Summary of Conference Call Company and Industry Involved - The conference is focused on **Chizi Cheng Technology** and its dynamics within the **TMT (Technology, Media, and Telecommunications)** sector [1] Core Points and Arguments - The meeting is a **mid-term investment strategy** session organized by **Anxin International** and **Luyanzhong** [1] - **Wang Yang**, the TMT analyst from Anxin International, is hosting the conference [1] - **Gloria**, the managing director of Chizi Cheng Technology, is present to provide insights into the company's core values and dynamics [1] Other Important but Possibly Overlooked Content - The conference aims to enhance understanding of **Chizi Cheng Technology** for investors, indicating a focus on investor relations and transparency [1]

Summary of Conference Call Company and Industry - The conference call involved **ZhiZi City Technology** (赤子城科技) and was hosted by **Anxin International TMT Analyst Wang Yang** [1] Core Points and Arguments - The management of ZhiZi City Technology, represented by **Gloria**, was invited to discuss the company's dynamics and core values [1] Other Important Content - Investors were encouraged to submit questions during the call for further engagement and clarification [1]

Acquisition and Share Transactions - The company acquired 1,000,000 shares of Chizicheng Strategy Investment for $1.00, representing 100% of its issued share capital[10] - The company entered into a sale and purchase agreement with Spriver, a major shareholder, for the acquisition of Chizicheng Strategy Investment, constituting a connected transaction under the Listing Rules[12] - The company completed the acquisition of Chizicheng Strategy Investment, expanding its social business portfolio with products like Blued and Finka[151] - The company completed the acquisition of Chizicheng Strategy Investment in August 2023, merging BlueCity and Land of Glory's revenues to expand its diversified social business[188] Restricted Share Units (RSUs) and Incentive Plans - The restricted share units (RSUs) under the RSU incentive plan had a lock-up period of three years from the first unlocking date, which is within six months after the grant[3] - No RSUs were granted, canceled, or lapsed under the RSU incentive plan from its adoption date to December 31, 2023[7] - The company purchased shares representing approximately 1.60% of the total issued shares under the RSU incentive plan[9] Financial Performance and Metrics - The consolidated affiliated entities generated revenue of approximately RMB 707.9 million and a profit of RMB 198.2 million for the year ended December 31, 2023[22] - The total assets and liabilities of the consolidated affiliated entities were approximately RMB 2,134.2 million and RMB 504.4 million, respectively, as of December 31, 2023[22] - Total revenue reached approximately RMB 3.31 billion, a year-on-year increase of 18.1%[167] - Adjusted EBITDA reached RMB 674.6 million, a year-on-year increase of 80.0%[138][167] - Net profit attributable to the company's owners was approximately RMB 512.8 million, a year-on-year increase of 294.2%[167] - Social business revenue reached approximately RMB 3.0 billion, maintaining a leading position in markets such as the Middle East, North Africa, and Southeast Asia[167] - Innovative business revenue reached approximately RMB 336 million, a year-on-year increase of 38.6%[167] - Cash and cash equivalents at the end of the period were RMB 1.39 billion, a year-on-year increase of 132.0%[161] - Business scale in the Middle East and North Africa region grew by 30.0% year-on-year[161] - The company's total assets increased to RMB 2.79 billion, with total equity reaching RMB 1.95 billion[164] - Total revenue for the year ended December 31, 2023, was approximately RMB 3,307.8 million, an increase of 18.1% compared to RMB 2,799.7 million in 2022[188] - Social business revenue for 2023 was approximately RMB 2,971.9 million, up 16.2% from RMB 2,557.4 million in 2022, driven by growth in both pan-population and diversified social businesses[188] - Gross profit for 2023 was approximately RMB 1,722.1 million, a 62.8% increase from RMB 1,057.9 million in 2022, with social business gross profit rising to RMB 1,429.1 million from RMB 856.6 million[192] - The company's social business cost of revenue decreased by 9.3% to RMB 1,542.8 million in 2023, primarily due to improved commercialization efficiency and reduced host sharing costs[191] - Sales and marketing expenses increased by 42.2% to RMB 688.4 million