NetDragon Websoft (777) H2 2025 earnings summary

Executive summary

• Implemented 'AI Now' strategy, advancing transformation into an AI-driven organization across education, gaming, and strategic investments, with significant cost optimization and operational improvements realized in 2025.

• Operating expenses decreased by 22.2% YoY, and operating profit in H2 2025 rose 47.7% YoY, with further benefits expected in 2026.

• Strategic partnerships established with Volcengine (ByteDance), Thailand's MHESI, and Cameroon's MINESEC, supporting global expansion and digital education initiatives.

• MSCI ESG rating upgraded from BBB to A, reflecting ongoing achievements in sustainability and governance.

Financial highlights

• Total revenue for FY2025 was RMB4.5 billion, down 26.0% YoY; gross profit was RMB3.1 billion, down 20.2% YoY, but gross margin improved by 5.1 percentage points to 70.3%.

• Gaming and application services revenue was RMB3.3 billion (73.2% of total), down 16.8% YoY; Mynd.ai revenue was RMB1.2 billion, down 43.2% YoY.

• Core segmental profit from gaming and application services was RMB897 million, down 3.0% YoY; core segmental loss from Mynd.ai was RMB358 million, up from RMB297 million loss in 2024.

• Profit attributable to owners was RMB151 million, a 51.4% decrease YoY, impacted by cryptocurrency impairment and one-off staff optimization expenses.

• Final dividend of HKD0.50 per share proposed, total annual dividend HKD1.0 per share.

Outlook and guidance

• Cost optimization benefits expected to be fully realized in 2026, supporting long-term value creation.

• Plans to expand AI-native games portfolio into new genres (Match-3, Roguelike) and launch multiple new titles in 2026.

• Continued investment in AI, AR, and frontier technologies to drive future growth and business synergies.

• Commitment to distribute at least HKD600 million to shareholders over the next 12 months via dividends and share repurchases.