CMGE Announces 2021 Annual Results

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CMGE Announces 2021 Annual Results

The IP Game Ecosystem was Very Competitive

Continued Expansion of User Scale and Steady Growth in Results

Financial Highlights

  • Revenue was RMB 3.957 billion, up 3.6% year on year;
  • Gross profit was RMB 1.473 billion, up 20.5% year on year;
  • The number of newly registered users totaled 116.9 million, up 15.0%year on year;
  • The average monthly active users reached 19.1 million, up 3.1% year on year
  • The average monthly paying user is 1.4 million, up 1.8 percent year on year.

HONG KONG, April 1, 2022 /PRNewswire/ — CMGE Technology Group Limited (the “Company”, Stock Code: 0302.HK) is pleased to announce the audited consolidated results of the Company and its subsidiaries (collectively, the “Group”) for the year ended 31 December 2020 (the “Year” or “Reporting Period”).

In 2021, relying on its strengths and experience in game publishing and R&D, the Group has  strengthened its IP cooperation and its own IP creation capabilities, continued to focus on long-term development strategies in game publishing business, conducted in-depth research and investment in game R&D business, pushed forward the continuous improvement of its own R&D capabilities,  committed in in-depth cooperation with high-quality mobile game developers, dedicated to  investment in high-quality mobile game developers, and continued to deepen the IP game ecosystem, the Group’s income and the main economic indicators achieved stable growth. As of 31 December 2021, the Group’s annual revenue generated from operation in 2021 was RMB3,956.6 million, representing a year-on-year increase of 3.6%, and the gross profit margin increased from 32.0% in 2020 to 37.2% in 2021. The total number of newly registered users in 2021 reached 116.9 million, representing a year-on-year increase of 15.0%; average MAUs reached 19.1 million, representing a year-on-year increase of 3.1%; and average MPUs reached 1.4 million, representing a year-on-year increase 1.8%.

Revenue Achieved Steady Growth, and the Financial Structure Sontinued to Optimize

In 2021, the group’s revenue was RMB 3,956.6 million, an increase of approximately 3.6% compared to the revenue of RMB 3,820.3 million in 2020.

Revenue from game development increased by 23.9% from RMB 730.3 million in 2020 to RMB 905.0 million in 2021, accounting for 22.9% of the group’s revenue in 2021. IP licensing revenue increased by 106.9% from RMB 112.1 million of 2020 to RMB 231.9 million of 2021.

The Group’s gross profit increased by 20.5% from RMB1,223.3 million in 2020 to RMB1,473.5 million in 2021. The Group’s gross profit margin increased from 32.0% in 2020 to 37.2% in 2021. The increase in gross profit and gross profit margin was mainly due to significantly increased revenue generated from the Group’s IP licensing; increased proportion of revenue generated from overseas publishing business in the revenue generated from publishing business, and the commissions charged by overseas publishing channels is lower; and the increased proportion of the revenue generated from R&D business, and a decrease in the commission charged by channels under the self-development business model.

Registered Users Continue to Grow Strongly   Domestic and Foreign Publishing Businesses Continue to Make Outstanding Achievements

With the Group’s distinguished game operation ability, research and development ability and the Group’s continued adherence to the implementation of the overseas gaming strategy, the Group is able to continuously launch new games that are popular among players in the market, the Group had approximately 116.9 million newly registered users in 2021, representing a year-on-year increase of approximately 15.0% as compared to 101.6 million newly registered users in 2020. As of 31 December 2021, the accumulated registered users of the Group reached 526.9 million.

Thanks to the in-depth layout of multi-category games in the publishing business, excellent game operation capability, as well as smooth cooperation with top traffic platforms and continuous adherence to the overseas gaming strategy, the Group achieved outstanding performance in the publishing business in both domestic and overseas markets in 2021. In 2021, the Group newly launched 20 games. As at 31 December 2021, 83 games were available for download on application stores and publishing platforms. The New Legend of The Condor Heroes: Iron Blood and Loyal Heart ranked the first on the chart of Top Free Game of Apple’s App Store in these three markets.  

In 2021, revenue from the Group’s overseas game publishing business amounted to RMB 458.5 million for 2021, representing a year-on-year increase of 7,260.0%, revenue generated from overseas business accounted for 11.6% of the Group’s revenue.

