NC Corporation (A036570) Earnings Call Transcript & Summary

[Interpreted] Good morning. Thank you for participating in this conference call for the first quarter of 2022. Now let me begin my presentation with the Q1 earnings highlights. Q1 sales totaled KRW 790.3 billion, representing an increase of 4% Q-o-Q and 54% Y-o-Y. As Lineage W's performance was captured for the fourth quarter and Lineage M's quarter sales rebounded, the company again broke its record for the highest sales in the quarter. Operating profit posted KRW 244.2 billion, a jump of 123% quarter-over-quarter and 330% year-over-year, driven by the top line growth and a decline in key operating expenses, such as labor cost and marketing. Pretax income was KRW 233.2 billion, an increase of 57% Q-o-Q and 151% Y-o-Y. And net income was KRW 168.3 billion, up by 38% Q-o-Q and 110% Y-o-Y. Next, let me go over the sales of each game. Sales for the 4 mobile games totaled KRW 640.7 billion, up by 6% Q-o-Q and 97% Y-o-Y. The record that we set in the fourth quarter for the highest quarter sales for mobile games was replaced once again. For Lineage W, it came in at KRW 373.2 billion, an increase of 4% quarter-over-quarter. During the 5 months from the launch in November of last year to the end of the first quarter this year, the title generated KRW 730.8 billion in sales, making it one of the most successful games for the company. The competitive tension created between global users has led to unprecedented levels of traffic such as daily user numbers of 1.2 million, driving the top line. Lineage M sales was KRW 115.9 billion, growing 31% versus the previous quarter. So relentless efforts to identify user needs and enhance player satisfaction has led to the successful turnaround in sales. Lineage M will have its fifth anniversary next month. And based on stable user traffic, we should be able to continue to expand the game's life cycle. With stable traffic and sales numbers in Korea and abroad, Lineage 2M recorded KRW 127.4 billion, up by 2% quarter-over-quarter. The large-scale update, we had to celebrate the first anniversary in Japan and Taiwan and also the tightly packed content updates in Korea and abroad, led to the solid performance. As Blade & Soul 2 sales moderated and stabilized, it posted KRW 24.2 billion, a decline of 23% versus the previous quarter. We are preparing for a Japan and Taiwan launch in the second half. The sales of the 5 PC online games combined was KRW 93.1 billion, an increase of 4% Q-o-Q but a decrease of 28% Y-o-Y. Lineage 1 recorded KRW 26.2 billion, up by 34% Q-o-Q because of more active business activities, while Lineage 2 posted KRW 23.5 billion [ 12% Q-o-Q ] [Technical Difficulty] AION sales was KRW 16.1 billion, higher by 14% Q-o-Q due to the classic server 2.2 update, and Blade & Soul revenue was KRW 7 billion, down by 25% versus the fourth quarter. Guild Wars 2 posted KRW 20.3 billion, a decrease of 9% Q-o-Q, but up by 24% Y-o-Y. The third expansion pack released on February 28 was well received by the market and key traffic numbers such as DAU and PCU have improved, resulting in sales outperforming our internal expectations. Lastly, royalties totaled KRW 38.8 billion, down by 10% Q-o-Q and 15% Y-o-Y. Taiwan Lineage M royalties have softened slightly, and royalties from other PC and licensing games have been on a natural decline over time. Next, let me go over the expenses. The Q1 operating expenses totaled KRW 546.1 billion, a decline of 16% Q-o-Q, but up 20% Y-o-Y. To walk through the line items, labor cost was KRW 218.5 billion, a decrease of 15% Q-o-Q and 6% Y-o-Y due to less incentives related to the success of Lineage W and regular bonuses for employees. And marketing was KRW 41.8 billion, a drop of 65% versus the previous quarter as the marketing spend for our Lineage W's global launch decreased. On a Y-o-Y basis, it was down by 24%. Variable costs and other expenses totaled KRW 259.3 billion, up by 5% Y-o-Y and 76% -- 5% Q-o-Q and 76% Y-o-Y due to more distribution fees paid as global [ group ] game sales grew. And this concludes my presentation on the first quarter performance. In the second half of the year, the company will be busy launching many new titles in the global market. In the second half of the year, the company will be busy launching many new titles in the global market. The second round of releases of Lineage W will take place. And also, as mentioned before, Blade & Soul 2 in Asia, and the global launch of TL are all expected to take place in the second half. And we are ramping up the preparations for these launches. We released the TL in-game trailer in March. And in only 2 weeks, it gained 8 million views, of which more than half came from North America and Europe. This enabled us to confirm the anticipation levels of our global users. So internally, it motivated us once again to create one of the best top-tier games, by a Korean company in the global market, that would be recognized, of course, by such market and audience, and we expect -- and our expectations are growing. In addition, we are planning to host an official showcase for TL during the summer, during which more detailed plans about the launch will be shared. So we look forward to your interest in this event. So in addition to TL, we have a diverse lineup of new titles targeting the global market. So as mentioned during the previous earnings conference call, the company is adopting an open R&D strategy, which enables us to communicate with the market from the development stage and ensure the voice of our users are fully reflected in the development process. Through this, we will be taking top quality, innovative games to the global market. And not resting on our laurels as the leader in Korea, everyone in the company is exerting their best efforts and focus very intensely to emerge as an even more competitive company in the global market that receives full recognition. In addition, by launching games from diverse genres on multiple platforms, we will strive to create a more solid foundation on the global stage, and we look forward to your support and interest in our endeavors. Thank you very much.

