NetDragon Announces Fourth Quarter and Fiscal Year 2016 Financial Results

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NetDragon Announces Fourth Quarter and Fiscal Year 2016 Financial Results
NetDragon Announces Fourth Quarter and Fiscal Year 2016 Financial Results

NetDragon Announces Fourth Quarter and Fiscal Year 2016 Financial Results

NetDragon Websoft Holdings Limited (“NetDragon” or the “Company”; Hong Kong Stock Code: 777), a global leader in building internet communities, today announced its financial results for the fourth quarter and Fiscal Year 2016. NetDragon’s management team will hold a conference call and webcast at 6:30 p.m. Hong Kong time on March 23 to discuss the results and recent business developments.

Mr. Dejian Liu, Chairman of NetDragon, commented: “I am delighted that NetDragon delivered strong results for the fiscal year 2016 by continuing with our focus on building online communities. The Company recorded a 119.5% increase in its revenue to RMB2,793.1 million. Of which, our gaming revenue was RMB1,210.0 million, increased by 22.8%, driven by the robust momentum of our flagship game Eudemon Online and more than doubling of our mobile gaming revenue. Revenue from education business jumped by over five times to RMB1,526.3 million due to penetration of our products into the international markets via our Promethean acquisition, as well as acceleration of our product commercialization in China.  Our achievements in 2016 are recognized by the capital market, as evidenced by our stock being included in the Hang Seng Large-Cap & Mid-Cap Index, Shenzhen-Hong Kong Stock Connect and Shanghai-Hong Kong Stock Connect.”

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“In 2016, the Company also focused on investing and strengthening our technology capabilities. Our AR and VR technologies have enabled us to enhance our content development in both gaming and education products. With these technologies, both of our gaming and education platforms are becoming uniquely attractive to our users and were able to maintain a high level of user engagement.”

“In the coming year, NetDragon targets to achieve major growth in both our gaming and education business. Our gaming business is expected to grow on the back of our push into mobile gaming and a strong pipeline of new games to be launched this year that leverage our proven IPs and technologies. For our education business, we will focus on gaining traction in revenue growth, user scaling and user engagement. In particular, part of our multi-pronged strategy in scaling up users is to work closely with the education authorities both in China and around the world. In December, we signed a strategic cooperation framework agreement with the Education Department of Fujian Province to co-develop a provincial-wide e-learning platform that will integrate 101 Education PPT and the whole suite of our education products.  We expect such partnership to drive provincial-wide user adoption and will serve as a reference case for other major provinces. In the international markets, we also recently announced a new educational technology partnership with the City of Moscow — this marks our first major step in tapping into the emerging markets to expand our global footprints. We will be announcing more partnership with similar models both in China and in the emerging markets later this year. Last not but least, we target to achieve operating profitability in 2017 as a group.”

2016 Q4 Financial Highlights

  • Revenue was RMB740.0 million, representing a 47.8% increase year-over-year.
  • Revenue from the games business was RMB342.7 million, representing 46.3% of the Group’s total revenue, registered a 21.0% increase year-over-year.
  • Revenue from the education business was RMB374.0 million, representing 50.5% of the Group’s total revenue, registered a 78.3% increase year-over-year.
  • Gross profit was RMB421.0 million, representing a 34.8% increase year-over-year.
  • Core segmental profit[1] from the games business was RMB97.9 million, representing an 8.7% increase year-over-year.
  • Core segmental loss[1] from the education business was RMB157.7 million, representing a 33.8% increase year-over-year.
  • Non-GAAP[2] operating loss was RMB67.2 million.
  • Net Loss attributable to owners of the Company was RMB94.4 million.

Fiscal Year 2016 Financial Highlights

  • Revenue was RMB2.79 billion, representing a 119.5% increase year-over-year.
  • Revenue from the games business was RMB1.21 billion, representing 43.3% of the Group’s total revenue, registered a 22.8% increase year-over-year.
  • Revenue from the education business was RMB1.53 billion, representing 54.6% of the Group’s total revenue, registered nearly a 5.3 times increase year-over-year.
  • Gross profit was RMB1.59 billion, representing a 66.0% increase year-over-year.
  • Core segmental profit[1] from the games business was RMB371.7 million, representing a 43.2% increase year-over-year.
  • Core segmental loss[1] from the education business was RMB485.2 million, representing a 95.1% increase year-over-year.
  • Non-GAAP[2] operating loss was RMB239.8 million, mainly attributable to continued investment in education business.
  • Net loss attributable to owners of the Company was RMB202.7million.
  • The Board of Directors proposed a final dividend of HK$0.10 per share, subject to approval by shareholders at the coming Annual General Meeting.

2016 Q4 Gaming Operational Metrics

  • Monthly average revenue per user (“ARPU”) for online and mobile games was approximately RMB369, a 28.6% increase year-over-year.[3]
  • Average Concurrent Users (“ACU”) for online and mobile games was approximately 336,000, a 3.7% increase year-over-year.[3]
  • Peak Concurrent Users (“PCU”) for online and mobile games was approximately 740,000, a 3.5% decrease year-over-year.[3]

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