Revenue Growth - Total revenue for the first half of 2022 increased by 20.5% year-on-year to RMB 971.2 million, driven by strong growth in VIP subscription services[23] - VIP subscription business became the largest revenue source, reaching RMB 339.2 million, a year-on-year increase of 61.4%[25] - Revenue from online advertising fell by 35.1% year-on-year to RMB 254.7 million, indicating a shift in revenue sources[25] - Revenue from SaaS and related businesses surged by 1,542.3% in the first half of 2022, primarily serving the cosmetics and skincare industries[35] - Revenue from internet value-added services increased by 11.7% year-on-year to RMB 41.7 million for the six months ended June 30, 2022, compared to RMB 37.3 million for the same period in 2021[47] User Metrics - Monthly active users (MAUs) grew to 240.9 million as of June 30, 2022, representing a 4.5% increase from December 31, 2021[26] - The number of MAUs for Meitu Xiuxiu reached 124.7 million, an increase of 8.7% from the previous period[26] - The number of MAUs in mainland China increased by 11.2% to 171.1 million, while overseas MAUs decreased by 9.0% to 69.8 million[26] - The monthly active user base grew by 4.5% compared to December 2021, indicating a stable user foundation for VIP subscription growth[30] Profitability and Losses - Adjusted net profit attributable to the company’s owners rose by 7.9% year-on-year to RMB 36.0 million[25] - The company reported a net loss of RMB 281.61 million for the six months ended June 30, 2022, compared to a net loss of RMB 137.68 million for the same period in 2021[38] - The net loss for the six months ended June 30, 2022, increased significantly to RMB 281.6 million, compared to RMB 137.7 million for the same period in 2021, primarily due to impairment losses on purchased cryptocurrencies[57] - The total comprehensive loss for the six months ended June 30, 2022, was RMB 235,868 thousand, compared to RMB 151,520 thousand for the same period in 2021, representing an increase of approximately 55.6%[107] Cost and Expenses - The gross profit margin decreased to 51.8%, down 14.3 percentage points compared to the previous year[25] - Operating costs increased by 71.2% year-on-year to RMB 467.8 million for the six months ended June 30, 2022, compared to RMB 273.2 million for the same period in 2021[49] - Research and development expenses increased slightly to RMB 265.49 million from RMB 259.46 million year-over-year[40] - Administrative expenses increased by 8.0% year-on-year to RMB 136.3 million for the six months ended June 30, 2022, compared to RMB 126.2 million for the same period in 2021[52] Strategic Initiatives - The company aims to maximize revenue from existing customers by expanding the range of competitive products available through its supply chain management SaaS[32] - The company plans to optimize costs and expenses to ensure prudent operations while investing more in R&D to enhance product performance[35] - The company is focusing on expanding its SaaS and ERP services for cosmetics retailers, which is expected to generate new revenue streams[116] - The company aims to expand its VIP subscription user base by enhancing premium features and offering various subscription models[44] Financial Position - Cash and cash equivalents as of June 30, 2022, amounted to RMB 793.065 million, an increase from RMB 738.732 million as of December 31, 2021[61] - Total current financial resources, including cash and cash equivalents, short-term and long-term bank deposits, were RMB 1,090.493 million as of June 30, 2022, down from RMB 1,258.191 million as of December 31, 2021[61] - The company maintained a low debt-to-equity ratio of 0.3% as of June 30, 2022, consistent with the ratio as of December 31, 2021[67] - The company reported a basic and diluted loss per share of RMB (0.06), compared to RMB (0.03) for the same period last year, indicating a 100% increase in loss per share[98] Investments and Acquisitions - The company acquired approximately 20.67% equity in Meidede for a total consideration of approximately RMB 79,742,000, which included RMB 39,871,000 in cash and the issuance of 29,452,667 shares at an issue price of HKD 1.66 per share[71] - As of June 30, 2022, the group holds approximately 63.35% equity in Meidede, which has become a subsidiary of the group[71] - The company made investments in financial assets measured at fair value totaling RMB 33.321 million for the six months ended June 30, 2022, compared to RMB 77.903 million for the same period in 2021[64] Compliance and Governance - The company has adhered to the corporate governance code as of June 30, 2022, ensuring transparency and accountability[84] - The audit committee has reviewed the unaudited interim financial statements for the six months ended June 30, 2022, confirming compliance with applicable accounting standards[90] - The interim financial data has been reviewed and found to comply with International Accounting Standards[96] Market and Regulatory Environment - Foreign investors are prohibited from holding more than 50% equity in companies providing value-added telecommunications services in China[91] - As of May 1, 2022, the qualification requirements for foreign investors in the value-added telecommunications sector have been abolished[91] - The approval process for foreign investment remains uncertain due to the lack of clear guidelines[91]

