Easou Technology (2550) H1 2024 earnings summary

Executive summary

• H1 2024 revenue rose 13.4% YoY to RMB277.8m; net profit was RMB3.4m versus a RMB12.8m loss, while gross margin declined to 41.3%.

• Adjusted profit excluding IPO intermediary fees was RMB17.7m, versus an adjusted loss of RMB2.9m in H1 2023.

Financial highlights

• Gross profit slipped 1.1% YoY to RMB114.8m as cost of sales rose 26.4% to RMB163.1m.

• Profit before tax was RMB5.2m versus a RMB14.6m loss; net profit was RMB3.4m versus a RMB12.8m loss.

• Selling and distribution expenses fell 8.1% to RMB68.8m; administrative expenses rose 15.9% to RMB23.1m, mainly due to higher listing expenses.

• R&D expenses were RMB17.6m, down 7.7% YoY; listing expenses were RMB14.3m versus RMB9.9m in H1 2023.

Segment performance

• Digital marketing revenue rose 28.9% YoY to RMB156.6m as advertiser demand recovered; segment gross margin was 7.7% versus 7.9%.

• Online reading revenue fell 7.8% to RMB105.8m: advertising reading declined 8.0% to RMB98.4m and paid reading fell 6.0% to RMB7.4m; gross margin was 89.2%.

• Online games publishing revenue increased 25.1% to RMB5.3m, supported by overseas releases; gross margin decreased to 52.3% from 54.0%.

• Other digital content revenue grew 125.5% to RMB10.1m, driven by music and video promotion; gross margin improved to 54.8% from 42.6%.

• Reading products had 45.4m cumulative registered users and average MAU of 26.3m; paid MPU/MAU was 0.1%.