Gala Technology Holding (2458) H1 2024 earnings summary

Executive summary

• H1 revenue fell 11.0% YoY to RMB315.4m and net profit declined 35.1% to RMB25.539m as older games matured.

• Newer titles gained traction; launches, overseas expansion and increased R&D investment underpin the H2 growth plan.

Financial highlights

• Revenue was RMB315.4m, down 11.0% YoY; self-published games generated 99.7% of revenue versus 99.4% in H1 2023.

• Gross profit fell 13.9% to RMB171.4m and gross margin declined to 54.3% from 56.2%, reflecting older-game revenue declines and higher license fees and staff costs.

• Profit before tax decreased 40.9% to RMB25.6m; net profit was RMB25.539m versus RMB39.351m.

• Adjusted net profit, excluding listing expenses, was RMB25.539m versus RMB39.625m in H1 2023.

• R&D expenses rose 17.0% to RMB58.9m; selling and marketing costs and G&A expenses each fell 15.0%, to RMB68.4m and RMB21.5m, respectively.

Outlook and guidance

• H2 priorities include domestic launches, overseas expansion, richer game content and player-community engagement; major tournaments and operating content are expected to drive significant YoY revenue growth.

• Total Football launched in Hong Kong, Japan and Korea in July; MLB Clutch Hit Baseball launched in mainland China in late July, and NBA Rivals launched there in August.

• NBA Rivals is expected to launch in Hong Kong, Macau and Taiwan in H1 2025; Football Champion is planned for Japan, Italy, the UK and France.

• Codename: Fishing Master is expected to enter testing in Q4 2024 and launch in H1 2025; Codename: Manual Rugby is in development for release within one to two years.

• Plans include PC and applet versions and broader use of AIGC in game operations and development.