Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Alicia Yapp from Citigroup. Please proceed.
Alicia Yapp - Citigroup
Good morning. Thank you for taking my questions. I have two quick questions. Can you tell us what was the main reason why your second quarter revenues were light off your guidance? What happened in the past six weeks since your last earnings that you did not anticipate when you gave out your second quarter guidance?
My second question is regarding your 3Q guidance. How do you feel about your visibility into this number? Thank you.
QD Wang
Thank you, Alicia. To answer your questions, yes, our Q2 results were slightly below our guidance. The main reason for that is a couple of things. One is MII had a new regulation on the SMS programs on TV and some of our popular programs, like name reading and romance and fortune telling programs, which generated a lot of income for us last year and also for the first quarter, had to be stopped. As you can see in our financial report, our SMS income dropped dramatically. So that’s the main reason.
Another one is China Unicom also changed their revenue confirmation policy and instead of based on statistical data to confirm revenue for us, now they confirm revenue based on their actual collection. So that affected our revenue from China Unicom.
These are the two major reasons why the Q2 numbers are below our guidance.
Looking forward to Q3 and even the first half of Q4, we don’t expect there is too much regulatory environment improved and Hurray! got ready for such -- and like Sean mentioned, start from Q1 they have a new policy coming out for the specified product, especially in the SMS product. But we grow our IVR products since the middle of the Q2 and we will continue to grow our IVR business in the whole quarter of Q3, as well as new products growing out for the SMS business.
So we do expect our revenue will grow in Q3 compared to Q2, and also we have cost and expense optimization plans and we believe we can manage our costs and expenses and deliver the right bottom lines in Q3.
Alicia Yapp - Citigroup
I apologize. I didn’t catch the first question when you answered the Q3 guidance. It was not very clear. Can you just repeat a little bit?
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