Global Mofy AI Limited

Ladies and gentlemen, welcome to the Global Murphy Market versus Fiscal Year 2023 Earnings Call. At present, our telephone attendants are in a listening state. After the speech, there will be time for participants to ask questions. Now, let's invite the host to start speaking. Thank you.

Thank you, operator. Greetings, dear shareholders, analysts, respected investors. and members of the Global Mophie Metaverse community. Good morning to audiences in the US and good evening to audiences here in China. Thank you for joining Global Mophie Metaverse fiscal year 2023 earnings call. I'm Celine, Securities Affairs representative of Global Mophie, and I extend a warm welcome to each one of you joining us today. It's an honor to stand before you, provide insights into the remarkable journey we've embarked upon over the past year. The past year has been nothing short of transformative for Global Mophie Metaverse, as we navigate the dynamic landscape of the Metaverse and digital entertainment economy. We find ourselves at the intersection of innovation, strategic excellence, and unwavering commitment to delivering value to our stakeholders. In the ever-evolving landscape of the Metaverse, Global Mophie has emerged not just as a participant, but as a frontrunner, shaping the narrative of what's possible in this digital realm. Our commitment to pushing boundaries, embracing cutting-edge technologies, and fostering a culture of creativity has propelled us to new heights. Today, we gather to unravel the story written in numbers, our fiscal year 2023, a year marked by resilience, growth, and strategic foresight. The financial matrix we are about to discuss are not just figures, They are a testament to the collective efforts of our dedicated team, the trust of our investors, and the execution of our business model. Throughout the fiscal year, we strategically executed initiatives that propelled us forward, whether it was the expansion of our high-margin 3D digital asset licensing business, bolstering our intangible assets, or successfully completing our initial public offering on NASDAQ. in October 2023. Each step was a strategic move toward a more robust and diversified future. Before diving into detail numbers, let me introduce our management team present today with me, our CEO Hao Gangyang, CFO Chen Chen, and CTO Wen Junjiao. They will be available for Q&A after the presentation. This page goes over our Safe Harbor forward-looking statements for people who are not familiar with our business in essence we specialize in virtual content production and digital assets development leveraging our expertise to craft immersive experiences for the metaverse our unique proposition lies in the deployment of our preparatory multi-lab technology platform this platform seamlessly integrates cutting-edge three-dimensional rebuild technology and artificial intelligence interactive technology. Through Mophie Lab, we've elevated content creation to newer heights. Our platform allows us to fashion highly detailed 3D virtual renditions in stunning 4K resolution. This extends to a diverse array of physical world objects. including humans, animals, or captivating scenes. The versatility of our creations finds applications across various domains. Mophilab is not just a tool, it's a strategic asset driving our continuous development in the metaverse industry by lowering costs, boosting efficiency, and optimizing resource utilization for us. We also take pride in being recognized as a frontrunner in the 3D digital asset landscape in China. According to the industry data sheet by Frost and Sullivan, we stand tall as one of the leading digital asset banks. Our repository owns over 30,000 high-precision 3D digital assets, a testament to our continuous innovation and R&D efforts. With our digital asset bank backing us and our self-developed Mophie Lab platform, Global Mophie operates primarily in two distinct but interconnected lines of business, those being virtual technology services powered by Mophie Labs. Our virtual technology services offer tailored solutions for the digital entertainment industry, from custom visual effects in film and television to engaging content development for advertising, games, animation, e-commerce, XR, and digital cultural tourism. We deliver precise technical solutions across a spectrum of fields. The other line of business being digital asset development and others. Through our virtual content production business and opportunistic acquisition of certain digital assets, we're able to build a robust digital asset bank with more than 13,000 3D digital assets. We license specific use rights of these digital assets to customers. We use them based on their specific needs across different applications, such as animation, and gaming. The licensing provides customers the right to use our 3D digital assets within certain scope of use, and we are entitled to receive the license fee under the licensing arrangements. Generally, unless the digital assets are customized specifically as requested by the customers, the licensing of the digital assets is not exclusive, and digital assets may be licensed repeatedly to other customers. Let's now dive into the standout achievements that define our fiscal year 2023. In fiscal year 2023, we achieved a historical