[Foreign Language] Now Q&A session will begin [Operator Instructions] [Foreign Language] The first question will be provided by [ Ui Hoon Jeong ] from Eugene Investment & Securities.

[Interpreted] Yes. Thank you for the opportunity to ask questions. There are 3 questions that I would like to ask you. First, if you look at your first quarter performance, it does seem to be that in terms of the Lineage-related mobile games, you have had a very strong performance there. However, if you look at the overall mobile game market, as of the end of the first quarter, I do believe that there are some changes that have taken place within the overall market dynamics. So reflecting that situation, what would be your expectations for the trend in the second quarter? The second question that I would like to ask you is about your expenses. If you look at the first quarter in general, I do believe that from the market side, we did expect that labor cost would increase, affecting more incentives related to your Lineage-related games. However, versus that expectation, it seems to be that the actual labor cost was less. So in terms of this overall situation, how should we interpret this? And in addition to that, to ask a question about the marketing spend, in light of the fact that you will be engaging in marketing for the launches of TL and the second round of countries for Lineage W, if you would compare your marketing spend going forward to the fourth quarter of last year, how much marketing do you think or how -- what would the level of your marketing spend be? And the third question that I would like to ask you is that in the second half of the year, you do have a robust pipeline of new launches that are to take place. You did mention that for TL during the summer, there would be a more official event during which you would disclose your plans. But would it be possible to talk about the general time line? For example, would there be a possibility that the launch in itself would get delayed to next year? And in addition to that, for TL in terms of your internal evaluation about this game, what would be the overall target evaluation that you're looking at? And what are the internal expectations? For example, should we deem this to be a AAA level game at the company level?

