the same period last year caused by one-off expenses. The quote-on-quote decrease largely reflected decreased personal related expenses. Share-based compensation costs decreased 23% year-on-year and increased 2% quarter-on-quarter to $59 million. Operating profit before share-based compensation costs increased 47% year-on-year and decreased 3% quarter-on-quarter to $1,166 million. Later, other losses from the first quarter of 2024 were $74 million. compared with the gains of $80 million for the fourth quarter of 2023 and losses of $63 million for the third quarter of 2024, respectively. Share of losses of associates were $148 million for the fourth quarter of 2024, compared with losses of $286 million and $428 million for the fourth quarter of 2023 and the third quarter of 2024, respectively. Income tax expense was $212 million, compared with $126 million and $31 million for the fourth quarter of 2023 and the third quarter of 2024, respectively. As a result of the reasons discussed above, profit attributable to owners of the parent was $460 million for the fourth quarter of 2024, compared with the profit of $205 million and $430 million for the first quarter of 2023 and the third quarter of 2024, respectively. Profit attributable to owners of the parent excluding share-based compensation cost was $496 million for the first quarter of 2024, compared with the profit of $257 million and $453 million for the first quarter of 2023 and the third quarter of 2024, respectively. The net profit margin, excluding share-based compensation costs, was 18%, 11%, and 16% for this quarter, the fourth quarter of 2023, and the third quarter of 2024, respectively. Now I'm on the yearly figures. Revenue increased 21% year-on-year to $10,380 million. Office software and services made up 50%, increased 12% year-on-year to $5,121 million. Online games and others made up 15% and increased 31% year-on-year to $5,197 million. Gross profit margin increased by 1 percentage point year-on-year to 83%. Operating profit before sharpest compensation cost increased 54% year-on-year to $3,922 million. Profit to owners of the parent was $1,552 million for the year of 2024. compared with the profit of $483 million for the last year. The group had a strong cash position towards the end of 2024, as at 31 December 2024, the group had cash resources of $27 billion. Net cash generated from operating activities was $4,587 million and $3,489 million. for the years ended 31 December 2024 and 31 December 2023, respectively. Capital expenditure was $426 million and $474 million for the years ended 31 December 2024 and 31 December 2023, respectively. That's all for the introduction of our financial results. Thank you all. Now, we are ready for the Q&A section. Thank you.

Thank you. As a reminder, if you'd like to ask questions, please press star 11 on your telephone and wait for a name to be announced. Our first question comes from the line of Xiao Dan Zhang from CICC. Please go ahead.

Hello, President Zhao, President Li, President Yin, and President Wang. Thank you for accepting my question. My first question is about our profit. We saw that in 2024, the group's EPS level actually achieved a very bright growth. I would like to ask the management level, if we look forward to 2025, will this growth be sustainable? Secondly, we see that the group's account is now very rich in cash. I would like to ask the management level, in addition to the investment in the game, including the office business level, around the new market and new products, So thanks management for taking my questions. First of all, the company has delivered notable growth in terms of earnings per share. So does management expect this improvement to be sustainable in 2025? And secondly, could management share your views on the use of cash and especially the strategic strategic investment plans on the group level, as well as the shareholder return plans. Thank you.

Okay, let me answer first. In 2020, the entire EPS has indeed achieved a relatively good growth. Basically, we have also issued a report. You can see that there are two main reasons. I think it's two and a half reasons. One is that the office itself has achieved a relatively good growth according to the overall plan. The gaming industry has certainly exceeded our expectations in the beginning of last year, especially the two games, Street Fighter 3 and Chen Bai. In addition, I think our company's loss reduction has also made a certain contribution. As for whether 2025 will continue, we still look at it from these three angles. From what we have seen so far, the office has still maintained a strong growth trend. You'll see, uh, uh, uh, uh, uh, uh, uh, uh, So let me just answer the first question.

