Rego Interactive (2422) H1 2023 earnings summary

Executive summary

• H1 2023 revenue fell 36.5% YoY to RMB69.0m and profit attributable to owners declined 59.6% to RMB11.5m, while gross margin rose to 63.0%.

• Weaker advertising drove the decline; virtual goods delivery and lottery software solutions provided growth. Adjusted net profit was RMB10.9m, down 63.6% YoY.

• Strategy focuses on lottery marketing, software and hardware, and cross-selling across services.

Financial highlights

• Revenue was RMB69.0m versus RMB108.6m; gross profit fell 24.4% to RMB43.4m and profit before tax fell 60.4% to RMB13.5m.

• Profit attributable to owners was RMB11.5m versus RMB28.4m; basic and diluted EPS was RMB0.01 versus RMB0.04.

• Adjusted net profit, excluding listing expenses and foreign-exchange differences, was RMB10.9m versus RMB29.9m.

• Cost of sales fell 50.0% to RMB25.6m, mainly as traffic acquisition costs declined 52.3% to RMB21.6m.

• Operating cash outflow was RMB32.1m; cash and cash equivalents ended at RMB148.2m, down from RMB186.8m at year-end 2022.

Outlook and guidance

• H2 priorities include lottery marketing tickets, expansion across Welfare Lottery and Sports Lottery markets, and additional provincial deployments of lottery software and equipment.

• Plans include continued lottery software and hardware development, virtual goods and digital marketing services, digital transformation for lottery shops, and a SaaS enterprise marketing platform initially targeting lottery retailers.

• Tangible-goods sourcing and delivery, mainly daily necessities, is expected to contribute revenue in H2 2023.

• Strategic investments and cross-segment synergies remain priorities; no numerical earnings guidance was stated.