NC Corporation (A036570) Earnings Call Transcript & Summary

[Foreign Language] Good morning, and good evening. Thank you all for joining this conference call. And now we will begin the conference of our fiscal year 2020 second quarter earnings results by NCSOFT. This conference will start with the presentation, followed by additional Q&A session. [Operator Instructions] Now we shall commence the presentation by NCSOFT.

[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 second quarter of 2020. Let me begin my presentation with the second quarter earnings highlights. With the launch of Lineage 2M, second quarter sales totaled KRW 538.6 billion, an increase of 31% year-over-year. It declined 26% quarter-over-quarter, as the initial excitement surrounding the launch of Lineage 2M is going through the natural process of slowing down and stabilizing. Considering the large-scale updates scheduled for key games, including Lineage M, we also paced ourselves a bit in terms of monetization. Reflecting this change in the top line, operating profit posted KRW 209 billion, up 61% year-over-year and down 13% quarter-over-quarter. Pretax income was KRW 216.4 billion, and net income was KRW 158.4 billion. Next, let me go over the sales of each title. Sales for Lineage 2M was KRW 197.3 billion, a decrease of 42% versus the first quarter. As time has passed since the launch on November 27, there has been a natural decline in sales. In addition, the company put less emphasis on the second quarter because we were leading up to the large-scale updates that would take place from late June to August. User numbers and sales have rebounded following the Chronicle 3 update, which started in the end of June. And we expect to maintain stable revenue trends throughout the second half of the year. For Lineage M, again updates on operations were adjusted in the second quarter before the third anniversary episode release. Sales posted KRW 159.9 billion, decreasing 26% Y-o-Y and 25% Q-o-Q. However, the third anniversary update, which started in early July, is generating incredibly positive responses, resulting in high expectations for a sales rebound in the third quarter. The performance has been so encouraging, it is hard to believe Lineage M is already in its third year. Dormant users have been returning in large numbers after the update, and the game returned to #1 on Google Play. As the momentum created by the anniversary update continues into the second half, we expect performance to be stronger versus the first half of the year. PC Lineage 1 sales was KRW 34.3 billion, down by 32% Y-o-Y and 23% Q-o-Q. As time has passed since the Remastered update in March 2019, first half 2020 has shown a gradual decline in sales. However, we expect a rebound from the third quarter as more aggressive events have been played -- planned for the second half, starting with the new class Spear Knight update that took place yesterday. Lineage 2 sales softened 3% quarter-over-quarter, but increased 21% year-over-year to KRW 25.8 billion. The game has been maintaining sound performance since revenue successfully rebounded with the Asian server update in fourth quarter of 2018. After adding a new field center PvP system, Lineage 2 has become a dynamic game where hundreds of users actively engage in siege warfare during the weekends. It is an example that shows that even if the game is in its 15th year, a turning point can be created by providing an update that satisfies the players' needs. In the fourth quarter, we have a significant update planned, which we believe will be able to create another meaningful rebound for the title. Guild Wars 2 sales was KRW 15.6 billion, an increase of 25% versus the previous quarter. Revenue grew as the concurrent user numbers and average playing time increased as more people stayed at home during the COVID-19 situation in the North American market. Blade & Soul posted sales similar to the previous quarter, and Aion sales decreased 19% Q-o-Q and 34% Y-o-Y. Both games also have major updates planned for the fourth quarter, which should lead to stronger performance in the second half. Lastly, royalty totaled KRW 62.3 billion, an increase of 21% Y-o-Y and 18% Q-o-Q. With the strong response from recent updates, Lineage M Taiwan sales have showed meaningful growth not only on a Q-o-Q basis but also year-over-year. The launch of the Blade & Soul IP-based mobile game in Asia also contributed. Next, let me talk about expenses. Second quarter operating expenses totaled KRW 329.6 billion, a decline of 17% year-over-year and 33% quarter-over-quarter. Labor cost was KRW 162.3 billion, which is an increase of 29% year-over-year, reflecting the increase in salaries and headcount. It's also a decrease of 23% quarter-over-quarter due to the absence of one-off factors, including the Lineage 2M incentives paid in the first quarter. Marketing spend was KRW 12.9 billion, down by 47% Y-o-Y and 67% Q-o-Q. There was a significant cutback in advertisements related to new game launches and less marketing for existing titles. We expect marketing in the second half to grow again due to activities related to new game launches in Korea, overseas launches and large-scale updates. Variable and other costs totaled KRW 138.7 billion, a drop of 17% Y-o-Y and 38% Q-o-Q. This brings me to the end of my presentation on the second quarter earnings. The company is confidently engaging in the development of new games based on the stable revenue streams created from Lineage M and Lineage 2M. The preparations for Blade & Soul II launch are going smoothly, and we are on schedule. Blade & Soul II will be a realization of the highest quality Asian fantasy world, totally different from any other game before. Features like the ease of play and dynamic action are expected to broadly appeal to a younger and trendier user base. Recently, the MMORPG gamer community has been growing, creating a more favorable backdrop for our business. As a result, as time passes, we internally are becoming more confident about the success of this game. In addition, a variety of games, including Trickster M, Pangya M and H3 are in the final stages before launch. Through these games, we hope to continuously broaden the horizon of our customer base. The company is also on schedule with our preparations to release games globally. Taiwan in the second half will be the first overseas market for Lineage 2M, with the target of gradually expanding to other markets next year. In addition, we continue to exert our efforts to identify new growth opportunities on new platforms. NCWest is currently taking preregistrations to launch a console-based game called FUSER this year. Development for Project TL, which will be our first next-generation console platform and PC game, is also going smoothly with our large-scale internal testing to take place soon. We will continue to do our best to ensure that we can continue to provide you with good news about new game launches, new markets and new platforms. We look forward to your continuous interest and support. Thank you.

