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Edited Transcript of CYOU earnings conference call or presentation 1-Feb-19 11:30am GMT

Q4 2018 Changyou.Com Ltd Earnings Call

Shijingshan District, Beijing Feb 5, 2019 (Thomson StreetEvents) -- Edited Transcript of Changyou.Com Ltd earnings conference call or presentation Friday, February 1, 2019 at 11:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Dewen Chen

Changyou.com Limited - CEO & Director

* Qing Wei

Changyou.com Limited - Chief Games Development Officer

* Yaobin Wang

Changyou.com Limited - CFO

* Yujia Zhao

Changyou.com Limited - Head of IR

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Conference Call Participants

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* Alex Xie

Crédit Suisse AG, Research Division - Analyst

* Alicia Yap

Citigroup Inc, Research Division - MD and Head of Pan-Asia Internet Research

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and good evening. Welcome to Changyou's Fourth Quarter and Fiscal Year 2018 Earnings Conference Call. (Operator Instructions) Today's conference call is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the conference over to your host for today's conference call, Changyou's IR Head, Mr. Yujia Zhao. Please go ahead, Yujia.

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Yujia Zhao, Changyou.com Limited - Head of IR [2]

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Thank you, operator, and thanks, everyone, for joining us today. On the call today are Mr. Dewen Chen, CEO; Mr. Xiaojian Hong, COO; Mr. Yaobin Wang, CFO; and Mr. Wei Qing, Chief Games Development Officer.

For today's agenda, management will discuss highlights for the fourth quarter and fiscal year 2018. This will be followed by a question-and-answer session.

Before we continue, please allow me to read you Changyou's safe harbor statement. Statements that are not historical facts, including statements about the company's beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore, you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. For more information about the potential risks and uncertainties, please refer to the company's filings with the SEC, including its most recent annual report on Form 20-F.

I will now turn the call over to our CEO, Mr. Dewen Chen.

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Dewen Chen, Changyou.com Limited - CEO & Director [3]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [4]

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In 2018, we stayed focused on our strategy of developing high-end mobile games. As a part of this, we took significant time to review (inaudible) about our previous experience in mobile game development, especially the games that we currently have under development and our overall development process. As we emerged from this constructive process, we implemented a number of changes that should help us lay a more solid foundation for producing high-quality games in the future.

A few of the biggest changes were that we streamlined our development processes, and we've set higher standards in terms of overall game policy when it comes to approving and advancing games within our pipeline. In the meantime, we also continued to adjust to the in-game environment and optimize the operational strategy of our existing games. As a result, we were able to maintain decent revenue contributions from our core existing games and achieved stable performance amidst the rapidly changing industry environment in 2018.

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Dewen Chen, Changyou.com Limited - CEO & Director [5]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [6]

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For the full year 2018, our total revenue was $486 million, and non-GAAP net income was $78 million. Excluding one-off items, including the accrual of additional tax -- income tax withholding in the first quarter and impairment charges in the fourth quarter, non-GAAP net income for 2018 was $141 million.

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Dewen Chen, Changyou.com Limited - CEO & Director [7]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [8]

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For the fourth quarter of 2018, total revenue was $118 million. Online game revenue was $94 million. Both were in line with our expectations. Excluding the impairment charges in the fourth quarter, non-GAAP net income was $28 million, which was at the top end of our guidance.

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Dewen Chen, Changyou.com Limited - CEO & Director [9]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [10]

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For PC games, TLBB PC delivered solid performance in the fourth quarter. As expected, revenue declined slightly quarter-over-quarter due to the impact of National Day holiday. During the quarter, we introduced a new eagerly anticipated feature that allows players to switch clans mid-game. And to the same time, we also provided more benefits to players through daily in-game promotion events, which effectively stimulated players' willingness to pay.

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Dewen Chen, Changyou.com Limited - CEO & Director [11]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [12]

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In the first quarter of 2019, we plan to launch a new expansion pack for the Spring Festival, and we will also host a variety of related online and offline events to maintain user engagement and retention. However, we expect revenue from TLBB PC to decline in the first quarter of 2019 on a sequential basis mainly due to the impact of the Spring Festival holiday.

Going forward, we plan to leverage the great experience we have accumulated from operating PC games over the year, continue to meet the needs of players, promote player engagement and maximize the longevity of our legacy PC games such as TLBB.

