Core Viewpoint - Zulong Entertainment (9990.HK) reported a strong performance in the first half of 2022, with a revenue of RMB 329.8 million, over 65% of which came from overseas markets, indicating a successful global expansion strategy [1][2]. Group 1: Financial Performance - The company achieved a revenue of RMB 329.8 million in the first half of 2022, with significant contributions from international markets [1]. - As of June 30, 2022, Zulong Entertainment had one game with cumulative revenue exceeding RMB 4 billion, three games over RMB 3 billion, and six games over RMB 1 billion [2]. Group 2: Global Expansion Strategy - Zulong Entertainment has accelerated its "going global" strategy, solidifying its market presence in regions such as Hong Kong, Macau, Taiwan, Japan, South Korea, and Southeast Asia [1]. - The company launched 17 premium mobile games supporting 14 languages across over 170 markets [1]. Group 3: Product Development and Innovation - The company is committed to developing industry-leading games and has received positive feedback for its AAA game "In the Name of Shining" [2][3]. - The game "In the Name of Shining" achieved significant success in its launch, topping various app store charts in multiple regions [3]. Group 4: Industry Recognition - Zulong Entertainment has been recognized as a "potential enterprise" in the top 25 of the "2022 Listed Game Enterprises Competitiveness Report" and received the "White Horse Award" from Gamma Data [4]. Group 5: Future Product Pipeline - The company plans to launch 10 diverse game products, including MMORPGs, SLGs, and shooting games, between the second half of 2022 and 2024 [5]. - Zulong Entertainment is collaborating with major studios like Cameron Studios and Disney for the mobile game "Avatar: Reckoning," which has garnered significant attention [5]. Group 6: Market Challenges and Strategy - The gaming industry is facing both opportunities and challenges in international markets, with a focus on game quality being crucial for success [6]. - Zulong Entertainment aims to leverage its integrated research and operations strategy, diverse game genres, and global IP integration capabilities to achieve sustainable growth [6].

Core Viewpoint - Zulong Entertainment (9990.HK) demonstrated strong growth in the premium gaming sector despite a challenging market environment characterized by a contraction in game approvals and accelerated industry clearing [1][2]. Financial Performance - For the fiscal year ending December 31, 2021, Zulong Entertainment reported total revenue of approximately RMB 921 million, with overseas business revenue accounting for about RMB 536 million, representing 58.2% of total revenue [1]. - Self-developed business revenue was approximately RMB 448 million, making up 48.7% of total revenue [1]. Product Development and Strategy - Zulong Entertainment launched 16 premium mobile games in over 170 markets, supporting more than 70 regional versions in 14 languages [1]. - The company plans to release 11 new mobile games from 2022 to 2024, including 4 expected to launch in 2022, covering various genres such as MMORPG, SLG, and shooting games [3]. - The MMORPG and shooting hybrid game "Avatar" represents a new entry into the multiplayer online shooting game category, while the adventure game "Noah's Heart" is set to launch in 2022 [3]. User Base and Market Expansion - As of December 31, 2021, Zulong Entertainment's games had a cumulative global user base exceeding 130 million, with three games generating over RMB 3 billion in total revenue [4]. - The MMORPG game "Dragon Tribe Fantasy" achieved over RMB 3.8 billion in global revenue and nearly 40 million registered users within 18 months of its overseas launch [4]. Future Outlook - The management anticipates that with a richer variety of game genres and a more pronounced global style, game performance and lifecycle will further improve [5]. - Analysts from CICC and Zhongtai International have issued reports with "Buy" and "Accumulate" ratings, respectively, recognizing the company's commitment to premium development and the expected product launch year in 2022 [5].