[Foreign Language] [Operator Instructions] [Foreign Language] The first question will be presented by Jae-min Ahn from NH.

[Interpreted] The first question that I would like to ask is about Blade & Soul II. You did mention a bit about this game, but could you provide some more detail about how -- what type of style this game actually has? For example, if you compare it to Lineage 2M, what differences would the game actually have? In addition to that, you also said that, internally, your expectations about the game are increasing. So to what level do you have high hopes? In addition, for the launch schedule for this game, is there any information that you would be able to share with us? For example, the launch timing or maybe the preregistration schedule. The second question that I would like to ask is about Lineage M. You did say that the third anniversary update is going well, and it seems to be that you're back at #1. However, it is true that in the second quarter, the revenue was a bit slow. So you did say that you have high expectations for future revenues. So for the third quarter, what would be those expectations? And what are your overall forecast for the revenue of this game?

[Interpreted] So thank you for the question. Maybe I can address your first question about Blade & Soul II. Blade & Soul II, needless to say, is, of course, based upon the Blade & Soul IP. So as a result of that, what we have taken from the existing PC game is the overall Asian fantasy concept in itself, and that in itself remains consistent. However, taking it to the mobile platform, there are differences in that in terms of the overall exploration or the game play that takes place across territories, there's more freedom of movement on the mobile platform. In addition to that, for the action features that Blade & Soul existing has, we have actually made it easier to play. And the reason for this is because we do want to appeal to a slightly younger user base than the existing Blade & Soul, which would be people who are in their 20s to 30s. So it would be a younger and more trendier user base that would represent the low to mid-end -- light to mid-end type of users, and we're looking forward to a strong inflow from that segment of the market. So as a result of that, for the business model in itself, these characteristics or this nature has been reflected into that. So I think that, that would be the features that this game has. And for the actual timing for Blade & Soul going forward, the target continues to be, and we are on schedule to launch the game within the year. In terms of the specific dates, this is something that is still being discussed internally, and we're still thinking about the right launch strategy. So it is my understanding that from the product team level, they are planning to have a event to announce the launch schedule in the not too far future. I believe the next question that you asked was about the overall update situation, the situation since the update of Lineage M. If we look at Lineage M versus the second quarter, we clearly and noticeably see that both in terms of the numbers and also in terms of the overall sales numbers, the third quarter presents a much more positive situation. So if we look at the update in itself and the contents of what has been updated, we did add on new servers, and this has been well received by the overall gamers of this title. So as of now, of course, we can't talk about specific numbers; however, what we see to date is that the third quarter, in terms of the top line, will be a much better situation and will represent a rebound from the second quarter. And in addition to that, needless to say, going forward, we will continue to provide more updates to ensure that we currently -- that we're able to stably maintain the current momentum that we have created.

[Foreign Language] The next question will be presented by Eric Cha from Goldman Sachs.