[Interpreted] So maybe I can take your questions one by one. The first question that you asked was what would our expectations be about the second quarter in terms of the overall trends that we see there. I think that what we can start by saying is that for Lineage W, the overall target that we have for this game would be that similar to the previous titles that we have had before Lineage W, we want to ensure that we have a very moderate revenue stabilization take place with this game. So as you are aware, for Lineage W, if you look at the overall business model and also the way that the game is being serviced, there are some differences versus the previous games that we have had. So as a result of that, there may be a view that, versus the previous IPs that the overall revenue stabilization trend in itself may take place at a more accelerated pace. However, how the company views this overall situation is that because this game versus its previous peers, does enjoy a higher traffic level. We do think that, that will have the effect of offsetting some of the overall decline. So we do expect it to be in line with the previous games. And when compared to the other games within the market launched by other companies that you have mentioned, I would have to say that if you look at the user base, it actually is a very different user profile. So as a result of that, we don't believe that, that will be an impact. So to move on to maybe Lineage M and Lineage 2M, and talking about them one by one. With the launch of Lineage W, I do believe that there were some concerns about cannibalization. But what I can say is that as of the current time, I don't believe that this is an issue anymore. And the reason for that is because if you look at Lineage M, Lineage M is a game that enjoys a very loyal customer base. And as a result of that, as you can see by the numbers, the overall revenues have been very stable and maintained at a very stable level. For Lineage 2M in the second half of the year, there is a very wide -- there is a very large change that we are planning to create within the game, to be able to see a recovery in the overall revenue. So as a result of that, if we look at the overall trends, we do think that the second half of -- excuse me, the second quarter versus the first quarter will be a softer level in terms of the top line. However, that having been said at the same time and in the same note, we do think that with regards to the trends themselves that they will be very stable. And there will be continuous efforts to try to create change within the games to continue to evolve. So as a result of that, if we look at the second quarter, we do think that the second quarter will be more of a transitional phase. And then if we go into the third quarter and then into the fourth quarter, I think that all in all, the overall trends that we will see will represent a soft landing. So again, if we talk about this year and the overall scope of the year, and this is also in line with the third question that you have asked, as you are well aware, we do have the launch of TL and also Lineage W in the second regions to be upcoming. So as a result of that, before that, in the second quarter and in the third quarter, I do think that there will be an overall moderately stabilizing trend that will be taking place. And I do think that to take an objective view about the trends going forward, that we will see that taking place in the near future. However, if we look at the degree of the moderation, I would have to say that not being a hard situation, it would be more of a soft landing that we will try to continue to create throughout. And that having been said, going towards the end of the year and the beginning of next year, when we actually see the effects of the new launches that we have and also the global launches kick in, we do think that at that time, the overall direction will be what we will see really take off. But before that, again, I think that the moderation is something that we will experience. And maybe to move on to the expense side. First, talking about labor cost and then taking on marketing cost. In the case of labor costs, for the Lineage W incentive specifically, this is something that we had tried to reflect in the previous quarter as much as possible, and we actually were able to do so. So as a result of that, if you look at the first quarter of this year, we have not had large-sized incentives actually be incurred or necessary for this quarter. Going into the second quarter of the year, on the labor cost side, we don't see any special elements that would need to be of mention. And I do think that the current trend is something that will be maintained. To talk about costs in general, I do think that, of course, when we need to spend, we do need to spend. However, that having been said, we are trying to take more prudent control because, of course, we do believe that cost control is something that is very important. Internally, we have our own cost limits. This is something that is strictly applied. And to move on to the marketing spend. If you look at the second quarter versus the first quarter, I do think that there will be an increase in our overall activity. And as a result of that, on a Q-o-Q basis, there will be a slight increase in the marketing budget. However, that having been said, as you are aware, going into the fourth quarter, we will have the launch of TL and also the second regions for Lineage W take place. So before that, across the second quarter to the third quarter, I think that we will see an overall increase in the overall marketing activity that we engaged upon before that. That having been said, one thing that I would like to highlight is that different from the past, going forward, I do think that we will try to emphasize more efficiency of our overall expenses. So as a result of that, I think that the general rule of thumb that we are going to take would be to have it not exceed 10% of our overall percentage of revenue. So that is the overall direction in which we would be heading. And thirdly, to talk about our new game launches. For the first quarter, we do have TL slated for that, which would be a global simultaneous launch. And internally, we are exerting the full company's efforts behind ensuring that this does not get pushed back. And as you are aware, TL will be a game that will be supported and be used both on PC and console platforms. So as a result of that, the preparations are -- be able to support a Windows, Mac, PlayStation, Steam, Xbox environment. So because you are all experts in the game industry, I think that -- what I can say is that for the TL launch, of course, this will be a global launch for us. And if you compare that to the cases in which we had an existing IP, that we took on a mobile format, I do think that we do recognize that there will be differences in how the performance actually takes place. However, that having been said, what we're trying to achieve by having TL is that of the overall MMORPG games that have been developed, we do understand that MMORPG as a genre is not considered to be mainstream in the western markets. However, what we are trying to do by launching this game in an MMORPG format is that we do think that there is a high probability that we can achieve a very meaningful and make an earmark within this market and creating a market. So from that standpoint, the overall attitude that we have is not just let's try to attempt and do something in this market, but whether it be from the actual business model side or in terms of how the gameplay takes place and how it's created or in terms of the content that is required for the game across the board in all aspects. Of course, this is something that we will be able to show you during the showcase in more detail. But I do think that we're trying to take a very different approach in terms of our NC mobile game strategy. And as a result of that, I do think that it will be very clear that from a business model side, from a platform support side, from a content side, that in all areas, that you will be able to see that there are points of differentiation that we will be able to highlight and also leverage. So we do understand that there are various concerns within the market space. But what I can say is, again, the business model will be very different from the models in the past. And added to that because of various concerns, there may be some of you within the market that don't have very high expectations towards this game. And of course, we do understand where you're coming from. However, I do think that we are putting our best efforts behind proving you wrong and showing you that this will be a case in which we will be able to make a breakthrough. So I think that the interpreter probably used too strong language when saying "proving you wrong." And it would be close to say that we are aware of the situation and we will try to make sure that the results are not something that you would expect.