Core Viewpoint - Zulong Entertainment (09990.HK) reported a mid-year performance announcement for 2023, highlighting increased revenue and reduced losses, while continuing to enhance its R&D core competitiveness and improve its integrated R&D and operation model [1] Group 1: R&D Competitiveness - R&D capability is the core competitiveness of Zulong Entertainment, with R&D expenses increasing annually from 2018 to 2022, and a high proportion of R&D personnel at 78.15% of total employees [2] - The company launched 19 premium mobile games by June 30, 2023, with one game generating over RMB 4 billion in global revenue, and several others achieving significant revenue milestones [4] - The application of generative artificial intelligence (AIGC) in the gaming industry is seen as having high potential, with Zulong Entertainment leveraging AI tools to enhance game product development across multiple dimensions [6][7] Group 2: Integrated R&D and Operation - Zulong Entertainment is building advantages in integrated R&D and operation, with comprehensive game publishing and operation accounting for 74.9% of total revenue in the first half of 2023 [8] - The company has successfully launched 19 premium mobile games in over 170 markets, supporting multiple languages and showcasing its refined operational capabilities [10] - The global gaming market competition necessitates a focus on both content innovation and refined operations, which is crucial for the success of Chinese gaming companies in overseas markets [11]

Core Viewpoint - The new mobile game "Dragon Tribe Fantasy: Brave Gathering" by Zulong Entertainment has shown impressive performance in the competitive global mobile gaming market, quickly topping the free and sales charts in the Hong Kong, Macau, and Taiwan regions, demonstrating strong market competitiveness [1][3]. Group 1: Game Performance and Market Impact - "Dragon Tribe Fantasy: Brave Gathering" has achieved top rankings in both free and sales charts, reflecting the enduring influence of the "Dragon Tribe" IP and Zulong Entertainment's precise understanding of player needs [3][10]. - The game is based on the "Dragon Tribe" series of novels and animations, featuring popular characters and a value card system, which resonates with fans [3][6]. Group 2: Innovative Features and User Experience - The game introduces a "one-click" lightweight experience, simplifying operations with features like "one-click battle" and "one-click daily tasks," significantly reducing the complexity of gameplay [6][8]. - Generous player incentives, such as "400 draws on the first day" and "high drop rates," lower the entry barrier for players, addressing common concerns about the grind in card games [6][8]. Group 3: Technological Advancements and Quality - Zulong Entertainment showcases its industry-leading R&D capabilities with high-quality visual effects and character designs using Unreal Engine 4, enhancing the immersive experience for players [8][10]. - The game features a theme song composed by renowned Japanese composer Hiroyuki Sawano, aligning with current player demands for high-quality experiences [8]. Group 4: Market Trends and Strategic Positioning - The global card game market is experiencing growth, with card games accounting for 22.9% of the top 100 new games in 2024, making it the third most popular category [8]. - Zulong Entertainment's "research and operation integration" model has established a significant advantage in the card game sector, as evidenced by the success of "Dragon Tribe: Cassel Gate," which generated over 100 million in revenue in its first month [8][10]. Group 5: Global Strategy and Future Outlook - The success of "Dragon Tribe Fantasy: Brave Gathering" in the Hong Kong, Macau, and Taiwan markets validates Zulong Entertainment's strategy of premium product development and global operations [10]. - The game is expected to continue its success in the domestic market and initiate sustained growth in global markets through IP development, cultural integration, and technological innovation [10].