[Interpreted] There are 2 questions that I would like to ask you. First is about your overall costs. And then the second would be about Lineage 2M. First about your expenses. If you look at the material that you have presented, I think that the breakdown is different from how you presented the breakdown in the past. So the variable expenses and others now are grouped together. Is there -- and however, if you look at the fact sheet, for the overall fees paid, I think that there has been a drop in that number from around KRW 190 billion to around KRW 100 billion. So if we look at the amount that, that represents, it seems to be a larger amount than what would be driven by just the mobile top line decrease that you have experienced. So is this due to an accounting change in your accounting standards? And if so, if we were to use the previous accounting standards, what would the number be? The second question that I would like to ask you is that in your previous call, you said that compared to Lineage M, for Lineage 2M, the overall pace of moderation seems to be taking place at a slower speed. However, if we look at what took place in this quarter, that does not seem to be the situation. So the question that I would like to ask is, do you have an overall different view about the current situation? And if so, in the second half of the year, what would be your overall sales outlook?

[Interpreted] So thank you for your question. Maybe I can address your first question. If we look at the overall variable costs that we had in the past, with the exception of the overall distribution fees, the other items were actually very small in size. So therefore, we do not believe that there was a need to break down all of the variable costs. And we actually believed that the way that we did it in the past did create a bit of confusion about what the costs represented. So from this quarter going forward, we have made the determination to actually group it together between the variable costs and the other costs. Within the overall fees paid or commissions paid, not only do we have the distribution-related fees or commissions, but there are other types of fees that are paid by the company that are included in that category. So as a result of that, it's not only the fees that are linked to the top line, but there are other fees that have declined during this quarter, which have driven the drop that you have mentioned. So as a result of that, since it's not only the distribution fees, going forward, there also will be times in which the overall trends at the top line may not be identical to that which you see in the fees paid category. And to address your question about Lineage 2M and the revenue outlook that we have or the sales outlook, as you have just mentioned, it is true that if we compare the overall performance of Lineage 2M from November to the first quarter, compared to lineage M, it did show a much more robust overall performance during that period of time. And of course, the company continues to be very committed to ensuring that we are able to maintain that level of performance. However, in the second quarter, as we had mentioned during our first quarter conference call, we did intentionally slow down or put less emphasis on the updates that we had or the promotions that we had during this quarter because in the third quarter, there were large-scale updates that had been scheduled. Since the update that has taken place, in terms of the overall impact, I do believe it was a bit less than we had expected. And as a result of that, our revenue has been slowing a bit down. However, one thing to take into consideration is that we're looking at this revenue trend, working off of a very high base within the first quarter. So internally, if we do our analysis and if we look at lineage 2M from the point of starting point to the current time and then we compare that to the same period of time in which Lineage M had evolved, using the time points or the time stamps, in actuality, the decline in the revenue is very similar, if we look at it from a time perspective. Going forward, we do have the siege warfare that we will be adding on. And then in the fourth quarter, we also have the first anniversary major update plan. So the current focus will be that in the second half, firstly, we want to focus on stabilizing and -- the current trend that we see and then going into the fourth quarter, prepare for a rebound.

[Foreign Language] The next question will be presented by Dong Hwan Oh from Samsung Securities.

[Interpreted] There are 2 questions that I would like to ask. The first is that if Blade & Soul II is hugely popular at the end of this year when it is launched, then will that have an impact on the launch schedule for Aion 2 or Project TL for next year? Does that have an overall implication on future games in your pipeline? The second question that I would like to ask you is that you said that your marketing spend in the second half would be increasing. To what level do you expect it to increase? For example, if you were to give us some color in terms of percentage of revenue type of number? Or maybe if you have an overall estimate about how much you want to spend on marketing per game launch, could you share that with us?

[Interpreted] So to address the first question that you had about whether the success of Blade & Soul II would actually have an impact on the future pipeline of other games, I would have to say that whether the game is successful or not, in itself would not have an impact. However, that have been said, of course, from the company's perspective, we don't want to launch 2 games at once. So as a result, from the beginning for the launch schedule, if we are clearly going to launch one game, then the polishing or the finishing touches for another game will be adjusted accordingly. But this is something that takes place before the actual launch. So we do space out the launches beforehand. So as a result of that, we do think that, that will have some impact. But of course, the success of Blade & Soul in itself will not have an impact on the schedule. And that's talking about the universe of mobile games. If we go outside of that and then talk about other platforms or other download of games, then that also is something that we proceed according to the initial schedule that we have and that also would not be impacted by the success of one game. And next to talk about our marketing in the second half and the numbers of what would be represented. When we talked about the first half of the -- if you look at the first half of the year and then compare it on a Y-o-Y basis, for example, if you take full year of last year and look at the percentage of revenue that marketing represented, then the first half versus that number actually is at a lower level. So when we talk about an increase in our marketing spend, what we're comparing is the first half to the second half. So we do think that the second half of the year will be a higher amount than the first half. But that has been said, if we take this year on full and compare it to last year, we do think that this year's spend will be a number that is within the boundaries of last year, and we are going to control it in that manner.

