Good morning and thank you for standing by for Xunlei's First Quarter 2015 Earnings Conference Call. At this time all participants are in listen-only-mode. After Management's prepared remarks there will be a question-and-answer-session. As a reminder, today's conference call is being broadcast live by webcast. In addition, a replay of the call will be available on the website following the call. Our press release for the first quarter financial results was distributed on May 20, 2015 after market close, Eastern Time, and it is available on the Investor Relations' section of Xunlei's website ir.xunlei.com. Before we get started, let me review the Safe Harbor statement regarding this conference call. Please note that the discussion today will contain certain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. To understand the factors that could cause results to materially differ from those in the forward-looking statements, please refer to our prospectus filed with the Securities and Exchange Commission on June 24, 2014. We do not assume any obligation to update any forward-looking statements except as required under applicable law. During this call we will be referring to both GAAP and non-GAAP financial measures and the non-GAAP measures are reconciled to the most directly comparable GAAP measures in the tables attached to our earnings results, which can be found on our Investor Relations website. Please note that all numbers are in U.S. dollars unless otherwise stated. Today's conference call is being recorded. I would now like to turn the meeting over to your host for today's conference, Vicki Feng, Vice President, Financials, Xunlei. Please go ahead.

Thank you, operator. Good morning and good evening. Welcome to Xunlei's first quarter 2015 earnings call. I am Vicki, Finance VP of Xunlei. With me today on the call are Sean Zou, our Chairman and CEO; and Tom Wu, our CFO. Now, I will turn the call over to Sean.

Thank you, Vicki. Good morning and good evening everyone. Thanks for joining us for our earnings call for the first quarter of 2015. Let me start by briefly commenting on our financial results for the first quarter of 2015. Our revenues of $39.7 million were within the guidance range we provided to the market. Because of the pending disposal of Kankan, which is our video streaming business, the results were presented according to the related accounting requirements and which therefore Tom will provide more details on our financial results in his section. Let me start by reiterating Xunlei's strategy focuses for 2015 which I have shared with you previously. First, to ensure execution of Project Crystal, our ongoing innovation; second, to execute our mobility strategies; and third, to refocus ourselves by optimizing existing businesses to achieve greater focus. But I would like to first again articulate the positioning of Xunlei in today's Internet world. Xunlei sees itself as a content delivery company, meaning that our products and services have improved content delivery in terms of the speed, success rate and disruptive cost savings for their users and the Internet content providers. If we do this well, we are uniquely positioned to benefit from China's increasing Internet usage. I am particularly pleased with the government's recent focus on improving Internet speed in China. Xunlei should benefit from these initiatives. Because the carriers would most likely try to improve internet speed by spending large amounts connections or bandwidth. The bigger the balance for the last month the more room there is for Xunlei to help accelerate. As you may note, Xunlei's value proposition is partly to help users to fully utilize its last month action. This applies to both, PC and the mobile phones. And the more Internet usage on PC and…

Thank you, Sean. Good morning and good evening everyone. First of all I would like to draw your attention to our financial statements. We are treating assets and liabilities related to Kankan which is a pending divestiture as we classified as held-for-sale. And results of our operations related to Kankan including comparatives are also reported as loss from the discontinued operations. This is in accordance with the accounting standards. Obviously financial results related to continuing operations and their comparisons are more relevant the net impact of the pending divesture of Xunlei's financials is that our revenue will be approximately 25% smaller. The composition of our revenues will also be different, but most importantly, profitability would improve as a result of the pending sale. As Sean mentioned, the strategic reason for this divestiture is to sharpen our focus to execute our long-term growth initiatives. So all the numbers I will be sharing with you are on ongoing operations basis including their comparatives which as usual will be on a year-over-year basis unless indicated otherwise. For the first quarter, our revenues were $30.2 million excluding Kankan. Including Kankan, our revenues were $39.3 million which is about midpoint of the guidance range we have provided. Let me now go through each of the segments. Subscription revenues were $21.2 million, which continued to be the most important segment for us, now representing about 70% of our total revenues. This segment declined on the sequential basis and on a year-over-year basis. Number of subscribers at the end of the quarter was $4.88 million, which is about $70,000 less compared to that of the previous quarter end. However, the magnitude of the decline this quarter was only about 40% of the previous quarter. But we are not ready to call this a bottom for our subscription…

Thank you. [Operator Instructions] The first question comes from the line of Ella Ji from Oppenheimer. Please ask your question.

