U.S. markets close in 5 hours 17 minutes

Edited Transcript of 036570.KS earnings conference call or presentation 12-May-20 12:00am GMT

Q1 2020 NCSOFT Corp Earnings Call

Seoul May 12, 2020 (Thomson StreetEvents) -- Edited Transcript of NCSoft Corp earnings conference call or presentation Tuesday, May 12, 2020 at 12:00:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Jae-Soo Yoon

Ncsoft Corporation - CFO

================================================================================

Conference Call Participants

================================================================================

* ChangKyu Kim

KTB Investment & Securities Co., Ltd. - Executive Director of Investment Screening

* Dong-hee Kim

Meritz Securities Co., Ltd., Research Division - Analyst

* Jong Hwa Sung

eBest Investment Securities Co. Ltd, Research Division - Analyst

* Minuh Cha

Goldman Sachs Group Inc., Research Division - Analyst

* Soyun Shin

Crédit Suisse AG, Research Division - Research Analyst

* Stanley Yang

JP Morgan Chase & Co, Research Division - Analyst

* Sung Eun Kim

Macquarie Research - Analyst

* Taewon Kim

UBS Investment Bank, Research Division - Director and Research Analyst of Internet and Gaming

================================================================================

Presentation

--------------------------------------------------------------------------------

Jae-Soo Yoon, Ncsoft Corporation - CFO [1]

--------------------------------------------------------------------------------

[Interpreted] Good morning. This is Yoon Jae-Soo, the CFO of NCSOFT. I would like to first thank everyone for taking time out of your busy schedule to participate in this earnings conference call for the first quarter of 2020. Let me begin my presentation with the first quarter earnings highlights.

First quarter sales totaled KRW 731.1 billion, representing an increase of 37% quarter-on-quarter and 104% year-on-year. Sales from existing PC online games and LM were stable, while Lineage 2M performance was included in full, leading to the highest quarter sales in the history of the company.

Operating profit posted KRW 241.4 billion, a jump of 71% quarter-over-quarter and 204% year-over-year, reflecting the performance of the top line.

Pre-tax income was KRW 255.6 billion, and net income, KRW 195.4 billion, up 161% and 261%, respectively, versus the previous quarter.

Next, let me go over the sales of each title. Sales for Lineage 2M, which was launched last November, was reflected in full for this quarter. The title recorded KRW 341.1 billion in sales, showing strong growth of 137% versus the fourth quarter. Well, for a mobile game, Lineage 2M showed an increase in initial user traffic, which we believe is one of the drivers behind the more stable sales trends that we are seeing when compared to other mobile games. As the most significant revenue source of this year, we expect the title to show stable sales trends throughout the year.

Lineage M sales was KRW 212 billion, similar to the previous quarter and up by 9% year-over-year. Sales have stabilized in the second quarter of 2018, and from that time to the current first quarter, which is around 2 years in total, the per quarter sales have kept strong at around KRW 200 billion. The response to the recent class renewal has been positive. And in late second quarter, we are planning to -- we are planning a variety of new content to celebrate the third anniversary of service, which we expect will enable us to continue to record healthy performance.

The sales of the 5 PC online games dipped 3% quarter-over-quarter, but increased 20% year-over-year to KRW 113.5 billion.

Lineage I sales decreased 13% quarter-over-quarter, but increased 116% year-over-year to KRW 44.8 billion. It has been about a year since we had the remaster update in March last year, so the moderation is natural. Based on the loyal user base, Lineage I is expected to show stable performance again in 2020, but we do believe the annual revenue will decline year-over-year since the remaster update effect was reflected in full for the year.

Lineage 2 sales was KRW 26.4 billion, down 5% Q-o-Q, but up 23% Y-o-Y. Aion, Blade & Soul and Guild Wars 2 each grew 26%, 9% and 11% quarter-over-quarter to reach KRW 10.1 billion, KRW 19.6 billion and KRW 12.5 billion, respectively.

