NIP Group Inc.

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to NIP Group's earnings conference call. At this time, all participants are in the listen-only mode. We'll be hosting a question and answer session after management's prepared remarks. Please note that today's event is being recorded. I'll now turn the conference over to the first speaker today, Mr. Ben Lee, CFO of the company. Please go ahead, sir.

Thank you. Hello everyone and welcome to NIP Group's second half and full year 2024 earnings call. With us today are our Chairman and Co-CEO Mr. Mario Ho and our Co-CEO Mr. Hisham Shaheen. You can refer to our second half and full year financial results on our IR website. You can also assess a replay of this call on our IR website when it becomes available a few hours after its conclusion. Before we continue, I'd like to refer you to our safe harbour statement in our earnings press release, which also applies to this call, as we will be making forward-looking statements. Please note that all numbers stated in the following management prepared remarks are in US dollar terms, and we will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported in our earnest release and findings with the SEC. I will now turn the call over to our Chairman and Co-CEO, Mario.

Good day, everyone. Thank you for joining NIP Group's second half and full year 2024 earnings conference call. I'm Mario Ho, Chairman and Co-CEO. Your participation today is greatly valued as we discuss our journey and strategic advancements. 2024 has presented its sets of challenges. Moderate shifts in sponsorship and sentiment have not been uncommon across the industry. Despite these external pressures, NIP Group has demonstrated remarkable adaptability. thanks in large part to the robustness of our diversified business model and the enduring strength of our brand. During the second half of 2024, we focus on executing our strategic transformation that reflects our broader evolution from a pure esports organization to a comprehensive gaming-centric digital entertainment company by building an integrated ecosystem and spans across esports teams, arenas, events, content, influencer networks, game publishing, and hospitality We are unlocking new revenue opportunities to fuel future top and bottom line growth. And with the consolidation of our global headquarters in Abu Dhabi, our priorities are squarely centered around integrating teams, aligning resources, and streamlining our business lines. The steps we took in the second half of the year position us to meet our goal of building a leaner, more agile, and integrated organization. While it has involved needing internal restructuring and coincided with a challenging global economic environment, we still delivered modest year-over-year top-line growth. Total net revenues increased by 1.8% year-over-year to 45.9 million, led by a 92.6% year-over-year increase in the events production revenue. This performance validates the strategic direction of our business shift and highlights the resilience of our diversified platform. Although macro factors continue to weigh on esports sponsorship and talent-driven revenues in the second half, our diversified business mix has helped offset these headwinds and position us for longer-term growth. On the cost side, we implemented structural optimizations, including more favorable revenue-sharing terms of talent, targeted OPEX reductions across business lines, and greater use of shared infrastructure across business units. These measures have laid the groundwork for a more efficient operating model. That said, The benefits from these cost initiatives were partially offset in 2024 by top line softness in our esports and talent segments. As a result, the overall bottom line impact of these efforts has not yet been fully realized. However, with our Western esports operations showing early signs of recovery and our revenue diversification initiatives gaining traction across events production, esports hospitality and game publishing, we're confident that the structural foundation we've put in place will begin to translate into more improved profitability as these revenues engine scale. Moreover, we expect to be able to unlock efficiency gains from our global consolidated headquarters in Abu Dhabi. In 2025, we also expect to benefit from new funding support and initiatives from ADEO, which is the Abu Dhabi Investment Office, as well as the Guangxi government and the Esports World Cup Foundation. All of these strategic sources of capital are positioned to improve our cash position and support our operational flexibility. They'll also play a meaningful role in sustaining momentum across several of our key verticals. With that overview, let me walk you through some of our recent highlights and initiatives across our business lines, starting with esports. We're beginning to see encouraging signs of recovery and renewed momentum. Despite near-term pressures in 2024, we remain confident in the long-term resilience of this segment. Following a period of strategic restructuring across both our China and Western divisions, we've entered 2025 with a stronger foundation and a clear path forward. In China, performance was slightly softer, while in the West, our operational overhaul and the revitalization of ninjas in pajamas have laid the groundwork for a return to esports profitability. One of our most pivotal catalysts for this turnaround has been our renewed inclusion in the Esports World Cup Foundation's Club Partner Program in March, which has solidified our ongoing participation in the program. The agreement provides us with added visibility and global branding for NIP Estar, our unified banner of ninjas in