So in the 2024, The EPS has a very good growth. We can see it from this financial report. The mandate has two reasons. And recently, that is 2.5 reasons. The first reason is that for the office itself, the overall planning is quite good. And also for the gains, this exists of our expectations, especially for the GX3 and also for this termite. This is out of our expectation. And the third point is about the loss. It's narrowed. It's furthermore narrowed. But to regard the question of the 2025, whether we could continue this growth, we're also going to answer this question from three perspectives. Currently, based on these three points, firstly, the office also has very strong growth. For the old gains, generally speaking, it's quite stable. For the new gains, Currently, we're doing this test, extra and external. Currently, their test result is quite good, but we don't know how after it's launched, what about the final data? We are not going to make that much comment for it. Once the whole general commercial operation has been finalized and also the result comes out, we can have a more detailed evaluation for it. So currently, based on this trend, we're going to get a pretty good result. And furthermore, for the union company, it has a furthermore debt loss. So this is going to be continued in 2025. So how do you say that? In 2025, we're going to have a pretty big confidence that the general situation will be better. But for the details, we're going to base it on actual business operation.

Second question. Talking about I've talked about this a lot of times. It's definitely going to happen. This track will definitely happen. And the overall thinking is getting clearer and clearer. But at the moment, there are some specific details that the group is still doing further research and planning. Therefore, it is not convenient for us to disclose the details at the moment. However, we can definitely tell everyone that in the direction of AI, J&J will definitely do something. As for the shareholder return, I think we will always insist on sending and, at the right time, we will insist on repurchasing from the market.

And also, I have mentioned that we're going to have a constant investment from the, as mentioned previously, is that we're going to constantly do the investment according to our schedule. And we definitely are going to do it. And based on the AI, we definitely are going to do it. So the general planning is going to be more and more clear. But currently for the data use, It's not clear yet. From the group perspective, we're going to furthermore do the research and planning. And for the details, it's not that convenient to release it. But it's for sure that based on AI, the other software groups will also do it. And we're going to do it as well. For the shareholders' returns, we will always pay their dividends and repurchase from the market.

Hello, operator.

Thank you. We will now move on to the next questions. One moment, please. Our next question comes from the line of Lingling Yang from Guanghua Securities. Please go ahead.

Good evening, Mr. Zhou and Mr. Yi. I have two questions for you. One is about the game. Due to the latest February test, I also saw that the total number of online users reached more than 300,000. This is very hot. At the same time, I also saw that there are some two-stage changes in the evaluation aspect. Mainly, it includes the long queue time of the server, and also the long queue time of the new users. It also includes some controversy about the gameplay of PvPvE. How do you see this test and user feedback? Will the company respond to this test within the expected time? Or will there be some changes in the future? Because compared to last year's test, it was very good. How to watch the test this time? And how to look forward to the next game? And for the game, do we have any guidelines for this year's game business? In fact, the guidelines mainly include, for example, how to look forward to the current game such as Sword and Shield 3 and Chen Bai. This is the first question. The second question is about, because we also saw that after DeepSeq came out, it brought a very big change to the industry. Can you ask the management to talk about it? We are in the office business and game business. Now, in terms of AI investment, including strategy and application, what specific changes will there be in these aspects? My first question is about the latest test. The concurrent users exceeded 300,000, demonstrating high popularity. Meanwhile, its user feedbacks are polarized. Key issues include server crash and the debate about its PWA-PWAE gameplay. How do you think about these tests and user feedback? How should we expect its performance? Could you give us some guidance about the game business? My second question is about AI as deep-seq deep-seq is driving advancements in general-purpose model capabilities while reducing inference costs. Its management elaborates on WPS and in-business trends in AI investments, strategies, and applications. Thank you.

