Flowing Cloud Technology (6610) H1 2023 earnings summary

Executive summary

• H1 revenue rose 26.6% YoY to RMB599.0m, gross profit increased 32.7% to RMB196.1m, and net profit grew 41.4% to RMB116.3m.

• Growth across all three core AR/VR service lines and lower income tax expense supported net profit growth despite weaker-than-expected macro demand recovery.

Financial highlights

• Revenue was RMB598.956m, up 26.6% YoY; gross profit rose 32.7% to RMB196.059m, with gross margin of 32.7% versus 31.2%.

• Profit before tax increased 15.0% to RMB122.577m; net profit rose 41.4% to RMB116.316m, and basic EPS was RMB0.064 versus RMB0.054 in H1 2022.

• Total comprehensive income was RMB84.213m; a RMB32.103m FVOCI equity investment fair-value loss weighed on the result.

Outlook and guidance

• Priorities include continued R&D investment, improving FT-Engine and AIGC content generation, expanding SaaS AI capabilities, and developing metaverse use cases and overseas business.

• AIGC tools reduced project development time by 10–20% and saved more than half the work time in selected production stages.

• Several digital-character accounts with millions of fans were planned for H2 2023, with potential monetization through streaming, rewards and advertising orders.