China Literature (772) investor relations material

Executive summary

• Revenue declined 9.3% year-over-year to RMB 7.37 billion, mainly due to fewer drama and film releases and a RMB 1.8 billion goodwill impairment, with net loss to shareholders widening to RMB 776 million.

• Online business revenues remained stable at RMB 4.05 billion, while IP operations and others dropped to RMB 3.32 billion.

• Non-IFRS net profit to shareholders dropped 24.8% year-over-year to RMB 858.5 million.

• The company leveraged its deep IP library and creator ecosystem to deliver hit content across multiple formats, with breakthroughs in AI-driven content creation and global expansion.

• Premium content ecosystem showed growth, with strong performance in short drama and AI-animated drama formats.

Financial highlights

• Gross profit was RMB 3.4 billion, with a gross margin of 46.1%, down from 48.3%.

• Operating loss increased to RMB 804.5 million, and EBITDA dropped 34.5% to RMB 477.4 million.

• Net other losses increased to RMB 1,245.8 million, mainly due to the goodwill impairment.

• Selling and marketing expenses decreased by 11.1% to RMB 2,011 million; G&A expenses fell by 11.9% to RMB 1,007.3 million.

• Net cash position at year-end was RMB 9,436 million.

Outlook and guidance

• Plans to release at least 200 short dramas in 2026, aiming for further growth in hit rate and profitability.

• Focus on scaling AI-animated drama business, expanding premium content, and deepening AI adoption across creative assistance, production, and IP development.

• Continued global expansion leveraging AI translation, international partnerships, and content genre diversification.