milestone with record revenue surging to $26.9 million, marking a remarkable 56.4% increase from the previous year. This signifies not only substantial growth, but also the highest revenue ever recorded in our company's history. Our fiscal success doesn't stop at revenues. Those gross profit and net income reach unprecedented highs, hitting $14.5 million and $6.6 million, respectively. This is accompanied by an impressive 54% gross margin, showcasing the robustness and strength of our financial performance. In October 2023, we entered a new era by successfully completing our initial public offering, securing $6 million in funding. This significant achievement not only underscores our financial stability, but also strategically positions us for sustained growth and continuing success in the public market. Our commitment to innovation is evident in the exponential growth of our 3D digital assets. From just over 7,000 in 2021, we have surged to over 30,000 in fiscal year 2023, reflecting our dedication to expanding and enhancing our digital asset bank. Let us visually explore the significant growth and transformation in our financial matrix by comparing the data from fiscal year ended September 30th, 2022 to September 30th, 2023 as illustrated our total revenue experience an impressive surge from 17.2 million in fy 2022 to record-breaking 26.9 million us dollars in fy 2023 a remarkable 56.4 percent increase the trajectory of a gross profit is equally notable from 4.1 million dollars in fy 2022 we forward to $14.5 million in FY 2023, an impressive 253.1% growth. A significant turnaround is evident in our net income, shifting from the FY 2022 net loss of $0.3 million to a noteworthy $6.6 million net income in FY 2023. This transformation underscores our strategic success Now, a detailed exploration of our revenue, highlighting the significant contribution of each business line and the strategic shift that shaped our fiscal success. In fiscal year 2023, virtual technology service revenues accounted for 57.2% of our total revenues, a strategic adjustment from the 72.9% in fiscal year 2022. Despite adjusted percentage, revenue from virtual technology service increased by $2.8 million, marking a substantial 22.7% growth from fiscal year 2022. This growth was primarily driven by the recovery of the Chinese movie and TV industry, showcasing our adaptivity and responsiveness to market dynamics. A deliberate shift in our business mechanisms lead to a significant change in the contribution of digital marketing to our revenue mix. In fiscal year 2023, digital marketing revenues accounted for 0% of total revenues as compared to the 3.7% in fiscal year 2022. This strategic shift reflects our focus on higher margin lines and the commitment to optimizing our revenue streams and to continuously reducing input in the digital marketing business line. As part of our forward-looking strategy, we anticipate a further reduction in the proportion of digital marketing to total revenues in the future. In FY 2023, revenues from digital asset development and related areas contributed significantly, accounting for 42.8% of our total earnings. showcasing a substantial increase from the 23.4% recorded in FY 2022. The revenue from digital assets development experienced an extraordinary upswing, skyrocketing by $7.5 million, indicating an impressive 186.3% overall growth from FY 2022 to FY 2023. In fiscal year 2023, Our growth margin witnessed a substantial surge from 23.9% to an impressive 54%. This noteworthy improvement can be attributed to enhanced growth profit margins across various segments, notably in virtual technology services and digital asset development. The growth profit margins for virtual technology services experienced a commendable rise from 24.1% to 37.5%, showcasing a strategic uplift. This improvement underscores our commitment to operational efficiency and maximizing returns in this pivotal business line. Furthermore, the gross profit margin for digital asset development and other segments reached an exceptional 76.2% in fiscal year 2023. This substantial margin reflects the inherent profitability of this business line and the successful execution of our strategic initiatives to further increase our input in this business line. The collective increase in growth margin for both segments can be traced to the completion of higher margin projects, a successful sale of possessed digital assets. These endeavors signify our focus on delivering value while optimizing revenue streams and operational efficiency. Our cash position soared to an impressive $10.4 million, showcasing a high increase from the $1.1 million recorded in FY 2022. This substantial growth, approximately 845.45%, underscores our strength in financial management. Also presented here in this graph, a noteworthy introduction of $6.5 million in intangible assets. a significant development compared to the absence of such assets in FY 2022. The infinite percentage increase reflects our ongoing investments in valuable assets, contributing to long-term value creation. Our intangible assets primarily consist of digital assets acquired from third-party suppliers. These assets, predominantly 3D models, are invaluable components of our digital arsenal. These licensed digital assets, crucial for our operations, are expected