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

[Interpreted] So there are 2 questions that I would like to ask you. The first is that for your new game lineup after TL, what would that actually be? So if it's difficult to actually talk about the overall pipeline in terms of the actual schedule, then could you at least share the overall order and what you would be launching projects going forward? The second question that I would like to ask you is about Guild Wars 2. It does seem to be that though you have actually sold a new expansion pack that the overall revenue has actually not been coming in, in terms of the overall impact. Is there a specific reason for that? And in addition to that, if you look at the Guild Wars 2 IP, is there any intention for you to actually create a mobile game using Guild Wars 2? Or is NCWest in itself planning to develop any new games for the future?

[Interpreted] So if we look at the overall new game lineup, I do think that what we can say to that would be that as you are aware for TL, that will be coming in the fourth quarter -- for the second round of regions for Lineage W, that will be coming in the fourth quarter also, and we will have NFT included in that. In addition to that, we have Blade & Soul S, which is a new IP or BFS, and that will be coming in the second quarter of next year. It would be the first round of regions which will mostly be focusing on Asia. In addition, there is also a project that we call [ ROCKET ], which would be an action battle royale genre. So we're planning to have a soft launch in the fourth quarter and then maybe in the second half of next year, target a global launch for this game. Also for Blade & Soul 2, for the Asian region launches, that is something that is slated for the second half of the year. So from the second half of this year, up until the end of 2023, all in all, we are planning to launch 7 titles, which include Lineage W second regions, Blade & Soul 2 Asia and also TL going global. And in addition to that, I know that there's a lot of interest about AION 2. This is also something that is right now in development. And I do think that sometime during the second half of the year, we will have an opportunity to talk in more detail about the road map for AION 2 going forward. So for Guild Wars 2, I think that for the expansion pack in the first quarter, there was a partial recognition of some of the performance. However, going into the second quarter, we will have the fourth quarter revenues being reflected. So as a result of that, on a Q-o-Q basis, there will be enough uplift that we will be able to enjoy. In addition, if you look at the overall sales recognition of this, it takes place every 3 months in installments. So in addition, for the Guild Wars 2 mobile in that area, and using the IP in other areas. This is something that we are looking into and making efforts for. Of course, we do want to take efforts to enhance the overall value of the IP in itself. And these efforts and initiatives are being led, as you said, by NCWest. So we are looking at various avenues of opportunities. I don't think that we are ready to share anything with you yet. However, I do think that -- what I could say would be that there is a lot of efforts that we have ongoing.

[Foreign Language] The next question will be presented by [ Sung Jong Hwa ] from eBest Investment Securities.

