Q4 2012 Earnings Call
March 11, 2013 7:00 am ET
Sam Lawn - Investor Relations Director
Joseph Chen - Founder, Chairman and Chief Executive Officer
Jian Liu - Chief Operating Officer and Director
Hui Huang - Chief Financial Officer and Principal Accounting Officer
Alicia Yap - Barclays Capital, Research Division
Timothy Chan - Morgan Stanley, Research Division
Alex Yao - Deutsche Bank AG, Research Division
Jiong Shao - Macquarie Research
Andy Yeung - Oppenheimer & Co. Inc., Research Division
Mi Zhou - UBS Investment Bank, Research Division
Long Lin - Brean Capital LLC, Research Division
» Renren's CEO Discusses Q2 2012 Results - Earnings Call Transcript
» Perfect World Company's CEO Discusses Q4 2012 Results - Earnings Call Transcript
Thank you, and welcome to our fourth quarter and fiscal year 2012 earnings conference call. Joining me on the call today are Joe Chen, Chairman and Chief Executive Officer; James Liu, Chief Operating Officer; and Hui Huang, Chief Financial Officer. For today's agenda, management will discuss highlights for the fourth quarter and fiscal year 2012. This will be followed by a question-and-answer session.
Before we continue, I refer you to our Safe Harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Finally, please note that, unless otherwise stated, all figures mentioned during the conference call are in U.S. dollars.
I will now turn the call over to our Chairman and CEO, Joe Chen.
Thank you, Sam. Good morning, and good evening everyone. Before I provide update on our fourth quarter's performance, let me first reflect upon the past year. 2012 was a challenging and a crucial year here at our company. In addition to macro headwinds, we faced the challenge of navigating our business through the new mobile landscape of the Internet. It was a huge transition as we transformed our company DNA to adopt a new mobile-centric environment. We also had to make the important key decisions on focus and how to better position for shifting competitive environment. Mobile is now the industry-wide game-changer that creates a whole new sense of a playing field for Internet services, and I believe we have reached the important strategic junction of our journey to becoming a true mobile company.
As I have mentioned before, mobile is both an opportunity and a disruption. During the year, our exploration definitely had its trials and errors. For example, one of the mistakes we initially made was switching to HTML5 our Renren mobile applications. The quality of the user experience on H5 turned out to be less satisfactory, and we ended up migrating back to native apps.
I'm pleased that we made progress in several mobile developments. For example, we rapidly grow our mobile user traffic on Renren, and our overall user base continued to grow steadily despite intensifying competition. We drove significant revenues from mobile-related games, and we opened up a whole new dimension for mobile commerce on Nuomi. Now at this point in time, I feel good that our priorities and the strategies are focused, and I'm excited about our prospects for 2013.
Throughout the past year, we also recognized our core strengths and how best to leverage them. First, from a product perspective, social networking has a natural affinity to mobile. And this offered us a great basis for transitioning into a mobile-centric company. For example, photo-taking and sharing has now become a simultaneous habit by most SNS users. We're fortunate to be in a mobile-adaptive business because not all Internet services can transition easily into mobile and maintain the same market share.
We recently integrated our PC and our mobile R&D teams for Renren into one from the previous 2 separate teams in order to improve efficiency and truly integrate our mobile DNA into our products. We will continue to dedicate a significant part of our resources to expanding our core foundation as Renren SNS still has more room to grow. We will seek to constantly improve the performance of Renren mobile services and be truly committed to a better user experience. After all, better user experience drives user engagement and expansion of social graph.
Secondly, on monetization, we have thought hard on how to monetize mobile and have concluded very early on that, in general, gaming and e-commerce will be the first 2 major means of monetization ahead of advertising. This would prove to be particularly true for Chinese social networking market, the market we're in. This was one of the major reasons why we launched the Nuomi, our group-buying service, more than 2 years ago, which, in addition to being an e-commerce business, is also a way to tap into the massive LBS space mobile advertising business. We expanded our gaming business from WAP to mobile very early on, and now we're currently enjoying a first-mover advantage.
In our view, the development of the mobile Internet will be a much more rapid pace than the PC Internet. Therefore, the company needs to evolve faster and respond more quickly to changes in order to capture new opportunities during this mobile transition. Most players in the space, including us, have already invested heavily in mobile, and we suspect this trend to be -- this trend to continue this year. In terms of timing, I think this year will be the year we see moment of truth. Because of the changing ecosystem and the nature of things being so different on mobile from PC Internet, most of the efforts on mobile Internet, like PC industry in general, will prove to be probably less than desired in the long term. I hope, however, and remain confident that despite this hyperrealistic outlook, our efforts will be in the small subset of those projects from an industry that will yield tremendous returns.