Lastly, royalty totaled KRW 52.9 billion, an increase of 19% quarter-over-quarter, driven by the increase in Lineage M Taiwan royalty. For Lineage M Taiwan, after the second anniversary update last December, the Shining episode update this January garnered positive response, leading to the rebound in sales from the fourth quarter of 2019. Going forward, the company is planning to update diligently to maintain same performance.

Next, let me talk about expenses. First quarter operating expenses totaled KRW 489.7 billion, an increase of 25% versus the fourth quarter.

To walk through the line items, labor cost was KRW 211.8 billion, up by 25% quarter-over-quarter due to an increase in headcount, special Lineage 2M incentives and regular company bonuses. The Lineage 2M incentives drove labor cost up temporarily, but it should go down to normal levels in the second quarter.

Variable costs jumped 52% quarter-over-quarter to KRW 176.5 billion because of a significant increase in distribution fees, fueled by stronger mobile game sales.

Marketing was KRW 39.6 billion, a decrease of 4% quarter-over-quarter, reflecting less marketing -- less advertising related to new title launches.

Due to the uncertainties from the COVID-19 outbreak, the company has been participating in social distancing by having employees work from home in shifts, but has also been trying to ensure to minimize any impact on business. In this challenging environment, we were still able to break the record for per quarter sales as the game based on legacy IP performed solidly.

The stable revenue creation from Lineage M and Lineage 2M gives us greater confidence to prepare new titles, such as Blade & Soul 2 and Aion 2. For Blade & Soul 2, the target is to launch in Korea within the year.

In addition, we continue to explore ideas on how to take our success in Korea in the Korean mobile MMORPG market and recreate it in the global market. On this front, the goal will be to launch Lineage 2M overseas before the end of the year.

The world is going through uncertainties that are unprecedented. Exogenous factors will impact our business. But amid this challenging environment, we will try to go back to the basics, continue to develop good content, sound technology and develop new markets.

We look forward to your continuous interest and support on our endeavors. Thank you very much.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(foreign language) The first question will be presented by Eric Cha from Goldman Sachs.

--------------------------------------------------------------------------------

Minuh Cha, Goldman Sachs Group Inc., Research Division - Analyst [2]

--------------------------------------------------------------------------------

[Interpreted] There are 2 questions that I would like to ask you. The first question is that you just said that for Lineage 2M, that the overall goal would be to launch within the year. So I am assuming that you're talking about the second half? Within the second half, could you be more specific about when the timing would be for that? The second question that I have is also related to Lineage 2M and the product life cycle of this title. During the last conference call, I do believe that you had said that if you look at the overall trajectory that Lineage 2M is showing versus Lineage M, that you see that there are differences in the way that the overall stabilization or moderation of the game is taking place. But you say that the overall stabilization is taking place at a much more moderate speed than with Lineage M. So if we look at the overall trends, not on an accounting basis, but on a booking basis, is it true that the overall decline has been more moderate in the first quarter versus the fourth quarter? And then going into the second quarter, do you see this as a trend that continues to exist?

--------------------------------------------------------------------------------

Jae-Soo Yoon, Ncsoft Corporation - CFO [3]

--------------------------------------------------------------------------------

[Interpreted] So for the first question, with regards to Blade & Soul 2, it would be that it's difficult to pinpoint the exact launch time as of the current time. However, I do believe in terms of probability, that the fourth quarter would be more probable than the start.

And to go on to your second question about Lineage Mobile, it seems to be that if we look at the various indicators amidst the current situation in which we do have the COVID-19 situation within the backdrop, we have done various analysis about the situation. So the main indicators that we're looking at are the user trends and also the overall revenue trends. And with these trend indicators, the biggest influences that we see are the contents that we are providing in terms of the update. So for the overall events that we have or for various updates that are taking place, that would be the biggest impact and the biggest driver that we see behind the trends that we have. So as you have mentioned, from the end of last year into the first quarter of this year, overall, we do see very strong performance. However, going into the second quarter, at the end of the second quarter, we are, as of the current time scheduling, a very large-scale update. So we believe that before that, up until the -- for the time leading up to that update that it will be a soft period.

