NetDragon Websoft Holdings Limited

Dear investors, good morning. Thank you for joining NetDragon Websoft Holdings Limited to our 2025 annual results presentation. 各位投资界的朋友早安,欢迎各位参加网络网络有限公司2025年全年业绩发布会。 Before the start of our presentation, please allow me to introduce the management who are joining us today. 首先,请让我为大家介绍今天出席的管理层。 Dr. Simon Lepp, Group Vice Chairman and Executive Director. 梁燕坚博士,集团副董事长兼执行董事。 Mr. Woodlapp, Group Interim CFO. 刘克健先生,集团代理首席财务官。 Mr. Lin Zhen. Group Senior Vice President, Mr. Lin Kun, Group Senior Vice President. Now, let's pass our time to Dr. Fan Leng to host our presentation today. Thank you.

Good morning, good afternoon, good evening, depending on where you are. It's that time of the year, so great to have everybody on the call. We're going to go through the same thing. Frankly, I'm going to talk a little bit about the highlights and then what's going to take us through the financials, and then we'll go through gaming with Linton. I'll talk about mine and education a little bit, and then I'm going to wrap it up with the outlook, and then we'll go into very active, hopefully, Q&A. So today's theme is, besides going through all the businesses, the progress and all that, I think you're going to hear a lot about AI. I mean, we've been kind of talking about and praising AI. I mean, we coined a term called AI now. So you will see what's going on in 2025, but more importantly, what's going to happen in 2026. If you look at the AI technology, 2026 is an inflection year. It really, because of the coming of AIGC, is actually going to make a huge difference. Before, AI was there to assist you, but now AI is going to do things for you. Vincent is going to talk a little bit about that, how it's going to help us to the future growth, and I'm going to talk about the education side, how does it create more opportunity for us. As far as we're concerned, we're going to take advantage of that transition or inflection. I would say we're going to go from optimization of our costs. Now, by the way, we're going to continue to optimize our costs, but more importantly, how do we leverage AI for growth? So with that, I'm going to go into the highlights. Start with gaming. As you can hear, we spend a lot of time optimizing our gaming business. I'm not going to steal Vincent's thunder by going on all the details. If you look at a lot of our key statistics, MAU and all those different things that grow is that it's there. So while we are optimizing our call structure, which is actually quite difficult, my analogy is that you're flying a plane and you're changing the engine at the same time. So congratulations to our intern's team by making it happen. But I think more importantly is how do we create native AI games going forward. So again, the intern is going to talk about it. The next one I'm going to talk about, frankly, is education rather than just on mine. The good news is that we're making progress on mine. It is, frankly, a challenging environment because of the worldwide economy, the uncertainty of some of the policies in the U.S., U.S. given our biggest market. And by coming into 2026, we felt optimistic. at the beginning of the year, which is January. And then all of a sudden we are seeing a war in Iran. So what we're going to do is actually we're going to continue with our cost optimization. AI is going to play a key role in that. I'll talk about our outlook for 2026 for mine. At the same time, we expanded our profit line so we can expand our addressable market. And then again, that's leveraging our big in surveys over a million classrooms around the world so we can maintain our revenue. We've seen growth. And then we are also going to be looking at how we can get back to profitability very quickly. And really encouraging. We are seeing a lot of country opportunities for us, both in Africa and in Asia, which I will go into a little bit more detail later on. And some specific opportunity for us leveraging the AI technology which is developing around the world, and the AI expertise that we have is going to give us a lot of great opportunities in those markets.

With that, I'm going to turn it over to Wood to go through the financials. Thank you, Simon. Good morning, everyone. Let me walk you through our financial highlights in tool 2.5. Despite a challenging background environment and a rough new situation, we still achieved a meaningful recovery second half of 2025. In this half, probability includes significance. You can see both operating profit growth 47% YOY to 164 million German B, and half over half is also growth 41%. Our operating margin in 2025 second half growth to 7.9%, almost 3% percentage point YOY over H. And more importantly, our OPEX in the second half dropped 38% worldwide and 7% H over H to 1.3 billion. And this demonstrates our cost-saving initiative and operates efficiency improvement that will transform into our margin recovery. And now turning to the full-year performance. Represents for 2025 was 4.5 billion. down 26% worldwide. In this fund, gaming and application services decreased by 30% to 3.3 billion. And this is due to the optimization of our flagship IP to support its long-term development and sustainability. And mine became by 45% primarily due to the disclosure of the Singapore early education business in the second half of 2024, and as well as a prolonged demand adjustment cycle But, as mentioned by Simon, once the market conditions stabilize and improve, we will expect a customer demand to gradually recover. Cost profit was 3.1 billion RMB, down 37% worldwide. And on our off-test night, both selling and marketing expense decreased by 30% due to the proactive measure to tighten our marketing spending, and administrative expense down and the R&D expense down 29% to 1 billion due to the foreign organization adjustment to back the line with the AI. And when you see the bottom line, the point of touch will go to the owners of the company and 2025 is 151 million. And bear in mind, we have one more adjustment here. One is the even impairment and 2025 was about $59 million and worth the disposal fee in the 2024. And another one of the service payment in 2025 is amounting to $220 million. And this pays the rate of our cost savings, office savings. And they excluded this item that's just the corporate HFO to owner actually was higher than that. And turning to the segmental performance, The gathering and application services, the revenue is down 70% to 3.3 billion. And however, our gross margin is still hit at a high level at just 57%. And our gross segmental profit is only decreased 3% to about $697 million. And due to the note, we have suffered the lower revenue, but at the same time, we are largely offset by the cost savings. So the core segmental profit margin increased by 3.9% to 27.4%. And talking about the op-ed, the segmental op-ed expenses became 22% YOY2. About 22% is due to our AI strategy to fully capturing the cost-saving benefits. Overall, you can see our gaming application services is still highly profitable and cash-generated. And talking about in my business, the revenue becomes 43% to 1.2 billion due to the exposure of the Singapore early-age key business and the prolonged demand adjustment. And the cost margin will still keep stable at 25% this year. while, you know, the core developmental loss at large too, about 315 million RMB. But our operating expenses declined 21% YOY. So the market is at a better position for the growth in the next few years. And in summary, WOW 2025 was a year of the revenue adjustment. We have been successful. We saw probability and momentum in the second half of this year. and to the cost optimization and the strategic focus. And our gaming business is remain profitable and highly cash generating while my business is at a better position for them once the market position is improved and stable. So now I turn over to Lincen talking about the gaming business.