Giant Interactive Group, Inc. (NYSE: GA) Daily Chart Q3 2007 Conference Call Transcript
Following the earnings announcement, Giant senior management will host a conference call at 8:00 AM ET on Tuesday, November 20, 2007
to discuss its 2007 third quarter financial results and recent business activity.
The conference call may be accessed by calling +1 866 202 1971 (US) or +1 617 213 8842 (International), with pass code 68099188. Please dial in approximately 10 minutes before the scheduled time of the call.
A replay of the conference call will be available through 10:00 PM, Monday, December 3, 2007 by dialing +1 888 286 8010 (international callers use +1 617 801 6888) and entering pass code 33847008.
A live webcast of the conference call and replay will be available on the investor relations page of Giant’s website at: http://www.giantig.com/investors/earningsannouncements.html
. Q3 2007 Earnings Report http://biz.yahoo.com/prnews/071119/cnm033.html?.v=8
SHANGHAI, China, Nov 19: Giant Interactive Group Inc., one of China's leading online game developers and operators in terms of revenues, announced today its unaudited financial results for the third quarter ended September 30, 2007. Q3 2007 Highlights
1. Net revenue
for the third quarter of 2007 was RMB 405.2 million (US $54.1 million), an increase of 164.2% over the third quarter of 2006 and 9.5% over the second quarter of 2007.
2. Gross profit
for the third quarter of 2007 was RMB 359.8 million (US $48.0 million), an increase of 152.8% over the third quarter of 2006 and 8.5% over the second quarter of 2007. Gross profit margin for the third quarter of 2007 was 88.8%.
3. Net income
for the third quarter of 2007 was RMB 290.2 million (US $38.7 million), an increase of 152.6% over the third quarter of 2006 and 9.8% over the second quarter of 2007. Net income margin for the third quarter of 2007 was 71.6%.
4. Net income per ordinary share
for the third quarter of 2007 was RMB 1.44 (US $0.19), compared to RMB 0.57 for the third quarter of 2006. After the recent initial public offering, each ADS represents one ordinary share.
5. Active Paying Accounts
("APA") for ZT Online in the third quarter of 2007 reached 1,318,000, an increase of 88.9% from the third quarter of 2006 and 5.6% from the second quarter of 2007.
6. Average Revenue Per User
("ARPU") for ZT Online in the third quarter of 2007 was RMB 305.2, an increase of 38.8% from the third quarter of 2006 and 3.3% from the second quarter of 2007.
7. Average Concurrent User
("ACU") for ZT Online in the third quarter of 2007 was 481,000, an increase of 77.6% from the third quarter of 2006 and a decrease of 6.6% from the second quarter of 2007.
8. Peak Concurrent User
("PCU") for ZT Online in the third quarter of 2007 was 888,000, an increase of 59.2% from the third quarter of 2006 and a decrease of 17.2% from the second quarter of 2007. Q3 2007 Business Highlights and Outlook
1. ZT Online
: The latest expansion pack, Zhong Zhi Cheng Cheng ("ZZCC") for ZT Online was released in July 2007 and has been well received by the players. We believe that this pack has greatly improved the community features of ZT Online by further enhancing the interactivity amongst players through development and expansion of collaborative and combative features in the game. It further enhances the retention of players and player loyalty to the game.
With unwavering commitment to game play, we continue to develop new enhancements and features to deliver a better gaming experience. Another expansion pack of ZT Online is expected to be released in the fourth quarter of 2007
, and beta testing of it is already in progress. The new version includes innovations in online game design to further enhance the geographical and dimensional interactive experience for players. Also, the ZT Online PTP version is aimed at deepening our penetration into other uncaptured niche segment and public beta testing has been in process since September.