Let me answer these two questions. The first one is about the decoding machine. On the one hand, this is our. Compared to the previous one, the scale is larger. From the number of participants, I guess it is a test that is 100 times larger. In general, we have reached our test expectations. The reason why we need to open such a large-scale test is actually to look at the user's So from what you just talked about, after the test, some of the content that the user responded to, I want to express that this is exactly what we need most. We have been making games for so many years. In fact, it has always been in the support or help of the user, or even called to build high-quality games and content with users. So, uh, uh, it doesn't say that it didn't meet expectations. From this test itself, it should be beyond expectations. So the user's feedback and opinions are not bad for us. In fact, in fact, this is exactly what we need. All right, so I want to express it, because I also understand that some friends also told me that there are some problems with the decoding test. I said that if there is no problem, why do we test it? It is precisely because we are afraid that the scale of our previous test is not enough, especially because we have high expectations for this game, so we need it. This should be the first game in the history of Jinshan to do such a large-scale test. It's still called a test. It's almost like letting go. So I still want to express that this is what I expected. As for the user's reasonable suggestions and evaluations, we need to improve and improve them. So, we have always insisted on making friends with users and players to build the idea or strategy of the premium game. Of course, I also want to talk about the test itself. We think that we have achieved very good results. Whether it is the ranking of Slim, or the monthly order, or its several boards, called the new quality trend board, and the upcoming launch board, and the demonstration board, we have ranked the first in these boards. Including the daily viewing on TV, the market has also exceeded 270,000 hours. So in general, these are all very good. This is a test data also for us To officially push the game to the market It's a very solid user base for us. It also gives us a lot of confidence. Okay, so I'm going to test it this time. Stand in my perspective Make an evaluation Talk about the second question uh uh 我们有信心啊这几个体量也比较膨大的啊我们叫老游戏呢这个 我们比较有信心的他会稳定在一个非常不错的基本盘上 至于说会不会像去年一样啊你像我们去年建网三同比那个前年 呃呃不仅那个稳住了基本盘啊而且还有 I don't know if there are any gaps, but there is a very big growth. This is combined together, that is, the growth rate of our game last year was 31. As for whether or not there will be this kind of rapid growth, to be honest, it depends on the overall situation of the entire game market every year. So this is very difficult to answer now. I can only say that we will stabilize at a relatively high water level, and then go to prison. It's also a bit like the term used in the government report, which is a strategy called steady prison. This is our old game. We are still relatively confident. As for our new game, I want to express my point of view as always, which is that no matter how good the data is during testing, We still hope to give the market a more accurate guidance and prediction based on the data of the first month of commercialization after the game's overall launch. Now, I have so many years of experience in the game industry, it's really hard to make a decision based on a small number of examples. This is the first question. Please help me translate it.

Okay. So based on the answer of the questions one by one, firstly is regarding the addition of service games for this task. I would like to talk in several points. The first point is that compared with the previous time, the whole scale is much bigger. And no matter for the people joining this testing, and compared with the previous time, it has turned 100 times bigger than the previous time. So generally speaking, it has reached our expectation. And because we're going to have such a big test, from a wider perspective, we can see that how the customers, how the players could accept it. And based on their after the test, all their feedback, all the comments from the users, I would like to say is that this is actually what our Microsoft needs. We have been doing the game business for so many years, and we always would like to cooperate together with our players, with our users, to create a very good content. So the test is out of our expectation. All the feedback we have collected from the users, it doesn't mean that it's not good. It's actually what we want. So at some time, the other friends may think that some people have negative feedback. We need that negative feedback. We need to realize the issues. Otherwise, why would we like to do the test? So we are afraid that the test is not enough. This is the key point. And especially that we have a very high expectation for this game. That is why we need to do much more tests to test this market feedback. This is the key thing we need to work on. And based on our history, when the first time, the first game, compared with the first time we do the game, and so this time we can see that the biggest fear of the testing almost completely relieved. But this is our thinking for the users. Their comments and their suggestions is really improve ourselves. It really can help us. So we really have this confidence that we need to have friends, make friends with our players meet friends with our users. We need to work together with the players to create an excellent game. And of course, I would like to say that for this test, it not only has collected a very good result, but also for the ranking. We have reached a simple top ranking, like for example, the new games trend ranking and the launching income ranking and several top ones top ranking and also I saw that on their their first days watching time it's more than 27 hours there appear it's more than 27 hours so all of these data are quite good this is actually have a very strong confidence for us to promote this game into this market so From our perspective, we make this comment. So from the second question is that for this year, for the game, whether we can give the guidance or the expectations, we have two steps to answer this question. The first question is that for the old game, we have several parts. It's like the GX3 and the the future of SWOT, the world of SWOT, et cetera. So all of this is serious. It's all serious. We have confidence that we're going to have quite stable performances. And whether it would be the same as last year, like GX3, compared with the year before last year, it's not only stable, but also have a very big growth. competitively speaking, the growth rate of game is extremely good. But every year we also have to base it on the actual situation to make a judgment. Especially for the game market, it's hard to make a judgment at this moment because we have confidence that we can have a very stable performance and then we're going to move forward to have an actual positive result. So we can use words used in the political arena is that we're going to make ourselves stable enough and then move forward. So make a conclusion is that for the old game, we have confidence. For the new game, everybody may think that no matter during the period of the testing, how good the data we're going to realize, we still hope that when the game has been launched, we still have to base it on their commercial operations data in the first month to make a more accurate forecast. So based on my experience, it's quite hard only based on the several samples without to make an accurate judgment. It's really very hard. So, Nika's conclusion is that this year, for the game, we have positive attitudes.