--------------------------------------------------------------------------------

Operator [4]

--------------------------------------------------------------------------------

(foreign language) The next question will be presented by Stanley Yang from JPMorgan.

--------------------------------------------------------------------------------

Stanley Yang, JP Morgan Chase & Co, Research Division - Analyst [5]

--------------------------------------------------------------------------------

[Interpreted] There are 2 questions that I would like to ask you. First is that if we look at Blade & Soul 2, you did say that you would be launching within the year. So when you compare the target users for this game versus that of Lineage 2M, how do you see the overall user base? Would it be the same user base? Or do you actually see a different user base in terms of the target users? In addition, for the launch timing for the Blade & Soul 2, would it take place at a time in which for Lineage 2M, you would see an overall moderation or stabilization in the trends there, so it would be a flat plateau in that trend at the time of which you would actually launch the game?

The second question that I have is related to Project TL. This is a title that has been in development for a long period of time. And as a result of that, I do think that we see less visibility on how things are going to evolve. So we did have very high expectations for this game because it's not a mobile format, but it's more a console-based or PC-based format. However, as of the current time, in terms of the overall development going forward for the beta test or when you would be able to actually open up the game or in terms of the time in which you would have the launch, if you could provide any updates or color to that, that would be appreciated.

--------------------------------------------------------------------------------

Jae-Soo Yoon, Ncsoft Corporation - CFO [6]

--------------------------------------------------------------------------------

[Interpreted] So to address your first question about the target users for Blade & Soul 2, of course, for Blade & Soul 2, this is based upon the Blade & Soul IP, which is, of course, different from the Lineage franchise that we have. In actuality, if you look at the users for these 2 franchises, they do have differentiations, and they do show differences. So as a result of that, we do think that for -- Blade & Soul 2 will appeal to a slightly different user base. There are some commonalities and the fact that these are 3D games. However, we think that in terms of the overall purpose of how the game will be taking place and also for the gameplay in itself, that there are different characteristics that will appeal to different groups.

And in terms of the launch timing for Blade & Soul 2, it's not dependent upon the performance of Lineage 2M. It would be more driven by the overall development of the game in itself and what the market conditions are at the time. So the expectations would be sometime during the second half. The second half is a time during which, of course, Lineage 2M, we do believe that based upon very strong demand that we will be in full-fledged services. However, as we have been able to share or show when we launched Lineage 2M amid a time in which we were still operating Lineage M, we don't believe that there will be any impact on Lineage 2M.

For Project TL, we haven't recently provided you with any updates about the game in itself. However, internally, we have had a lot of discussions. The development is going very well. So we do think that we will be in a position by the end of the year to do some testing on this game based upon the feedback or the response that we get from that testing, then we think that next year, we may be able to see some contribution from Project TL.

--------------------------------------------------------------------------------

Operator [7]

--------------------------------------------------------------------------------

(foreign language) The next question will be presented by Sung Eun Kim from Macquarie.

--------------------------------------------------------------------------------

Sung Eun Kim, Macquarie Research - Analyst [8]

--------------------------------------------------------------------------------

[Interpreted] There are 2 questions that I would like to ask you. The first question that I would like to ask would be a big picture question with regards to how do you believe the overall COVID-19 situation has had, if any, impact on the game industry. Whether it would be from a traffic perspective or from an ARPU perspective? What do you think the implications have been from the outbreak? The second question that I would like to also ask you is related to COVID-19, again. People are staying at home a lot more and as a result of that, for the existing games or titles that you have, I do believe that it might be delaying the overseas launch of some of these titles. What would be your view about that comment?