Financial Performance - Total revenue for the first half of 2022 increased by 20.5% year-on-year to RMB 971.2 million, with adjusted net profit attributable to the company owners rising by 7.9% to RMB 36 million[4]. - The company's revenue for the six months ended June 30, 2022, reached RMB 971.88 million, a 20.5% increase compared to RMB 806.00 million for the same period in 2021[15]. - Total revenue for the six months ended June 30, 2022, was RMB 971,188,000, representing a 20.5% increase from RMB 806,004,000 for the same period in 2021[55]. - The company reported a net loss of RMB 281,613,000 for the six months ended June 30, 2022, compared to a net loss of RMB 137,679,000 for the same period in 2021, reflecting an increase in losses of approximately 104.5%[45]. - Adjusted profit attributable to owners for the six months ended June 30, 2022, was RMB 36 million, compared to RMB 33.4 million for the same period in 2021, driven by revenue growth from VIP subscription services[30]. Revenue Sources - VIP subscription business became the largest revenue source, generating RMB 339.2 million in the first half of 2022, a significant growth of 61.4% year-on-year[6]. - The VIP subscription business was the largest revenue source, growing by 61.4% year-on-year, with over 5 million active paying subscribers as of June 2022[13]. - Revenue from SaaS and related businesses surged by 1,542.3% in the first half of 2022, contributing RMB 226.55 million, which accounted for 23.3% of total revenue[15][16]. - Revenue from SaaS and related services surged by 1,542.3% year-on-year to RMB 226.6 million for the six months ended June 30, 2022, mainly due to natural growth and the acquisition of Meidede Technology[19]. - Revenue from online advertising declined by 35.1% year-on-year to RMB 254.7 million, indicating a shift in revenue sources[6]. User Engagement - Monthly active users reached 240.9 million in June 2022, a 4.5% increase compared to December 2021, driven primarily by the popularity of the Meitu Xiuxiu app[4]. - The number of VIP subscribers is expected to continue growing rapidly, supported by a large and stable base of monthly active users[9]. - The company is focusing on enhancing user experience through in-app marketing and optimizing VIP features to maintain high retention rates[9]. - New applications like Wink, which focuses on video portrait editing, are being introduced to further drive VIP subscription growth[9]. Operating Costs and Expenses - Operating expenses increased, with a focus on R&D investments to enhance product performance, while the company plans to optimize costs moving forward[13]. - Operating costs increased by 71.2% year-on-year to RMB 467.8 million for the six months ended June 30, 2022, with SaaS and related services being the largest contributor to this increase[22]. - R&D expenses increased by 2.3% year-on-year to RMB 265.5 million for the six months ended June 30, 2022, primarily due to increased employee costs[24]. - Sales and marketing expenses decreased by 2.9% year-on-year to RMB 182.7 million for the six months ended June 30, 2022, mainly due to reduced employee costs[24]. - Administrative expenses for the six months ended June 30, 2022, were RMB 136.3 million, an increase of 8.0% compared to RMB 126.2 million for the same period last year, primarily due to increased employee costs[25]. Cryptocurrency and Impairment - The fair value of purchased cryptocurrencies as of June 30, 2022, was approximately USD 32 million for Ethereum and USD 18 million for Bitcoin, with impairment losses recognized of RMB 124.1 million and RMB 181.4 million respectively[25]. - The company reported a net impairment loss on cryptocurrencies of RMB 305,457,000 for the six months ended June 30, 2022, compared to RMB 111,907,000 in the previous year, indicating a significant increase in impairment losses[44]. - The impairment loss on cryptocurrencies for the six months ended June 30, 2022, is RMB 305,457,000, compared to RMB 111,907,000 for the same period in 2021[69]. Strategic Initiatives - The company is leveraging its brand image and technological capabilities in AI and computer vision to provide enterprise solutions in the beauty industry[10]. - The company aims to maximize revenue by expanding the range of competitive products offered through its supply chain management SaaS and converting existing ERP customers[11]. - The company plans to introduce higher-margin premium products as it expands its market share and customer trust in the supply chain management sector[11]. - The company plans to continue its strategic focus on expanding its SaaS offerings and enhancing its ERP systems for cosmetics retailers[53]. - The company plans to seek strategic investment opportunities to enhance synergies in technology development, product research, and market expansion[41]. Financial Position - Cash and cash equivalents as of June 30, 2022, amounted to RMB 793.1 million, compared to RMB 738.7 million as of December 31, 2021[32]. - The company has a low debt-to-equity ratio of 0.3% as of June 30, 2022, consistent with the previous year, indicating minimal reliance on borrowing for operations[38]. - As of June 30, 2022, total assets decreased to RMB 4,449,398 thousand from RMB 4,747,314 thousand as of December 31, 2021, representing a decline of approximately 6.3%[46]. - The company reported a total equity of RMB 3,357,773 thousand as of June 30, 2022, down from RMB 3,515,802 thousand as of December 31, 2021, indicating a decrease of about 4.5%[47]. - The company’s accumulated losses increased to RMB (3,795,172) thousand as of June 30, 2022, compared to RMB (3,528,927) thousand as of December 31, 2021, marking an increase of approximately 7.6%[47]. Governance and Compliance - The audit committee reviewed the unaudited interim financial statements for the six months ended June 30, 2022, confirming compliance with applicable accounting standards[77]. - The company has adopted the Corporate Governance Code and confirmed compliance with its provisions for the six months ended June 30, 2022[76]. - The interim results announcement will be published on or before September 30, 2022[81].