Okay, the second question. After DeepSeq was launched, our overall investment strategy in AI Uh, uh, uh, . . . . . . For users, there is one more option. Yes, this is it. But at the same time, we also have a point of view that has not changed with the change of DeepSeq. In fact, DeepSeq is just a general model. But if we really want to apply it to some vertical industries, or if we really want to get into the exclusive field of companies, We still believe that we need to combine the personalization data itself to carry out the further adjustment and training of the model to achieve better results. Therefore, this big trend has not changed with the arrival of DeepSeq. We are still around this. The specific point is that for the personalization scene of our customers, To continue to increase investment and polish In this way, you can really do this model Well, this is in addition to its universal ability Can really pay for the enterprise Well, I think this is also the past two years Everyone is a consensus on the development of the entire model direction Yes, the improvement of universal ability cannot replace This professionalism in the field of thinking In order to really do this and highly valuable in this field, so we still need to invest more. So in terms of investment in this area, we will still, whether it's AI, whether it's office or game, we will still keep a bigger investment. As for the game, to be honest, Even in the global gaming industry, AI is still divided into two levels. One is the development process of the game. This is quite common. We have been doing this for the past two years. There are some things that we have experienced that have improved the efficiency of the entire work. This is a great help. On the other hand, it is a combination of the real experience of the game itself. Personally, I am more optimistic about this area. Within the scope of the whole world, we are actively exploring in different directions. . . uh, uh, uh, uh, uh, uh, uh, uh, uh, DeepSeq is a universal model that is relatively low in cost and ahead of the international market. It will accelerate our AI to enter various fields. This is a very good thing for the entire office and the game. But at the same time, OK.

So based on this first question for the deep seek, and actually we can see that for the AI we have the investment strategy. For the deep seek itself, from the market perspective, it's kind of newly like new power and more efficient strategy. arrangement and the cost is much lower is a common module so the promotion for it is we are seen as the other companies that we have very quickly get connected with it and the privacy we also connect get connected with the other modules as well is like the touching out of punching or the other and meat slits is that a different type of the modules for the users themselves they're going to have another option so my perspective is that we were not going to face um because their change of physics so to have any change yet because this is just a common big model for their application to get into the enterprise specific region we have to based on their the application itself to furthermore adjust this module to do the practice for it in that case it could be better, you could have better performances. So this is a big trend. It will not be changed. Based on this, we think that how to make it, how to make this application in the typical customer's private scenario to furthermore invest it and make it as practice and to train it as possible to make it have different abilities for the common use and also in the different customers private situation we can have some power values and power value added um based on the different applications and previously for their development for big modules we have this same comment and also that is why the affiliates for the module has increased quite a lot But we believe that to be used in the typical scenario, how to make it as professional as possible to really have high value for the customers, we still have to constantly do the investment. So in this part, we think that for the office, for the game, we need to keep the big investments. For the game, from the global perspective, using AI technology, to do the game creation, we're going to talk about it with two aspects. The first is that for the whole development process, of course, using AI is going to reduce the cost. This is common sense. But actually, in the past two years, we did it that way. It's definitely the increase of efficiency of working. And in another perspective, to really make this game, have a better experience, you have a good experience connection. This is the things we look at for it. So actually the whole world is also using different perspective to actively trying to do the research on how to make a better performances by their game creating. For us, we're gonna, we all like the many games we make like the Remark TG and also in the future we're gonna have more wider space When AI comes out, it's like GX3, we're going to make it has a soul. It means that we're going to make the experience of this game is constantly improved and it's going to have different change and make the content richer. It's kind of a soul existing in a metaverse. So we are actually very active to explore these parts. So in the future, we're going to promote it to our customers and also to make it a better experience. So make a conclusion is that for DeepSeq, it's just an advanced, international advanced module, and the cost for it is much lower. But this is just a common model. And when the acceleration development of AI is going to get you into different industries like officing for the game, you're going to have some benefit for it, for sure. But no matter for their internal performances or external experience, you definitely use it in different industries. We still have to keep a very big investment to promote the AI application constantly.

Thank you for all joining us today, and this will conclude our presentation for the 2024 Horse Porter and Annual Results Earnings Call. Thank you.

That does conclude today's conference call. Thank you for your participation. Now disconnect your lines.