to contribute to our endeavors over a period ranging from three to five years. As part of prudent accounting practices, we amortize these assets using the straight-line method, evenly distributing the associated costs over their estimated economic life. Account receivables increased to $3.3 million compared to the 2.1 million recorded in FY 2022. Although a slight increase in accounts receivable, but considering our growth of 56.4% in revenue, the percentage of accounts receivables to revenue has decreased relatively from approximately 14.48% in FY 2022 to around 12.27% in FY 2023. This signifies our enhanced efficiency in managing receivables and optimizing cash flow, contributing to our overall financial health. Now a comprehensive overview of our operating expenses, offering a clear perspective on the strategic allocations that accompanies our remarkable financial results for fiscal year 2023. In FY 2023, our operating expenses experience a prudent increase of $2.5 million, aligning with the substantial growth in our total revenues. It is crucial to emphasize that these increases are not arbitrary, but are strategically rationalized in the context of our amplified revenue stream. Selling expenses reflecting expenses for sales and marketing, when there's a slight uptake of $0.1 million, increased from recorded $0.2 million in FY 2022 to now recorded $0.3 million in FY 2023. These expenses, although showing growth, contribute significantly to our total revenue growth as well. FY 2023 G and A expenses, inclusive of salaries, professional service fees, and office expenses, showcased an increase of $2.0 million from $1.0 million to FY 2022 to $3.0 million in FY 2023. This increase is justified by higher professional service fees related to the initial public offering, amortization of intangible assets, and provision for doubtful accounts. Research and development expenses covering employee salaries, overheads, and outsourced development costs experienced a moderate increase of $0.3 million, reflecting a 10.5% uptick to $3.5 million for FY 2023 from $3.2 million in FY 2022. This measures increase in attributed to fewer ongoing research and development projects as we transition into the development stage after completing our initial research on digital assets related techniques. These insights underscores the rationalization and strategic alignment of our operating expenses with the substantial growth in our revenues. Each category's growth is intricately linked to our broader fiscal strategy, ensuring that our investments are sensible and conducive to sustained success. This page now shows some growth drivers shaping the landscape of the metaverse industry in China, presenting a dynamic scenario that aligns seamlessly with our future strategic positioning. First, regulatory impediments. In August 2023, a groundbreaking initiative unfolded as five key departments, including the Ministry of Industry and Information Technology, jointly issued the three-year action plan for the innovation and development of metaverse industry. This comprehensive plan outlines a visionary trajectory targeting breakthrough in technology applications and governance by 2025 with the aim of propelling China's metaverse industry to a world-class standard. Secondly, metaverse evolution, Further fortifying this momentum, the Metaverse White Paper 2023, jointly released by the China Academy of Information and Communications Technology and the Virtual Reality and Metaverse Industry Alliance, anticipates a pivotal development in 2024. This marks the Metaverse's inaugural upgrade, propelling it into a medium-sized platform within the front-end experience layer. The forecast emphasizes a transformative journey from the human terminal to the 3D immersive audio-visual layer, underlining an exciting phase of innovation and evolution. At Global Multi-Metaverse, we recognize the profound impact of these strategic directives and industry predictions. Our forward-looking strategies position us to not only adapt but thrive in these thriving landscapes. As the metaverse industry in China undergoes this huge revolution, We stand poised to capitalize on emerging opportunities, ensuring that we remain at the front end of technological innovation and market leadership. Let's now turn our attention to the broader canvas of the global market metaverse, where exponential growth and transformative possibilities unfold. As illustrated in this diagram, the metaverse market is on a compelling ascent. poised for substantial expansion. Projections indicate that by 2024, the market is expected to reach a commendable value of US$74.4 billion. What makes this even more intriguing is an anticipated annual growth rate, forecasted at an impressive 37.73%. This dynamic growth is expected to propel the market volume to an astounding US$507.8 billion by the year 2030. We recognize the vast potential embedded in the global metaverse market. These projections not only signify a thriving industry, but also underscore the immense opportunities for 3D asset developers and solution providers like us. Our strategic initiative are attuned to capitalize on this significant market growth, ensuring that we are not just observers, but active contributors to this transformative journey. In conclusion, as we navigate the evolving