Financial Performance - In 2021, the company's revenue reached RMB 1.666 billion, representing a year-on-year growth of 39.5% compared to RMB 1.194 billion in 2020[10]. - The adjusted net profit attributable to the company's owners for the year was RMB 85.073 million, a 39.7% increase from RMB 60.892 million in 2020, marking the second consecutive year of profitability[12]. - The gross profit for 2021 was RMB 1.125 billion, with a gross margin of 67.5%, up from 66.5% in 2020, indicating improved profitability[12]. - Online advertising revenue increased by 12.5% to RMB 765.849 million, compared to RMB 680.709 million in 2020[12]. - The company reported a net loss of RMB 77.430 million for the year, which is a 28.8% increase in losses compared to RMB 60.132 million in 2020[12]. - Revenue from VIP subscriptions and image SaaS grew significantly by 146.9% to RMB 519.49 million, representing 31.2% of total revenue[35]. - Internet value-added services revenue rose by 51.9% to RMB 81.67 million, driven by increased revenue sharing from third-party partners[36]. - Revenue from other businesses increased by 20.0% year-on-year to RMB 299 million for the year ended December 31, 2021, compared to RMB 249 million for the year ended December 31, 2020[37]. - The company had approximately 4 million VIP members globally by December 2021, more than doubling from the end of 2020[35]. - Total revenue for the year ended December 31, 2021, increased by 39.5% to RMB 1,666.03 million from RMB 1,194.02 million for the year ended December 31, 2020[30]. User Engagement - The total monthly active users decreased to 230.644 thousand, down 11.6% from 261.048 thousand in 2020[15]. - The monthly active users for the BeautyPlus app dropped by 32.7% to 37.116 thousand, while the number for the Beauty Camera app decreased by 8.1% to 56.870 thousand[15]. Strategic Initiatives - The company is focusing on expanding its image SaaS solutions targeting design professionals and individuals, leveraging computer vision technology[10]. - The company aims to enhance its product offerings and market presence through strategic initiatives in the coming years[10]. - The company's SaaS strategy for the imaging and beauty industries is expected to drive future revenue growth, with a focus on AI technology and design solutions[20]. - The company plans to launch a second-generation skin analysis device with enhanced features, aimed at expanding its customer base in the medical beauty sector[22]. - The company plans to enhance competitiveness by providing more beauty-related products and services, leveraging the growing trend of brands using live streaming for marketing[34]. - The company aims to continue investing in user experience improvements for its services, anticipating ongoing growth in its VIP subscription and image SaaS business[35]. Cost Management - The company is focusing on optimizing costs and expenditures while maintaining operational efficiency amid rising operating expenses in 2021[25]. - Operating costs increased by 35.2% to RMB 540.9 million for the year ended December 31, 2021, up from RMB 400.1 million for the year ended December 31, 2020[38]. - Research and development expenses increased to RMB 545.49 million from RMB 404.21 million in the previous year[29]. - Sales and marketing expenses increased by 36.0% to RMB 391 million for the year ended December 31, 2021, up from RMB 287.5 million for the year ended December 31, 2020[42]. - Administrative expenses grew by 28.7% to RMB 265 million for the year ended December 31, 2021, compared to RMB 205.9 million for the year ended December 31, 2020[43]. Investments and Acquisitions - The company has entered into a further acquisition agreement to gain controlling interest in Meide, which will be consolidated into the group from January 2022[21]. - On April 9, 2021, the company acquired approximately 9.57% equity in Meidede for a total cash consideration of RMB 19,133,200, increasing its stake from approximately 33.11% to approximately 42.68%[68]. - On December 17, 2021, the company entered into an agreement to acquire an additional 20.67% equity in Meidede for approximately RMB 79,741,920, resulting in a total ownership of approximately 63.35%[68]. - The company plans to continue seeking strategic investment opportunities to establish synergies in technology development, product research, product portfolio, channel expansion, and cost control[67]. Financial Position - Cash and cash equivalents decreased to RMB 738,732,000 in 2021 from RMB 1,158,117,000 in 2020, a decline of approximately 36.2%[55]. - The company maintained a healthy liquidity position with total current financial resources of RMB 1,258,191,000 as of December 31, 2021, down from RMB 2,182,016,000 in 2020[55]. - The company's debt-to-equity ratio was 0.3% as of December 31, 2021, down from 0.5% in 2020, indicating a reduction in reliance on debt financing[62]. - The workforce increased to 2,090 full-time employees in 2021 from 1,770 in 2020, reflecting a growth of approximately 18.1%[63]. Corporate Governance - The company has a strong management team, including CFO Yan Jinliang and COO Wang Xiujuan, who joined in June 2015 and August 2019 respectively[80]. - The company has established a remuneration committee to formulate remuneration policies for directors and senior management[96]. - The board of directors has confirmed the independence of all independent non-executive directors as per the listing rules[127]. - The company has purchased liability insurance for its directors to provide adequate protection[130]. Regulatory Compliance - The acquisition and ongoing related party transactions are subject to independent shareholder approval and regulatory compliance as per listing rules[145]. - The company has obtained necessary licenses and permits for its operations, including the Internet Culture Business License and the ICP License[147]. - The company is closely monitoring regulatory developments in China to mitigate risks associated with the Meitu Yifu contractual arrangements[173]. - The company has been advised that the existing Dajie VIE agreement does not violate relevant Chinese regulations[190]. Shareholder Information - The company did not recommend the distribution of a final dividend for the year ended December 31, 2021[93]. - The employee stock option plan allows for a total of 116,959,070 shares to be granted, with 18,692,770 shares of options unexercised as of December 31, 2021[100]. - The maximum number of shares that can be issued under the post-IPO share option plan is capped at 30% of the company's issued share capital[103]. - As of December 31, 2021, a total of 422,729,455 shares are available for grant under the post-IPO share option plan, representing 9.71% of the issued share capital[103]. Market Position - The main business segments include online advertising and internet value-added services, as well as smart hardware production[88]. - The company generates revenue from online advertising and sales of virtual goods through its mobile applications, with significant income derived from these operations[147].

