- Total Revenues: Increased by 27.7% year-over-year to RMB4.4 billion.
- Online Business Revenues: RMB1.94 billion compared with RMB1.98 billion in the first half of 2023.
- Revenue from Own Platform Products: Decreased slightly to RMB1.7 billion year-over-year.
- Revenue from Self-Operated Channels on Tencent Products: RMB131 million compared with RMB177 million in the same period last year.
- Revenue from Third-Party Platforms: Increased by 18.2% year-over-year to RMB116 million.
- Total MAUs for Online Reading Business: RMB176 million compared to RMB212 million in the first half of 2023.
- MPUs for Paid Content: RMB8.8 million, a slight 0.4% increase year-over-year.
- Monthly ARPU for Paid Reading Content: RMB31.7 compared to RMB32.3 in the first half of 2023.
- Revenues from IP Operations and Others: Increased by 73.3% year-over-year to RMB2.3 billion.
- Revenues from IP Operations: Increased by 75.7% year-over-year to RMB2.2 billion.
- Revenues for the Other Category: Increased by 6.9% year-over-year to RMB48 million.
- Cost of Revenues: RMB2,200 million, up 25.6% year-over-year.
- Gross Profit: Increased by 29.8% year-over-year to RMB2.1 billion.
- Gross Margin: Increased to 49.7% from 48.9% year-over-year.
- Selling and Marketing Expenses: Increased by 41% year-over-year to RMB1.2 billion.
- G&A Expenses: Increased by 1.9% year-over-year to RMB545 million.
- Operating Profit: Increased by 46.1% year-over-year to RMB454 million.
- Profit Attributable to Equity Holders: Increased by 33.9% to RMB504 million.
- Non-IFRS Profit Attributable to Equity Shareholders: Increased by 16.4% year-over-year to RMB702 million.
Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- China Literature Ltd (CHLLF, Financial) achieved a significant milestone with the successful debut of Joy of Life 2, which became a national sensation and set viewership records.
- The company saw a 27.7% year-over-year increase in total revenues, reaching RMB4.4 billion.
- Monthly paying users for the online reading business grew to over 8.8 million, indicating strong user engagement.
- The company made significant progress in the commercialization and monetization of its IP, with notable success in the collectible cards business.
- China Literature Ltd (CHLLF) is actively leveraging AI technology to enhance its content ecosystem, including AI translation and text generation, which has significantly improved efficiency and reduced costs.
Negative Points
- Revenues from the online business decreased slightly year-over-year to RMB1.94 billion, primarily due to optimization of ROI in distribution channels.
- Total MAUs for the online reading business decreased from RMB212 million to RMB176 million, reflecting a focus on quality over quantity.
- Selling and marketing expenses increased by 41% year-over-year to RMB1.2 billion, impacting overall profitability.
- Revenues from self-operated channels on Tencent products decreased significantly, from RMB177 million to RMB131 million.
- The cost of revenues increased by 25.6% year-over-year to RMB2.2 billion, driven by higher production costs and increased investment in high-quality content.
Q & A Highlights
Q: Can management share the pipeline for the second half of the year and next year, and specific plans for New Classic Media?
A: Mr. Tang from New Classics Media addressed this. The pipeline for the second half includes drama series like "Guardians of the Dafeng." Over the next two years, more than 10 drama series are planned, including "Narcotic Operation" and "Beautiful Destiny." NCM has achieved significant integration with China Literature and is exploring new areas, with several works preordered by video platforms.
Q: What's the company's strategy for the IP character business unit, particularly for collectible cards and merchandise?
A: CEO Xiaonan Hou explained that the market demand for merchandise characters is robust. The company focuses on IP content and operates the business through both licensing and self-development models. They engage top artists to design products based on fan preferences and synchronize merchandise releases with other content formats and offline events.
Q: How should we think about the online reading business in terms of paying ratio and ARPU, and what are the future trends?
A: Vice President Yan Huang stated that the paying ratio and ARPU are not expected to be affected by macro uncertainties. High-quality literature remains essential, and users show a strong willingness to pay for premium content. The company focuses on creating high-quality content and optimizing user engagement and distribution efficiency.
Q: Can management share the latest updates on AI technology application in operations and user experience?
A: The company has made significant progress in AI translation, enhancing efficiency and reducing costs. AI-translated works now account for 40% of the top 100 bestsellers on their overseas platform. They are also developing AI models for text generation, text-to-image, and text-to-video features to assist writers and enrich user experiences.
Q: What are your thoughts on IP operation and incremental revenue, and the trends in the drama industry?
A: CEO Xiaonan Hou highlighted the success of "Joy of Life 2" as a national blockbuster, validating the commercial value of their premium IP. The company benefits from the growing demand for top-tier IPs and focuses on integrated content operations across the industry value chain. The short-form drama industry is also growing, and the company plans to release over 100 short-form dramas in 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