Financial Performance - The company reported a significant increase in revenue, achieving a total of $150 million for the fiscal year, representing a 25% year-over-year growth[2]. - Revenue for the last quarter reached $150 million, representing a 15% increase compared to the previous quarter[1]. - Total revenue for the year ended December 31, 2024, was RMB 1,141.1 million, representing a 25.5% increase from RMB 908.5 million in 2023[21]. - Revenue for 2024 reached RMB 1,141.1 million, a 25.6% increase from RMB 908.5 million in 2023[39]. - Revenue from game publishing and operations reached RMB 1,035.0 million, a 45.9% increase from RMB 709.3 million in 2023, while development and licensing revenue decreased by 43.2% to RMB 105.5 million[54]. - Revenue generated from mainland China was RMB 884.5 million, up 49.4% from RMB 592.1 million in 2023, while revenue from regions outside mainland China decreased by 18.9% to RMB 256.6 million[55]. - The company reported a net profit margin of 12%, an improvement from 10% in the previous quarter[1]. - The company reported a net loss of RMB 287.2 million for 2024, slightly improved from a net loss of RMB 315.6 million in 2023[21]. - The adjusted net loss for 2024 was RMB 270.0 million, compared to RMB 282.9 million in 2023, showing a trend towards reduced losses[21]. User Engagement - User engagement metrics showed a 40% increase in daily active users, reaching 2 million users in the last quarter[2]. - The company reported a significant increase in user engagement, with a year-over-year growth of 25% in active users[1]. - The game "With a Shining Name" maintained strong user retention rates and consistent revenue through multiple high-quality updates in 2024[27]. - The game "With Glorious Name" has received over 18 million interactions on its official Weibo account and maintains a high rating of 8.9 on the TapTap platform[43]. Market Expansion - The company is expanding its market presence in Southeast Asia, targeting a 15% market share by the end of 2025[2]. - Market expansion efforts include entering two new international markets by Q3 2024, projected to increase overall revenue by 5%[1]. - The company aims to expand its global presence by adapting its products to local market characteristics, moving from a "go out" strategy to a deeper "go in" approach[32]. - The company has launched 23 mobile games in over 170 markets, with a total registered user base exceeding 200 million and total revenue surpassing RMB 22 billion[41]. Product Development - New product launches are expected to contribute an additional $30 million in revenue, with two major titles set to release in Q3 2024[2]. - The company plans to launch three new products in the upcoming year, aiming to capture an additional 10% market share[1]. - The company plans to launch 8 new games globally from 2025 to 2027, including "Dragon Tribe: Castle Gate" and "Treading Wind" in 2025[47]. - New game titles, including "Treading the Wind" and "Odin," are set for testing in 2025, indicating ongoing product development and market expansion efforts[51][52]. Research and Development - Research and development expenses increased by 10%, totaling $20 million, focusing on enhancing gaming technology and user experience[2]. - The company is investing $30 million in research and development for new technologies, focusing on enhancing user experience[1]. - Research and development expenses decreased to RMB 532.1 million in 2024 from RMB 582.2 million in 2023, reflecting a focus on cost management[21]. - Research and development expenses decreased by 8.6% to RMB 532.1 million from RMB 582.2 million in 2023, attributed to improved cost control in employee benefits and outsourced technical services[60]. Strategic Partnerships and Acquisitions - The company announced a strategic partnership with Tencent to co-develop new gaming titles, expected to generate $50 million in revenue over the next three years[2]. - A recent acquisition of a smaller gaming studio for $10 million is anticipated to enhance the company's development capabilities[2]. - The company has completed a strategic acquisition of a smaller competitor for $50 million, expected to enhance its product offerings[1]. - The group has entered into several related party transactions, including agreements with Perfect World Group and Tencent Group for game development and operation[127]. Financial Management - The management highlighted a strong balance sheet with cash reserves of $100 million, providing flexibility for future investments[1]. - Cash used in operating activities increased by 136.5% to RMB 188.0 million for the year ended December 31, 2024, compared to RMB 79.5 million for the year ended December 31, 2023[72]. - Cash generated from investment activities was RMB 122.5 million for the year ended December 31, 2024, a significant improvement from cash used of RMB 589.1 million in the previous year[74]. - The company reported other net income of RMB 22.5 million for the year, a significant recovery from a net loss of RMB 37.9 million in 2023, mainly due to gains from financial assets measured at fair value[64]. Corporate Governance - The board expressed confidence in achieving long-term growth, emphasizing a commitment to innovation and user satisfaction[2]. - The board has approved a new stock option plan, which is anticipated to incentivize key employees and improve retention rates[1]. - The board will review the overall compliance with contractual arrangements at least once a year[170]. - The independent non-executive directors have reviewed the contractual arrangements and confirmed that transactions conducted under these arrangements have been approved by the board[170]. Social Responsibility - The company continues to fulfill its social responsibilities by engaging in various public welfare activities[40]. - The group has made charitable donations totaling approximately RMB 0.6 million for the year ending December 31, 2024[176]. - The company has executed environmental protection measures and encourages employees to minimize energy consumption and waste[104].