[Interpreted] Congratulations on a very strong quarter. There are 2 questions that I would like to ask you about your new game launches. When you mentioned the schedule for the second half, I think that initially, we thought that for Lineage W and the second round of regions that, that would take place in the third quarter. And then the global launch of TL would take place in the fourth quarter. However, when you mentioned your schedule, you said that for Lineage W second round and for TL, it's all fourth quarter's business. And you also mentioned Blade & Soul 2 Asia will be coming in the second half. So if second half does mean the fourth quarter, then should we take this to mean that the overall third quarter would be void of any new game launches, and then there would be a concentration taking place in the fourth quarter across these 3 games? If you could elaborate a bit more about that, that would be appreciated. And in addition to that, if you look at the 5 teasers that you have shared before, setting aside TL and also Blade & Soul 2, I think that you also have Project E, Project R and Project M. So would it be possible to maybe elaborate a bit more about these 3 titles?

[Interpreted] So for Lineage W, the second round of regions, I think that we did try to be a bit conservative in sharing the schedule with you. So as a result of that, what I can say is that as you are aware, what is most important with this game is to fully -- is to understand the user characteristics of the addressable audience that we are going to cater to with the second region launches. So in terms of the content and the BM that would actually appeal to such users, and this is a discussion that we are having. In addition, we are also going to include NFT into the service in itself. And this is something that we did mention before. And I do think that at the same time, what we told you before and what is still valid now is that when we are including NFT, we are trying to think of an approach that would minimize the impact of the existing economic systems that we have for our existing games as much as possible. Added to that, as you are aware, if you look at the games within the market or the existing games that do use NFT, whether they have coins or whether they apply blockchains or have a crypto aspect to them, I think that there is volatility within the performance that we see. So as a result, we think that rather just going out in the third quarter and having users face a maybe unexpected situation, what we want to do is have a very thorough and full review of the overall situation and also their business model. So that's why I tried to keep some buffer when I was talking about the second half. But it was not to say that the company is intentionally trying to push back our launch. So as mentioned, up until 2023, there are 7 titles that we are planning. However, as you are probably expecting and as you are aware, it would be difficult for us to share our internal targets in terms of specific time lines with you as of this point. What I can say is that in the second half of the year, there will be 2 undisclosed new titles that we will be sharing with you, that are targeting next year. In addition, for Project R, which I think something -- which was one of the games that you mentioned. This is something that we are preparing by the end of the year for a launch in 2023. Unfortunately, I won't be able to specify a specific quarter. But I think that in terms of communication, as mentioned before, the company does have an open R&D policy. So for various communication about the development process and also the time lines going forward, I think that rather than through the earnings conference call, we want to have the development team take the lead for the various announcements and communication. So as a result of that, I do think that during the quarter and in the interim period, there will be announcements and also communications made. Added to that, there are interactive -- there's also interactive movies that will be a new [ challenge ] that we will be engaging upon. And then there would be Project E which shares the overall universe with TL. So again, for this Project E, it would be the same. I think that the development team there will be leading the communication about more details, about how that game will be taken forward.

[Foreign Language] The following question will be presented by [ Kim Jingu ] from [ Kim Securities ].

[Interpreted] There are 2 questions that I would like to ask you about new business areas. First is about metaverse. This is an area in which I do know that you are planning to enter into. And also, I do understand that there may be a mid to long-term strategy involved with that. So if you could elaborate a bit about that, including your angle by including games or maybe your UNIVERSE service. And in addition to that, in the execution or action plan for a metaverse, is there any investment plans that you would have, for example, including any investments that would be made in technical solutions? The second question that I would like to ask you is about AI. I do know that the company is deeply interested in AI. So I would like to know what type of progress you have made in this area to date and also for the direction going forward. For example, with the various games and contents that you have, what type of synergies are you expecting to be able to enjoy from AI?