pajamas and Estar gaming, while also providing meaningful financial support. As part of this program, we're looking at the exposure to an overall $70 million commercial framework through the club championship, marketing programs, and prize pool participation, which has the potential to bolster our revenue streams. Beyond revenue, this initiative enhances our brand equity and solidifies our position as a globalized esports organization, anchored by a more global fan base with teams competing across the Americas, Europe, China, Japan, and Southeast Asia. It also allows us to showcase our competitive presence across the industry's broadest competitive footprints. In parallel, we're seeing increasing momentum across our commercial pipeline. In the West, our revamped operations have attracted new sponsorships, including partnerships with Red Bull, as well as yet-to-be-announced partners in industries such as blockchain, travel, and cryptocurrency. On a Middle East front, our five-year partnership with Audio isn't just about regional opportunity. It has opened up many commercial conversations globally, laying the groundwork for new monetization opportunities, Our global headquarters in Abu Dhabi has also helped generate local jobs and fund our broader growth ambitions. As we scale up these initiatives, we've strengthened our emphasis on talent development and competitive excellence. In 2025, our esports teams will be supported by expanded infrastructure with a focus on long-term talent stability and sustainable performance. We are taking decisive steps to reinforce our global position and deliver stronger results, both competitively and commercially. Moving on to our events production business. This vertical has rapidly evolved into one of the strongest engines of growth across our portfolio. In the second half of 2024, revenue from this segment surged 92.6% year over year and 147.5% for the full year. This momentum reflects both the strong demand for live digital entertainment and our growing ability to deliver large-scale premium events across multiple formats. ranging from esports tournaments to music festivals and cross-media activations. Looking ahead, we are expanding this momentum through a number of strategic initiatives. A centerpiece of this expansion is the new Shenzhen NIP Arena, which officially opened in March through a strategic partnership between our group and Shenzhen Polyculture Development. The new arena serves not only as the exclusive home venue for NIP's League of Legends Pro Team in South China, but also as a broader cultural landmark for digital entertainment in the greater Bay Area. At the same time, we're scaling our music festival capabilities with a suite of upgraded projects in the pipeline for 2025 that aim to diversify audience engagement and deepen monetization across ticketing, IP licensing, and sponsorship. As I mentioned, we are receiving substantial funding support from the Guangxi government. which marks a major milestone in our long-term commitment to developing a digitally integrated entertainment ecosystem in China's emerging regions. As part of this partnership, we are securing up to 50 million RMB in strategic support to co-develop a China-ASEAN International Digital Sports Industry Park in Nanming. This initiative will serve as a comprehensive digital entertainment hub, encompassing live event spaces, e-sport education, AR, VR, R&D centers, and cross-border e-commerce marketing infrastructure. The project reflects not only the government's confidence in NIP Group's platform, but also our shared ambition to accelerate growth of the digital economy and export Chinese cultural IP to Southeast Asia. Together, these initiatives are reshaping our event production business into a scalable and multi-purpose revenue engine. Beyond our core esports and events production pillars, we continue to make strategic shifts and diversify our businesses, contributing to NIP Group's broader ecosystem and long-term growth. In talent management, we've also begun anchoring this vertical more closely to the regional hubs, such as our ongoing collaboration with the Optics Valley project in Wuhan. which aims to cultivate a new generation of digital influencers and esport content creators. In game publishing, we formally entered this space with the launch of our first title in December 2024. We're now building a focused pipeline of high-potential, monetizable games. Our next major release will be Color Bang, a fast-paced, competitive doodle game. We're planning to begin close beta testing towards the end of the second quarter, with a full commercial launch planned for the second half of 2025. This title will mark our entry into the casual competitive game genre. In esports hospitality, we are preparing to open our first S-tier integrated gaming entertainment complex in Chengdu by the end of third quarter. The nearly 4,000 square meter facility will combine esports themed hotel rooms, a premium internet cafe, tournament, and community event space, as well as merchandise retail. In addition to hosting live tournaments and anime content crossover events, The complex will serve as a physical anchor for experiential engagement, live streaming activations, and even educational workshops, setting a new benchmark for offline gaming destinations in China. Together, these initiatives are reshaping the scope and scalability of our business. They contribute incremental revenue and strengthen the broader ecosystem that supports our long-term digital entertainment strategy. With that, I'll hand it over to our co-CEO, Hisham Shaheen. who will walk you through our Middle East expansion and share more about our operational roadmap and future strategy.