Core Viewpoint - The company, Dianhun Network, is expected to report significant losses in the first half of 2025, with a projected net profit loss of between 11 million to 7.5 million yuan, indicating a decline compared to the previous year [1][11]. Financial Performance - The company's revenue has decreased from 1.024 billion yuan in 2021 to 550 million yuan in 2024, representing a decline of 46.3% [11]. - Net profit has plummeted from 454 million yuan to 54 million yuan during the same period, a staggering drop of 88.11% [11]. - For 2024, the total revenue was 359.26 million yuan, down 18.46% from 2023 [5]. Game Performance - The core game, "Dream Three Kingdoms," has been in operation for over 15 years and is experiencing a decline in revenue and active users [1][3]. - In 2024, the revenue from "Dream Three Kingdoms" was 359 million yuan, accounting for 65.27% of total revenue, but this was an 18.46% decrease year-on-year [4][5]. - The average monthly active users (MAU) for 2024 was 566,400, a decrease of 3.9% from 2023 [5]. Management and Ownership Changes - The company has seen a significant reduction in its founding team, with only two founders remaining, Hu Jianping and Chen Fang [2][19]. - Founders have collectively cashed out 850 million yuan since the company's IPO, raising concerns about management stability [2][19]. Investment and Asset Management - The company has faced substantial investment losses, with long-term equity investments and goodwill impairments totaling 68.28 million yuan, which exceeded the net profit for the period [12][18]. - Six out of ten major invested companies are facing operational difficulties, leading to full impairment of their book values [12][13]. New Game Releases - The company has several new game titles planned for release, including "Wild Barbarian Battle 2" and "Xianxia Era," but the performance of these new titles has been underwhelming [6][7]. - "Wild Barbarian Battle 2" initially performed well but quickly fell in rankings and revenue, indicating challenges in sustaining player interest [9]. Market Context - The gaming industry is experiencing a policy-driven recovery, which has led to a temporary increase in stock prices, but the company's internal challenges remain significant [20][21].

Core Viewpoint - The company, Hangzhou Dihun Network Technology Co., Ltd., reported a significant decline in revenue and net profit for the year 2024, primarily driven by the performance of its flagship game "Dream Three Kingdoms" which has been operational for over 15 years [1][3][5]. Financial Performance - In 2024, the company achieved operating revenue of 550 million yuan, a year-on-year decrease of 18.71% - The net profit attributable to the parent company was 30.58 million yuan and 5.30 million yuan, reflecting declines of 46.2% and 91.1% respectively [1][3]. Game Performance Metrics - Revenue from "Dream Three Kingdoms" accounted for 65.27% of total revenue - The game experienced a decline in key performance indicators over the past three years: - Revenue in 2024 was 359.26 million yuan, down 18.46% from 2023 - Total transaction amount decreased by 38.47% to 308.06 million yuan in 2024 - Monthly active users fell to 566,400, a decrease of 3.90% [2][3][8]. Revenue Recognition and Accounting Practices - The company recognizes revenue based on the consumption of virtual items and the lifecycle of paying players, which aligns with the accounting standards [4][5]. - The average revenue per user (ARPU) in 2024 was 45.32 yuan, down 35.98% from the previous year [2][3]. Business Model and Cost Structure - The company operates under four business models: self-operated, authorized, joint operation, and agency operation - Despite a decline in revenue, operating costs increased by 12.35% due to rising costs associated with mobile game licensing and operational expenses [5][8]. Cost Composition - The main components of operating costs in 2024 included: - Employee compensation: 78.91 million yuan, up 12.31% - Revenue sharing and licensing fees: 32.15 million yuan, up 48.46% - Server rental fees: 16.81 million yuan, down 10.63% [8][9]. Future Game Development and Risks - The company has several new game products in the pipeline, with various stages of licensing and release planned for 2025 - However, there are risks associated with the timely launch and performance of these new titles, influenced by market conditions and development timelines [4][5][6].