Revenue Growth - Total revenue for the first half of 2021 reached RMB 806 million, a year-on-year increase of 44.6%[24] - Revenue from premium subscription services and in-app purchases surged by 150.7%, amounting to RMB 211 million[24] - Revenue for the first half of 2021 increased by 44.6% to RMB 806.0 million compared to RMB 557.5 million in the same period of 2020[33] - Online advertising revenue grew by 23.3% to RMB 393 million[24] - Internet value-added services revenue increased by 65.6% to RMB 35.3 million[24] - Advertising business grew by 23.3% year-on-year, contributing significantly to overall revenue recovery[33] - Revenue from premium subscription services and in-app purchases surged 150.7% year-on-year to RMB 210.9 million, attributed to the optimization of premium features and an increase in new and renewing subscribers[44] - Other revenue increased by 25.2% year-on-year to RMB 167.2 million, with the influencer marketing solutions (IMS) business contributing 87.0% of this revenue[46] Profitability - Gross profit increased by 49.8% to RMB 533 million, with a gross margin of 66.1%[24] - Adjusted net profit attributable to the company's owners was RMB 33.4 million, reflecting a 33.8% increase year-on-year[24] - Gross profit for the first half of 2021 was RMB 532.8 million, up from RMB 355.7 million in the previous year[37] - The adjusted net profit attributable to the company’s owners was RMB 33.4 million, compared to RMB 24.9 million in the same period last year[39] - The adjusted profit attributable to the owners for the six months ended June 30, 2021, was RMB 33.58 million, compared to RMB 24.94 million for the same period in 2020, driven by growth in premium subscription services and in-app purchases[61] Expenses and Costs - Operating expenses increased, with R&D spending rising to RMB 259.5 million from RMB 188.0 million year-on-year[37] - Research and development expenses rose by 38.0% year-on-year to RMB 259.5 million, mainly due to increased personnel costs[51] - Sales and marketing expenses increased by 39.8% year-on-year to RMB 188.2 million, driven by higher promotional and employee costs[52] - Operating costs increased by 35.4% year-on-year to RMB 273.2 million, with the IMS business being the largest contributor to this increase[49] Cash Flow and Liquidity - Total cash and cash equivalents as of June 30, 2021, were RMB 772.26 million, down from RMB 1,158.12 million as of December 31, 2020[64] - The company reported a total of RMB 1.11 billion in cash and other liquid financial resources as of June 30, 2021, compared to RMB 2.18 billion as of December 31, 2020[64] - The company maintained a healthy liquidity position with a focus on prudent financial management as of June 30, 2021[65] - Cash used in operating activities for the six months ended June 30, 2021, was RMB 348,349 thousand, compared to RMB 79,211 thousand for the same period in 2020[117] Losses and Impairments - The net loss for the six months ended June 30, 2021, increased significantly to RMB 137.68 million from RMB 24.99 million in the same period of 2020, primarily due to impairment losses on purchased cryptocurrencies[60] - The company reported a net impairment loss on cryptocurrency of RMB 111,907 thousand, with no such loss reported in the previous year[103] - The company reported a net loss attributable to equity holders of RMB 128,666,000 for the six months ended June 30, 2021, compared to a loss of RMB 15,953,000 for the same period in 2020[157] Employee and Shareholder Information - The company employed a total of 1,909 full-time employees as of June 30, 2021, an increase from 1,770 employees as of December 31, 2020[75] - The company has a competitive compensation policy to retain employees, including salaries, discretionary bonuses, and benefits plans[75] - As of June 30, 2021, the company had a total of 4,351,883,565 shares issued, with significant shareholders holding various percentages of equity[78][81] - The largest shareholder, Lion Trust (Singapore) Limited, held 1,398,366,670 shares, representing 32.13% of the total shares[81] Strategic Initiatives - The company anticipates continued revenue growth driven by premium subscription services, online advertising, and new business initiatives[35] - The company is focusing on integrating the beauty ecosystem to replicate past successes through the right commercialization strategies[35] - The company plans to seek strategic investment opportunities using existing internal resources and/or other funding sources to enhance technology development, product research, and market expansion[74] Financial Position - Total assets as of June 30, 2021, were RMB 4,435,339 thousand, a slight decrease from RMB 4,507,160 thousand as of December 31, 2020[110] - The company’s total equity decreased to RMB 3,446,552 thousand from RMB 3,567,835 thousand, indicating a decline in shareholder value[110] - The company’s total fair value of financial assets increased to RMB 599,841,000 as of June 30, 2021, compared to RMB 555,433,000 in the previous year[149] Corporate Governance - The company has complied with the corporate governance code as of June 30, 2021, ensuring effective internal control measures and transparency[86] - The audit committee has reviewed the unaudited interim financial statements for the six months ended June 30, 2021, confirming compliance with applicable accounting standards[92] Cryptocurrency Investments - The company holds cryptocurrencies such as Ethereum and Bitcoin, classified as intangible assets with an indefinite useful life, subject to annual impairment testing[125] - The company purchased cryptocurrencies totaling RMB 649,969,000 during the six months ended June 30, 2021, including 31,000 units of Ethereum and 940.88522604 units of Bitcoin[162] - The carrying amount of cryptocurrencies as of June 30, 2021, was RMB 534,103,000 for Ethereum and RMB 646,010,000 for Bitcoin[165] - The company faces price risk related to its cryptocurrency investments, with a potential pre-tax loss impact of approximately RMB 20,776,000 if the fair value of cryptocurrencies fluctuates by 10%[166]

Financial Performance - For the fiscal year ended December 31, 2020, the company reported a total revenue of RMB 1,194,020 thousand, representing a year-on-year increase of 22.1%[16] - The adjusted profit attributable to the company's owners for the same period was RMB 60,892 thousand, a significant turnaround from a loss of RMB 190,813 thousand in the previous year[16] - The company's gross profit for 2020 was RMB 793,871 thousand, with a gross margin of 66.5%, down from 71.5% in 2019[16] - Revenue from premium subscription services and in-app purchases surged by 140.1% year-on-year, reaching RMB 206,489 thousand[16] - The online advertising segment generated revenue of RMB 680,709 thousand, a decline of 9.5% from RMB 751,886 thousand in 2019[16] - The company experienced a significant increase in revenue from other services, which rose by 177.1% to RMB 261,611 thousand[16] - The company reported a loss from continuing operations of RMB 60,132 thousand, a substantial improvement of 82.5% compared to a loss of RMB 344,061 thousand in the previous year[16] - Total revenue for the year ended December 31, 2020, increased to RMB 1,194.02 million, a significant rise of 22.1% compared to RMB 977.87 million for the year ended December 31, 