Good day, and welcome to the Cheetah Mobile Fourth Quarter and Full Year 2017 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Helen Zhu, IR Director. Please go ahead.

Thank you, Operator. Welcome to Cheetah Mobile's fourth quarter 2017 earnings conference call. With us today are Mr. Fu Sheng; CEO and Chairman; and Mr. Vincent Jiang, CFO. Following management's prepared remarks, we will conduct a Q&A session. Before we begin, I refer you to the Safe Harbor statement in our earnings release, which also applies for our conference today as we will make forward-looking statements. At this time, I would now like to turn the conference call over to our Chairman and CEO, Mr. Fu Sheng. Please go ahead, Fu Sheng.

Thanks, Helen, and hi, everyone. We have strong results in Q4. Total revenues grew by 9% year-over-year and 16% quarter-over-quarter to RMB1.4 billion. Operating profit grew by almost 2.6 times year-over-year and 68% quarter-over-quarter to RMB222 million. Now let me give you more details on each of our business lines. Our utility products and related services continued towards strong profit and cash flow. The non-GAAP operating margin for our utility products and related service increased to 34% in Q4 from 32% in Q3 and the last year. Thanks to our strategy to continue to optimize the coach and expense structure for the utility products business. For the full-year of 2017, our utility products earned a record RMB980 million in operating profit. Our utility products such as Clean Master and CM Security experienced some hard gains in the overseas market. Facebook stopped using certain ads format i.e. mobile phone lock screens since May 2017. Google made the same decision in January 2018, this change impressed all app developer that monetize through apps, including Cheetah Mobile. As a result we saw year-over-year decrease in revenue from utility products in the overseas market. The overseas market starting in the second half of 2017 discrete was because the lock screen app were large part of our ad inventory for Clean Master and CM Security in the overseas market. Our effort will continue in 2018. On the bright side, we believe this change will have remove many more apps developers and are forced to a cleaner and more user friendly mobile apps industry which will benefit Cheetah Mobile in the long run. For example, the makeup of revenues from our mobile utility products in the overseas market is now very healthy because they are mainly from result page ad to which more likely by our…

Thank you, Mr. Fu Sheng. Hello, everyone. We are pleased to report that Cheetah Mobile closed our 2017 with a strong quarter. Total revenues grew by 9% year-over-year and 16% quarter-over-quarter to RMB1,388 million in Q4 and exceeded the high ends of our guidance range by 6% driven by strength in Live.me mobile game and domestic utility apps business. We posted stronger than expected revenue growth in the quarter. By platform, mobile revenues grew by 18% year-over-year and 16% quarter-over-quarter to RMB1,280 million which accounted for 88% of our total revenues in the quarter. By region although overseas revenue growth decelerated from the previous quarter’s, revenues generated from the Chinese market accelerated its growth to increase 23% year-over-year and 38% quarter-over-quarter to RMB544 million. Profits continue to expand in the quarter, gross profit increased by 14% year-over-year and 17% quarter-over-quarter to RMB926 million in Q4 2017. Operating profits increased to RMB222 million from RMB62 million in the same period last year and RMB132 million in Q3 2017. The expanded profits and margins resulted from higher revenues of our strategy to optimize the cost and expense structures for utility products and our initiative to offload the loss making business News Republic. In Q4, the total operating expenses equates by 6% year-over-year to RMB704 million. Our core business continue to generate strong cash flow in the quarter. We made RMB267 million in net cash from operating activities and RMB259 million in free cash flow in Q4 2017. We also got two significant disposals including News Republic and our interest in Musical.ly which generated again of RMB1,089 million in Q4 and greatly boosted our earnings and balance sheet. In Q4, we reported a diluted income per ADS of RMB7.27 up from RMB0.41 in the same period last year and RMB0.95 in Q3 2017.…

[Operator Instructions] The first question comes from Thomas Chong of Credit Suisse. Please go ahead.

[Foreign Language] I’m going to translate my questions in English. I mean, first, can management talk about the robotics and blockchain initiative and how we should think about the monetization potential. And my second question is about our system business Live.me and mobile games, how should we think about the revenue trend? Thank you.

[Foreign Language] Now I’ll translate. So Live.me had a healthy revenue growth year-over-year and right now it structure of revenues is actually is more balanced because the marketing expenses for Live.me is decreasing and the topline has increased. And we are confident that the Live.me revenue will continue to increase and on other hand we understand that just like the line broadcasting business in China, it is also has certain negative impact from the short video part of business from other players that's why Live.me has launched a short video business called Cheez. We think that this is a strategic movement and if that strategic move can materialize and generate good return and then the overall Live.me business can be very prosperous. While we think that robots that has certain perceptions that can do certain job they do exist today. And so of course all the robots are facing challenges about the cost of production and sales price. We have been trying very hard to reduce the cost of robots. We think that a general purpose robot doesn’t exist yet because of the technology is increasing but we believe that robot for a certain vertical area and for certain scenario do exist. For example for a robot in the household to company purpose that do exist. And the technology including visual and language that can help to achieve this goal. And the day after tomorrow, we will have a product launch events that will showcase our family of robot products. We think that if the product can reach our expectation, including the hardware production manufacturing plant, we think that future of our robot market can be huge and high growth market. As the human cost are getting high and high and with the high expectation people expecting, we think that this is a global issues. We think that the general direction is very good. We are concerned about this. We think that blockchain technology is really innovation. We agree on this trend. We are following this trend as well. In blockchain will cause a change in many different applications. Right now with the computer and cell phone getting very popular and everybody is online now, so that makes decentralization become possibilities. Also blockchain technology - while Cheetah Mobile has its own advantage in developing blockchain technologies because blockchain technology requires security and also it's a utility product as well. And people will prefer a good user experience and safety of using blockchain products. Because Cheetah Mobile has a global user base and this provides a basis for a massive user of a blockchain technology related products also security and utility, those are the extension of Cheetah Mobile's capabilities. So that’s natural for Cheetah Mobile to develop blockchain technologies.