[Interpreted] So metaverse, this is an area that we continue to prepare. Of course, in terms of what we're operating right now, we do have UNIVERSE, and maybe UNIVERSE can be deemed to be one form of metaverse, but it's not the metaverse that we're contemplating. We will get what we are trying to do, it would be a much larger and broader concept. So for the metaverse strategy, it is to have games, of course, but also to have nongame contents within the overall platform. And added to that, I do think that there is a lot of progress that we have been making internally to this end. So as a result, I do think that in the not-too-far future, we will have an opportunity to share more details, and then ask more details. Recently, the company did register some trademarks and I think that there have been many questions about whether this is related to our metaverse initiative. The answer to that would be yes. And what I can say is that we're looking at not only games to exist within this metaverse, but also to be able to link NFT and crypto because, of course, at the end of the day, having these all mashed together is something that is very important. As we say time and time again, for the crypto and NFT side, it would not be to have P2E. So that's not the intention. And we're not to apply the existing P2E format. However, within the metaverse, of course, our UNIVERSE that we have now could be one of the contents. And added to that, we would also have game and nongame contents all together. And by having a wide variety of mix and also having various cohesion between all of these different contents, I think that from the user's point of view, what we want to have is a place that is really somewhere where people want to reside and stay. So creating that type of need and creating that type of attraction is what we're focused on. And again, I think that the company will have a separate opportunity to elaborate about this further. So for AI, as you mentioned, this is an area in which we do have a long history and long interest. So for AI being applied in the game production cycle, of course, this is something that is already being done. And we're also exploring avenues through which we would apply AI in nongame-related areas. So for that, once we do have some results, I do think that, that would be something that we would be able to share with you.

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

[Interpreted] So there are 2 questions that I would like to ask you. First is that I think that from our point of view, for the new games that will be launched going forward or for the midterm forecast, of course, from institutions like ourselves, we try to take our own view about the situation. However, for existing games like LM, which is the game that I would like to ask you about. I think that we do refer a lot on what the company says in terms of the momentum and what the view that the company holds on the way forward, is something that we will take in weight in terms of the forecasting. If you look back in the fourth quarter, I think that before that, when you were talking about LM, I think that the overall color that we read to be was that you were expecting a soft landing. And I think that, that was something that was -- something that you had tried to share with us. But in actuality, if you look at what took place in the fourth quarter, there was a drop of 40% Q-o-Q. Then if we look at the first quarter, I think that what was shared with us in terms of the view was that you did believe that the first quarter would be an extension of the fourth quarter momentum. However, if you look at first quarter actual, it was actually a jump of 30% Q-o-Q. So for games that are already within the market, I do think that it's not a situation in which the user traffic is very volatile. And in terms of the top line performance, it's something that would be geared by the overall business model strategy that the company is implementing. So as a result of that, the question that I would like to ask you is, why is it difficult for the company to forecast for the near future for these games? What element makes it challenging? The second question that I would like to ask you is about TL. Needless to say, this is a very important game, new game for the company. And if you look at the teaser, as mentioned before, I think that the engagement levels are very high. Within the Korean game industry, I think it was at the highest level that we have seen. And if you look at the teasers released by other competitors, they were due to -- they released these teasers through the global game shows. And that is actually what made it viral and made it pick up. However, for the company and for the TL teaser, you actually did not do this. And still, you saw this huge engagement. So internally, how have you analyzed this phenomenon? And what do you think the drivers were that actually drove that type of engagement?