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Dewen Chen, Changyou.com Limited - CEO & Director [13]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [14]

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For mobile games, Legacy TLBB mobile's revenue increased slightly in the fourth quarter on a sequential basis, which exceeded our expectations. For TLBB mobile, we have always taken a long-term view and look at it as an important franchise in our portfolio. With this in mind, we have continued to invest in the game not just on ongoing content updates but also on overall gameplay. Mr. Wei Qing, our Chief Games Development Officer, will give you an update later on our latest progress within -- with this game.

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Dewen Chen, Changyou.com Limited - CEO & Director [15]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [16]

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For TLBB 3D, revenue was flat quarter-over-quarter. The game has now been in operation for more than 4 years. We will keep maintaining the game and experiment with creative R&D ideas that we can apply to other games.

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Dewen Chen, Changyou.com Limited - CEO & Director [17]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [18]

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Looking out at 2019, we will continue to execute our strategy of Top Games by greatly improving our capabilities in game device, game technology and graphic artists, enhancing project management over the development process, improving development efficiency as well as further investing in talent acquisition and development.

MMORPG mobile games will continue to be our strategic focus, but we are also developing some casual games and strategy games. Leveraging our accumulated experience and ongoing innovations, we believe we are well positioned to roll out new blockbusters and create value for our shareholders over the long term.

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Dewen Chen, Changyou.com Limited - CEO & Director [19]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [20]

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With that, let me turn the call over to Mr. Wei Qing, our Chief Games Development Officer, to give you an update on the latest progress of Legacy TLBB Mobile.

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Qing Wei, Changyou.com Limited - Chief Games Development Officer [21]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [22]

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During the quarter, we were happy to see that Legacy TLBB Mobile's revenue increased on a sequential basis. As Dewen mentioned, this was mainly due to the continuous updates that we have been making to the game content and design as we look to keep maximizing the longevity of the game.

During the quarter, we launched a new expansion pack and introduced a new clan called [Shaolin], which effectively drew many former players back to the game and improved player engagement. Meanwhile, we also introduced a new crossover "clan war," which is similar to the gameplay of a strategy game. So far, it has received very positive feedback from players due to the creative freedom it provides.

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Qing Wei, Changyou.com Limited - Chief Games Development Officer [23]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [24]

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For the first quarter of 2019, we plan to launch various events for the Spring Festival and upgrade some of the popular gameplay to ensure player retention. We expect revenue to decline in the first quarter of 2019 on a sequential basis, meaning because of the Spring Festival. Going forward, we will continue to update the in-game content as we make further optimizations based on player feedback. Ultimately, we are confident that we can continue to maximize the life cycle of the game through such long-term-oriented operational strategies.

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Qing Wei, Changyou.com Limited - Chief Games Development Officer [25]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [26]

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Now let me turn the call over to our CFO, Mr. Yaobin Wang, to discuss the financial highlights.

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Yaobin Wang, Changyou.com Limited - CFO [27]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [28]

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Now let me walk you through our financial highlights for the fourth quarter.

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Yaobin Wang, Changyou.com Limited - CFO [29]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [30]

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Total revenue was $118 million, a decrease of 18% year-over-year and flat quarter-over-quarter, in line with our guidance.

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Yaobin Wang, Changyou.com Limited - CFO [31]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [32]

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Online game revenue was $94 million, a decrease of 14% year-over-year and 2% quarter-over-quarter, in line with our guidance. The year-over-year decrease was due to the natural decline in revenue from our older games, including Legacy TLBB Mobile.

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Yaobin Wang, Changyou.com Limited - CFO [33]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [34]

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Our advertising revenue was $4 million, a decrease of 32% year-over-year and 14% quarter-over-quarter. The year-over-year and quarter-over-quarter decreases were mainly due to fewer PC and web games being marketed on the 17173 website.

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Yaobin Wang, Changyou.com Limited - CFO [35]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [36]

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Cinema advertising revenue was $18 million, a decrease of 30% year-over-year and an increase of 13% quarter-over-quarter. The year-over-year decrease reflected the impact of a strategy adjustment in the second quarter of 2018 related to the acquisition and sale of advertising resources. The quarter-over-quarter increase reflected a recovery in the revenue following the strategy adjustment.