Good evening, Sean and Tom. First a question is relating to your partnership with Xiaomi, so the current conversion rate is about 20%. Do you think you can improve the conversion rate going forward and if so, what type of strategies will you apply? And then second question is relating to your headcount. We noticed that you mentioned the staff compensation cost growth year-over-year. Could you kindly break it down may be by different segments and going forward where are we going to see most headcount increases, what are the businesses that they are going to work for? Thank you.

Thank you, Ella. This is Sean. I will try to address the first question. The commercial rate is 20%. Currently the users are trying to use Xunlei's software from using app store, gaming centre and system upgrades. But we are rolling out SDK for third party applications. We believe the conversion rate will continue to improve. So yes, the answer is we can improve the conversion rates and the strategy is to offer SDKs to third party applications.

So Ella, I want to address your second question in terms of headcount. First of all you should probably realize the fixed cost I think that's what you're referring to. This is a pre-rationalization of any fixed cost that will be associated with Kankan. Obviously the cost associated with Kankan which is included in the one line of discontinued operations was only up to the operating cost of Kankan without the platform back office cost. So I think the way that we can think about this is that we will progress this in a sequential manner, meaning that one we will close the divestiture first, which we should expect probably by the end of this quarter, next month or two and after that we will make some rationalizations for the cost that would no longer be needed for a smaller platform. I think to quantify that at this stage, but roughly the total headcount associated with Kankan was roughly about 25% to 30% of the total headcount of Xunlei pre-divestiture. So obviously you probably cannot assume the same amount of reduction in fixed cost, but some reduction should also be expected. And lastly, part of the increment in terms of cost was our investment in Project Crystal, which has not produced revenues yet, but obviously we have been very aggressive in terms of investing in the technology, people and the R&D. So thank you for your question. Operator, your next question?

[Operator Instructions] The next question comes from the line of Binbin Ding from JPMorgan. Please ask your question.

Hi, good evening management, thanks for taking my question. My first question is regarding your probability. It seems that the probability of the company after the deconsolidation of Kankan is too below our estimate, is just still loss making our debt level. So, I am wondering if management can share some color about the future trend of your margin of where operating level going forward and what could be the key reason dragging down the margin? The second question is in terms of the monetization of the Crystal Plan. So you mentioned that now 27% of your total bandwidth is contributed by this product sales to bandwidth. So, I am wondering is there any like monetization plan in terms of Crystal and what the revenue percentage could be coming from the Crystal by the end of the year? Thank you.

Okay, thanks Binbin, it is Tom here. I'll take a stab at both of your questions. First of all, I think you may have read the financial statements incorrectly. Stripping out the pending transaction, Xunlei was profitable on the GAAP basis and certainly more profitable on a non-GAAP basis. I realized that it's a very complex set of financial statements because of the accounting treatment and a lot of numbers, but we were profitable on a GAAP and non-GAAP basis number one. And second that, profitability at the gross margin level as I commented on improved actually significantly by almost 4%, 5% points, which is a lot for any business. So, but I do want to be a little bit cautious in terms of profitability for the remainder of the year. I think as Sean pointed out, there will be additional investments required for Project Crystal and so that may drag down profitability, especially in the second half a little bit okay. Now, which goes into your next question in terms of revenues for Crystal, first of all the 27% bandwidth contribution from Crystal has directly impacted our margin, I can quantify that, because of the cost savings from the cost structure of crowd source bandwidth we were able to - out of that 4%, 5% improvement in gross margin, about 1% which came from bandwidth alternative sourcing. That's point number one. And point number two, we do expect revenues to come in, in terms of monetization for Crystal, second half of the year. We have not phased in, in terms of guidance for revenues for the second quarter and it's too early for us to quantify that, but we did share with you that over 20 various customers are in various phases of testing already. So we are hopeful that we will be able to produce revenues most likely in the second half of the year, but I am not going to quantify that at this stage yet, but as soon as we're able to see some visibility, reasonable certainty, we'll provide that guidance to the marketplace.

Thank you. That's helpful.

Are there any other questions?

[Operator Instructions] Thank you for your questions. There are no further questions at this time. I would like to hand the call back to the management for closing remarks.

Thank you for all your participations and continued interest in Xunlei and we look forward to speaking with you next quarter. Thank you.

Thank you.

Ladies and gentlemen, that concludes our conference for today. Thank you for your participation. You may now disconnect the lines.