NetDragon Websoft (777) H1 2026 earnings summary

Executive summary

• Gaming segment achieved half-over-half growth, driven by operational resilience of flagship IPs, AI-powered innovation, and stabilization despite year-over-year decline.

• AI Workforce OS and moyu AI ecosystem were launched, supporting significant cost reductions and operational efficiency across gaming and education.

• Mynd.ai faced headwinds in the U.S. and Europe but narrowed core segmental loss by 35.4% YoY and grew SaaS revenue by 30% YoY.

• Interim dividend of HKD 0.5 per share declared, with net cash and liquid investments at RMB 3,478 million as of June 2026.

Financial highlights

• Total revenue for H1 2026 was RMB 2.1 billion, down 12.2% YoY; gaming and application services contributed RMB 1.6 billion (down 8.8% YoY, up 3.1% HoH); Mynd.ai revenue was RMB 505 million (down 21.2% YoY).

• Gross profit was RMB 1.5 billion, down 11.7% YoY; gross margin for gaming and application services was 83.3%.

• Profit attributable to owners was RMB 36 million, up 20% YoY; adjusted profit (excluding impairment and one-off items) was RMB 254 million, down 8% YoY.

• Operating profit rose 24.1% YoY to RMB 144 million.

• Interim dividend per share remained stable at HKD 0.5.

Outlook and guidance

• Cautiously optimistic for H2 2026, expecting continued growth in gaming, further AI integration, and cost optimization in education.

• AI-native games and SaaS expansion anticipated; plans to enhance product offerings and expand language editions for key gaming IPs.

• Market recovery signs in North America; slow recovery expected in the Middle East and Europe, with 2027 seen as a stronger recovery year.