Strengthened Independent R&D and Technology Precipitation Independent R&D Income Achieved Rapid Growth, Consolidating the Competitive Advantage

The Group increased investment in research and development business in 2021, the number of research and development personnel of several research and development teams such as the newly established Mantianxing Studio and DaYu Studio reached 624, a year-on-year increase of 30.0%; research and development investment increased from RMB208.6 million in 2020 to RMB310.7 million in 2021, representing a year-on-year increase of 48.9%. The Group continued to develop in-depth in five major game categories, namely value-oriented, platform-oriented, gameplay-oriented, eSports-oriented and card-and-board-oriented games to create the Group’s self-developed barrier with full effort.

In terms of platform-oriented games, Legend of Sword and Fairy: World, a self-developed game of the Group’s Mantianxing Studio, is China’s first metaverse game featuring open world elements such as cross-PC, console, virtual reality device and mobile phone and the Chinese culture. It is also the first in China to offer in-depth virtual reality experience and allow players to play virtual characters with virtual reality equipment. The game has been developed for nearly two years and the first round of testing will be conducted in the second half of 2022. Thanks to the rich experience and knowledge of the research and development team in virtual reality technology and open world RPG technology, the game will provide players a highly differentiated immersive experience. In the World of Legend of Sword and Fairy, players can engage in their development and evolvement with different virtual identities, choose the ways of living, playing and socialising in the World of the Legend of Sword and Fairy based on their own philosophy, and explore the world of game as they wish and dream.

Stepped up Efforts to Its Own IP Operation and Continuous Enhancement of the Influence of IPs to Consolidate the Industry Leadership

In 2021, the Group has adopted a full deployment along the whole industry chain of the Legend of Sword and Fairy IP, covering literature, film and television, comics, animation, games, music, content experience, live entertainment and derivatives, and has joined hands with top partners in related fields to jointly build the Legend of Sword and Fairy IP universe. The Group launched its first Legend of Sword and Fairy digital collections with the release of 40,000 NFT of Legend of Sword and Fairy character badges through the digital collections e-commerce platform, The One. Art, which were sold out in one second. For the year ended 31 December 2021, revenue derived from the Group’s IP licensing business amounted RMB231.9 million, representing a year-on-year increase of 106.9%.

The Group is also committed to building a highly competitive IP game ecosystem. In addition to owning its own IP, the Group also actively obtains a large number of selected licensed IP from third parties. For the year ended December 31, 2021, the revenue generated by the group’s IP games reached RMB 2,965.5 million, up 12.4% year on year.

Continued Investment in Potential Developers Has Strongly Supported the IP Gaming Ecosystem

As of 31 December 2021, the Group had direct investments in over 20 high-quality game developers. In 2021, the Group completed its investment in Shenzhen Heyao, Xinrui Mutual Entertainment, Maiji IT and Tornado Network and formulated detailed cooperation plans with these game developers.

In addition, the Group, through China Prosperity Capital Mobile Internet Fund, L.P. and Fontaine Capital Fund L.P, focused on digital creative culture, communications and other emerging technology industries, and has established a close connection and achieved synergy with them. Some projects also achieved multiple times growth in investment income, which improved the safety margin and financial return of fund assets.

Prospects

In 2022, the Group will continue to seize the opportunities of digital economic development and enhance its technological innovation capabilities, constantly striving to strengthen its highly competitive IP-based game ecosystem. With a large portfolio of top IPs and games, the Group will continue to leverage the core competitiveness of quality IPs and create more quality games, while the publishing business in Mainland China will maintain its stable growth. With the continuous rapid growth of the overseas publishing business, more games will be launched in overseas markets in an accelerated manner during the year. The self-developed business of the Group will continue to invest in five major categories to create high-quality games with global competitiveness. At the same time, it will also enter the harvest period of products of certain research and development subsidiaries and studios in 2022. The Group will be constantly committed to enhancing its value and boosting its vitality and influence, determined and confident to make the Legend of Sword and Fairy the top Xianxia IP. The Group will continue to carry forward China’s excellent traditional culture and socialist values, and become a practitioner of responsibility and disseminator of cultural values.

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