Ge Long Hui·2025-05-23 18:26Core Viewpoint - The company reported a significant improvement in its financial performance for Q1 2025, with a notable increase in revenue and adjusted net profit compared to the same period last year, indicating a positive growth trajectory in user engagement and monetization strategies [1][2]. Group 1: Operational Performance - In Q1 2025, the platform's user traffic, stickiness, and payment rate all saw further growth, with Monthly Active Users (MAU) increasing by 8% year-on-year to 368 million, and Daily Active Users (DAU) rising by 5% to 107 million [1]. - The average daily usage time per user increased from 105 minutes in Q1 2024 to 108 minutes in Q1 2025, while Average Revenue Per User (ARPU) significantly improved from 17 yuan to 19 yuan year-on-year [1]. Group 2: Key Financial Metrics - The company achieved a revenue of 7.003 billion yuan in Q1 2025, representing a year-on-year increase of 24% but a quarter-on-quarter decrease of 9% [2]. - The revenue breakdown includes mobile gaming at 1.731 billion yuan (YoY +76%, QoQ -4%), live streaming and value-added services at 2.807 billion yuan (YoY +11%, QoQ -9%), advertising at 1.998 billion yuan (YoY +20%, QoQ -16%), and IP derivatives and other businesses at 467 million yuan (YoY -4%, QoQ slightly up) [2]. - The gross margin stood at 36%, an increase of 8 percentage points year-on-year, with various expense ratios showing continued optimization [2]. Group 3: Mobile Gaming Business - The exclusive licensed game "Three Kingdoms: Strategize the World" performed exceptionally well, driving mobile gaming revenue up by 76% year-on-year to 1.731 billion yuan [3]. - The company anticipates that the game will develop into a long-term attractive title, with a significant update planned for May 31, which is expected to further enhance user engagement [3]. Group 4: Live Streaming and Value-Added Services - Revenue from live streaming and value-added services grew by 11% year-on-year to 2.807 billion yuan, driven by increased earnings from these segments [4]. - The number of monthly paying users reached a record high of 32 million, and the total number of paying members increased to 264 million, reflecting a 12% year-on-year growth [4]. Group 5: Advertising Business - Revenue from advertising increased by 20% year-on-year to 1.998 billion yuan, with the number of advertisers growing by over 35% [5]. - AI-driven advertising creation and placement contributed to a more than 30% increase in performance advertising, while brand and native ads showed stable growth [5]. Group 6: Profit Forecast and Investment Rating - The company forecasts revenues of 30.5 billion yuan, 34 billion yuan, and 37.6 billion yuan for 2025E, 2026E, and 2027E respectively, with corresponding NON-GAAP net profits of 2 billion yuan, 2.6 billion yuan, and 3.3 billion yuan [6]. - The company maintains a strong content ecosystem and user engagement, leading to an upward trend in monetization capabilities, with a target price of 168 yuan per share [6].