Chen Yuanyuan - IR Sean Zou - CEO Tom Wu - CFO.

Ella Ji - Oppenheimer Alex Yao - JP Morgan Peter Penn - Huatai Asset Management.

Good morning and thank you for standing by for Xunlei's Fourth Quarter 2014 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. Today's conference call is being recorded. I would now like to turn the call over to your host today Mr.

Chen Yuanyuan, IR Director of Xunlei..

Thank you. Good morning and good evening. Welcome to Xunlei's fourth quarter 2014 earnings call. With me today on the call are Mr. Sean Zou, our Chairman and CEO; and Mr. Tom Wu, our CFO. Today's conference call is being broadcasted live via webcast. In addition, a replay of the call will be available on our Web site following the call.

Our earnings release was distributed earlier today and is now available on the Investor Relations section of Xunlei's Web site as well as Newswire service. Before we get started, please note that the discussion today will contain certain forward-looking statements made under the safe harbor provision 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. Please refer to our SEC filings for more detailed discussion of risk factors that may affect our results.

We do not assume any obligations 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 recent directly comparable to GAAP measures in this table attached to our earnings release, which can be found again on our Investor Relations Web site.

Please note that all numbers are in US dollars unless otherwise stated. Now I would give the floor to our CEO Sean. Sean, please..

Thank you, Chen. Good morning and good evening everyone. Thank you for joining us today for our third earnings call since our IPO. Let me start by briefly commenting on our financial results. For the fourth quarter last year, our revenues of 46.7 million were within the guidance range we provided to the street.

The results were again impacted by the current operating environment, but we were pleased that we were able to achieve near the high-end of the guidance range. Tom will provide more details on the financial results in his section.

Given this is the first earnings call for 2015, I would like to take this opportunity to share with you the outlook for the year and Xunlei's core strategies for 2015, which is no doubt a critical year for Xunlei in its continued transition to mobile Internet.

But first, I would like to again articulate the position of Xunlei in today's mobile Internet. Xunlei positions itself as a crowd sourced content delivery company by/and [4K] users across devices, including increasing popular Xiaomi phones.

Xunlei will continue to focus on the user experience of content delivery in terms of speed, success rate and cost efficiency via Project Crystal. We feel that positioning with attributes will continue to increase its value and especially now that mobile devices have bigger screens and accommodate bigger storage.

New users’ behavior on bigger screen mobile devices will increasingly resemble that of the PC. And in short we will focus on three initiatives to execute our strategies for 2015 to ensure our transition to mobile Internet. Mobility strategy is our first and foremost focus in 2015.

Transforming Xunlei from a primary PC based company to that of a mobile Internet. The anchor of our mobility strategy is no doubt our cooperation with Xiaomi.

As you may know our mobile acceleration software benefits from our pre-installation agreements with Xiaomi whereby all Xiaomi phones will be pre-installed with Xunlei's mobile accessories and software. The progress on that front has continued since I’ve spoken to you last time.

As you may recall we achieved that milestone towards the end of the year whereby our mobile acceleration software was officially adopted by Xiaomi's latest operating system MIUI 6. It was a milestone both from a product development standpoint as well as from our corporation with Xiaomi.

We will continue to refine our mobile acceleration products in its performance and consistency to continue to spend its store base to enable more mobile apps on Xiaomi phones to drive up our active user traffic and to potentially monetize active user traffic.

As of the end of last month, our installed base has reached above 55 million, all of which are Xiaomi phones up from 28 million which I had shared with you in our last earnings call. As mentioned before the growth in installed base comes from new phone shipments and system upgrade from existing Xiaomi phones.

Based on Xiaomi's phone sales trajectory we think it is reasonable to assume that our installed base should reach 100 million if not more by the end of 2015. Active user which is also our secondary milestone has also increased dramatically since last time we shared this number with you.

Our DAU or daily active user is now about 8.5 million up from 1.6 million in last November. This active DAU ratio has roughly been trending around 20% of our installed user base. While our relationship with Xiaomi is a corner stone for our mobility strategy. There are two more milestones we want to achieve in 2015.

First to expand our relationships to other smartphone makers this is important to make Xunlei's mobile products more widely accepted and a second to gain a user interface. The current versions of Xunlei's mobile acceleration software is part of Xiaomi's operating system.

Although our users benefit from acceleration and higher success rate, it will be crucial for us to develop the direct interface with users to gain user awareness and to explore potential monetization of Xunlei.