--------------------------------------------------------------------------------

Jae-Soo Yoon, Ncsoft Corporation - CFO [9]

--------------------------------------------------------------------------------

[Interpreted] So to talk about your first question and the impact of COVID-19, this is a topic in which we also have done some analysis. However, we haven't been able to come up with any conclusive results or answer. I think that there's still a lot that is uncertain. So for example, how long this overall outbreak will last? Therefore, we have done our own analysis, and we have looked at the numbers in terms of the traffic and the ARPU, and I think this is something that I touched upon in one of the previous answers. But all in all, we think that there are positive factors and also negative factors coming from the COVID-19 situation. So that all balances out. And at the end of the day, we think that the overall COVID-19 situation is neutral for our operations. In particular, if you look at the game titles that we have, in most cases, the engagement is very strong. And for example, for Lineage 2M, this is a game that has been just recently launched. And so we don't think that the COVID-19 situation has had any impact on the overall trends. We think that the impact is neutral there. And we think the larger factor or the more bigger driver would be the contents of that game.

And I just wanted to add a comment saying that what I just said would relate to the Korean market. So this is about the situation in Korea. If we go overseas and look at the U.S. or Europe and Japan, in which we have subsidiaries, there, they are experiencing significant increases in the overall sales from those regions. So I do think that there are differences from different regions and also differences according to the platforms that are being used. And this is an ongoing analysis for us.

And to go on to your second question about whether the current situation is having any impact on our launching schedule for overseas markets, I would have to say in the preparation phase, of course, there are some challenges that we are facing because of the current working conditions. For example, for employees, it is hard to travel for business. And on the supply chain side also, for example, sourcing servers is more challenging than in the past. However, though there are those obstacles, it hasn't had a material impact on the overall time line in terms of our expectations.

--------------------------------------------------------------------------------

Operator [10]

--------------------------------------------------------------------------------

(foreign language) The next question will be presented by Taewon Kim from UBS.

--------------------------------------------------------------------------------

Taewon Kim, UBS Investment Bank, Research Division - Director and Research Analyst of Internet and Gaming [11]

--------------------------------------------------------------------------------

[Interpreted] The first question that I would like to ask you is maybe a follow-up to what you have just mentioned. You talked about Blade & Soul 2 and the differentiation that it had with Lineage 2M. If we look at your internal feedback that you're getting, what type of points of differentiation do exist between the 2 games between Blade & Soul 2 and Lineage 2M?

The second question that I would like to ask you is about the overseas market. If you look at Blade & Soul, this is a game franchise that has a very strong user base in the global market. So as a result of that, does that make you think more of -- or focus more on the overseas side for the launch of Blade & Soul 2? In addition to that, when we talk about the overseas expansion for Lineage 2M, in terms of localizations or maybe contents, adjustments or updates, how much work is actually going into that for -- to take this title overseas?

--------------------------------------------------------------------------------

Jae-Soo Yoon, Ncsoft Corporation - CFO [12]

--------------------------------------------------------------------------------

[Interpreted] So to address your first question, if we compare the 2 titles, actually, there's a lot of differences. There's more differences than similarities between the two. For example, for Blade & Soul 2, it's more action-based. It's more based upon a martial arts type of backdrop. It gives you a more Asian feel in terms of the overall graphics. In addition, we do think it's a game that appeals to a younger generation in terms of the users. So I think that that would be the situation. And therefore, when we compare it to Lineage M or Lineage 2M, this was the same situation if we look at the PC online games that they originated from. It is appealing to a different user base. And I think that that's the point of differentiation in our strategy.

And for Lineage 2M and the overseas launch of that game, of course, there will be some localization to make sure that it fits the local appetite. However, it's not like we're trying to revamp it altogether. It would more be that we're taking what we're operating in Korea right now. And then we would be adding on some local content that would be needed for those markets. If we compare this to the Blade & Soul 2 situation, of course, it was same for the PC online games, but Blade & Soul was a franchise that appealed more to a global market. So from the start up development for Blade & Soul 2, we have been developing it with targeting the global market in mind.

