Ge Long Hui·2025-05-23 18:26Core Viewpoint - The company reported strong financial performance in Q1 2025, with revenue and adjusted net profit exceeding market expectations, indicating robust growth across various business segments [1][2][3] Financial Performance - Q1 2025 revenue reached 7 billion yuan, slightly above Bloomberg consensus by 1%, with a year-on-year growth of 24% [1] - Adjusted net profit for Q1 2025 was 360 million yuan, surpassing Bloomberg consensus by 47%, marking a turnaround from losses, with a corresponding profit margin of 5.2% [1] - Operating cash flow for Q1 2025 was 1.3 billion yuan [1] User Engagement - Monthly Active Users (MAU) reached 368 million, a year-on-year increase of 8%, while Daily Active Users (DAU) reached 107 million, up 4% [1] - Average daily usage time per user was 108 minutes, an increase of 3 minutes year-on-year, with both MAU and user engagement time hitting historical highs [1] Gaming Business - Q1 2025 gaming revenue was 1.7 billion yuan, a significant year-on-year increase of 76%, driven by the game "Three Kingdoms: Strategy of the World" [2] - The company is focusing on long-term operations for "Three Kingdoms" and has several games awaiting approval, with new seasons and expansions planned [2] Advertising Business - Q1 2025 advertising revenue was 2 billion yuan, reflecting a year-on-year growth of 20%, with high-margin performance advertising revenue growing over 30% [2] - AI is increasingly contributing to advertising growth by optimizing user conversion and generating ads through AIGC, covering over 30% of performance ads [2] Value-Added Services - Q1 2025 revenue from value-added services was 2.8 billion yuan, showing an 11% year-on-year increase [2] - The number of premium members reached 23.5 million, a 7% year-on-year increase, with a paid rate of 6.4% [3] Cost Management - Q1 2025 gross margin was 36.3%, in line with expectations, achieving eleven consecutive quarters of sequential improvement [3] - Effective cost control was noted, with total expenses increasing by only 4% year-on-year, despite a 26% rise in sales and marketing expenses due to promotional activities [3] Profit Forecast - The company has revised its adjusted net profit forecasts for 2025-2027 to 2.049 billion, 2.947 billion, and 3.507 billion yuan respectively, maintaining a buy rating [3]