in 2023, mainly due to increased promotion efforts for the social business[194] Contractual Arrangements and VIE Structure - The company's existing contractual arrangements include exclusive business cooperation agreements with Chizicheng Mobile Technology for software development, technical and market data consultation, and customer service[17] - The company's structural contracts ensure economic benefits flow from the consolidated affiliated entities to the group, with detailed diagrams illustrating the flow[16] - The company's exclusive equity call option agreement allows Shandong Chizicheng to purchase equity in Chizicheng Mobile Technology for RMB 1, subject to minimum purchase price regulations[18] - BlueCity and its affiliates have become consolidated entities of the group following the acquisition, with contractual arrangements allowing control over restricted or prohibited industries in China[44] - BlueCity Information Technology holds 100% ownership of intellectual property created under the Exclusive Consulting and Service Agreement, with further licensing negotiations planned[48] - Chinese equity holders (including Han De Hou Cheng and Chizi Network Technology) hold approximately 99.85% and 0.15% interests in the Variable Interest Entity (VIE), respectively[46] - The contractual arrangements enable the group to control and derive economic benefits from BlueCity entities without direct equity ownership[60] - Chinese equity holders are restricted from transferring or encumbering their equity in the VIE without prior written consent from BlueCity Information Technology[54] - The group's financial statements consolidate the performance of BlueCity entities as if they were wholly-owned subsidiaries[61] - The VIE structure places the group in a unique position regarding continuous connected transactions under listing rules, potentially increasing administrative costs[61] - The company operates mobile application development business in China through contractual arrangements with Chizicheng Mobile Technology and its subsidiaries, and provides internet and social networking services through BlueCity entities, but certain terms of the contractual arrangements may not be enforceable under Chinese law[66] - The company has taken measures to ensure the effective operation of contractual arrangements and compliance with them, including addressing potential conflicts of interest with Chinese equity holders[92] - The company's contractual arrangements are crucial to its legal structure and business operations, and transactions under these arrangements are conducted on fair and reasonable terms[84] Market and Business Strategy - The company's core business is global social entertainment, with its fastest-growing and most deeply developed segment being open social platforms, including MICO, YoHo, SUGO, and TopTop[102] - The company is actively exploring innovative business areas in social entertainment, including the development of premium games such as "Mergeland-Alice's Adventure"[102] - The Middle East and North Africa (MENA) media and entertainment market is projected to grow from $39.05 billion in 2023 to $61.23 billion by 2028, with the company being a leading player in the region[179] - The global diversified social market reached approximately $3.842 billion in 2023, with significant growth potential in Southeast Asia, Japan, South Korea, and欧美 regions[180] - The company plans to focus on localized operations and product innovation to expand its pan-population social product matrix and enhance its global social entertainment ecosystem[180] - The global casual gaming market is expected to grow at a CAGR of 9% from 2022 to 2027, reaching $25 billion by 2027, with the company continuing to develop high-quality games[183] - MICO's community activity and new user scale increased significantly through multiple upgrades and customized services for Middle Eastern users, leading to improved profitability[197] - YoHo enhanced content operations and localized gameplay for Middle Eastern users, improving user engagement and operational precision[197] - SUGO's monthly active users (MAU) increased by over 3 times year-over-year (YoY), with revenue and profit also growing by over 3 times YoY[197] - TopTop's product revenue grew by over 2 times YoY, and profit increased by over 6 times YoY, driven by an improved user growth system and increased community rewards[197] - The company's broad social business achieved high-quality growth, laying a solid foundation for expansion in the