--------------------------------------------------------------------------------

Operator [13]

--------------------------------------------------------------------------------

(foreign language) The next question will be presented by Jong Hwa Sung from eBest.

--------------------------------------------------------------------------------

Jong Hwa Sung, eBest Investment Securities Co. Ltd, Research Division - Analyst [14]

--------------------------------------------------------------------------------

[Interpreted] There are 2 questions that I would like to ask you. First is on the cost side in terms of the marketing budget and also in terms of your labor cost. During your presentation, you had mentioned that on the labor cost side that you believe that in the second quarter, you would be returning back to more normal levels. When you refer to normal levels, does that mean that you would be looking at, not the fourth quarter of last year but maybe somewhere in the areas of the second or third quarter of 2019? Or does that refer to different levels? On the marketing side also, for Lineage 2M and the launch of that from the fourth quarter to the first quarter to the second quarter, I think that all in all, around KRW 40 billion has been spent on marketing for this game. And when you see the overall trend for this, when we compare the second quarter, should we compare it to and expect it to be similar to the second quarter and third quarter of last year? And then maybe when you go into the launch of late Blade & Soul 2 or the global launch of Lineage 2M, that it will start to rise again. So should that be the expectations on the marketing spend?

The second question that I would like to ask you is about some of the comments that you made about Lineage 2M. You had said that in light of the fact that there would be a large-scale update in the end of the second quarter, that going up to or running up to that period of time, you could have a soft patch. If that is the situation, because we're still in the initial stages of the launch, some moderation is something that we will continue to expect. So we do expect the second quarter to be softer than the first quarter. But do you expect that when you do, do that large-scale update, that would include the overall siege warfare? Do you think that it would slightly dip, after which you would see a strong rebound? Or how do you see the overall trends taking place? And if you could provide some more color, that would be appreciated.

--------------------------------------------------------------------------------

Jae-Soo Yoon, Ncsoft Corporation - CFO [15]

--------------------------------------------------------------------------------

[Interpreted] So first to talk about labor cost. If you compare the second quarter expectations to the first quarter of this year or maybe the fourth quarter of last year, we do believe it will represent a significant decrease. However, if you look at it on a Y-o-Y basis, this year, of course, there has been a raise in the overall salary levels. And also, we have added on headcount. So Y-o-Y, it should represent an increase.

And to talk about the marketing spend, it is clear that, of course, we will not be launching a new game in the second quarter. So different from the fourth quarter or the first quarter. We do think that on a Q-o-Q basis, it will represent a decline on the overall marketing from that standpoint. However, we are providing live operations for Lineage M and Lineage 2M. And in addition to that, as mentioned before, at the end of the second quarter, there will be an update that we are going through. So if we look at it versus the second quarter of last year, it should represent an increase.

And to talk about the second question about Lineage 2M and the second quarter expectations for the overall revenue or sales of this game, as you have mentioned, we will continue to see a natural stabilization of the overall game. However, as we have seen with past other titles, when there is a large-scale update for the overall aggressiveness that we pursue on the monetization side, before such an update, it will be weakened a bit. So that would be a factor of consideration for you.

--------------------------------------------------------------------------------

Operator [16]

--------------------------------------------------------------------------------

(foreign language) The next question will be presented by ChangKyu Kim from KTB.

--------------------------------------------------------------------------------

ChangKyu Kim, KTB Investment & Securities Co., Ltd. - Executive Director of Investment Screening [17]

--------------------------------------------------------------------------------

[Interpreted] There are 2 questions that I would like to ask you. The first question is that if you look at the company and in terms of the various platforms that are available, what would be the priority that the company has? So for example, for new title launches, is it that your preference would be or priority would be on the mobile game side? And if so, what would be the priority between the other platforms, for example, for console games or PC-based or cloud-based games or multi-platform games? What would be your view there? And what type of development is taking place?