Before I read the topic of mobile products, it’s worthwhile to mention that one of Xunlei's existing mobile apps, Xunlei Mobile has been gaining traffic significantly over the last several months. Xunlei Mobile is a mobile app which allows users to search and download content on their mobile devices.

The daily active user of this product has now surpassed 6 [billion] up from 2.6 million last August. The rapid rise demonstrates that the mobile users increasing need for downloading on their mobile phones. I expect that the reason for increasing downloading needs.

As I mentioned earlier is a function of phones with bigger screens and a bigger storage capacity. I’m bringing up this app for two reasons. First user behavior is changing with more downloading demand as phones get bigger and second it is important for us to have not only one but several important products to drive up our mobility strategy.

Now let me move to our second focus for 2015, which is Project Crystal. As you may recall, Project Crystal is our ongoing innovation in crowd sourcing idle bandwidth and potentially storage from our large user base.

We think that it could potentially become a disruptive innovation by providing crowd source bandwidth just like Uber for taxi, at a more competitive rate without actually having to invest in hard assets. As Internet usage continues to grow, bandwidth usage will increasingly become a precious commodity.

We think it is a good business to be an innovative bandwidth provider and it is consistent with Xunlei's technology DNA, where our traditional acceleration products utilize users computing power and in Crystal we crowd source their idle bandwidth and potentially storage.

Before I move onto the operational updates, just a quick word of Uber user technology. That would range from mobile apps with downloading needs such as app stores to online video apps. We would want to benefit from the secular growth of the demand for bandwidth from the ever growing online content consumption in the Internet market.

And we think we’re very well positioned to do that. Let me update you on the progress as well as the milestones for this year. The amount of bandwidth crowd sourced as of now is about 50% higher compared to the last time I spoke to you.

It now supplies about 19% of bandwidth that Xunlei uses for its own acceleration services, meaning that instead of buying bandwidth from traditional carriers, we now are able to supply some of the bandwidth using Crystal technology.

Just like the end of third quarter, Crystal has not generated meaningful cost savings yet, because we are trying to scale this business by paying participants market rates. What needs to take pace for Crystal is two things. First, to continue to scale in magnitude of the bandwidth we can crowd source.

And second, to generate external sales meaning other Internet content providers or ICPs with bandwidth demand will be willing to pay Xunlei for the bandwidth crowd source through Crystal. In order for this to happen, those product management -- product developments and a sales and marketing effort would have to synchronize.

We're making progress on both ends and we think that it is a realistic goal to achieve third party sales in 2015 meaning Crystal would start to generate revenues in 2015. Let me clarify the financial impact. The bandwidth crowd sourced so far has only been used internally, with no revenue impact.

We would only start to generate revenues once third party ICPs start to purchase bandwidth from us. On the other hand, we would need to continue to invest to scale this product. The areas of the investments will primarily been product development most of which is people cost as well as sales and marketing activities.

We believe that it is important to make this investment even though it will lead to losses in the short-term. And before I leave the topic, I would like to share my observations about a strong leadership provided by Chen Lei.

As you know Chen Lei joined Xunlei recently as our CTO and even though he has been with us for a short while, I have been impressed with his leadership and the technology insights. I'm confident that Crystal project under his leadership should achieve these important milestones in [2005].

Our third and final focus for 2015 is to streamline our existing businesses. That is our subscription services, video streaming and online game businesses.

There are a number of exciting new products on our plate, including our Mobility products and the Project Crystal which are the future of Xunlei, so it is very important that we are focused and have sufficient management of bandwidth to execute our Mobility strategy and Crystal.

What this means is that the management's team and myself, we evaluate the key components of our existing portfolio. The criteria we would be using in validating and streamlining existing business clearly will be in two-fold. First, whether from a technology standpoint a particular business would add to our technological capacity.

Xunlei is first and foremost a technology driven company. Its product and businesses must help contribute to our technology DNA. And second, profitability profile, a potential for achieving profitability. We're keenly aware that shareholder value must be built through our technology advances as well as profit -- our profit growth.

We believe it is important that we're focused and are single mindedly executing our Mobility strategy and Crystal. So we will be selective in our existing businesses in terms of their relevancy to our core competence, long-term strategy and our profitability. We expect to complete this strategic revenue in the next several months.

As in our summary, I am very excited about the future of Xunlei. I think that if we could focus on the three strategies, Mobility, Crystal and a streamlining existing business and executing them well, it will be an important year in successfully transitioning Xunlei to today's mobile Internet world.