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Yaobin Wang, Changyou.com Limited - CFO [37]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [38]

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Let me provide some more details about our other financials. From now on, most of the figures discussed will be on a non-GAAP basis. As a reminder, you can find a reconciliation of these non-GAAP measures in our published earnings release.

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Yaobin Wang, Changyou.com Limited - CFO [39]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [40]

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Gross margin was 66% compared with 68% in the fourth quarter of 2017 and 67% in the third quarter of 2018.

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Yaobin Wang, Changyou.com Limited - CFO [41]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [42]

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Gross margin of the online game business was 85% compared with 84% in both the fourth quarter of 2017 and the third quarter of 2018.

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Yaobin Wang, Changyou.com Limited - CFO [43]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [44]

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Operating profit was $9 million compared with an operating profit of $35 million in the fourth quarter of 2017 and an operating profit of $28 million in the third quarter of 2018.

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Yaobin Wang, Changyou.com Limited - CFO [45]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [46]

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Net income attributable to Changyou.com Limited was $11 million compared with net income of $34 million in the fourth quarter of 2017 and net income of $54 million in the third quarter of 2018.

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Yaobin Wang, Changyou.com Limited - CFO [47]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [48]

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Fully diluted net income attributable to Changyou.com Limited per ADS was $0.21 compared with net income of $0.64 in the third (sic) [fourth] quarter of 2017 and net income of $1.01 in the third quarter of 2018.

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Yaobin Wang, Changyou.com Limited - CFO [49]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [50]

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During this past quarter, we recognized a goodwill impairment of USD 16 million. The impairment was mainly related to the 17173.com Website business, which was acquired in 2011. In the first -- fourth quarter of 2018, due to more stringent regulations, there was a significant decline in the number of new game launches in the market, so the number of games marketed on 17173.com also fell. In addition, the profit outlook of its new initiatives remained uncertain. As a result, the company determined that the future performance of 17173.com would likely to fall short of expectations. And that, impairment charges were required.

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Yaobin Wang, Changyou.com Limited - CFO [51]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [52]

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Excluding the impairment charges in the fourth quarter, net income was $28 million, which was at the top end of our guidance.

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Yaobin Wang, Changyou.com Limited - CFO [53]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [54]

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Next, moving on to the balance sheet and cash flow statement.

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Yaobin Wang, Changyou.com Limited - CFO [55]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [56]

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As of December 31, 2018, excluding $220 million we obtained from a loan agreement in the fourth quarter of 2018, we had net cash of $673 million compared with $978 million as of December 31, 2017.

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Yaobin Wang, Changyou.com Limited - CFO [57]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [58]

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For the fourth quarter, we had net operating cash inflow of $47 million.

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Yaobin Wang, Changyou.com Limited - CFO [59]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [60]

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Now let me walk you through our 2018 full year financials very briefly.

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Yaobin Wang, Changyou.com Limited - CFO [61]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [62]

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Total revenue was $486 million, representing a decrease of 16% year-over-year.

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Yaobin Wang, Changyou.com Limited - CFO [63]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [64]

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Gross margin was 67%, which compares to 72% in 2017.

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Yaobin Wang, Changyou.com Limited - CFO [65]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [66]

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Operating profit was $94 million compared with $108 million in 2017.

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Yaobin Wang, Changyou.com Limited - CFO [67]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [68]

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Net income attributable to Changyou.com Limited was $78 million compared with $126 million in 2017.

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Yaobin Wang, Changyou.com Limited - CFO [69]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [70]

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Fully diluted net income attributable to Changyou.com Limited per ADS was $1.45 compared with $2.36 in 2017.

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Yaobin Wang, Changyou.com Limited - CFO [71]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [72]

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Finally, for the first quarter 2019 guidance, we expect...

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Yaobin Wang, Changyou.com Limited - CFO [73]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [74]

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Total revenue to be between $105 million and $115 million. This implies a sequential decrease of 11% to 3%.

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Yaobin Wang, Changyou.com Limited - CFO [75]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [76]

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Moving to the revenue. Online game revenue to be between $80 million and $90 million, this implies a sequential decrease of 15% to 4%.