The second question that I have is on Project TL. You did say that you believe that there would be some contribution from Project TL next year. Can we interpret that to mean that for Project TL, the launch will be taking place next year? And if so, for this game, what would be the priority for the platform of the game, including console and PC?

--------------------------------------------------------------------------------

Jae-Soo Yoon, Ncsoft Corporation - CFO [18]

--------------------------------------------------------------------------------

[Interpreted] So to address your first question. Internally, when we think about the right game to launch at the right time, I don't think that the platform would be one of the preferences that we have. So for example, when we develop games, it's not that we think about the platform on which that game will sit and then determine what the priority would be. For example, on the console game side, in the U.S., we do have user, which would be developed by an outside developer, but this is something that we're planning to publish within the year. And then on the mobile game side, of course, we have various developments taking place using our existing IPs. So when we think that the development is at a right stage, then that would also go into launch. And then for projects such as Project TL or other AAA level games that we're trying to develop, we do have console and PC platforms that are being developed. And then one by one, we will be launching that. So I don't think that platform is a specific point of consideration for us when coming up with these decisions. It's more in terms of the overall development and the overall level of quality that we want to pursue. If we think that we're at that level, and we think it's the right time, then that would be more where we determine our decision on.

And to move on to the question about Project TL in terms of the launch time and also the platform priority there. Again, as of now, the schedule is that we are planning to do some testing in the second half of the year. So that would take us to a position in which there would be a high probability that we would be launching this next year. Of course, this is dependent upon how the testing goes in terms of what type of results we see there. But as of now, I think that we can say that there will be a high probability of launching it next year. And you also asked about the platform priority for Project TL. Right now, we are doing development, so that we can support both platforms. And at the end of the day, I think that the determination on which platform to go to would be a strategic decision for us. On the console side, of course, we do need to talk to the console providers, and the business relationship there may have also some implications. But I think that in terms of what the platform will be, this is something that near to launch, when we have some more color, it's something that we can share with you.

--------------------------------------------------------------------------------

Operator [19]

--------------------------------------------------------------------------------

(foreign language) The next question will be presented by Dong-hee Kim from Meritz.

--------------------------------------------------------------------------------

Dong-hee Kim, Meritz Securities Co., Ltd., Research Division - Analyst [20]

--------------------------------------------------------------------------------

[Interpreted] There are 2 questions that I would like to ask you. The first is that right now, you are in discussions about acquiring a piece of land in the Seongnam area, close to your HQ. If you are selected as the preferred bidder for that project, then how much CapEx from the company side do you believe that that would represent?

The second question is that the government recently announced a game industry promotional plan. And according to that plan, I think that there are some more discussions about the gambling features of games and also the nature of random reward items. So do you think that there will be any impact coming from that development?

--------------------------------------------------------------------------------

Jae-Soo Yoon, Ncsoft Corporation - CFO [21]

--------------------------------------------------------------------------------

[Interpreted] To address your first question about the Pangyo parking lot, I think that there are 2 things that we can say about the situation. The first is that if you look at the overall space in terms of our headquarter capacity, I think it's been around 2 to 3 years, in which we have outgrown the space that we have in the headquarters. So right now, as of the current time, around 1/4 of our employees are working in locations that are outside of the headquarter building. So they're spread across different office spaces in the Pangyo area. As a result of that, we do believe that this is not as efficient. And also, there are issues with regards to the welfare of our employees. So there is a clear need of more office space for the company as a whole. And we do believe that it's better to have one centralized location to accommodate these people rather than having them work from different sites here and there. As you are aware, within the Pangyo area and more specifically within the Techno Valley area, which we sit, all of the buildings are running at full occupancy. So there's not space available in a large scale, in which we would be able to rent. So that's why when there are opportunities for us in other areas, we are trying to explore them as much as possible. And the parking lot that is under discussion should be regarded as one option that we're trying to look at.