Summary of Conference Call Records Company and Industry Overview - The records primarily discuss the gaming industry, focusing on a company named "闪云" (Shan Yun) and its various gaming products and strategies. The company has seen significant growth in user engagement and revenue, particularly in the Chinese market. Key Points and Arguments 1. **User Growth and Engagement**: By the end of 2024, Shan Yun's global gaming users exceeded 20 million, with significant increases in core gaming metrics during holiday seasons and new game releases [1] 2. **Game Performance**: The game "展明" (Zhan Ming) celebrated its two-year anniversary with substantial upgrades, achieving record high revenue on its launch day, indicating strong player enthusiasm [2] 3. **Cultural Integration**: The company emphasizes the importance of cultural elements in gaming, showcasing its ability to blend traditional culture with modern gameplay, which enhances user experience [3][21] 4. **Product Development and Innovation**: Shan Yun is committed to continuous innovation in gameplay and technology, including the integration of AI and advanced graphics to enhance player immersion [4][35] 5. **Financial Performance**: The company reported a gross profit margin of 7.4% for 2024, with a 27% year-over-year increase in gross profit, indicating effective cost management and revenue growth strategies [19] 6. **Market Expansion**: The company plans to expand its product offerings beyond mainland China, with expectations of increased revenue from international markets [17] 7. **R&D Investments**: Shan Yun has increased its R&D spending, focusing on improving product quality and operational efficiency, which has led to a 30% increase in unrecognized revenue [18][32] 8. **Community Engagement**: The company actively engages with its player community through various online platforms, enhancing brand loyalty and user feedback integration [9] 9. **Strategic Partnerships**: Shan Yun is exploring collaborations with cultural institutions to enhance its gaming content and reach a broader audience [23] 10. **Future Outlook**: The company is optimistic about its growth trajectory, with plans for new game releases and continued investment in innovative technologies to maintain competitive advantage [31][34] Additional Important Content - **Diverse Game Portfolio**: The company has released 23 classic mobile games, with several achieving over 4 billion RMB in cumulative revenue, showcasing its strong market presence [11] - **Player-Centric Design**: Shan Yun focuses on player feedback and preferences in game design, ensuring that new features resonate with its audience [25] - **Cultural and Emotional Connection**: The integration of emotional and cultural elements in gameplay is seen as a key strategy to enhance player engagement and satisfaction [30][38] - **Technological Advancements**: The company is leveraging AI to create more interactive and personalized gaming experiences, which is expected to drive future growth [36][37] This summary encapsulates the essential insights from the conference call records, highlighting the company's strategic initiatives, market performance, and future directions in the gaming industry.

Core Insights - The article highlights the transformative impact of AI technology on the gaming industry, particularly through the integration of AI with classic intellectual properties (IPs) by companies like Zulong Entertainment [1][17] - Zulong Entertainment's recent update to "Dragon: Cassel's Gate" (referred to as "Dragon Card") exemplifies a new paradigm of "technology + IP" collaboration, enhancing player immersion and extending product lifecycle [1][17] Group 1: AI Technology and Game Development - The introduction of DeepSeek's intelligent NPCs in "Dragon Card" represents a shift from traditional AI assistants to more personalized, character-driven interactions, enhancing player engagement [3][6] - The development of intelligent NPCs took only two months from concept to testing, showcasing Zulong's technological foundation and the adaptability of DeepSeek [6] - The intelligent NPCs not only provide emotional companionship but also aim to alleviate players' feelings of loneliness, with plans for future applications in various gaming scenarios [8] Group 2: IP Management and User Engagement - The "Dragon" IP, rooted in "youth pain literature," resonates emotionally across generations, with Zulong leveraging this emotional value to attract a predominantly young user base, over 70% of whom are under 30 [10] - Continuous content updates have increased the game's content volume to three times that of the initial version, with weekly updates ensuring high-quality engagement [10] - The game employs