Core Viewpoint - The financial performance of Glacier Network in 2024 reflects the deep-seated competition within the gaming industry's "user acquisition model," revealing a paradox of revenue growth without profit increase [1] Financial Performance - In 2024, the company reported total revenue of 2.788 billion yuan, a slight increase of 0.17% year-on-year, but incurred a net loss of 249 million yuan, with a further loss of 317 million yuan after excluding non-recurring items, indicating the cost of strategic expansion [1] - In the first half of the year, the company spent 909 million yuan on user acquisition for five games, accounting for 64.95% of sales expenses, while generating only 1.206 billion yuan in revenue [2] - The aggressive strategy of "loss for scale" is compounded by a longer revenue recognition cycle for overseas investments, leading to a mismatch in cash flow, with sales expenses exceeding revenue [2] Product and Market Dynamics - The core product "Super Ability World" saw a 69% year-on-year decline in domestic iOS revenue, and ARPPU dropped by 47%, while the overseas version "Hero Clash" remained weak in the U.S. market [3] - The new product "Realm of Legends" generated only 340,000 USD in its first month, failing to compensate for the decline of older products, highlighting an over-reliance on "sub-game user acquisition" [3] Profitability Outlook - For Q1 2025, the company anticipates a profit of 176 to 228 million yuan, attributed to cost reduction and efficiency improvements, but this is largely driven by the release of deferred revenue [4] - The actual cash inflow remains under pressure, as the increase in deferred revenue may mask the true profitability, with non-recurring gains being minimal [4] Financial Risks and Strategic Challenges - As of Q3 2024, the company had a debt-to-asset ratio of 55% and net cash flow from operating activities of -467 million yuan, raising concerns about financial stability [5] - The controlling shareholder's plan to sell shares worth approximately 110 million yuan may further undermine market confidence [5] - Despite the approval of a 1.2 billion yuan capital increase to alleviate short-term debt pressures, the company faces challenges in overcoming rising user acquisition costs and the need for product innovation [5] Industry Implications - The ongoing "cash flow consumption battle" may redefine the survival threshold of the user acquisition model in the gaming industry [6]