social entertainment sector[198] - The company plans to continue exploring global markets and user demands to launch more high-quality social products and become a leading platform in various segments[198] - HeeSay, a new online community targeting LGBTQ+ users, was officially launched in early 2024 to meet their needs for self-expression, life sharing, and entertainment[200] Intellectual Property and Trademarks - The group has applied for 28 trademarks in Hong Kong and monetized several apps through mobile advertising on Google Play and Apple App Store[59] - BlueCity Information Technology holds 100% ownership of intellectual property created under the Exclusive Consulting and Service Agreement, with further licensing negotiations planned[48] - The company has applied for 6 trademarks in Hong Kong through BlueCity Holdings Hong Kong Limited[83] - The company has registered trademarks in Hong Kong and operates app traffic monetization business there as part of its strategy to comply with regulatory restrictions on foreign ownership in China[83] Risks and Challenges - Risks include potential government penalties, less effective control compared to direct ownership, and additional tax scrutiny[63][64][65] - The group faces challenges in complying with foreign investment restrictions in China's telecommunications sector, requiring approval from regulatory authorities[57] - The company faces risks related to the interpretation and implementation of the Foreign Investment Law, which could impact its corporate structure, governance, and business operations[87] Corporate Governance and Board Structure - The company's board of directors consists of seven members, including four executive directors and three independent non-executive directors[110] Environmental and Social Responsibility - The company has implemented environmental protection measures and encouraged employees to save energy and reduce unnecessary waste[109] Customer and Supplier Concentration - The top five customers accounted for approximately 12.81% of the company's total revenue, with the largest customer contributing 8.81%[107] - The top five suppliers accounted for approximately 42.92% of the company's total procurement, with the largest supplier contributing 16.93%[107] Dividend Policy - The company did not recommend the distribution of a final dividend for the year ended December 31, 2023[105] Property, Plant, and Equipment - The company's property, plant, and equipment details for the year ended December 31, 2023, are provided in Note 16 of the consolidated financial statements[127] Game Development and Performance - The game "Alice's Dream: Merge Island" achieved significant growth in revenue and became a top product in the global Merge game category[153] Overseas Operations and Compliance - The company has accumulated overseas experience in operating value-added telecommunications services and has taken measures such as operating its own app traffic monetization business in Hong Kong through Solo X Technology[83]

Investment Rating - The report assigns a "Buy" rating to the company, with a target price of HK$ 3.31, down from a previous target of HK$ 3.73 [2][5]. Core Insights - The company reported revenues and net profit attributable to the parent company of RMB 3.31 billion and RMB 510 million, respectively, slightly exceeding expectations [2]. - Strong performance from applications like Sugo and TopTop offset the weak contribution from Mico, which saw a year-on-year decline of over 30% [2][5]. - The MENA market is identified as a key growth driver, with Sugo and TopTop revenues growing approximately 3x and 2x year-on-year [2]. - The company aims to develop two social applications with monthly revenues exceeding USD 10 million over the next three years [2]. Financial Summary - Total revenue projections for the upcoming years are as follows: RMB 3,307.8 million in 2023, RMB 4,190.7 million in 2024, RMB 4,542.0 million in 2025, and RMB 4,880.5 million in 2026, reflecting a year-on-year growth of 18.1% in 2023 and 26.7% in 2024 [9]. - Gross profit is expected to reach RMB 1,722.1 million in 2025, with a gross margin of 51.1% [9]. - Net profit projections are RMB 601.8 million in 2025, with a year-on-year growth of 3.7% [9]. Market Position and Competitors - The report highlights that Mico's performance remains weak, and new games and social applications have not yet achieved breakeven [17]. - The company is compared with peers in the gaming and social media sectors, indicating a competitive landscape [17].