2019[37] - Revenue from online advertising decreased by 9.5% year-on-year to RMB 680.71 million, primarily due to the impact of the COVID-19 pandemic[41] - Revenue from premium subscription services and in-app purchases surged by 140.1% year-on-year to RMB 206.49 million, up from RMB 85.99 million in the previous year[42] - Revenue from other sources increased significantly by 177.1% to RMB 261.61 million, compared to RMB 94.39 million in the previous year, driven mainly by the IMS business[45] User Engagement - Monthly active users (MAUs) totaled 261,048 thousand as of December 31, 2020, reflecting a decrease of 7.6% compared to 282,472 thousand in 2019[19] - The peak daily active users for the flagship app Meitu Xiu Xiu reached over 31 million during the 2021 Spring Festival, driven by the successful launch of the "Meitu Formula" feature[14] - Monthly active users declined by 7.6% year-on-year due to the Indian government's ban on Chinese apps, but overall monthly active users remained stable excluding this impact[27] - The company reported a significant increase in user engagement, with a year-over-year growth of 25% in active users[81] - User retention rates improved to 85%, reflecting successful engagement strategies implemented over the past year[86] Strategic Focus and Growth - The company is focusing on adjusting its overseas strategy to drive high-value user growth rather than just increasing the number of ordinary users[14] - The company is focusing on high-value user growth that can generate profits, shifting its strategy from general user growth[27] - The company expects continued revenue growth in 2021 driven by the rapid development of premium subscription services and in-app purchases, while also planning to increase investments in technology and human resources[59] - The company is expanding its user base in countries along the Belt and Road Initiative[27] - The company is expanding its market presence in Southeast Asia, targeting a 20% market share by the end of 2024[87] - The company plans to pursue strategic acquisitions to enhance its product offerings and market reach, with a budget of $50 million allocated for this purpose[84] Research and Development - The company launched a SaaS solution to integrate the beauty ecosystem, focusing on AI technology, marketing, and supply chain management[28] - The flagship AI skin analysis device of Meitu Yifu has been deployed in over 200 cities globally, with partnerships established with leading cosmetic brands[29] - The second-generation AI skin testing product is currently under development, aiming to provide better user experience and more accurate analysis[45] - Research and development expenses for the year ended December 31, 2020, were RMB 404.2 million, a decrease of 19.3% from RMB 500.6 million for the year ended December 31, 2019, primarily due to more effective cost control in employee expenses[50] - Research and development investments have increased by 40%, focusing on innovative technologies in image editing software[81] Financial Position and Investments - Cash and cash equivalents as of December 31, 2020, were RMB 1,158.1 million, an increase from RMB 864.6 million as of December 31, 2019[64] - Total current financial resources as of December 31, 2020, were RMB 2,182.0 million, a decrease from RMB 2,621.6 million as of December 31, 2019[64] - The company has terminated its smartphone business in 2019 and exited its e-commerce business in 2018, focusing entirely on its internet business[63] - Capital expenditures increased significantly to RMB 352,503,000 in 2020 from RMB 12,749,000 in 2019, primarily due to the purchase of office properties[68] - Investments in financial assets measured at fair value through profit or loss amounted to RMB 115,160,000 in 2020, up from RMB 12,338,000 in 2019[69] - The company's debt-to-equity ratio as of December 31, 2020, was 0.5%, compared to 0.0% in 2019, indicating a low reliance on debt financing[73] - The company has no significant contingent liabilities as of December 31, 2020, maintaining a stable financial position[72] Corporate Governance and Management - The board of directors has approved a new strategic initiative to diversify revenue streams, including entering the e-commerce sector[85] - The board has the authority to determine the minimum holding period before stock options vest, although no specific minimum holding period is stipulated in the plan[131] - The board may grant rewards to eligible participants who have contributed or are expected to contribute to the group, with prior approval required for rewards granted to directors[137] - The independent non-executive directors confirmed that transactions conducted during the fiscal year ended December 31, 2020, were established according to the relevant terms of the contract arrangements[192] - The company has purchased liability insurance for its directors to provide appropriate protection[151] Regulatory and Compliance - The company faces risks related to its contractual arrangements, including potential penalties from the Chinese government if agreements are deemed non-compliant[174] - The company is closely monitoring regulatory developments in China to mitigate risks associated with contract arrangements[187] - The Dajie VIE agreement allows the company to indirectly control the domestic target company and its subsidiaries, facilitating the consolidation of their financial performance[194] - The Dajie VIE agreement was established to comply with the 2020 Negative List, which restricts foreign investment in certain sectors, including value-added telecommunications services[195] - The agreements are designed to prevent asset and value flow from the domestic target company to its related shareholders without Dajie's consent[200]

Financial Performance - The adjusted net profit attributable to owners of the company for the first half of 2020 was RMB 24.94 million, marking a significant recovery from a loss of RMB 173.78 million in the same period of 2019[9]. - Revenue for the first half of 2020 reached RMB 557.47 million, representing a year-on-year increase of 20.1%[9]. - Gross profit for the first half of 2020 was RMB 355.73 million, with a gross margin of 63.8%, down 2.6 percentage points from 66.4% in the first half of 2019[9]. - The total revenue for the six months ended June 30, 2020, increased to RMB 557.465 million, a significant rise of 20.1% compared to RMB 464.024 million for the same period in 2019[18]. - The company reported a significant increase in revenue from other services, which rose by 126.2% to RMB 133.49 million[9]. - Revenue from premium subscription services and in-app purchases surged by 209.2% year-on-year to RMB 84.1 million, representing 15.1% of total revenue[23]. - Internet value-added services revenue increased by 37.3% year-on-year to RMB 21.3 million, making up 3.8% of total revenue[24]. - The company anticipates continued revenue growth driven by new IMS, premium subscription services, and in-app purchases, although advertising business outlook remains uncertain due to the global pandemic[13]. User Engagement - Monthly active users reached 295.44 million as of June 30, 2020, an increase of 4.6% compared to December 31, 2019[10]. - The number of monthly active users for the BeautyPlus app increased by 18.1% to 78.09 million[10]. - Monthly active users reached 