Okay. Thank you.

Actually in terms of blockchain, I also wanted to add a few things. Recently Cheetah Mobile has already released a couple of products. One is the SafeWallet. And it has released a decentralized app browser and there are few other products in the pipeline, yes. So just keep tuned.

[Operator Instructions] The next question comes from Wendy Huang of Macquarie. Please go ahead.

[Foreign Language] I will translate the question myself. So my first question is about your domestic value. Why should we expect your domestic value configuration to surpass 50%? How there is a margin of your domestic thing differing from overseas spending. Second question, trying to get some clarification on the Live.me strategy. I think previously you mentioned that Live.me just raised some money and priority is not really monetization. So in your prepared remarks just now you actually mentioned that Live.me was currently trying to control the cost and blow the topline? So can you give us some clarification on this? Thank you.

Well Wendy first of all, let me answer about the domestic mobile utility product. Right now, the revenue from mobile utility products in China is getting close to the revenue from utility product on the overseas market in Q4, 2017. And I think we expect that in Q1 the 2% will to be very similar, will be kind of equal. In terms of the overall overseas revenue because in overseas revenue we still have Live.me and mobile games, which mobile games primarily is from the years right now - outside China now. So, the overall overseas revenue of DAU is larger than the revenue from the domestic market. In terms of margins, gross margin in the domestic market and overseas market for the utility product are very healthy.

[Foreign Language] Live.me is a independent company. Although in general its approach will be in conformity will follow the general direction of the Cheetah Mobile, they still has its own independent decision making process. For the Live.me itself the huge acquisition cost and the revenue it has been achieved a certain healthy balance. So we think that there is no need to reduce the acquisition cost or marketing expenses for the revenue to continue to grow. The only thing is that we are talking about the Cheez, that’s a short video business outplayed by Live.me. Because we think that the short video business has the potential to bring more users to their Live.me platform so they are continuing to put a more user acquisition, more marketing dollars to Cheez. Of course there's a balance of how much you're putting Cheez and that would directly impact the bottom line of Live.me also kind of bottom line of Cheetah Mobile. That's why, we're kind of trying to reach a balance of the user acquisition cost and the user growth.

[Operator Instructions] The next question comes from Andrew Orchad of Nomura. Please go ahead.

[Foreign Language] Just a question on the revenue growth guidance, I'm guessing that the weaker guidance for revenue this quarter is due to - due partly due to the disposals of News Republic and musical.ly. So I'm just trying to get a sense of what the revenue growth would be if we had taken out these two businesses that we sold off now? Thanks.

[Foreign Language] Okay. So the overall impact resulting from the disposal of user public business actually is not that significance. The main reason for the guideline in the lower range is because first of all, the U.S. dollar depreciation against the RMB which has a quite significant impact. And secondly, as we mentioned earlier Facebook and Google changed their approach, they do not allow ads on cell phone lock screens which reduced our ad inventory and that reduced our revenue in turn. On the other hand, our two utility products itself has been going well. For example, one of our product is CM Launcher and the other one is Keyboard. Those two products has a very good user growth trajectory. These two products still are relatively new. So commercialization from those products still need some time. That's why in the short term, we do have some pressure in terms of revenue growth from the overseas utility products. But in the long run, we were very confident because one of the new driver is our mobile game business. We have started the casual game business for - in the last couple of years and we found that the casual game can be a virtually - have a longer life circle - have a long lifespan and has a relatively good revenue and profits. For example Piano Tiles 2 which is a causal game, has been around for more than three years. And we have added more than 200 songs to the product, and still have a very good user base and good revenues. So we think that in the long term, the mobile game business can be a very significant part of our overseas revenue source.

[Operator Instructions] The next question comes from Liping Zhao of CICC. Please go ahead with your question.

[Foreign Language] I have a small question about the operating margin. So we saw, in the fourth quarter last year, the operating margin improved a lot. And what will be the margin trend in first quarter 2018 and full year 2018?

Let me answer that question. The improved are mainly from our higher revenues in first quarter. Also we have been continuing to optimize the cost and expense structure for our utility products perhaps some other reasons. The third one is, we disposed New Republic in the fourth quarter which was a loss making business. So disposal of it helped our margin in the first quarter.

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Helen Zhu for any closing remarks.

Thank you all for joining us today. If you have any further questions, please do not hesitate to contact us. Thank you. Bye.