Investment Rating - The investment rating for Newborn Town (09911.HK) is "BUY" with a target price of HK$ 3.31, reduced from the previous target price of HK$ 3.78 [20][28]. Core Insights - Newborn Town reported a total revenue of RMB 3.3 billion and a profit attributable to shareholders of RMB 512.8 million, slightly exceeding estimates. The strong performance of apps like Sugo and TopTop in the MENA market contributed significantly, with revenue increases of approximately 3x and 2x year-on-year respectively. However, the app Mico experienced a significant decline of over 30% year-on-year, which was unexpected and negatively impacted overall performance [9][26][28]. - The company aims to develop two more flagship social networking apps with expected monthly revenues exceeding USD 10 million within three years, although details on these apps remain limited [9][28]. Financial Performance - Revenue projections for the upcoming years are as follows: RMB 4,190.7 million in 2024, RMB 4,542.0 million in 2025, and RMB 4,880.5 million in 2026, reflecting year-on-year growth rates of 26.7%, 8.4%, and 7.5% respectively [6][16]. - Gross margin has shown resilience, maintaining above 50%, with a reported gross margin of 52.1% for 2023, an increase of 14.3 percentage points from previous estimates [10][22]. - The net profit attributable to shareholders is projected to be RMB 449.5 million in 2024, RMB 472.1 million in 2025, and RMB 499.3 million in 2026, indicating a growth trajectory despite challenges [24][32]. Market Position and Competitors - Newborn Town's market capitalization is approximately HK$ 3.1 billion, with a current stock price of HK$ 1.85 [5][21]. - The company is positioned within a competitive landscape, with peers showing varied performance metrics, highlighting the challenges faced in replicating successful app performance [14][31].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Insights - The company's social business revenue for 2023 grew by 16.2% year-on-year to RMB 2.97 billion, with a gross margin increase of 14.6 percentage points to 48.1%, driven by product upgrades and improved content quality [1] - The innovative business segment saw a revenue increase of 38.6% year-on-year to RMB 340 million, with a gross margin rise of 4.1 percentage points to 87.2%, attributed to the successful launch of new products like Sudoku games [1][2] - The company launched a hit game "Alice's Dream: Merge Island" in 2023, achieving high rankings in global charts and generating significant overseas revenue [2] - The social business strategy of "multiple products, multiple markets" has shown success, with several products entering top revenue rankings [12] Financial Summary - For 2023, the company reported total revenue of RMB 3.31 billion, an 18.1% increase year-on-year, with a net profit of RMB 512.85 million, reflecting a 294.2% year-on-year growth [11] - The forecast for net profit is adjusted to RMB 4.5 billion for 2024 and RMB 5.2 billion for 2025, with an expected net profit of RMB 6.0 billion in 2026 [13] - The current stock price corresponds to a price-to-earnings ratio (P/E) of 6 for 2024, 5 for 2025, and 4 for 2026, indicating strong growth potential [13]

Financial Performance - Revenue reached RMB 3.31 billion, representing an 18.1% year-over-year growth[3] - Adjusted EBITDA amounted to RMB 674.6 million, reflecting an 80.0% year-over-year increase[18] - The company reported a net profit of RMB 760.6 million for the year, compared to RMB 287.3 million in the previous year[14] - For the fiscal year ending December 31, 2023, total revenue was approximately RMB 3,307.8 million, an increase of about 18.1% compared to RMB 2,799.7 million for the fiscal year ending December 31, 2022[58] - Operating profit for the year ended December 31, 2023, was approximately RMB 551.1 million, an increase of about 104.6% from RMB 269.3 million in 2022[65] - Adjusted EBITDA for the year ended December 31, 2023, was RMB 674,638 thousand, compared to RMB 374,688 thousand in 2022[70] - The total comprehensive income for the year ended December 31, 2023, was RMB 734,551 thousand, compared to RMB 328,916 thousand in 2022, representing an increase of approximately 123%[136] - Basic earnings per share for the year ended December 31, 2023, were RMB 0.45, up from RMB 0.11 in 2022, indicating a significant growth of 309%[137] Revenue Breakdown - Social business revenue accounted for 89.8% of total revenue at RMB 2,971.9 million, up 16.2% from RMB 2,557.4 million