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NetDragon Announces 2023 Interim Financial Results, Gaming Recovery on Track with Record High Revenue

NetDragon Websoft Holdings Limited ("NetDragon" or the "Company"; Hong Kong Stock Code: 777), today announced its financial results for the first half of 2023. NetDragon's management team will hold a webcast at 10:00am Hong Kong time on 31 August 2023 to discuss the results and recent business development.

 

Dr. Dejian Liu, Chairman of NetDragon, commented: "As China entered into a new post-pandemic era, we were able to capitalize on the domestic economic recovery as our gaming business resumed its growth trajectory in the first half of 2023, achieving revenue of RMB1.9 billion, an 8% increase YoY. We remained focus on executing our multi-pronged strategy of driving consistent revenue growth of our existing flagship games, continually investing in R&D to expand our pipeline of new games, as well as driving innovation with new technologies. As a result, our revenue growth for the period significantly exceeded the market growth again both in the PC and mobile segments. This is a testament to not just the strength of our IPs, but more importantly, the deep capabilities of our team."

 

"Our education business recorded a decline in revenue along with the broader market, as the industry entered into a digestion period after the Covid-driven demand spike in the last 2 to 3 years. Despite the temporary slowdown in shipment volumes, we maintained our global ex-China market share leadership as we continued to achieve high win rates in the market. During the first half, we successfully launched our new ActivPanel LX which targets the "value" segment and enables us to address a significant share of the global addressable market, where users look for affordable, yet high-quality solutions. We also stepped up our development effort related to software monetization as we continued to make progress towards providing AI-enabled tools that are integrated with our panels with the goal of driving recurring revenue."

 

"We are proud to report positive progress made on the ESG front. In the first half of 2023, our S&P Global Sustainability Score increased to 40 points, putting NetDragon in the top 7% of the "interactive media, services, and home entertainment industry" assessed by S&P Global. NetDragon was also rated in the "low-risk" category by prominent rating agency Morningstar Sustainalytics. And in July 2023, we were honored as a "Gaming Company with Outstanding Social Responsibility" by People's Daily Online for five consecutive years."

 

"We remain committed to our capital return initiative, and therefore we are pleased to announce that the Board declared a special interim dividend of HK$1.0 and an interim dividend of HK$0.4 per ordinary share for the first half of 2023."

 

 

2023 First Half Financial Highlights

  • Revenue was RMB3.68 billion, representing a 13% decrease YoY.
  • Revenue from the gaming business was RMB1.92 billion, representing 52% of the Group's total revenue and an 8% increase YoY.
  • Revenue from the education business was RMB1.72 billion, representing 47% of the Group's total revenue and a 29% decrease YoY.
  • Gross profit was RMB2.29 billion, representing a 2% decrease YoY.
  • Core segmental profit from the gaming business was RMB1.09 billion, representing a 9% increase YoY.
  • Core segmental loss from the education business was RMB249 million, compared to RMB36 million in the same period last year. The increase is due to lower revenue and gross profits in the education segment, whereas our total education core segmental operating expenses were largely flat.
  • Operating profit was RMB699 million, representing a 6% decrease YoY.
  • Non-GAAP operating profit was RMB692 million, representing a 19% decrease YoY.
  • EBITDA was RMB917 million, representing a 5% increase YoY.
  • Non-GAAP EBITDA was RMB864 million, representing a 16% decrease YoY.
  • Profit attributable to owners of the Company was RMB500 million, representing a 12% decrease YoY.
  • Non-GAAP profit attributable to owners of the Company was RMB589 million, representing a 28% decrease YoY.
  • The Company declared a special interim dividend and an interim dividend of HK$1.0 and HK$0.4 per ordinary share respectively, for the six months ended 30 June 2023.