With that let me turn over to Tom to comment on the details of our financial results. Tom..

Thank you Sean, good morning and good evening everyone. Before we delve into the numbers I would like to just highlight a couple of points.

First of all our user base, our user base as of the end of September was roughly about 306 million, this is according to iResearch, that continues to rank Xunlei as one of the top Internet platforms in terms of user traffic in China.

Second, as Sean pointed out we’re clearly focused on executing three initiatives for 2015; mobility, Crystal and focused approach to managing our existing businesses.

I am also particularly excited that our mobile traffic on Xiaomi phones and mobile Xunlei which is the mobile app that Sean mentioned has surged even though they have not produced revenues yet. In terms of financials all the growth rates and comparisons that I’m reciting will be on a year-over-year basis and less indicative otherwise.

For the fourth quarter our revenues were 46.7 million which as Sean pointed out is towards the high end of our own guidance range. The current operating environment clearly is impacting our results but on a year-over-year basis we were able to generate revenue growth by 7.1%. Let me now go through each of the segments.

Subscription revenues continue to be the most important segment for us representing about 50% of our total revenues. This segment declined both on a sequential basis and on a year-over-year basis.

Number of subscribers at the end of the quarter was 4.9 million down from 5.1 million at the end of the previous quarter, roughly about 4% decline sequentially. And ARPU was RMB28.2 for the quarter lower on a sequential basis.

We've continued to offer [suspension] of services to roughly about 350,000 subscribers up from about 300,000 at the end of last quarter. As mentioned on the previous calls the current operating environment is impacting this business and we expect impact to continue in 2015.

Advertising revenues were 8.9 million for the quarter, 8.3% decline on a year-over-year basis and 26.1% on a sequential basis. The sequential decline is partly due to seasonality, as the third quarter is typically the strongest quarter of the year. The number of advertisers declined both on a sequential and a year-over-year basis.

As we mentioned previously this business continues to generate an operating loss. IVAS revenues were 14.6 million for the quarter; this represents an 18.3% increase on a sequential basis. Increase in online games revenues was the primary reason for growth in IVAS revenues.

User behavior changes in a couple of the games led to increases in online game revenues. Cost of revenues declined by 6.5% sequentially to $24 million from $25.7 million. Bandwidth cost declined from 9.7 million to 9.5 million, this was primarily due to the decrease of bandwidth cost in subscription business.

We were able to generate some bandwidth cost savings through Project Crystal but as Sean pointed out the savings were so not meaningful. Gross margin improved from 46.5% to 47.4% on a sequential basis. The improvement was primarily driven by declining content costs as a percentage of total revenues.

Sales and marketing expenses for the quarter were 9.4 million accounting for 20.1% of total revenues up from 17.8% in the same period last year. The increase was partly due to additional marketing expenses in the areas of user traffic this past quarter.

General and administrative expenses for the quarter were 8.4 million representing 17.9% of total revenues, down from 20.2% in the same period last year. Research and development expenses for the quarter were 10.4 million, accounting for 22.3% of total revenues as compared to 19.6% from the same period last year.

The increase was primarily due to the rise in staff compensation expenses including share based compensation. GAAP net income attributable to Xunlei Limited was 1.0 million compared with a net loss of 4.7 million for the same period last year, primarily because of gross profit increase.

Non-GAAP net income attributable to Xunlei was 3.4 million compared with a net loss of 4.5 million for the same period last year. Turning to our balance sheet, we ended the year with a cash and short-term investment balance of 434 million, essentially flat compared to the end of the previous quarter.

Cash value on the per ADS basis is 6.6 million per ADS. Our balance sheet remained strong and we're ensured that we can execute the strategic initiatives that Sean mentioned in his section; Crystal and mobility both of which represent future growth drivers for Xunlei.

Guidance for the first quarter, we expect our revenues to be between 37 million to 41 million, the midpoint of the range represent 5% decline on a year-over-year basis. With that, Sean and I will be happy to take any questions you may have.

Operator?.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Ella Ji from Oppenheimer. Please ask your question..

I have three questions if I may.

First question is, within your total installment as well as daily active users, how many of them are coming from Xiaomi smartphones? And then also could you talk about what are the scenarios that you are seeing, the users are using your mobile products -- what do they use, what kind of activities are they engaged in when they use your mobile products? Are they very similar to PC? So that's my first question.

