Flowing Cloud Technology (6610) H2 2023 earnings summary

Executive summary

• Revenue rose 16.7% YoY to RMB1,244.7 million; gross profit increased 12.5% to RMB420.7 million and profit for the year rose 11.6% to RMB263.9 million.

• Adjusted net profit, a non-IFRS measure adding back listing expenses and share-based payments, increased 6.3% to RMB274.0 million.

• Basic and diluted EPS were RMB14.6 cents versus RMB14.8 cents; total comprehensive income fell 14.0% to RMB221.4 million.

Financial highlights

• Revenue growth was driven mainly by AR/VR marketing services, which increased 24.0% to RMB845.1 million and represented 68.0% of revenue.

• Cost of revenue rose 19.0% to RMB824.0 million, faster than revenue, as traffic acquisition costs increased with marketing growth.

• Profit before tax increased 9.9% to RMB271.7 million; income tax expense decreased 26.7% to RMB7.7 million.

• Other comprehensive expense was RMB42.6 million, including a RMB41.4 million FVTOCI fair-value loss; total comprehensive income was RMB221.4 million.

Outlook and guidance

• Priorities include expanding AR/VR content and services across cultural tourism, C-end XR content, digital characters, overseas markets, AI-enabled production and Web3.0 applications.

• Plans include developing AI vertical models for 3D content and digital-character production, offering models through SaaS or solutions, and exploring AI computing-centre cooperation.

• Commercialization of digital characters is expected to draw on fan communities, brand partnerships and live-streaming e-commerce; immersive XR content development will continue.