landscape of the metaverse, these global market projections inspire confidence and excitement. It's a testament to the balanced possibilities that lie ahead, and we are well positioned with our abundant 3D digital asset bank to be architects of this future. Fiscal year 2023's financial results not only met but exceeded our expectations. After exploring fiscal year 2023, let's take a moment to spotlight some noteworthy developments and milestones that have transpired post our fiscal year ended September 30, 2023, setting the stage for a promising year of 2024. On January 3, 2024, Global Multi-Metaverse proudly announced the successful closure of a follow-on offering, securing a substantial US$10 million fund from institutional investors. This financial injection is a testament to the confidence that the investors placed in our growing business. Building on our vision for global impact, on January 4, 2024, the company took a significant step by registering its overseas subsidiary, Global Mophie Technology LLC. in California, USA. This strategic move positions us to expand our virtual content production business overseas and explore new frontiers in the international digital entertainment market. In a strategic diversification move, January 11, 2024, Global Movie Metaverse announced a groundbreaking investment in Mera Edu. marking our entry into the vocational education sector with an RMD $8 million funding round led by the Angie County Government Industrial Guidance Fund. This initiative showcases our commitment to exploring diverse avenues for growth. These recent accomplishments not only reflected our ambition for continued growth, but also laid the foundation for our positive outlook on 2024, The success of the follow-on offering provides us with additional resources to fill our growth initiatives, while the global expansion and educational sector entry align with our strategic vision for diversified revenue streams. Looking ahead to 2024, we have set an achievable target with an overall revenue goal of $50 million. Given the substantial growth we experienced between the fiscal year 2022 and 2023. Furthermore, our strategic focus is on maintaining our current growth margin of 53.9% and we are committed to elevating it even higher. This commitment aligns with the continuous investment in the high margin 3D digital asset licensing business, ensuring sustained growth and profitability. Dear shareholders, analysts, respected investors, and members of the global Murphy metaverse community, thank you for staying with us here. In the face of challenges that tested the meta of business worldwide, global Murphy metaverse is strong. It's important to recognize that the fiscal year 2023 was a transformative period for global Murphy metaverse. In 2023, we're strategically executing moves that are not only overcome obstacles but also reshaped our business structures. From the expansion of a high-margin 3D digital asset licensing business to the successful completion of initial public offering on NASDAQ, each decision was a deliberative step towards a more diversified and successful future. We appreciate your engagement and look forward to addressing any questions or insights you may have as Global Murphy continues to navigate the path of innovation and growth. As we move on to the Q&A session, I'm pleased to introduce the key executives joining us today once again as they will provide for a deeper dive into our fiscal year 2023 performance and the exciting prospects for the future. Firstly, we have with us here our Chief Executive Officer, Mr. Haogao Yang. Haogao's visionary leadership has been instrumental in shaping our strategic vision and driving the overall success of Global Mophie Metaverse. Next, we have our Chief Financial Officer, Mr. Chen Chen. Chen Chen's financial acumen and strategic financial planning have played a crucial role in achieving the remarkable fiscal achievements we've just shared. Last but not least, we are joined by our Chief Technology Officer, Ms. Wenjing Jiang. Wenjing's visionary approach to technology has been pivotal in positioning Global Mophie Metaverse as a tailblazer in digital entertainment and metaverse industry. Now I invite you to post any questions you may have over the phone. Our conference assistant will provide instructions on how to participate in the Q&A session shortly. Without further ado, let's commence the Q&A session. I will be translating questions and answers in between Chinese and English for our management team. In case of discrepancy, please refer to our management team's statement in original language. Operator, we can open the call for Q&A session. Thank you.

To register your questions, please press star followed by one on your telephone keypad. In order to be fair for all callers wishing to ask questions, we will take two questions at a time. Thank you. To register your questions, please press star followed by one on your telephone keypad. In order to be fair for our callers wishing to ask questions, we will take two questions at a time. Thank you. To register your questions, please press star followed by one on your telephone keypad. In order to be fair for all callers wishing to ask questions, we will take two questions at a time. Thank you. The first question comes from Jenny Chen from BBC Fund. Thank you.