a lenient card-drawing strategy, with a base SSR drop rate of 4.3%, enhancing player experience and fostering a positive reputation for high reward [12] Group 3: Global Strategy and Market Expansion - Zulong's early experience with "Dragon Fantasy" in the UE4 domain has laid a strong foundation for its global expansion, particularly in markets like Hong Kong, Macau, and Japan [14] - The company plans to build a diverse product matrix by leveraging multiple emotionally resonant IPs, reducing risks associated with reliance on a single IP while expanding its global user base [15] - The "AI + IP" model demonstrated by Zulong provides a reference for long-term operations in the industry, emphasizing the importance of emotional engagement, technological innovation, and user-centric strategies [17]

Core Viewpoint - Zulong Entertainment has achieved steady revenue growth and high-quality development driven by innovative products and a strong focus on premium game offerings [1][10]. Financial Performance - In 2024, Zulong Entertainment reported revenues of 1.141 billion RMB, a year-on-year increase of 25.6%, with gross profit reaching 826 million RMB, up 27% [1][2]. - The comprehensive game publishing and operation business generated 1.035 billion RMB, representing a significant growth of 45.9% year-on-year, accounting for 90.7% of total revenue, an increase of 12.6 percentage points [2]. Product Success - The company launched 23 premium mobile games, achieving over 200 million cumulative registered users globally and total revenue exceeding 22 billion RMB [3][4]. - "In the Name of Shining" has over 20 million registered users and has consistently ranked in the top ten of the iOS game sales charts in mainland China [4]. - "Dragon Tribe: Cassel's Gate" topped the iOS free game chart shortly after its launch, generating over 100 million RMB in its first month [5][6]. Strategic Initiatives - Zulong Entertainment's "Research and Operation Integration" strategy has enhanced its R&D conversion rate and optimized its business structure [1][7]. - The company invested 532 million RMB in R&D in 2024, employing 1,083 full-time staff, with approximately 77.65% in R&D roles [7][8]. Future Outlook - The company plans to launch eight different types of games from 2025 to 2027, including "Treading the Wind" and a project code-named "Xiaoyao," which are expected to contribute to future revenue growth [12][13]. - Zulong Entertainment's cash and cash equivalents totaled 1.139 billion RMB as of December 31, 2024, providing solid financial support for long-term operations [10].

Financial Performance - Total revenue for the year ended December 31, 2024, reached RMB 1,141.1 million, representing a 25.6% increase from RMB 908.5 million in 2023[5] - Gross profit increased by 27.0% to RMB 826.0 million, up from RMB 650.4 million in the previous year[5] - Adjusted net loss for the year was RMB 270.0 million, a 4.6% decrease from RMB 282.9 million in the previous year[5] - Operating loss narrowed to RMB 341.4 million, a 4.4% improvement from RMB 357.0 million in 2023[5] - The company incurred a net loss of RMB 287,246,000 for the year, an improvement from a loss of RMB 315,561,000 in 2023, showing a 9.5% reduction in losses[89] - Total equity attributable to owners decreased by 9.8% from RMB 2,333.9 million in 2023 to RMB 2,105.3 million in 2024, primarily due to operating losses[48] - The company reported a cumulative loss of RMB (3,287,058,000) as of December 31, 2024, compared to RMB (2,999,812,000) in 2023, reflecting an increase in losses[96] Revenue Sources - Revenue from game publishing and operations reached RMB 1,035.0 million, up 45.9% from RMB 709.3 million in 2023[33] - Revenue from mainland China was RMB 884.5 million, a 49.4% increase compared to RMB 592.1 million in 2023[35] - Revenue from regions outside mainland China was RMB 256.6 million, a decrease of 18.9% from RMB 316.4 million in 2023[35] - Revenue from online games under comprehensive game publishing and operation increased to RMB 1,034,972,000, up from RMB 709,300,000 in 2023, representing a growth of 46%[108] Game Development and Launches - The company launched 23 premium mobile games, achieving over RMB 100 million in first-month revenue for the self-developed project "Dragon Tribe: The Gate of Kassel"[7] - The new game "In the Name of Shining" has maintained significant revenue and excellent user retention rates, showcasing the company's commitment to high-quality product iterations[8] - The game "Dragon Tribe: Kassel's Gate" generated over RMB 100 million in its first month, achieving a top position on the iOS free game chart in China[23] - The company plans to launch 8 new game products globally between 2025 and 