Core Viewpoint - North Latitude Technology (002148) reported a mixed performance in its 2025 mid-year financial results, with significant revenue growth but a notable decline in net profit [1] Financial Performance - Total revenue reached 194 million yuan, a year-on-year increase of 47.26% [1] - Net profit attributable to shareholders was -3.13 million yuan, a year-on-year decrease of 129.52% [1] - Gross margin was 37.28%, down 10.69% year-on-year, while net margin was -2.69%, a decrease of 131.21% [1] - Operating expenses (sales, management, and financial expenses) totaled 64.19 million yuan, accounting for 33.01% of total revenue, an increase of 47.42% year-on-year [1] Revenue and Cost Drivers - Revenue growth was driven by increases in the Internet of Things (IoT) applications and mobile gaming businesses [2] - Operating costs rose by 58.54% due to increased revenue [2] - Sales expenses surged by 181.46% as the company intensified marketing efforts [2] - Management expenses increased by 9.95% due to higher stock compensation costs [2] Cash Flow and Investments - Net cash flow from operating activities decreased by 159.07%, attributed to increased marketing expenditures and higher prepaid accounts [3] - Net cash flow from investing activities increased by 129.12%, driven by the redemption of financial products [3] - Net cash flow from financing activities decreased by 65.66%, as the previous period saw significant inflow from newly issued restricted stock [3] Balance Sheet Changes - Accounts receivable increased by 126.83% due to expanded revenue [2] - Long-term equity investments rose by 30.32% due to increased investments during the period [2] - Contract liabilities increased by 38.99%, reflecting the growth in revenue [2] - Accounts payable increased by 81.08% as a result of expanded revenue [9] Profitability Metrics - Return on Invested Capital (ROIC) was 2.23%, indicating weak capital returns [11] - Historical data shows a median ROIC of 2.07% over the past decade, with two years of losses since the company went public [11] Business Model Insights - The company's performance relies heavily on research and marketing efforts, necessitating a thorough examination of the underlying drivers [13] - The accounts receivable situation is concerning, with accounts receivable to profit ratio reaching 125.71% [14]