And secondarily, could you also provide us a little bit more colors regarding the monetization strategy of your mobile products? Is it going to be similar to PC which is mostly subscription based? And then last question is regarding your margin outlook. I think you are going to accelerate investment in R&D and sales and marketing which make sense.

With that in mind, could you comment on the 2015 margin spend? Thank you very much..

[Foreign Language] Maybe I can just translate that. Answer for the first question; thanks Ella for your questions first of all. The short answer for your first question is yes.

Most if not all of our installed base of 55 million comes from Xiaomi phones, but as we mentioned part of our milestone for this year is to develop other strategic relationships with smartphone makers other than Xiaomi, so we expect that toward the end of the year our installed base will come from the growth of Xiaomi, but also other smartphone makers.

Your second question about scenarios that users will use our mobile acceleration products, the first one is the acceleration product incorporated in Xiaomi's operating system.

There are number of scenarios where users will actually use or benefit from acceleration, that is when they use the game center to download a game, when they use the app store and when they use system upgrade which is probably one of the biggest data usages if you will.

So that is sort of the typical scenario for using our mobility products in Xiaomi phones. Now the second product that I mentioned [indiscernible] Xunlei -- which is the Xunlei Mobile which recently surpassed 6 million in DAU.

This is kind of a search and download function, almost like what you do on a PC and as I mentioned user behavior is changing or appears to be changing as phones get bigger. So phones increasingly act almost like the PC whereby users would search and download content onto their smartphones.

So that’s essentially the functionality or the usage scenario you asked about for the two primary mobility products that we currently have. And now I will move out to the second question. [Foreign Language] Let me perhaps translate the answer first for the second question.

So again that's a good question Ella and let me just reiterate the strategies broadly speaking that we have in place for our mobility strategy. Number one is; obviously, continue to refine our products both in terms of performance and consistency of performance.

And second just to increase our installed base and as I have mentioned we do think it's reasonable to assume that our installed base which is currently roughly about 55 million should reach if not exceed 100 million by the end of this year and partly come from non-Xiaomi relationships.

And third, user traffic which as I mentioned has really increased since the last time that we spoke, now over 8 million. And finally it’s monetization, now I am going to add to this that there is no revenue assumption based in as far as budgeting is concerned for 2015 for mobile monetization revenues from sort of accounting finance standpoint.

But what we think is that if we do a good job making our products useful, relevant to our user base and if we do a good job, continue to cultivate our active user traffic which is currently tending at about 20% of our installed base which should reach, if not exceed 100 million. We're hopeful that there will be opportunities to monetize.

And just one last minute. There are currently two schools of thoughts if you will, in terms of how to monetize potentially that user base. One is a 2B model whereby we will simply license the software to the smartphone makers.

And the second which is more similar as you pointed out to what we're currently doing with PC users is a 2C model whereby it's buy and try and VIP services model.

Those are conceptual framework that we have but as I pointed out earlier we're going to focus on the first three phases of strategies for 2015 but we're confident that if we can execute those three phases, the fourth one will be there. Let me answer your last question in terms of margin outlook.

I think obviously there are number of variables -- moving parts here. One is that the investing activities that we're going to have to make to scale our Crystal product and as Sean pointed out these investing activities will primarily be the areas of sales and marketing as well as research and developments.

So that's the first driving piece, number one.

And number two will be how we streamline existing businesses, this is as Sean pointed out the third strategic initiative for Xunlei this year, how we look at our existing portfolio of businesses and make sure that they are relevant as far as technology is concerned and equally as importantly we can achieve profitability, let alone all suitability of profitability going forward.

So having said that, we obviously have the base case forecast internally and we don’t provide margin forecast level on the annual basis, but I could provide as you recall we do our guidance processes on the revenue basis and on the quarterly basis, but given that it's the beginning of the year and it's the opportunity that we talk about, outlook and prospects for business going forward, it is fair for us to qualitatively comment on margin trends.

We think margins will be trending down because of these investing activities because of some of the possible restructuring charges. We think most likely it will be trending at about high 30s, if not close to 40% for 2015 and that’s as much as I wanted to say frankly in terms of numbers for the full year 2015.

Thank you, operator, can we move up to the next question please?.

Certainly. Your next question comes from the line of Alex Yao from JP Morgan. Please ask your question..

I want to follow up regarding Sean's comment of streamlining and the potential restructuring of existing business. Sean you have laid out the framework in relation to how to think about this business and how good is the rationale behind these stream-linings.