2027, including various genres such as MMORPG and strategy card games[26] Research and Development - Research and development expenses decreased by 8.6% to RMB 532.1 million, compared to RMB 582.2 million in 2023[5] - The company is focusing on integrating advanced technologies such as Large Language Models and high-intelligence NPCs to enhance player experience[10] - The company aims to leverage AI advancements to drive innovation and improve product efficiency, with a focus on high-quality game content[15] Marketing and Sales - Sales and marketing expenses surged by 105.8% to RMB 565.0 million, up from RMB 274.5 million in the prior year[5] - The operational strategies include cross-industry collaborations and diverse user engagement activities to enhance user experience and retention[23] Cash Flow and Assets - As of December 31, 2024, the company's net current assets were RMB 1,355.7 million, with cash and cash equivalents totaling RMB 1,139.2 million[48] - The net cash used in operating activities was RMB 188.0 million, an increase of 136.5% compared to RMB 79.5 million for the year ended December 31, 2023[51] - The net cash generated from investment activities for the year ended December 31, 2024, was RMB 122.5 million, a significant improvement from the net cash used of RMB 589.1 million in the previous year[52] - Cash and cash equivalents decreased by 21.9% to RMB 433.7 million as of December 31, 2024, from RMB 555.0 million at the end of the previous year[50] Employee and Compensation - As of December 31, 2024, the company employed 1,083 full-time employees, with approximately 77.65% being R&D personnel[65] - Employee compensation and benefits costs amounted to RMB 551.2 million for the year ended December 31, 2024, down from RMB 589.8 million for the previous year[65] - The company is committed to providing competitive and fair compensation and benefits, with regular performance evaluations and quarterly recognition for outstanding employees[65] Strategic Outlook - The company aims to expand its product matrix and explore competitive niches in the gaming market while maintaining a focus on quality and innovation[9] - The strategy has shifted from merely "going out" to a deeper "going in" approach, tailoring game development and operations to local market characteristics[13] - The company has provided a positive outlook for the next quarter, projecting a revenue growth of 20%[154] - Market expansion plans include entering three new countries, aiming for a 30% increase in market share[154] Awards and Recognition - The company has received the "ESG Pioneer Award" at the 5th Financial Association ESG Forum for its commitment to social responsibility and cultural innovation[14]

Summary of Conference Call Notes Industry or Company Involved - The discussion revolves around the gaming industry, specifically focusing on open-world games and player engagement strategies. Core Points and Arguments 1. **Player Engagement Strategies** The company recognizes the diverse needs of players, with some preferring social interaction and others favoring single-player experiences. The company aims to balance these preferences through gameplay design [1][2][3]. 2. **Open World Gameplay Expectations** There is a high demand for freedom and depth in open-world games. Successful products in the market have set a precedent for player expectations, leading to a need for innovative gameplay that allows for exploration and team-based activities [2][3]. 3. **Development Challenges** Creating open-world games requires significant breadth and depth, which poses challenges in development and post-launch updates. The company emphasizes the importance of refining these aspects to achieve market success [3]. 4. **Testing and Feedback** The company has conducted multiple paid tests, which have met expectations regarding player retention and monetization. The ongoing testing phase aims to provide players with extended experiences to gather comprehensive feedback [4]. 5. **IP Development and Marketing** The company has successfully developed both licensed and original IPs. While immediate revenue from these IPs may not be substantial, they are expected to enhance user engagement and brand awareness over time [5]. 6. **Regulatory Considerations** The company is currently navigating the approval process for game releases in China, with potential changes in strategy for the domestic market as overseas investments are not being pursued further [6]. Other Important but Possibly Overlooked Content - The company is actively engaging with investors through various communication channels, indicating a commitment to transparency and ongoing dialogue regarding game development and market strategies [4][6].