HONG KONG, Aug. 2, 2022 /PRNewswire/ — On August 2, Newborn Town Inc. (9911.HK), a company focusing on global social networking markets, released its H1 2022 positive profit alert. The Company expects to record a revenue of RMB 1,350 to 1,400 million by the end of the first half of the year, up over 30% on a yearly basis. Its net profit will approximate RMB 145 to 165 million, representing a YoY growth of 5% to 20%, while adjusted EBITDA is expected at RMB 200 to 220 million, achieving a YoY increase of 14% to 25%. Its net profit attributable to the parent company is expected to reach RMB 75 to 95 million, 103% to 157% higher, more than doubling when compared with H1 2021.
Over the past six months, thanks to its model of replicable success and more efficient business operation in multiple markets, the Company expects to record social networking business revenue of RMB 1,250 to 1,285 million, an increase of about 50% compared with H1 2021.
Meanwhile, it has also achieved success in the innovative businesses, especially with its refined games. The revenue from innovative businesses is expected to reach approximately RMB 100 to 115 million, up roughly 80% compared with H2 2021.
Robust profitability from core social networking business
Committed to the strategy of emphasizing profits and expanding scale, Newborn Town has been improving its products, technology arena and business model in the first half of the year. These efforts have been leading to continuous growth in both revenue and profit, especially in terms of adjusted EBITDA and net profit attributable to parent. Results show that with more investments going to the Company’s innovative businesses, the profitability of its core business has become stronger.
According to the profit alert, in H1 2022, Newborn Town’s social networking business posted a YoY growth of approximately 30% in average MAUs (monthly active users), while growth in revenue was 50%. This indicates more efficient monetization for its social networking business.
With focus on global open social networking, Newborn Town has built a portfolio of audio and video social networking products, including video-matching social app Yumy, open social platform MICO and voice-based social app YoHo. The Company uses these diversified applications to connect global users and satisfy their distinct social needs.
Benefiting from its increasingly mature middle-platform capacity, since this year, Newborn Town has been able to further upgrade product experience, improve content ecology, optimize recommendation algorithms, and offer global users with more refined services.
Recently, Newborn Town has launched new, interactive mini-games such as virtual pets in its social products to create stronger interaction between users. This is a move that not only improves user retention, but also further opens up monetization scenarios.
The Company has also improved its incentive mechanism for content creators, which can provide opportunities for new creators in various fields and help outstanding creators get more rewards, as a way to facilitate the establishment of a sustainable content ecology. In the meantime, the Company is also promoting its algorithm mechanism for more efficient matching-making, accurate social connections and content distribution.
“Replicable success in different countries” boosts breakthroughs in high-value markets
Aside from consolidating the social ecology, Newborn Town has also exploited high-value markets such as Europe, North America, Japan and Korea in the first half of the year, where the Company replicated its previously proven business model and experience with great success. Leveraging on strong localization capability, it can make faster landing in high-value markets, promote brand awareness and improve products penetration to pursue long-term scale growth.
Following its success in markets where the Company has established competitive edges, Newborn Town offers a range of localized operation activities by digging into the needs of local users and developing local resources, which effectively stimulates creators to produce diverse content and attracts loyal users.
For example, in Japan, one of the strategic markets of Newborn Town, the Company organized a series of online and offline activities together with local soccer teams after learning about the local soccer culture. These well-designed local events provided creators with not only more opportunities for self-display, but also higher rewards. The offline events also successfully directed traffic into the Company’s products. The products were quickly known and supported by the local community of soccer fans, which helped drive daily active users to a new high.
In markets where the Company has longer presence and established competitive edges, such as the MENA region and Southeast Asia, Newborn Town has been involving more in public welfare and social campaigns, such as donating to charitable hospitals and organizations and organizing press gathering during the holy month of Ramadan in the MENA region. These activities helped demonstrate the Company’s dedication to social values, which will in turn help promote brand reputation and influence among the locals.
Along with the continuous improvement in content ecology, user loyalty and willingness to pay, the accelerated breakthroughs in high-value markets, and the consolidated leading position in previous markets, Newborn Town has improved the efficiency of its social networking business for high-quality growth.
The shift to innovative businesses bears remarkable fruit
In addition to the social networking business, the Company’s innovative businesses have also performed well in the first half of the year. Results were particularly encouraging with refined games, where the Company has proceeded to large-scale promotion from the stage of initial investment. The innovative businesses have brought new highlights to performance growth, shaping up a second growth curve for the Company.
The Company has formally released two merge games, Mergeland – Animal Adventure and Mergeland – Alice’s Adventure – in April and June, respectively. Upon release, the Company has been making fast version updates to diversify the gameplay and optimize the gaming experience. The Company is ramping up the advertising efforts around the two games as they gradually step into the scale monetization phase.
According to data.ai, both the downloads and revenue of Mergeland – Animal Adventure presented an upward trend with increasing steepness after its launch. The game kept notching new records in the best-selling game ranking in different counties recently. It has been one of the Top 30 best-selling puzzle games on Google Play in more than 30 countries and regions, including Canada, U.K., Portugal and Australia.
In addition, Newborn Town has been exploring novel technologies and new fields, including Metaverse and smart hardware. Through the cooperation with numerous industry leaders in virtual technology and the investment into smart wearable device makers like Shi Mi Network Technology, the Company seeks to expedite the deep integration of its existing business with Metaverse and to pinpoint more development opportunities.
“In 2022, we will further expand our scale and achieve higher-quality growth on the premise of profits,” Liu Chunhe, Chairman of Newborn Town said at the Company’s performance meeting of 2021. As shown from the profit alert, Newborn Town is forging ahead steadily towards its goal and making “high-quality growth” a reality.
