Giant Interactive Group, Inc. (GA) Q1 2012 Earnings Call May 7, 2012 9:00 p.m. EDT Executives Rich Chiang – IR Director Jazy Zhang – CFO Wei Liu – President Xuefeng Ji – VP of R&D Analysts Timothy Chan – Morgan Stanley Eddie Leung – Merrill Lynch Steve Zhang – Macquarie Jake Lee – Citigroup [May Gehr] – UBS [William Chan] – Barclays Capital Wendy Huang – RBS [Ruby] – Nomura Securities Mark Marostica – Piper Jaffray Jialong Shi – CLSA Andy Yeung – Oppenheimer Adam Krejcik – Roth Capital Partners Atul Bagga – Lazard Capital Martin Bao – CICC Presentation Operator
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Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results of Giant to be materially different from the historical results or from any results expressed or implied by such forward-looking statements. These factors include but are not limited to the risks discussed in filings with the Securities and Exchange Commission, including our annual report on Form 20-F filed on April 23, 2012. All forward-looking statements are qualified by their entirety by this cautionary statement and Giant undertakes no obligation to revise or update this information to reflect events or circumstances the date hereof. In addition, please note that references in the presentation to dollars refer to US dollars.Now, I would like to turn the call over to our CFO, Jazy Zhang. Jazy? Jazy Zhang Thank you, Rich. Good morning to those of you in the east and good evening to those in the west. First, I would like to read the prepared remarks from our President, Ms. Wei Liu, and then I will walk you through our financial highlights and update you on our game development progress. We are pleased to report a strong start to 2012, having delivered healthy top and bottom-line financial growth and an improvement in our key operating metrics. The successful development of ZT Online 2 into a new blockbuster game continued to drive our results for the first quarter and demonstrate our ability to continue developing hit games in the current competitive MMO market. We’re especially encouraged by the sequential increase in average paying accounts and average revenue per user in a quarter in which we did not launch any significant game upgrades or marketing campaigns. We believe that incremental improvement in these operating metrics highlight the underlying appeal of a truly innovative game such ZT Online 2. And with the strong response to the launch of the first expansion pack of ZT Online 2 in April, we believe there is still room for further growth of this blockbuster game in coming quarters.
We’re also pleased to see continued stable performance in our legacy game portfolio, namely the ZT Online 1 series where continuous game enhancements have helped to keep players engaged and attract former players to return to these games. Extending the life span of all of our games and increasing user stickiness is a key element of our growth strategy, and we are pleased to see our continued execution and success on this front.While ZT Online 2 represents our latest success, we’re working extremely hard on developing the next generation of hit games, whether they are MMORPGs or web games. The reorganization of our game development studios and the new revenue-sharing plan that was put into place in 2011 have begun to bear fruit as we are seeing a high degree of productivity and motivation among our research and development teams. As a well-known company in China, we strive to offer our R&D staff the opportunity to turn their ambitions into commercially viable products and be rewarded based on the success of those products. We’re dedicated to building a brand that not only attracts users seeking quality games, but also attracts developers dedicated to building those games. With talented game developers, substantial resources and a focused strategy, we believe we will be able to deliver more hit games in the future. Read the rest of this transcript for free on seekingalpha.com