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Perfect World Company, Ltd. (PWRD)

Q2 2012 Earnings Call

August 27, 2012, 09:00 pm ET


Joanne Deng - IR Manager

Michael Chi - Chairman & CEO

Robert Xiao - SVP

Vivien Wang - VP, IR & Corporate Communications

Kelvin Lau - CFO


Mark Marostica - Piper Jaffray

Eddie Leung - Merrill Lynch

Muzhi Li - Citigroup

Timothy Chen - Morgan Stanley

Jin Yoon - Nomura

Adam Krejcik - Roth Capital Partners

Andy Yeung - Oppenheimer

Thomas Chong - BOCI

Martin Bao - CICC

Atul Bagga - Lazard Capital



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Ladies and gentlemen, thank you for standing by and welcome to the Perfect World 2012 Q2 earnings conference call. At this time, all participants are in a listen-only mode. (Operator Instructions) I must advise you this conference is being recorded today 28th of August, 2012.

I would now like to hand the conference over to your first speaker today, Ms. Joanne Deng, Investor Relations Manager for Perfect World. Please go ahead, Ma’am.

Joanne Deng

Thank you operator and thank you everyone for joining us today for Perfect World’s second quarter 2012 earnings release conference call. We distributed our unaudited earnings release earlier today. You may find a copy of the press release on our official website or through the newswires.

Today, you will hear from Mr. Michael Chi, our Chairman and CEO, who will give us a brief overview of the quarter and will make an important announcement of the company. After that we’ll provide a brief update on our business. Then Ms. Vivien Wang, our Vice President of Investor Relations and Corporate Communications will take us through some of our latest operational developments. And then she will pass the call to Mr. Kevin Launch, our CFO, who’ll take you through our financial performance in the second quarter of 2012. Following the prepared remarks, Mr. Chi, Mr. Lau and Ms. Wang would be available to answer your questions.

Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectation. Potential risks and uncertainties include but are not limited to those outlined in our public filings with the SEC, including our annual report on Form 20-F.

For more information about these risks and uncertainties, please refer to our filings with the SEC. Perfect World does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

Our earnings release and this call include discussions of certain non-GAAP financial measures. Our earnings release contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures and is available on our website at under the Investor Relations section.

I would now like to turn the call over to Michael.

Michael Chi

Thank you, Joanne. Thank you all for joining our call today. Our second quarter results were in line with our previous expectations. During the quarter, we continued to work on developing and releasing our variety of expansions packs and the content enhancements which are part of our consistent efforts to maintain healthy lifecycles for existing games. At the same time, we also continued to focus on the development of the new games in our deep and diverse pipeline.

In July, we unveiled Legend of the Condor Heroes, a new 3D MMORPG which is currently under development. This game adapted from novel of the same name by the highly acclaimed martial arts author Louis Cha. We have also adapted another game from Mr. Cha’s well known martial arts novels Return of the Condor Heroes which we are scheduling for launch soon this year.

In addition to these titles our development teams continue to work on highly anticipated MMORPGs, Swordsman Online and the Saint Seiya Online, as well as a number of other games from our pipeline. With these existing upcoming titles, we look forward to delivering more high quality entertainment to our gamer worldwide.

I am pleased to announce that in order to further enhance our executing capabilities, we have decided to create a new senior management position; Co-CEO and promote our COO, Mr. Robert Xiao, to this new leadership position. In his new role, Robert will mainly focus on the execution of our business strategies through further enhancing the effectiveness and the efficiency our operations. I will remain the Chairman of the Board of Directors while taking the new Co-CEO position, and primarily focus on setting strategic directions for Perfect World to capture new growth opportunities in this fast changing industry.

Looking ahead, we will remain focused on the growth of our business and continue to generate value for our shareholders overtime.

Thank you. Now I will pass the call to Robert.

Robert Xiao

Thank you, Michael. Hello everyone, I am very excited to take the new role in the company that will allow me to work closer with our management and talented staff across the world to help lead our business to evolve into a global leader in online gaming industry. Through the great effort of the team, I believe that we have build a very successful presence in overseas markets; while in addition to our strong pipeline that Michael just mentioned, our well established development team across the world is another key differentiating factor in our industry.

Our specialized studios overseas not only further strengthen our R&D capabilities, but also add world class titles to our robust pipeline. For example, our Cryptic Studios in the Bay area in US is currently developing highly anticipated MMOPRG called Neverwinter. All of our global development assets are playing an important role in our path to become a leading gaming online gaming company.

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