Flowing Cloud Technology (6610) H2 2024 earnings summary

Executive summary

• Revenue fell 20.0% YoY to RMB995.3m; the year swung to a RMB43.7m net loss from RMB263.9m profit, while adjusted net loss was RMB30.6m.

• Strategy expanded from B-end services into C-end virtual-human streaming, with integrated marketing introduced and a virtual-streamer ecosystem exceeding 100 streamers.

Financial highlights

• Gross profit fell 52.5% YoY to RMB200.0m; loss before tax was RMB44.8m versus profit before tax of RMB271.7m in 2023.

• Cost of revenue declined 3.5% to RMB795.3m, less than the revenue decline; distribution and selling expenses rose 356.5% to RMB88.2m.

• R&D expenses increased 64.7% to RMB84.3m; no R&D expenditure was capitalized in 2024.

Outlook and guidance

• B-end priorities include deeper global penetration, stronger AR/VR content and services, MR content and open-world games, plus large-scale offline VR spaces.

• C-end plans focus on lowering virtual-content production costs, growing virtual-idol IPs and combining content creation, virtual streaming and fan monetization.

• Plans to incubate 30+ XR ecosystem partners within a year through global studio acquisitions and integration; remaining IPO proceeds expected to be used by end-2025 for selected M&A and strategic investments.