in the previous year[40] - Innovative business revenue reached RMB 335.9 million, representing a growth of approximately 38.6% from RMB 242.3 million in the previous year[58] - The company's social business revenue for the year ended December 31, 2023, was approximately RMB 2,971.9 million, an increase of about 16.2% compared to RMB 2,557.4 million for the year ended December 31, 2022[133] - The company’s income from social business was RMB 2,854,467,000, up from RMB 2,535,943,000 in 2022, showing a growth of approximately 12.6%[175] Cost and Profitability - Gross profit for the fiscal year was approximately RMB 1,722.1 million, a significant increase of about 62.8% from RMB 1,057.9 million in the previous year[43] - Gross margin improved from approximately 37.8% in 2022 to approximately 52.1% in 2023, with social business gross margin increasing from approximately 33.5% to 48.1%[62] - Gross profit for the year was RMB 1,722,083,000, compared to RMB 1,429,096,000 in the previous year, indicating a gross profit margin improvement[173] Expenses and Investments - Research and development expenses increased by approximately 48.3% to RMB 314.5 million from RMB 212.1 million in the previous year[45] - General and administrative expenses increased to approximately RMB 172.0 million for the year ended December 31, 2023, from RMB 111.8 million in 2022, marking a 53.8% increase primarily due to higher employee benefits[89] - The company plans to pursue strategic investments or acquisitions to create synergies with its existing business, focusing on companies with competitive advantages in technology and data[48] Market Expansion and New Initiatives - The company completed the acquisition of Chizicheng Strategy Investment in August 2023, expanding its social business portfolio[24] - The new online community HeeSay targeting LGBTQ+ users is set to launch in early 2024[8] - The company plans to continue investing in the MENA market while expanding its presence in Southeast Asia, Japan, and North America[12] - The company aims to further explore the integration of gaming and social businesses to better meet user entertainment needs[38] - HeeSay aims to create a diverse and open online community, enhancing user interaction through various features like posts, live streaming, and voice rooms[82] Employee and Corporate Governance - As of December 31, 2023, the company had a total of 1,465 full-time employees, with approximately 50.24% in research and development[53] - The company has established an audit committee consisting of three independent non-executive directors to enhance corporate governance[109] - The company expressed gratitude to management and employees for their efforts during the year, highlighting the importance of their contributions to overall performance[192] Cash Flow and Financial Position - Operating cash flow increased to approximately RMB 738.8 million in 2023 from approximately RMB 311.7 million in 2022[75] - Cash and cash equivalents as of December 31, 2023, were approximately RMB 1,386.3 million, up from RMB 596.7 million as of December 31, 2022[98] - The net cash inflow from operating activities for the year ended December 31, 2023, was RMB 753,503 thousand, compared to RMB 312,645 thousand for the previous year[120] - The total assets as of December 31, 2023, reached RMB 2,790,856 thousand, compared to RMB 1,720,217 thousand in 2022, reflecting a growth of approximately 62.2%[113] Acquisitions and Strategic Moves - The company completed the acquisition of Blue City Holdings Limited on August 2, 2023, enhancing its operational capabilities in the social business sector[149] - The company is actively pursuing acquisition opportunities, as indicated by the agreement with Spriver for share acquisition[200] Risks and Future Outlook - The company acknowledges the risks and uncertainties associated with forward-looking statements regarding its business outlook and financial performance[193] - The company plans to continue expanding its market presence and investing in innovative technologies to drive future growth[148]

