After the market on August 24, Celadon Games (6633.HK) announced the semi-annual results ending June 30, 2023 and held a results conference.

As a leading mobile game developer and publisher in China, Celadon Games has always been committed to providing quality mobile games to players around the world, and its many products are popular. In recent years, it has implemented an excellent integrated model of R&D and operation, promoted global business layout, and steady improvement of operations.

The following are specific highlights of the company's latest performance:

Increased profitability, excellent performance in long-term operations and new tours

According to financial reports, Celadon Gaming recorded revenue of 334 million yuan in the first half of the year, an increase of 25% over the previous year; net profit to mother was 41.482 million yuan, reversing the year-on-year loss. As reflected on the user side, as of June 30, 2023, the Group had accumulated more than 82.36 million registered players, an increase of 8.14% over the previous year; the average number of monthly active users was about 1.8 million, and ARPPU increased by 41% to 296 yuan.

Looking at specific products, the game “The Strongest Snail” developed independently by Celadon Games is still strong. It has been three years since the game was launched. As of the first half of 2023, the game recorded a cumulative turnover of about 2,975 billion yuan at home and abroad, with a cumulative total of 24.53 million registered players. From launch to the end of the reporting period, the average weekly player retention rate was 25.9%.

In addition to laying a good foundation for flagship games, new games have also begun to be launched intensively. “Legend of Sword and Fairy: Sword Waving and Greeting”, which was jointly distributed with China Mobile Games, was officially launched on June 9. It quickly gained strong popularity from a wide range of players. In addition to the self-developed game “Project Demon”, which was released in January, contributed to increased performance. “Magical Card Girl Sakura: Key to Memories” was also recently officially announced to be released in September.

Promote overseas trips and the layout related to the new version, and improve game reserves

In terms of existing games, Celadon Games will continue to promote overseas business, develop new versions, and reach more players. The share of overseas revenue in the first half of the year increased significantly to nearly 20% compared to 13% in the same period last year. For example, “The Strongest Snail” was successfully released in Thailand in January of this year. It was also launched in North America and Australia in August and reached the top of the iOS free list in the three regions. Currently, preparations are being made for release in other regions of Southeast Asia, and the H5 version will be launched in the fourth quarter of 2023, so that players can experience this game through various channels and in a more convenient way. The H5 version of “Legend of Sword and Fairy” is also being prepared.

As of the first half of 2023, Celadon Games also has 12 reserve games, covering various genres and categories, including RPG, SLG, and casual games, including “Magical Card Girl Sakura: Key to Memories” and “Time Travel Agency”, which are highly anticipated by the market.

The following is a transcript of QA questions and answers from investors and management at the results meeting:

Q&A

Q1: The company cooperated with China Mobile Games to publish “The Legend of Sword and Fairy: Sword Waving Your Love”.In a situation where new game launches are relatively intensive this year, will the purchase volume and operation of this product be affected to a certain extent? as wellThe company is rightOf this productThe operating strategy isWhat kind?

A1: It's true that there are quite a lot of new tours launched in the same period, but so far this product has performed very well. Behind this achievement, one is that the product itself has a unique gameplay, integrating multiple cards+RPG+SLG gameplay, which enhances players' stickiness and payment depth; second, Celadon has a unique content marketing method. For example, we planned a Maotai event on the theme of Jiu Xian during the launch of the festival, and covered a multi-level player base through collaborations with different styles of stars. It is expected that this product will have a steady flow of performance.

Q2:When will the game “Magic Card Girl Sakura: Key to Memories” be released?undOn the marketGo to OtherofwomanhoodtowardsCompared to the game, what are the features of this game? as well asincorporationWhy is it involving women into games?

A2: It was officially announced yesterday that this product will be released in the mainland on September 21. It will later be launched in Hong Kong, Macao and Taiwan. Judging from the product features, this game features the Q version of the Kozakura Online Blind Box, focuses on collection, development, etc., and has a built-in AR system; Kozakura IP has a strong influence and is liked by many female players. The producers hope to create a game that carries everyone's precious memories of their youth and brings everyone a unique experience. The release of this game can also further broaden our player base, deepen our understanding of players' interests and needs, and at the same time enrich the game's themes and expand its influence in players' minds.

Q3: “The Strongest Snail”alreadyLaunched in many overseas regions,If you want to askCurrent share of domestic and overseas revenuesituations? How does the company look forwardThis productThe next revenue trend?

A3: Currently, this product still accounts for a relatively high share of domestic revenue. Overseas accounts for about 30%, but we can see that the share of overseas revenue will gradually increase. On the domestic side, since “The Strongest Snail” already has a large loyal player base in China, we will continue to work hard for a long time. In particular, the H5 version will be launched in the fourth quarter, which is expected to improve sales performance. On the overseas side, Japan and Thailand have now entered a stable long-term operation stage, and the performance of North America and Australia is in line with expectations. In the future, we will also deepen our coverage of other regions in Southeast Asia, and it is expected that overall overseas revenue will maintain a relatively significant increase.

Q4:The future,Will the company continueThe idea of fee control?HowLooking forward to future expenses?

A4: Since last year, we have been promoting cost reduction and efficiency, and this year we have continued this line of thought. We have continued the celadon style in terms of expenses. Running in small steps in the first and middle of the project will not incur huge expenses, and at the same time, we will not deliberately save on R&D expenses. Currently, the development of new games and self-developed games is progressing well. In the future, all expenses will remain at a relatively ideal ratio.

Q5: When is the company's self-developed game “Time Travel Agency” expected to be released? In which regions will it be distributed? What level of turnover is expected for this game compared to “The Strongest Snail”?

A5: “Time Travel Service” is expected to be officially launched within this year, and is currently in a quasi-launch state. As far as planning the release time is concerned, the first is based on game refinement and tuning considerations. The company wants to achieve “celadon products must be excellent products”; second, the company arranges and grasps the pace of game distribution. “Magic Card Girl Sakura” will be launched in September, and after that, “Time Travel Service” will be scheduled to be launched in major regions around the world. When designing “Time Travel Agency,” the company considered global distribution. For example, using characters with local characteristics and scenes suitable for the local area, unlimited streaming can accommodate a variety of content and styles. This is also a characteristic of celadon development.

Compared to “The Strongest Snail,” this game has had quite a few iterations in terms of gameplay, social networking, etc., so that players with different payment habits can find fun, and it also hopes to increase players' retention rates.

In terms of turnover, this game favors a path of steady growth over the medium to long term, and its long-term retention rate is expected to surpass “The Strongest Snail.”