So if I apply the framework you just discussed in the prepared remark to the existing free business, I believe the subscription business is a direct monetization of your core technology so that fits very well into the framework and that will continue to grow especially on the mobile, as the mobile monetization picks up, but when Web gains which is more of a concurrent sourcing and gain operation I see very little relevancy to the core competency and technology advancement.

And then regarding the [vital] parts which is mostly driven by capital which has a very little to do with your core competence as well, so can you comment -- am I in the right if I think about how this business is feeding to your framework and also if there are some restructuring in relation to these two business segments what could be the financial impact to the P&L in 2015? Thank you..

[Foreign Language] Thanks Alex for your question. I guess just two or three points that I want to share with you.

One is that sort of the background of the possibility of streamlining our existing business portfolio and this would have to start with what we wanted to achieve for 2015 and as I try to articulate and articulate several times that the key focus for Xunlei for 2015 and possibly beyond would be on the mobile side and would be on Project Crystal side.

So we think that both in terms of focus, both in terms of management bandwidth, let alone financial implications, we ought to take a hard look to focus if not refocus our effort on our businesses.

Now the second point is that I wanted to reiterate that the guiding principles if you will of how we will look at our existing portfolio, you are correct in a number of ways that you commented on.

First and foremost is Xunlei sees itself as a technology driven company so any products, existing products or future product would have to be driven by our technology core competencies or actually the prowess of the whole technology platform.

So that would be the first priority so -- and second is profitability and you're aware that a couple of products not only generally lost, but sizeable losses and that it would be up to management to finalize its reviews to ascertain, to assess the near-term to mid-term likelihood for us to achieve profitability let alone the sustainability of profitability.

Those are the two guiding principles criteria if you will that we'll be applying over the next three, four months when we evaluate our existing portfolio.

But like I said the purpose of this exercise is to focus the company, is to make sure that we can deliver and execute the milestones that we have placed for ourselves and let along to make sure that financially it will be a more profitable company going forward.

But we're not going to comment on it specifically right now and obviously upon finalization of our analysis will be informing the marketplace in a timely and hopefully insightful manner as well..

The second question is about the monetization of Project Crystal. Sean you mentioned that skill is probably the most important milestone for the monetization. Can you share with us how far away is your current scale, should -- ideal scale for monetization. And then secondly, the timing might be a little uncertain for this.

Can you help us to understand the magnitude of the monetization or the potential distinct model from this business and how to think about ’16 financial contribution from Project Crystal?.

[Foreign Language] Thanks Alex and thanks for your appreciation of the importance of Crystal to Xunlei. I have just a couple of thoughts to share.

One is that, as I pointed out the two key milestones for this year number one is we need to increase the scale, the amount of bandwidth we can crowd source, and on that front clearly we've made very meaningful progress almost on a daily basis and we're 50% more compared to where we were two or three months ago, when we spoke last.

So that clearly has to continue to go up, number one. And second milestone is sales revenues and again let me just clarify who will be buying potentially this kind of technology of services from Xunlei.

It will be anybody with bandwidth needs, so your gain companies, your video streaming companies and you probably realize that it's a secular growth story directly in the function of online consumption in China. So we think it's a good business to get into, let alone that we think we're uniquely positioned in that business.

Now in terms of timing of revenues, it is baked in for 2015 as far as management's budget is concerned. Most likely we think revenues will be realized probably towards the middle of this year. And that will be a milestone that will be a true testimony of not only the scalabilities, the viability of the product but market demand of this product.

And finally, I would just provide some color, we are testing already with a third party company right now and hopefully that will be turned into first sale force in the near future, but that clearly is one of the most important strategic target for us this year..

Thank you. And your next question comes from the line of [Chungbo Yeng]..

Actually could you please elaborate more about the gaming business of Xunlei in the fourth quarter?.

Yes, I'd be happy to do that. Are there any specific question you have about gaming or I can give you some broad parameters about what the performance is of our gaming business..

Yes the broader gaming will be fine and could you please name three, the best cash generating games of Xunlei in the fourth quarter?.

Let me just make two points there. First of all gaming as I pointed out in my script contributed to the growth of our IVAS revenues this past quarter. And broadly speaking we've run two types of games, web games and client games.

Now both games benefited from user behavior changes this past quarter, whereby I guess it's sort of two sided coin, on the one hand, it helped our revenues, but on the other hand the useful life of some of the games that we ran were shortened.

And the second point that I would make for you is the types of games that we make and the portfolio that we have, so on the web game side, it's a very steady growth kind of business. Not as much volatility, the types of games for us. And partly because of the diversity that we have, we have probably close to, if not over a 100 we games.