[Foreign Language] The next question will be presented by Stanley Yang from JPMorgan.

[Interpreted] I would like to ask you about your overseas market strategy in general. You did say that for Lineage 2M that there would be a launch in Taiwan first in the second half of the year. Does that mean that for the other markets outside of Taiwan that we should expect a first half 2021 type of launch? In addition to that, for the company going forward, I do believe that the success in the overseas market will be more important than your business in Korea. So as a result of that, for Project TL or for Aion mobile, in the development of that, how is the development of these games different from the development of other games? And how you take into consideration the overseas target user base that you have. For example, in the game development processes, if you compare those projects to Lineage M or Lineage 2M, what is the difference in the development processes? What different facts are you taking into consideration there? And then how you design the overall business model? How do you take into consideration the overseas markets that you want to tap in the business model in itself? In addition to that, there was the Director's Cut event in November of last year. Are you going to have a similar event this year? And if so, to what extent would you be sharing with us information or new facts about new game launches going forward and of the contents.

[Interpreted] For Lineage 2M, right -- as of now, in terms of overseas markets, the only markets in which we have determined that we will have a clear launch would be in Taiwan. As mentioned before, for this game in the second half, we are very focused on creating the updates that are required to have a rebound within the existing game operations. And in addition to that, we also have the preparations for the Taiwan launch. So right as of now, we think that our plate is full with those 2 events, and we want to be very concentrated on them. So for the other markets outside of Taiwan, we are going to be a bit more moderate in terms of when we want to achieve that. And if we do have more details, that is when we will share them with you. So for Project TL and the other games that we have in our pipeline, I think the question is, how are we preparing to appeal to other markets or to overseas markets and what type of consideration is taking place in the preparation, when -- for the development that would be different from other games. I think that the way that I can answer this is, and this is something that I also mentioned before, is that for the major titles that we have in our pipeline to be developed or the large-scale games, we are not limiting ourselves to just looking at the Korean market as the target market. The differences would be that in terms of the platform, of course, for Korea, if you exclude mobile games, then the second largest platform is actually PC based. However, if you go to Japan or if you go to more western markets, then the console market is actually a much bigger market. So as a result, for all of the games that we're developing on a forward-looking basis, we are taking console as one of the main platforms on which the game would be played. That means that from the very beginning of the game development process, for example, for the user UI or for other types of considerations, there needs to be a lot of different facts taken into consideration, and that is embedded in the process in itself. So we are taking the platform that will be used by the users and trying to make it more accessible on that platform for other types of overseas users. The second point would be that in terms of the overall visual graphics or in terms of the technical aspects of the game in itself, for overseas markets, we don't have the benefit of having a very strong legacy with very well-known IP of which would appeal to the user base like we have in Korea. So we need to be able to compete with other global competitors on a purely visual aspects, appeal, maybe technical basis. So that is something that we do take into consideration. We want to ensure that, for these users, they will be able to use our games with the platform that they are very familiar with and that they would be able to play the games very easily. So creating that type of appeal is something that we're also very focused on. And I think the last part of your question was that will we be having a large-scale event like we had last year? As far as I know, we don't have any plans as of yet to have such an event, but that doesn't mean that it's not going to take place. Because if you look at the schedule or the plans that we have from the third quarter going into the fourth quarter, there's a lot of new information and a lot of new communication that we will have to share with the market. So as a result of that, whether we will have one big event to capture all of that new news or whether we will do it game by game, is something, I think, that has not been determined internally yet. But what is clear is that there will be events to share with you, but what the format will be is something that is not determined.

[Foreign Language] The next question will be presented by Soyun Shin from Crédit Suisse.

[Interpreted] I would like to ask you one additional question about Lineage M. If you look at the data from a third party that has been provided about Lineage M, it actually says that if you compare the July revenue to the average monthly revenue of the second quarter, July represents a 30% increase in sales versus that of the average monthly revenue during the second quarter. So the first part of my question would be, is that correct? And the second part is, if it is correct, then if we look at the trends in August and September versus July, what direction is the overall trend heading? The second question that I would like to ask you is about Lineage 2M. You said that, as of now, you don't have any specific plans for launches overseas outside of Taiwan for next year. However, if you could share a bit more detail with us on what potential countries are you looking at outside of Taiwan to launch Lineage 2M and to what scale would it be or what timing would these launches take take?

