In This Article:
Release Date: March 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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NetDragon Websoft Holdings Ltd (FRA:3ND) reported a significant increase in profit, up 90% to 759 million.
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The company's gross margin improved by 3.3% to 65.2%, indicating better cost management.
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NetDragon Websoft Holdings Ltd (FRA:3ND) has maintained a strong cash flow, with six consecutive years of over 1 billion in opening cash flow.
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The company declared a 2.5% dividend per share, resulting in a 7.6% dividend yield based on the previous day's share price.
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NetDragon Websoft Holdings Ltd (FRA:3ND) is embracing AI across its core businesses, gaming and education, to enhance cost efficiency and product development.
Negative Points
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The company faced revenue declines, with gaming and application services dropping 6% to 3.9 billion.
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Revenue from the education segment is experiencing headwinds in key markets like the US and Europe due to inflation and budget uncertainties.
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The company's mine business saw a significant revenue drop of 70% to 2.1 billion.
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There is a one-time non-cash deferred tax provision expense of 452 million related to the mine operations.
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NetDragon Websoft Holdings Ltd (FRA:3ND) anticipates continued headwinds in the education sector in 2025, with recovery expected only in 2026.
Q & A Highlights
Q: Can you elaborate on the strategic partnership with the AI company and its expected impact? A: The partnership involves a company investing RMB 75 million in cash and AI assets. This collaboration is expected to enhance our AI capabilities, particularly in education and gaming, and expand our market reach beyond mainland China. (Respondent: Unidentified_2)
Q: How is NetDragon planning to manage the financial headwinds in the education sector? A: We are facing challenges in the US and Europe due to inflation and budget uncertainties. However, we expect a recovery by 2026. We are also focusing on cost management and leveraging AI to improve efficiency. (Respondent: Unidentified_2)
Q: What are the financial highlights for 2024, and what is the outlook for 2025? A: Despite a revenue drop to 6 billion, our gross margin improved to 65.2%, and profit increased by 90% to 759 million. We expect cost savings from AI initiatives to materialize in 2025, positioning us well for future growth. (Respondent: Unidentified_3)
Q: Why did the gaming core profit drop significantly in the second half of 2024, and what is the outlook for 2025? A: The drop was due to proactive adjustments in our evergreen IP. We expect a flat performance in the first half of 2025, with a rebound in the second half as new games are launched. (Respondent: Unidentified_3)