Financial Performance - Sales and marketing expenses for the six months ended June 30, 2023, were RMB 246.6 million, an increase of 24.0% compared to RMB 198.8 million for the same period in 2022[4]. - Operating cash income increased to RMB 181.9 million for the six months ended June 30, 2023, compared to RMB 80.9 million for the same period in 2022[12]. - Basic earnings per share for the six months ended June 30, 2023, were RMB 185,302,000, compared to RMB 82,705,000 for the same period in 2022, representing a significant increase of over 124%[193]. - The total expenses for the period amounted to RMB 1,134,234,000, a decrease from RMB 1,232,845,000 in the previous year, indicating a reduction of approximately 8%[191]. - The company reported a net cash outflow from financing activities of RMB 138,528,000, compared to RMB 130,055,000 in the previous year, showing a slight increase in cash outflow[176]. Assets and Liabilities - The total assets as of June 30, 2023, amounted to RMB 1,897,839,000, an increase from RMB 1,720,217,000 as of December 31, 2022, reflecting a growth of approximately 10.3%[112]. - Non-current assets totaled RMB 790,655,000 as of June 30, 2023, compared to RMB 743,600,000 as of December 31, 2022, indicating an increase of about 6.3%[112]. - Current assets reached RMB 1,107,184,000 as of June 30, 2023, up from RMB 976,617,000 as of December 31, 2022, representing a growth of approximately 13.3%[112]. - As of June 30, 2023, total liabilities amounted to RMB 431,103 thousand, a decrease of 10.6% from RMB 482,207 thousand as of December 31, 2022[145]. - Total equity increased to RMB 1,466,736 thousand, up from RMB 1,238,010 thousand, marking a growth of 18.5%[145]. Share-Based Compensation - The company confirmed share-based compensation expenses of RMB 4.26 million for the six months ended June 30, 2023, related to the employee restricted share unit plan[36]. - The company has not granted any restricted share units under the employee restricted share unit plan as of June 30, 2023[52]. - A total of 25,733,333 restricted share units were granted under the management restricted share unit plan, representing approximately HKD 44.9 million based on an average closing price of HKD 1.744 per share prior to the grant date[61]. - The total number of restricted share units granted remained at 25,733,333, accounting for about 2.16% of the company's issued share capital[84]. - The company has adopted a restricted share unit incentive plan to attract and retain skilled personnel, with the plan approved by the board on June 7, 2022[94]. Cash Flow and Investments - The company reported an increase in cash and cash equivalents to RMB 774,894,000 as of June 30, 2023, compared to RMB 596,729,000 as of December 31, 2022, reflecting a growth of approximately 29.8%[112]. - Net cash inflow from operating activities was RMB 176,881,000, significantly higher than RMB 80,856,000 for the same period in 2022, reflecting a growth of over 118%[176]. - The total cash and cash equivalents at the end of the period were RMB 774,834,000, compared to RMB 737,910,000 at the end of the previous period, marking an increase of approximately 5%[176]. - The company acquired property and equipment at a cost of RMB 6,209,000 during the period, compared to RMB 3,958,000 in the same period last year, reflecting an increase of about 57%[195]. Employee and Recruitment - The company has implemented a systematic recruitment process and offers competitive benefits and training opportunities to attract and retain skilled personnel[45]. - The company is committed to regularly reviewing employee compensation policies and overall remuneration based on performance evaluations[45]. - The company implemented an employee interest-free loan scheme to retain high-performing employees, enhancing workforce stability[167]. Corporate Governance and Compliance - The company has adopted the Corporate Governance Code as per the listing rules since its listing date[106]. - The company confirmed compliance with the standards set out in the Securities Trading Code during the relevant period[107]. Risks and Challenges - The company faces risks related to retaining existing advertisers and attracting new ones, which could negatively impact revenue and business[17]. - The company has engaged a trust service provider to assist in managing and vesting restricted share units under the employee plan[29].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示概不會就因本公告全部或任何部分內容而產生或因依 賴該等內容而引致的任何損失承擔任何責任。 截至2023年6月30日止六個月之中期業績公告 在本公告中，「我們」及「我們的」指本公司及本集團（視乎文義所指）。 1 附註： 於2021年8月30日，董事會向32名合資格人士授出合共80,000,000份購股權。授予包括授 予承授人的與績效掛鈎的購股權，一般歸屬期限在10年內。各承授人的購股權將分四期歸 屬，惟須待與本公司有關的若干績效目標獲達成後，方可作實。績效目標由董事會釐定。 就該等獎勵而言，評估於2022年6月30日進行，以評估達到績效目標的可能性。截至2022 年6月30日止六個月，以股份為基礎的報酬開支確認為人民幣17,524,000元。 於2021年8月30日，董事會向32名合資格人士授出合共80,000,000份購股權。授予包括授 予承授人的與績效掛鈎的購股權，一般歸屬期限在10年內。各承授人的購股權將分四期歸 屬，惟須待與本公司有關的若干績效目標獲達成後，方可作實。績效目標由董事會釐 ...