[Interpreted] To first address your question about Lineage 2M's top line, I think that, as I had mentioned during the beginning of the overall call, it is true that we have seen a significant increase in growth within the top line. Unfortunately, we will not be able to share with you specific numbers about what that growth actually represents. But what I can say is that it is a significant improvement that exceeds a lot of the expectations in the market. And since a lot of this momentum is driven by the actual excitement around the game and the popularity of the game, of course, according to what type of updates we provide in the future and how we manage the overall games, there can be a difference in the trend going forward. So nothing is for sure. But that have been said, leveraging the know-how that we have internally and also taking into consideration the loyalty of the overall user base that we have, we do believe that we feel pretty good that this is something that we can maintain going into the second half of the year. To address your second question about Lineage 2M and the schedule outside of Taiwan, in terms of the timing, in actually, it's not that we're not sharing the information with you, it is that we don't have information to share with you as of the current time. And the reason for that is because, as mentioned before, in terms of the development resources that we have and also of the game servicing resources, there are limitations within capacity. So as of right now, we do think that once we have the launch taking place at the end of the year for Lineage 2M Taiwan, it would be very challenging to have a back-to-back launch in the first half of the year into a different market. However, not only the situation evolving with Lineage 2M, but also there are other games that are targeting other overseas markets first. So we need to take all of these different factors into consideration before making a determination. So as of now, we don't have information about what markets we're looking at and what the schedule would be like going forward. However, what can be said is that for Lineage 2M in Taiwan, this is something that we will be servicing through our Taiwanese office. So as a result of that, in terms of the contribution to the top line and also in terms of the operating profit, it will be larger than when we had published through a third party.

[Foreign Language] The next question will be presented by Jingu Kim from KTB.

[Interpreted] There are 2 questions that I would like to ask you. First is about Project TL. In terms of the current status of development or about the testing going forward and the schedule there, what information would you have to share with us? Also, in terms of the PC-based game and also console-based game, what would be the overall launch schedule for those different platforms for this game? The second question that I would like to ask you is about Aion 2. It's the same question. What's the overall development status of this game? And what would be the launch schedule for the different regions in which the game would be launched? In addition to that, when you compare Aion 2 to the current PC-based Aion original, what type of points of differentiation do you think actually exist in terms of the overall game play or appeal?

[Interpreted] For Project TL first, in light of the current pandemic situation, it is very challenging or it would be very challenging for us to have a large-scale CBT with people -- with the general public as the user base for that test. So as a result of that, the plan is that within the next couple of weeks, because the company has grown to a very large size in terms of the headcount, we are going to have a large-scale internal or in-house test that we conduct. And I think that you can think that this would replace the existing public CBTs that we had in the past. That is where we are in terms of the overall development. It's going very smoothly. And we feel very confident that we will be in a position to launch this game next year. In addition, you asked about what the launch schedule would be for the different platforms on which Project TL can be played. Most likely, it will be that the PC version will come first next year. And then for the console-based version, we're actually targeting the next-generation consoles for the game to be played on. So we do think that there will be a gap versus the PC-based launch. And if we look at Aion 2, as we have decided to go ahead and launch Blade & Soul II first right now, we are strengthening the polishing process for Aion 2. So as of now, it's difficult to talk about specific timing, but the launch will take place next year. In addition to that, if we look at the overall contents of the game versus the PC-based Aion, I think that what is common would be the overall theme of the game in itself and maybe some of the look and feel. However, in terms of the overall game layout, it is a totally different reinterpretation of the Aion IP.

[Foreign Language] The next question will be presented by Taewon Kim from UBS.

[Interpreted] So I would like to ask 2 follow-up questions about questions you had previously answered. First is about your overseas business strategy. The company does have a much more robust cash flow that you are able to enjoy. And also, you did mention that the overall user base or MMORPG gaming community is expanding and growing. So in light of that overall situation, in addition to the major titles that are in the development pipeline that you have already mentioned, what would be the company's mid- to long-term growth strategy on a forward-looking basis? You did mention that at NCWest, there is a game that is being developed. So if you could elaborate a bit more about that, that would be appreciated. And in addition to that, does the company have any plans to expand your overseas presence in terms of branches or maybe offices in other markets? Or do you have any plans to make investments to acquire other IPs? The second question I would like to ask you is about your commissions paid. If you do a calculation and take into consideration the fees related to your mobile game distribution, and if you exclude that from the overall fees paid, the balance or the amount that is left is actually not that significant. So once again, I would just like to ask you, has there been any difference in the way that you account for this item?