295.4 million in June 2020, up 4.6% from December 2019, with average daily usage time increasing from 13.6 minutes to 15.4 minutes[13]. - The average daily usage time for social users of the Meitu Xiuxiu app was 15.4 minutes, up 13.2% from the second half of 2019[7]. - The company reported a significant increase in monthly active users, reaching 100 million, representing a growth of 20% year-over-year[167]. Advertising Revenue - The online advertising revenue decreased by 12.1% to RMB 318.51 million, impacted by COVID-19[9]. - Advertising revenue declined by 12.1% due to the impact of COVID-19, but showed a significant recovery as the pandemic situation in mainland China improved[13]. - Online advertising revenue decreased by 12.1% year-on-year to RMB 318.5 million, accounting for 57.1% of total revenue[20]. Cost Management - The company reduced sales and marketing, R&D, and administrative expenses by 21.2%, 25.5%, and 21.5% respectively during the first half of 2020[13]. - Research and development expenses decreased by 25.5% year-on-year to RMB 188 million due to effective cost control measures[28]. - Sales and marketing expenses fell by 21.2% year-on-year to RMB 134.6 million, reflecting improved cost management[29]. - Administrative expenses decreased by 21.5% year-on-year to RMB 101 million, attributed to effective cost control[30]. - The total operating costs, including sales, marketing, administrative, and R&D expenses, amounted to RMB 625,324 thousand, down from RMB 707,858 thousand in the previous year[113]. Financial Position - The company has over RMB 2.5 billion in cash and liquid financial resources available for continued investment in technology innovation and business development[13]. - Cash and cash equivalents as of June 30, 2020, amounted to RMB 649.29 million, down from RMB 864.61 million as of December 31, 2019[39]. - Total current financial resources, including cash and cash equivalents, short-term and long-term bank deposits, were RMB 2.52 billion as of June 30, 2020, compared to RMB 2.62 billion as of December 31, 2019[39]. - The company has maintained a healthy liquidity position as of June 30, 2020, with a focus on prudent financial management to meet its funding needs[40]. - The company’s total liabilities decreased to RMB 704,831 thousand from RMB 880,510 thousand, a reduction of approximately 20%[84]. Strategic Initiatives - The company is focusing on strategic measures to counteract the impact of COVID-19 on its advertising revenue while leveraging growth in premium subscription services[7]. - The new IMS business focuses on providing multi-platform social advertising marketing services, leveraging the company's rich user resources and content production capabilities[12]. - A strategic partnership was established with Christian Dior for AI skin analysis and product recommendations for users in China[12]. - E-commerce live streaming tests were conducted in the first half of 2020, with plans for further testing in the second half[12]. - The company continues to seek strategic investment opportunities to enhance synergies in technology development, product research, and market expansion[48]. Operational Changes - The company has terminated its smartphone business in 2019 and exited its e-commerce business in 2018, focusing entirely on its internet business[38]. - The company has not conducted any significant acquisitions or disposals of subsidiaries or associates in the six months ending June 30, 2020, apart from the sale of PressLogic[48]. - The company has ceased smartphone manufacturing and exited the e-commerce business to focus on its new strategy centered around "beauty and social" as of April 30, 2019[158]. Future Outlook - The company plans to expand its market presence in Southeast Asia, targeting a 30% increase in user acquisition in the region by the end of 2021[168]. - New product launches are expected to contribute an additional HKD 300 million in revenue for the second half of 2020[171]. - The company is investing HKD 200 million in research and development for new technologies aimed at enhancing user engagement[171]. - A strategic partnership with a leading tech firm is anticipated to enhance the company's service offerings and increase market share by 10%[171]. - The company has set a performance guidance of HKD 2.5 billion in revenue for the full year 2020, reflecting a cautious outlook due to market conditions[171].

Financial Performance - Revenue reached RMB 977.9 million, a year-on-year increase of 3.2%[21] - Online advertising revenue grew significantly to RMB 751.9 million, up 21.1% from RMB 620.9 million in 2018[11] - Gross profit amounted to RMB 699.3 million, representing a 42.1% year-on-year increase, with a gross margin expanding from 51.9% to 71.5%[11] - Adjusted net loss attributable to owners of the company decreased by 77.7% to RMB 190.8 million, with a positive adjusted net profit recorded in Q4 2019[21] - Total revenue for the year ended December 31, 2019, increased to RMB 977.87 million, a 3.2% increase from RMB 947.67 million in 2018[29] - Online advertising revenue reached RMB 751.89 million, accounting for 76.9% of total revenue, up from 65.5% in 2018[32] - Gross profit for 2019 was RMB 699.28 million, significantly higher than RMB 492.13 million in the previous year[29] - The adjusted net loss attributable to the company’s shareholders for 2019 was RMB 404.82 million, compared to a loss of RMB 1.24 billion in 2018[29] - Revenue from premium subscription services and in-app purchases surged by 518.1% year-on-year to RMB 86 million, supported by a new business model targeting overseas applications[35] - Internet value-added services revenue grew by 21.0% year-on-year to RMB 45.6 million, attributed to enriched service offerings and improved distribution efficiency[37] - Revenue from other segments decreased by 65.7% year-on-year to RMB 94.4 million, primarily due to a decline in live streaming business amid increasing competition[38] User Engagement - Monthly active users totaled 282.5 million, a decrease of 7.8% compared to 306.3 million in 2018[18] - The average daily usage time for social users of the Meitu Xiuxiu app increased to 13.6 minutes in H2 2019, up from 12.5 minutes in H1 2019[11] - The number of quality content creators on the platform has increased, contributing to user engagement and advertising revenue growth[25] - The company reported a significant increase in user engagement, with a 25% year-over-year growth in active users[82] Cost Management - The company implemented a cost optimization plan, resulting in a reduction of sales and marketing expenses to RMB 326.46 million from RMB 782.70 million in 2018[29] - Operating costs reduced by 38.8% year-on-year to RMB 278.6 million, due to a decline in user engagement and a cost optimization plan[39] - Research and development expenses decreased by 3.2% year-on-year to RMB 500.6 million, reflecting effective cost control measures[42] - Sales and marketing expenses fell by 58.3% year-on-year to RMB 326.5 million, as the company shifted its user acquisition strategy[42] - Administrative expenses decreased by 8.5% year-on-year to RMB 250.8 million, with a more pronounced reduction of 18.1% in the second half of 2019[43] Strategic Initiatives - The company launched several customized advertising products to better attract consumers for brand