The second point that I would like to make is that as of the current time, nothing specifically is -- really has been developed to the level in which we can share with you. For example, in terms of the direction, in terms of our decision-making, I don't think we're in an area yet in which there would be a lot to say. There's still a lot that is up in the air, and there are still a lot of variables. For example, for us to participate in that project, we have our own conditions that we would require. And whether those conditions can be met or not is something that still has yet to be determined. And in addition to that, and I think that this leads to the question that you have been asking. For this new office space, we do want to ensure that though we take on new space, that there's no financial burden to the company. So we are looking at ways in which we can structure it, so that it would not be a financial burden. And this is still a work in progress. So as of now, we don't have a structure for the deal. We don't have a definitive deal with the Seongnam city government, so we haven't determined whether we would go ahead with this or not. So as a result, I think it's too early to talk about CapEx. We don't have anything to share with you, unfortunately, as of now at the current time.

And to move on to your second question about the overall comprehensive plan, I think that this is something in terms of discussion that has started from 2017 within the overall gaming industry as a whole. And as a result of that, there are voluntary regulations that the companies have been adopting. Of course, we are no exception. We also are faithfully committed to the various voluntary regulations. So for example, for the random reward items, we are disclosing what the probabilities are behind those items.

And in terms of how the development of this is taking place, communication, whether on a company level or whether on an association level, continues to take place with the authorities and with the government. So I think that it's an ongoing discussion.

--------------------------------------------------------------------------------

Operator [22]

--------------------------------------------------------------------------------

(foreign language) The next question will be presented by Soyun Shin from Crédit Suisse.

--------------------------------------------------------------------------------

Soyun Shin, Crédit Suisse AG, Research Division - Research Analyst [23]

--------------------------------------------------------------------------------

[Interpreted] The first question that I would like to ask is about the Lineage 2M overseas launch schedule. If you could give us some more detail about that? For example, in terms of markets, what markets specifically would you be looking at to launch first? Would it be similar to Lineage M where you took it to Taiwan and Japan? Or are there other markets? And specifically, within the second half, should we be thinking about the third quarter or the fourth quarter? Which side should we be leaning towards in terms of the overall schedule?

The second question that I would like to ask you is with regards to Blade & Soul 2. You had said from the beginning that you have been looking at or targeting a more global user base for the development of this game versus the Lineage legacy -- or based IP games, if that's the situation, if we look at the pace of the global launch versus the timing of the launch in Korea, do you think it would be a shorter time period between the Korea launch to global launch versus the Lineage-based IP games? Or how do you see that overall pace taking place?

--------------------------------------------------------------------------------

Jae-Soo Yoon, Ncsoft Corporation - CFO [24]

--------------------------------------------------------------------------------

[Interpreted] To talk about Lineage 2M overseas, I think that, as you have mentioned that first market would probably be in Asia. And for the exact timing, internally, we do have a target time line that we're looking at within the second half. But I think that it could be flexible in terms of the preparation and also other factors. So as of now, we don't have a timing that we would be able to share with you.

And to move on to your second question about the pace of the launch between Korea versus global for Blade & Soul 2 versus the other Lineage-based games, I think that for this question, it's too early to provide you with an answer. Right now, we're very focused on getting the Korea launch done and done well. So as of right now, all of our efforts are very focused on Korea. And I think that for the global launch, we would have to see how the Korea launch goes and then make a determination. So as of now, I can't say whether it will go faster or go slower.

So I think that today, we had a bit more questions. And as a result of the slightly longer call, for any of you who may have additional questions, please do not hesitate to contact our IR team. And with this, I would like to wrap up the earnings conference call for the first quarter of 2020. We hope to see you next time, and please stay safe and also healthy.

[Portions of this transcript that are marked Interpreted were spoken by an interpreter present on the live call.]