[Interpreted] To talk about our mid- to long-term growth strategy, I think that this is something that continues to be that on one side, internally, of course, we have our overall plan for the future over the mid- to long-term and including not only large games but a wide variety of games across a lot of different platforms, whether it be mobile, PC and console and across a wide variety of different challenges. We do have our own internal pipeline that we do not share with the outside, looking down into the future. So these are things that can take 3 to 4 years to actually come to fruition. And we have a pipeline and we have different attempts and different projects that we're trying out. So this is an effort that we continue at the head office level here in Korea. And at the same time, using the robust cash flow that we have, we continuously continue to monitor and look into opportunities and investments and other types of acquisitions that could be possible overseas. However, one of the things that we have realized is that doing everything from Korea in terms of the actual results, we think, is maybe not the best approach. So as a result of that, from the beginning of the year, we have set forth and established an overseas entity that would be more focused on investment and also incubation opportunities. So this entity would be leading a lot of the active opportunities and searching for opportunities in overseas markets like the U.S. and Europe, whether it be in M&As or whether it be pure investments. So in terms of the strategy going forward in terms of the activities, I think it's twofold. Once again, on one side, internally here in Korea through the head office, we will continue to do what we do best, which is develop a pipeline, continue development here and try to introduce, though we cannot share everything with you, we try to create something new that has not taken place or has not been seen before. And on the other side, we continue to have the strategy of looking at opportunities overseas, whether it be M&A or other forms of opportunities. So that will continue to be our approach going forward. And in terms of your second question about the commissions paid, I think that there are multiple factors that are taking place and working behind this category. So in light of the time constraint, we are over the budgeted time right now, I think it would be difficult to share everything with you during this call. However, if you do have further questions, please do not hesitate to contact our IR team, and I do think that they can provide you with that response.

[Foreign Language] Our last question will be presented by Jinman Lee from SK.

[Interpreted] There are 2 questions that I would like to ask you. If you look at the second quarter and mobile MMORPG market as a whole, within the market space, there were new games that were launched. There was The Kingdom of the Winds and there was also the Ragnarok Origin launch. So if we look at the overall decline in revenue that you saw for Lineage M, how much do you think can be attributed to the intensified competitive landscape and the overall backdrop versus how much would be attributed to your intentionally being a bit more soft in that quarter and putting less emphasis on the second quarter? If you were to look at those 2 factors and then look at what took place, what was the bigger driver? How would you view that situation? The second question that I have is about, if you look at the situation since the end of the second quarter, so as a result of that, third quarter-to-date, for Lineage M and Lineage 2M, if you look at your overall user data and numbers, what do the trends actually look like?

[Interpreted] So first to address your first question, I think that we also have been doing our own analysis and internal share base about how much of the decline or the dip that we saw was due to a natural decline and how much was due to the launch of new games within the market space. As of now, the new games in the market, it's not a lot of time passed since the launch in itself. So I don't think that we can clearly say what was the larger. However, according to what we see as of now and what we see to date, with the exception of The Kingdom of the Winds, I don't think that the other new launches within the market really had any meaningful impact on our operations. And even with The Kingdom of the Winds, I think that the impact was maybe limited to just the first week of launch for that title. So for lineage M, there was no impact at all. In actuality, after our update, there has been a rebound in the overall trend. And for Lineage 2M, again, it was a very limited impact that we saw in that first week. But since then, there has been a rebound in the numbers themselves. So all in all, if we look at the overall impact, I don't think it's very large. And I think that going into the second half, according to how we conduct our updates going forward and according to what type of in-game events we may have, that will be the bigger driver behind the trends. And to talk about the user trends for Lineage M and Lineage 2M in the second quarter, as mentioned before, we did see a stable moderate decline in bookings in terms of the users. However, beginning at the end of the second quarter and going into the third quarter-to-date, if we look at Lineage M, as mentioned before, we have seen a significant improvement in the user numbers. If we look at Lineage 2M, the overall situation is that we don't see a decline taking place. It has plateaued. And because we are in the beginning of August, the beginning of the month tends to be when we see an overall upswing taking place. Whether this will continue going forward is something that we will have to monitor a bit more. But I do think that the current intention is to try to stabilize the overall trend at the current level going forward. So thank you for your attention during this conference call today, and thank you for staying with us during this very long call. We would like to wrap up the second quarter 2020 earnings call at this point, and thank you once again for your participation. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]