[Interpreted] For LM, of course, it's not a situation in which we intentionally have been going up and down. But what I can say is that I think that if we look at the first quarter, for the first quarter in itself, it is a result of very successful efforts from the Lineage M team in operating the game. So whether it be for existing users, whether it be for the users that returned after being dormant or whether for -- it be for new users who have been coming into the game, all of these different types of users do have different types of needs. And I think that they have been able to successfully cater content that satisfies all of these different types of user profiles. In addition to that, for the more older content or more dated content that we had, there were improvements that were made. The overall user convenience areas also were improved. So I think that it was really a customer-centric concerted effort made by the team that was able to create the overall revenue rebound that we have seen. So I do think that it's a result of very difficult and challenging efforts that were made by the team. If we forecast the second quarter, I think that the momentum that we have created in the first quarter, the team will be focusing on trying to maintain that into the second quarter. But I think that for existing games, the overall moderation and also stabilization of revenue is a trend that takes place. And there are efforts that are made to try to offset that as much as possible. And to talk about your second question, which was about the teaser for TL. I think that for MMORPG within the Western Hemisphere, that we have seen a lot of interest. So even in the past, interest did exist. So if we look at the experience that we had with AION or with Lineage 2, though it was on a PC platform basis, we did have a sizable user base then. And also, if you look at the more recent developments taking place through the example of Lost Ark, I think that there is a potential, very broad user base that can be tucked into. However, I think that one thing that has been hindering maybe the potential and the leverage of such was the fact that there was a play-to-win element coming from the Korean games. And so that actually hindered the growth that we were able to achieve overseas. So that's why for TL from the start, very clearly, we have been communicating that it would be very different from the MMORPGs than in the past. And I think that is something that did contribute. And at the same time, in the trailer and itself, I think that people had an opportunity to actually see what the contents, how different they are. And as a result of that, at the end of the day, I think that what we need to do is try to get -- try to -- though there are concerns within the market, show what we can do through our performance. So for the concerns that people may have, to try to address them as much as possible and change and create more positivity is something that we want to do. And I think that this is an area in which from all sectors within the company and from all areas within the company, we are exerting our best efforts to try to do that. So again, the company does have an open R&D policy. So we will be looking for feedback from the market. And I think that the project team in that process will be taking your comments and reflecting them into the overall development process.

[Foreign Language] The last question will be provided by [ Kim Jongmin ] from CLSA.

[Interpreted] The question that I would like to say is that if you look at the Google Play ranking of the games that you have across April to May, for example, for Lineage M, I think that it's been ranking #1 and keeping that spot for some time. And that's for Lineage W, it went down to maybe #4. However, if you look at the first quarter and in terms of the average daily revenue, it seems to be that there is a significant gap between Lineage W and Lineage M. So for Lineage M, I think that the rebound started at the end of March. So maybe that is something that is continuing into April and May. But from the comments that you made previously. I think that for the Lineage mobile games, what you said as a general sentiment would be that there would be a moderation in the overall revenue numbers. And that what you're trying to do is that for LM, I think that -- for LW, in actuality, we do see that taking place. So as a result, I think that what the company is getting at is that you're trying to create a soft landing for that. So if that is so, if you could talk about the overall trends that you say for April and also May. And in addition to that, I think that there's the element that may be not being reflected into the Korea game rankings, which would be the overseas performance. In terms of the percentage of overseas revenue and also the overseas performance in general, is it very stable? How much does it account for? And if we look at the trends in the fourth quarter of last year and the first quarter of this year, what would that represent? Maybe if you could talk about all of that, it would help us understand this better.

[Interpreted] So I think that it's good to see that there's a lot of discussion around LM, Lineage M. And if we look at the trends of revenue up until today, I think that we do see the very good performance, being continued that we see -- that we saw in the first quarter to the current time. So again, I think that as mentioned before, from the project team or from the game team that there is continuous efforts that are being made, and that has been leading to the current situation. For our Lineage W, it was not my intention to say that there would be a steep decline in the overall situation. It's more that I think that in the first quarter, I personally did think that there were things that we could have done that may take place in the second quarter. And I think that all in all, as mentioned before, what we are expecting would be that as we have seen in other titles, a very gradual, soft landing. So I think that, that would be the best way to say it and to create that very gradual soft landing would be what we're trying to do. So these types of games are not something that we're doing for the first time. We do have accumulated experience. And to talk about the point that you made about overseas, of course, Taiwan is very -- a strong market for the game. And also, if you look at the contribution, it does account for a significant portion for LW. For LW, it has continued to rank #1 in Taiwan since launch. And as LW is launched in the second round of regions, we're not going to try to do everything at once. But I think that in a very gradual basis, we are going to try to create, again, a very good, sound landing for both LW and TL. So I think that what we're trying to achieve here would be a real, solid first breakthrough within these markets. So again, I would like to thank everyone for participating in today's call. And I do think that going forward, we will try to do our best for the plans that we have set out. Once again, thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]