So it's not a concentration issue, let alone the dependency on a particular game. Now that same cannot be said on the client game side. As you'd probably appreciate that client game requires much bigger investment and there is a lack of diversity as far as portfolio is concerned.

We have less than 10, probably close to half a dozen games that are online right now.

Now I wouldn’t want to get into too much details about the cash flow profile, but let me just say this, on a combined basis, gaming is that is including client games and web games, the cash flow is good is positive, but obviously it depends on you have to dig deeper to segregate client games versus web games and I'm not prepared to share that with you on this call..

Okay, is there are plans for Xunlei to -- if you are going to launch any mobile games recently?.

The short answer is yes, but still in a very timid fashion. We do have a team -- a small team focusing on mobile games. I think internally it's very strategic for us to evaluate how much resources we want to dedicate to it, but I think it's fair to say we have wasted that [indiscernible] trying to articulate what is our focus this year.

And I'm just -- I know what it means to work here, the first focus is our mobility strategy, broadly speaking the Xiaomi products acceleration and Xunlei Mobile. And second strategic prerogative is on Crystal.

I think mobile products -- mobile games is something that's on the horizon, but I think it will not be a high conviction item for Xunlei and that fits within our sort of third strategic prerogative which is really to focus and refocus on our existing businesses.

And we would consider mobile games part of our existing business even though from a revenue standpoint or from a scale standpoint, it's really at the minimal. Operator, next question please..

Thank you. And your next question comes from the line of Peter Penn from Huatai Asset Management. Please ask your question..

Hello, Sean and Tom. I just speak in Mandarin. [Foreign Language] First of all let me translate the question. It's from Peter Penn from Huatai Asset Management.

The first question totally agree with the overall strategy in terms of mobile products and appreciate the magnitude or significance of the magnitude of 55 million installed base, I think the question is it's part of the operating system and how do you gain a user interface with users. And that's the first question.

And second question is that, is there any timetable or revenue model in relationship with other smartphone makers?.

[Foreign Language] And the answer is I guess first reiterating our strategy, which as first and foremost to continue to expand our installed base which as you rightfully pointed out has reached 55 million and will probably reach 100 million by the end of the year.

And our active user base has also increased dramatically to 8.5 million on a daily basis. So these are the good news and second is that we will -- we are in discussions with other smartphone makers, there are ongoing discussions in terms of installing our products in their smartphones.

Now the second point is that how to gain that user interface that is also ongoing in terms of product development, design, how we negotiate with phone makers in terms of the presentation of our value adds.

And in terms of revenue model, it's -- obviously it will be driven by demand from users and we are still focusing on the product and the distribution strategy as we speak, but we're hopeful that if we continue to focus on the core aspect of our mobile strategy, it should be a successful strategy. [Foreign Language] Just one more comment from Sean.

Just an observation or sharing of data. It's the trend that continues. It looks like Xunlei mobile traffic by the end of 2015 will probably exceed our PC traffic by the end of this year..

[Foreign Language] Let me translate the question again. It's from Peter Penn from Investment or Asset Management.

The question is on Project Crystal and I guess the question is; how is Crystal different from traditional, if you will CDN provider?.

[Foreign Language] There are three points; one is that the sourcing is very different. Traditional CDN providers they buy bandwidth from carriers whereby -- we are buying bandwidth if you will crowd source type bandwidth from user base. So it's all about like Uber would not invest in bandwidth. So that's a first point. Sourcing is very different.

Now in terms of users, they are very similar, anybody with content provider will be using this kind of bandwidth whether it'd be a game company or streaming companies.

In fact you could argue that some of these CDN providers could be potentially distributors from Xunlei's crowd source bandwidth, essentially they will be a channel and we will be a supplier of the bandwidth through them. So we're not exactly in competition in that respect.

And finally just reiteration of the milestones that we have in place, really to scale and really to develop sales and marketing product development to make sure that the revenues that we had baked in for 2015 can be realized..

There are no further questions at this moment. [Operator Instructions]. Yes there are no further questions at this time. I will like to hand the call back to the management for closing remarks..

Thank you again for joining us. We believe it was a very important call as we articulated our strategies and milestones and last but not least our conviction to execute our strategy. So thank you and have a good evening and good morning. Look forward to speaking to you soon. Thank you very much..

Ladies and gentlemen that does conclude the conference for today. Thank you for your participation. You may now disconnect the lines..