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Yaobin Wang, Changyou.com Limited - CFO [77]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [78]

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Non-GAAP net income attributable to Changyou.com Limited to be between $23 million and $28 million.

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Yaobin Wang, Changyou.com Limited - CFO [79]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [80]

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Non-GAAP fully diluted net income attributable to Changyou.com Limited per ADS to be between $0.43 and $0.52.

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Yaobin Wang, Changyou.com Limited - CFO [81]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [82]

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Share-based compensation expense to be around $1 million, assuming no new grants of share-based awards.

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Yaobin Wang, Changyou.com Limited - CFO [83]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [84]

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In our guidance, we have adopted a presumed exchange rate of RMB 6.9 to $1 as compared with the actual exchange rate of about RMB 6.91 to $1 for the fourth quarter 2018.

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Yaobin Wang, Changyou.com Limited - CFO [85]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [86]

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Like previous quarters, we won't take questions regarding the going-private proposal in the Q&A session of this call.

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Yaobin Wang, Changyou.com Limited - CFO [87]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [88]

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This concludes our prepared remarks. Thank you.

Operator, we would like to open the call to questions now.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first questions comes from the line of Alex Xie from Crédit Suisse.

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Alex Xie, Crédit Suisse AG, Research Division - Analyst [2]

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So I have 3 questions. First one, I would like to ask about the breakdown of the online games revenue. How much is from mobile? How much is from PC? And secondly, I would like to ask about the company's new game pipeline. So how much -- how many games are in the pipeline? And among them, how many have a [pink] -- that they -- the new pink license? And how many people were put into this -- or resources were put into this new games? And what kind of new games are there? And thirdly, I would like to ask about -- do management have any plan for the -- for another round of special dividends like we did in 2018?

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Yujia Zhao, Changyou.com Limited - Head of IR [3]

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(foreign language)

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Dewen Chen, Changyou.com Limited - CEO & Director [4]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [5]

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For the first question, Alex, in terms of revenue, PC game accounts for around 60%, and the mobile game accounts for 40%. In terms of gross billing, it's -- PC game accounts for 40%, and the mobile game accounts for 60%. (foreign language)

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Dewen Chen, Changyou.com Limited - CEO & Director [6]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [7]

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Now we have no more than 20 games under development. We're considering to decrease some number of the games under development because we hope to deploy more resources to more promising games. So far, we only have 2 games that have got the license approval. But we won't -- we don't worry about that because, in 2019, actually, we won't launch too many games, so we are confident that we can get enough license approval in the year.

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Dewen Chen, Changyou.com Limited - CEO & Director [8]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [9]

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Other than the games under development, we're also licensed in some games for both domestic and overseas markets.

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Dewen Chen, Changyou.com Limited - CEO & Director [10]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [11]

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We have 800 to 900 employees working on mobile game development.

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Dewen Chen, Changyou.com Limited - CEO & Director [12]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [13]

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(foreign language)

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Dewen Chen, Changyou.com Limited - CEO & Director [14]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [15]

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Currently, we don't have that plan.

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Alex Xie, Crédit Suisse AG, Research Division - Analyst [16]

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And so for the new game title, may I ask a follow-up question? So what kind of games or what kind of gamers are there among the games that we think there is a high chance of -- higher chance of success?

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Yujia Zhao, Changyou.com Limited - Head of IR [17]

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(foreign language)

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Dewen Chen, Changyou.com Limited - CEO & Director [18]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [19]

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We have more MMO games, strategy games and also casual games, but we believe MMORPG games will be mostly successful ones for Changyou in the future.

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Operator [20]

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(Operator Instructions) Next, we have the questions comes from the line of Alicia Yap from Citigroup.

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Alicia Yap, Citigroup Inc, Research Division - MD and Head of Pan-Asia Internet Research [21]

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I have 2 questions. Number one is that, could you share with us some data point on your gamers' commitments and time spent? For example, for the PC TLBB, what are the typical hours of playing time from your hardcore gamers now? And similarly, for the TLBB Legacy Mobile, how long are the core users spending time on playing that game these days? Second, I just wanted to follow up on the games approval. I guess, you mentioned you have 2 games that already got approval. But then out of that 10-plus games in the pipeline, have you -- have all the rest of the games you already submitted to the authority? Or is it you haven't submitted? And just curious if you know any criteria about how they're using it for approving the game. Is that by the timing of the submission?