advertisers[22] - A professional-grade skin detection device was introduced in collaboration with beauty industry participants to help consumers make informed skincare decisions[22] - A partnership was established with Shanghai Dermatology Hospital to provide remote dermatology consultations through the company's imaging applications[22] - The company aims to enhance its strategic focus on social and beauty-related themes, aligning with its mission to make beauty accessible to everyone[22] - New initiatives, such as remote dermatology consultation services, are expected to benefit from increased home confinement during the pandemic[26] Acquisitions and Investments - The company completed the acquisition of approximately 57.09% of Dajie Net, enhancing collaboration to strengthen the community ecosystem of its social application[25] - The company completed the acquisition of approximately 57.09% equity in Dajie Net for a total consideration of approximately HKD 395,486,084, with HKD 342,956,420 paid through the issuance of shares and the remainder in cash[73] - The company invested RMB 991.8 million in acquiring synergistic businesses[107] - The company plans to acquire approximately 57.09% equity in Dajie Net and its subsidiaries for a total consideration of approximately HKD 395,486,084, with HKD 342,956,420 to be paid through the issuance of 85,739,105 shares[145] Financial Position - Cash and cash equivalents as of December 31, 2019, amounted to RMB 864.6 million, an increase from RMB 531.6 million in 2018[57] - The company maintained a healthy liquidity position with total cash and cash equivalents, short-term, and long-term bank deposits amounting to RMB 2.62 billion as of December 31, 2019[57] - The company has adopted a cautious financial management approach to maintain a healthy liquidity status and closely monitors its cash flow situation[58] - As of December 31, 2019, the company had no pledged bank borrowings, compared to RMB 10,000,000 in 2018, resulting in a debt-to-equity ratio of 0.0% (2018: 0.3%) [67] - The company had restricted deposits of RMB 500,000 as collateral for certain operational expenses as of December 31, 2019, down from RMB 1,000,000 in 2018 [66] Shareholder Actions - The board of directors has approved a share buyback program worth $30 million to enhance shareholder value[82] - The company repurchased a total of 26,000,000 shares at a total cost of HKD 41,513,853.36 (approximately RMB 37,281,000) during the year ended December 31, 2019[116] - In October 2019, the company repurchased 15,000,000 shares at a maximum price of HKD 1.76 and a minimum price of HKD 1.65, totaling HKD 26,083,544.53[117] - In December 2019, the company repurchased 11,000,000 shares at a maximum price of HKD 1.44 and a minimum price of HKD 1.35, totaling HKD 15,430,308.83[117] Governance and Compliance - The company’s board of directors includes both executive and independent non-executive members, ensuring a diverse governance structure[146] - The independent non-executive directors confirmed that transactions conducted during the fiscal year ended December 31, 2019, were in accordance with the relevant terms of the contractual arrangements[184] - The company has established a VIE agreement, allowing it to indirectly control the domestic target company and its subsidiaries, with an actual ownership of approximately 57.09% in Dajie Group[187] - The company is subject to restrictions under the 2019 Negative List for foreign investment in China, which limits foreign ownership in certain sectors, including value-added telecommunications services[189] Operational Risks - The company faces risks related to its contractual arrangements, including potential penalties from the Chinese government if its business structure is deemed non-compliant[171] - The company’s operational control may not be as effective as direct ownership due to its contractual arrangements[171] - The company may incur significant costs and restrictions if it exercises its purchase rights for equity ownership in Meitu Network[171]

User Engagement and Growth - As of June 30, 2019, the total monthly active users reached 308.1 million, a 0.6% increase from December 31, 2018[11] - Monthly active users of Meitu Xiuxiu reached 123.4 million, a 5.1% increase from 117.4 million in December 2018[11] - The average daily usage time for social users of Meitu Xiuxiu exceeded 12 minutes in June 2019, compared to approximately 5-6 minutes before the social transformation[8] - The company has successfully restored active user growth and is focusing on enhancing user engagement through new features like private albums[13] Financial Performance - Total revenue for the first half of 2019 was RMB 464.0 million, a slight decrease of 4.7% compared to RMB 486.8 million in the same period of 2018[30] - The company reported a net loss attributable to shareholders of RMB 371,231,000 for the six months ended June 30, 2019, compared to a profit of RMB 130,365,000 in the same period of 2018[100] - The company reported a total loss of RMB 391,294,000 for the six months ended June 30, 2019, compared to a loss of RMB 115,592,000 for the same period in 2018, representing an increase of 238% in losses year-over-year[104] - The company incurred a loss from continuing operations of RMB 265,058,000, compared to a loss of RMB 203,038,000 in the prior year, reflecting an increase of 30.5% in losses from ongoing operations[104] Revenue Breakdown - Online advertising revenue surged by 27.2% to RMB 362.3 million, driven by strong growth in the advertising business[8] - The revenue from internet business was RMB 462.5 million, a decrease of 5.0% from RMB 486.8 million in the same period of 2018[10] - Revenue from premium subscriptions increased over 6 times year-over-year, significantly contributing to internet value-added services and other revenues[13] - Revenue from internet value-added services and others decreased by 50.4% to RMB 100.2 million, primarily due to a decline in the live streaming business[35] Cost Management and Expenses - Sales and marketing expenses decreased by 38.1% to RMB 170.8 million, reflecting more cautious brand advertising spending due to adverse macroeconomic conditions[44] - Research and development expenses slightly increased by 1.5% to RMB 252.4 million, maintaining stable investment in AI-based imaging technology[45] - The adjusted net loss attributable to owners of the company narrowed significantly from RMB 293 million for the six months ended June 30, 2018, to RMB 171.7 million for the same period in 2019, driven by a 28.4% increase in gross profit and effective cost control on promotional expenses[51] Strategic Initiatives - The company plans to explore new monetization models for its international applications, including premium subscription services[13] - The company has entered into a strategic cooperation agreement with Xiaomi, categorizing its smartphone business as discontinued operations, with Xiaomi responsible for the design, development, production, and sales of the cooperative smartphones[55] - The company terminated smartphone manufacturing on April 30, 2019, and exited the e-commerce business on November 30, 2018, to focus resources on a new strategy centered around "beauty and social"[196] Assets and Liabilities - Cash and cash equivalents as of June 30, 2019, amounted to RMB 1,036.2 