Financial Performance - For the fiscal year ended December 31, 2022, customer contract revenue was RMB 2,799.7 million, an increase of 18.6% from RMB 2,359.8 million for the fiscal year ended December 31, 2021[6]. - Gross profit for the fiscal year ended December 31, 2022, was RMB 1,057.9 million, up 5.4% from RMB 1,003.3 million for the fiscal year ended December 31, 2021[6]. - The net profit for the fiscal year ended December 31, 2022, was RMB 287.3 million, a significant increase of 174.2% compared to a net loss of RMB 387.1 million for the fiscal year ended December 31, 2021[6]. - Adjusted EBITDA for the fiscal year ended December 31, 2022, was RMB 374.7 million, reflecting a 4.9% increase from RMB 357.1 million for the fiscal year ended December 31, 2021[6]. - The company recorded a total revenue of RMB 2.80 billion for the year ended December 31, 2022, an increase of 18.6% from RMB 2.36 billion in 2021[40]. - Operating profit increased by 169.0% to RMB 269.3 million for the year ended December 31, 2022, compared to an operating loss of RMB 390.1 million in 2021[47]. - The company’s net profit for the year ended December 31, 2022, was RMB 287.3 million, a 174.2% increase from a net loss of RMB 387.1 million in 2021[50]. - The company reported a total comprehensive income of RMB 328,916 thousand for the year, compared to a total comprehensive loss of RMB 398,115 thousand in 2021[165]. - The company reported a net profit of RMB 130,135,000 for the year ended December 31, 2022, compared to a net loss of RMB 286,284,000 for the previous year[183]. Revenue Breakdown - The total revenue for the fiscal year ended December 31, 2022, was RMB 2,799.7 million, with a breakdown showing that streamer salaries and shares accounted for 42.0% of total revenue[23]. - Revenue from social business reached RMB 2.56 billion, a year-on-year increase of 22.0%[29]. - For the fiscal year ended December 31, 2022, the company's social business revenue was RMB 2,557.4 million, an increase of 22.0% compared to RMB 2,095.5 million for the fiscal year ended December 31, 2021[67]. - Social business revenue increased to RMB 2,535,943,000 in 2022, up from RMB 2,073,908,000 in 2021, representing a growth of approximately 22.3%[181]. - The cost of revenue for the social business segment was RMB 1,700,755,000, leading to a gross profit of RMB 856,616,000 for the same period[200]. User Engagement - Average monthly active users for social products were approximately 22.9 million, representing a year-on-year growth of about 20.0%[29]. - The overseas user base accounts for 40% of BlueCity Brothers' social business, indicating substantial growth potential in international markets[20]. - The new product TopTop, a multiplayer game social platform, achieved over 30% revenue growth in Q4 2022 compared to Q3 2022[31]. Research and Development - Research and development expenses reached RMB 210 million, representing a year-on-year growth of 62.1%[11]. - The company plans to enhance R&D for new social products to meet diverse global user needs[38]. - Research and development expenses for the fiscal year ended December 31, 2022, were RMB 212.1 million, a 62.1% increase from RMB 130.9 million for the fiscal year ended December 31, 2021[71]. - As of December 31, 2022, the company had a total of 846 full-time employees, with 62% (522 employees) working in research and development[91]. Cost Management - The company reduced general and administrative expenses by 84.7% to RMB 111.8 million for the year ended December 31, 2022[47]. - The company’s sales and marketing expenses for the fiscal year ended December 31, 2022, were RMB 484.1 million, a decrease of 4.1% from RMB 504.9 million for the fiscal year ended December 31, 2021[70]. - The total operating expenses for the year were RMB 2,549,744,000, a decrease from RMB 2,722,361,000 in 2021, indicating a reduction of about 6.3%[182]. Investments and Acquisitions - The company plans to pursue strategic investments or acquisitions to create synergies with its existing business, focusing on companies with competitive advantages in technology and data[85]. - The company completed the privatization transaction of BlueCity Holdings on August 12, 2022[114]. - The company has committed a total cash contribution of $50 million to the Metaclass Management ELP fund, which aims to participate in the privatization of BlueCity Holdings Ltd[114]. - The fund's total fundraising target is $100 million, with contributions from Chizicheng Strategy Investment ($0.1 million), Spriver ($49.9 million), and the company itself ($50 million)[114]. Financial Position - The company's total assets increased from RMB 1,622.4 million as of December 31, 2021, to RMB 1,720.2 million as of December 31, 2022, while total liabilities decreased from RMB 782.3 million to RMB 482.2 million, resulting in a debt-to-asset ratio decline from 48.2% to 28.0%[53]. - Total liabilities amounted to RMB 482,207,000, while total equity reached RMB 1,238,010,000 as of December 31, 2022[170]. - Cash and cash equivalents decreased from RMB 724.6 million as of December 31, 2021, to RMB 596.7 million as of December 31, 2022[54]. - Cash and cash equivalents stood at RMB 596,729,000 as of December 31, 2022, compared to RMB 724,588,000 in the previous year[173]. Corporate Governance - The company has adopted corporate governance codes and has complied with the principles and provisions during the reporting period[94]. - The company’s independent auditor confirmed that the financial statements for the year ended December 31, 2022, align with the reported figures[131].