Investment Rating - The investment rating for the company is "Buy" with a 6-month outlook maintained [4]. Core Insights - The company reported a revenue of 7.34 billion yuan for Q2 2025, which is in line with Bloomberg consensus expectations. Adjusted net profit reached 560 million yuan, exceeding Bloomberg consensus by 8.1% [1]. - The user metrics show a Daily Active Users (DAU) of 109 million and Monthly Active Users (MAU) of 363 million, with a daily average usage time of 105 minutes [1]. - The company is benefiting from a strong performance in its gaming and advertising segments, with significant growth in user engagement and creator monetization [1][2][3]. Revenue Breakdown 1) **Mobile Games**: - Revenue for the quarter was 1.61 billion yuan, a year-on-year increase of 60%, driven by strong performance from "Three Kingdoms: Strategize the World" and stable contributions from "Fate/Grand Order" and "Azur Lane" [2]. - The company is also focusing on new game releases and overseas expansion for existing titles [2]. 2) **Advertising**: - Revenue reached 2.45 billion yuan, up 20% year-on-year, primarily due to strong growth in performance advertising [3]. - The company has improved its advertising infrastructure, leading to a more than 10% increase in eCPM and approximately 30% growth in performance ad revenue [3]. 3) **Value-Added Services (VAS)**: - Revenue was 2.84 billion yuan, a year-on-year increase of 11%, supported by growth in live streaming and other value-added services [3]. - The number of paid members reached 23.7 million, with over 80% opting for annual or auto-renewal plans [3]. 4) **IP and Derivatives**: - Revenue was 440 million yuan, a year-on-year decline of 15% [3]. Profitability - The gross profit was 2.68 billion yuan, with a gross margin of 36.5%, reflecting a year-on-year increase of 6.6 percentage points. The adjusted net profit of 560 million yuan indicates a turnaround from previous losses [4]. - The company is expected to benefit from its strategy of "self-developed quality products and global distribution," with projected revenues for 2025-2027 of 30.1 billion, 32.6 billion, and 35.6 billion yuan respectively [4].

Core Insights - Perfect World reported a significant decline in total revenue for the fiscal year 2024, amounting to 5.57 billion yuan, a year-on-year decrease of 28.50% [1] - The net profit attributable to shareholders was -1.288 billion yuan, compared to a profit of 491 million yuan in the same period last year [1] - The company announced a cash dividend of 2.3 yuan per 10 shares, with no stock dividends [1] Financial Performance - For Q1 2025, the total revenue reached 2.023 billion yuan, reflecting a year-on-year increase of 52.22% [2] - The net profit attributable to shareholders for Q1 2025 was 302 million yuan, a turnaround from a loss of 29.76 million yuan in the previous year [2] - The net profit excluding non-recurring items was 163 million yuan, compared to a loss of 158 million yuan in the same period last year [2] Business Strategy - The company focuses on "self-developed boutique" games, establishing a content matrix linked by IP, with key offerings including the Perfect World IP and the Zhu Xian IP [2] - The upcoming MMORPG "Zhu Xian World" is set to launch in December 2024, aiming to strengthen the company's traditional advantages in the MMORPG sector [2] - The light sci-fi open-world game "Honkai: Star Rail," launched in December 2021, has opened new avenues for the company's trendy game category [3] Market Challenges - Industry analysts suggest that the upcoming "Zhu Xian World" lacks innovative elements, indicating a need for new ideas and products to attract younger players [3] - The core player demographic for Perfect World games is aging, with a need to engage a new generation of gamers to ensure future success [3]