Flowing Cloud Technology (6610) H1 2024 earnings summary

Executive summary

• H1 revenue fell 25.2% YoY to RMB448.013m; net profit declined 45.4% to RMB63.473m amid weaker domestic demand, lower content project pricing and fewer SaaS subscriptions.

• Overseas AR/VR marketing revenue grew 61.2%; virtual-human livestreaming, XR content and AI-enabled digital tourism were key growth initiatives.

Financial highlights

• Revenue was RMB448.013m, gross profit RMB125.239m and profit before tax RMB74.435m, down 25.2%, 36.1% and 39.3% YoY, respectively.

• Total comprehensive income fell 46.5% to RMB45.054m; basic EPS decreased 45.3% to RMB0.035.

• Cost of revenue declined 19.9% to RMB322.774m, slower than revenue; gross margin contracted to 28.0% from 32.7%.

• R&D expense fell 49.2% to RMB14.4m; selling and administrative expenses rose 49.6% and 41.5%, respectively, partly due to option expenses.

• Other income fell 97.0% to RMB0.1m; other gains were RMB1.8m versus a RMB1.8m loss, including RMB0.6m in foreign-exchange gains.

Outlook and guidance

• Plans to deepen AR/VR content and services and expand overseas B2B opportunities, including in Europe and the Middle East; European trade shows were planned for Q3.

• AIGC is intended to improve 3D asset production efficiency; development will continue in MR content, XR games and VR large-space solutions, with investment through industry funds.

• FT Live is intended to support external livestream guilds and creators and build a digital-asset marketplace; guild membership was expected to increase substantially by year-end.