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Yujia Zhao, Changyou.com Limited - Head of IR [22]

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Okay, thank you. (foreign language)

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Qing Wei, Changyou.com Limited - Chief Games Development Officer [23]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [24]

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Over beating the players, the time players spend in our PC game is longer than players' playtime on our mobile games. In 2018, our MAU and, in other words, user engagement have been very stable because we actually have been trying to decrease the pressure or the time playing within the game for players.

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Qing Wei, Changyou.com Limited - Chief Games Development Officer [25]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [26]

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Like PC game, for example, a player takes, on average, 10 hours per day in the game. And for mobile game, a player takes about 4 to 5 hours per day.

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Qing Wei, Changyou.com Limited - Chief Games Development Officer [27]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [28]

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Well, just for 10 hours in PC games, typically, players just sitting there for selling things or the person is not actually sitting in front of the desk, so it's longer than mobile game. (foreign language)

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Dewen Chen, Changyou.com Limited - CEO & Director [29]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [30]

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Yes, we have submitted some materials for some of the games. But for others, it depends on their development progress. This year, so far, they have approved 5 batches games, so we don't worry as about -- worry about the problem this year. (foreign language)

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Qing Wei, Changyou.com Limited - Chief Games Development Officer [31]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [32]

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Same question is asked. So we don't worry about this because TLBB PC has been awarded many times by the government for its topics. And this year, we don't see any specific criterias that government is paying attention to any longer of the game.

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Dewen Chen, Changyou.com Limited - CEO & Director [33]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [34]

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So far, our -- we see that the license approval is given by chronological order.

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Operator [35]

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(Operator Instructions) We have the follow-up questions from the line of Alex Xie from Crédit Suisse.

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Alex Xie, Crédit Suisse AG, Research Division - Analyst [36]

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So I would like to ask about the bank loan arrangements we made in this quarter. So because we have a very solid balance sheet, and I think we have most of the cash balance in offshore. So why do we still need the USD 220 million loans to -- for the refinancing? And also, I would like to ask about the matching loan status, so how much we have drawn down from Sohu and how much Sohu has drawn down from us? Yes.

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Yujia Zhao, Changyou.com Limited - Head of IR [37]

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(foreign language)

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Yaobin Wang, Changyou.com Limited - CFO [38]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [39]

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For the matching loan, actually, we had 2 times of special cash dividends in previous year: one is $500 million; and the other one was $200 million. And also, we had expenditures in overseas business. So for the matching loan, we had a net balance of $630 million we drawn down from Sohu. So this number is not enough for our special cash dividend and also the overseas business expenditure. And in the past, we had a financing facility, which is not a bank loan, just a similar one, and won't be showed up in our balance sheet. And this time, we used an offshore bridge loan to financing this amount of money.

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Yaobin Wang, Changyou.com Limited - CFO [40]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [41]

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So after the mature of the old financing facility, we have to sign a new agreement bank loan offshore bridge loan to repay -- to roll over the old one.

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Yaobin Wang, Changyou.com Limited - CFO [42]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [43]

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The bridge -- also, the bridge loan has a relatively high capital cost. So if we can get other method of financing, we will repay that. Actually, at the end of January, we have another financing facility. So we have repaid [$80] million of this offshore bridge loan.

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Alex Xie, Crédit Suisse AG, Research Division - Analyst [44]

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Okay. May I have just one last follow-up about our cash and short-term investments. How much is in offshore? And how much is in onshore?

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Yujia Zhao, Changyou.com Limited - Head of IR [45]

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(foreign language)

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Yaobin Wang, Changyou.com Limited - CFO [46]

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(foreign language)

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Yujia Zhao, Changyou.com Limited - Head of IR [47]

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Including tax, tax equivalents, short-term investments, restricted cash, and restricted time deposits, our offshore and onshore cash has a 1:1 ratio.

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Operator [48]

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(Operator Instructions) As there are no further questions, we will now begin closing comments. Please go ahead, Yujia.

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Yujia Zhao, Changyou.com Limited - Head of IR [49]

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Thank you. Once again, I would like to thank you for joining us today. If you have any follow-up questions, please don't hesitate to contact us, and we wish you a happy Chinese New Year. Thank you.

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Operator [50]

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