2. Giant Online
: Engineering testing, internal tests and closed beta testing for this highly anticipated game were successfully completed by the end of August. The dual version beta test commenced in September with over 100,000 daily registered volunteer participants and concurrent user of 30,000 as of the end of the third quarter of 2007. Giant Online has already been commercially launched in the fourth quarter of 2007 and we anticipate to start ramping up users by the first quarter of 2008
3. King of Kings III
: Developments to launch King of Kings III, which Giant acquired from a Taiwan-based company, continues to remain on schedule and will soon enter into the internal testing phase.
4. Initial Public Offering
: On November 1, 2007, Giant Interactive Group successfully listed on the New York Stock Exchange in an initial public offering of 57,197,423 shares and a new issuance of 1,612,903 shares to a third-party cornerstone investor. After inclusion of an additional 8,579,613 ADSs, representing the over-allotment shares, the total offering size was approximately US $1.04 billion
5. Fourth Quarter Guidance
: Based on the current outlook, Giant expects to generate total net revenues for the fourth quarter in the range of RMB 425 million to RMB 430 million
. Giant Interactive Celebrates IPO on NYSE Giant Interactive Group, Inc. (NYSE: GA)
2/F No. 29 Building
396 Guilin Road
Shanghai F4 200233
Phone: 86 (21) 6451-5001 Web site
: http://www.giantig.com Investor info
: http://www.giantig.com/investors/companyoverview.html SEC Filings
: http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001415016 IPO Prospectus
: http://www.sec.gov/Archives/edgar/data/1415016/000119312507232632/d424b4.htm New York Stock Exchange
: http://www.nyse.com/about/listed/ga.html Company Overview
Giant Interactive is one of China’s leading online game developers and operators in terms of revenues
, and its online game ZT Online was the most popular online game in China in 2006
. Giant Interactive focuses on massively multiplayer online, or MMO, games
that are played through networked game servers in which tens of thousands of players are able to simultaneously connect and interact.
Giant Interactive's first internally developed MMO game, ZT Online
, was commercially launched in January 2006. ZT Online’s compound quarterly growth rate was 39.6% and 45.3%, respectively, in terms of peak concurrent users and average concurrent users from the quarter ended March 31, 2006 through the quarter ended September 30, 2007. ZT Online had 120,037 quarterly peak concurrent users and 51,202 quarterly average concurrent users for the quarter ended March 31, 2006 and had 888,146 quarterly peak concurrent users and 481,054 quarterly average concurrent users for the quarter ended September 30, 2007.
Giant Interactive's success is largely attributable to itsability to internally develop, operate and market a high quality MMO game tailored to China’s core game player audience
, which we define as players between the ages of 18 and 40.
Giant Interactive has a team of over 140 experienced game developers
, which includes dedicated product development and enhancement teams for each MMO game.
Giant Interactive plans to commercially launch a second MMO game, ZT Online PTP
, a pay-to-play game based on the ZT Online free-to-play game, and a third MMO game, Giant Online, in the fourth quarter of 2007
Giant Interactive will be able to leverage its national distribution and operational platform
to market these games to players throughout China.
Giant Interactive acquired the intellectual property rights to a third free-to-play MMO game, King of Kings III
, from Taiwan Lager Network Technology Co., Ltd., or Lager Network, a developer in Taiwan, in the third quarter of 2007, and intends to commercially launch the game in China in 2008.
Giant Interactive believes that the high playability, interactivity and community-oriented nature of its games
, together with their large active player bases, have resulted in a strong growth in the number of paying players and average revenues per user
, or ARPU.
Giant Interactive built nationwide distribution and marketing networks to sell and market prepaid game cards and game points
. The distribution network consists of over 200 distributors
and reached over 116,500 retail outlets
, including Internet cafés, software stores, supermarkets, bookstores, newspaper stands and convenience stores located throughout China. Giant Interactive also sells game points through its official game website. The marketing network consists of over 250 liaison offices located throughout China
Although substantially all revenues have been generated in China, starting in January 2007 Giant Interactive will also derive revenues from the license of ZT Online to Lager Network for operation in Hong Kong, Macau and Taiwan
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