million, up from RMB 531.6 million as of December 31, 2018[58] - The company's total assets decreased to RMB 4,417,894,000 as of June 30, 2019, down from RMB 5,088,972,000 at the end of 2018, reflecting a decline of approximately 13.2%[120] - The company's total liabilities as of June 30, 2019, were not disclosed in the provided documents, but the financial performance indicates a challenging operating environment[100] Shareholder Information - The company did not recommend any interim dividend for the six months ended June 30, 2019[65] - The company’s major shareholders include Easy Prestige Limited and Xinhong Capital, each holding 1,694,546,670 shares, representing 40.15%[77] - The total number of issued ordinary shares increased to 4,220,296,000 as of June 30, 2019, from 4,202,516,000 on January 1, 2019[173] Compliance and Governance - The company has complied with the corporate governance code as per the listing rules for the six months ending June 30, 2019[85] - The audit committee has reviewed the unaudited interim financial statements for the six months ending June 30, 2019, and confirmed that they are prepared in accordance with applicable accounting standards[88] Discontinued Operations - For the six months ended June 30, 2019, the total revenue from discontinued operations was RMB 203,704,000, with a gross loss of RMB 72,356,000[197] - The operating loss from discontinued operations was RMB 119,221,000, compared to a profit of RMB 84,446,000 for the same period in 2018[198] - The company recognized other income of RMB 9,649,000 from discontinued operations in the first half of 2019, compared to RMB 947,000 in the same period of 2018[197]

Financial Performance - Total revenue for the year ended December 31, 2018, was RMB 2,791.5 million, a decrease of 37.8% compared to RMB 4,490.4 million in 2017[8]. - Adjusted net loss for the year was RMB 879.1 million, compared to a profit of RMB 66.1 million in 2017[8]. - Gross profit for 2018 was RMB 429.3 million, a decline of 59.8% from RMB 1.0691 billion in 2017, with overall gross margin dropping from 23.8% to 15.4%[29]. - The company recorded a net loss of RMB 1.2 billion for the year, with losses from smartphone and e-commerce businesses amounting to approximately RMB 500 million and RMB 200 million, respectively[17][19]. - The company reported a net loss of RMB 1.043 billion for the year ended December 31, 2018, compared to a loss of RMB 78.1 million in the previous year, reflecting increased competition and reduced smartphone sales[41]. Revenue Breakdown - Internet business revenue increased by 26.3% to RMB 947.7 million, while smart hardware revenue decreased by 50.7% to RMB 1,843.8 million[8]. - Online advertising revenue grew significantly by 101.9% to RMB 620.892 million, highlighting progress in monetizing the user base[22]. - Internet value-added services and other revenues decreased by 26.2% to RMB 326.779 million, attributed to a decline in paid user numbers[23]. - The revenue contribution from Meitu and its subsidiaries accounted for approximately 27.9% of the group's total revenue in 2018, up from 16.7% in 2017[130]. User Engagement - Monthly active users as of December 31, 2018, were 332.2 million, down 19.9% from 414.9 million in 2017[10]. - The proportion of social users on the Meitu Xiuxiu platform increased from approximately 17% at launch in September 2018 to about 50% by February 2019[7]. - Page views for image and video content on the Meitu Xiuxiu social platform reached approximately 8 billion in December 2018[13]. Cost Management - Operating costs decreased to RMB 2.3621 billion in 2018, down 31.0% from RMB 3.4213 billion in 2017, aligning with revenue trends[26]. - Internet business segment costs were RMB 455.5 million in 2018, a decrease of 15.7% from RMB 540.7 million in 2017, mainly due to reduced revenue sharing with content creators[27]. - The smart hardware segment recorded costs of RMB 1.9066 billion in 2018, down 33.8% from RMB 2.8806 billion in 2017, attributed to a decrease in smartphone sales[28]. Strategic Initiatives - Strategic partnerships were formed with Xiaomi and TryTry to focus on social transformation and streamline operations[13]. - The company aims to create a decentralized social platform using precise content-user matching algorithms[13]. - The company has shifted towards a light-asset model with a focus on internet business and reduced cash flow volatility[13]. - The company plans to leverage programmatic advertising products to scale its advertising business in the future[14]. Research and Development - Research and development expenses increased by 68.2% to RMB 699.2 million in 2018, compared to RMB 415.8 million in 2017, due to higher personnel-related costs[33]. - The company allocated approximately RMB 278 million for expanding research and development capabilities[73]. Employee Management - Employee count was reduced by approximately 30% from June 30, 2018, to December 31, 2018, as part of structural adjustments[14]. - The company employed a total of 2,080 full-time employees as of December 31, 2018, compared to 2,066 in 2017[54]. - The company maintains a competitive compensation package to retain employees, including salaries, discretionary bonuses, and benefits plans[55]. Liquidity and Investments - Cash and cash equivalents decreased to RMB 531.62 million as of December 31, 2018, down from RMB 1.396 billion as of December 31, 2017[45]. - Total cash and current financial resources were RMB 2.693 billion as of December 31, 2018, a decrease from RMB 5.171 billion in the previous year[44]. - The company invested RMB 393.35 million in long-term investments for the year ended December 31, 2018, compared to RMB 65.05 million in 2017, reflecting a strategic focus on technology and business enhancements[49]. Corporate Governance - The board consists of seven members, including two executive directors, two non-executive directors, and three independent non-executive directors[150]. - The board held a total of seven meetings during the year ended December 31, 2018, with all directors attending at least 6 out of 7 meetings[157]. - The company has established a series of contractual arrangements to gain effective control over the business operations in China[121]. - The company has adhered to corporate governance codes and regulations throughout the reporting period[147]. Risk Management - The board confirmed its responsibility for the company's risk management and internal control systems, which were reviewed for effectiveness during the year ended December 31, 2018[186]. - The company has established a risk management and internal control team that reports directly to the board on any findings and follow-up actions[186]. - The company is closely monitoring regulatory developments in China to mitigate risks associated with contractual arrangements[130]. Shareholder Relations - The company emphasizes the importance of effective communication with shareholders to enhance investor relations and understanding of business performance and strategy[197]. - Shareholders holding at least 10% of the paid-up capital have the right to request a special general meeting within two months of submission[193]. - The company adopted a dividend policy on December 20, 2018, allowing the board to decide on dividend distributions based on financial performance and operational needs[185].