NetDragon Websoft Holdings Limited

Thank you for joining NetDragon Websoft Holdings Limited 2026 Interim Results Presentation. 各位投资界的朋友,早安! 欢迎各位参加网龙网络有限公司2026年中期演习发布会。 Before we start, please allow me to introduce the management who are joining us today. 首先,请到我为大家介绍今天的主席的代理人。 我们有Dr. Simon Leung, Group Vice Chairman and Executive Director. Liang Nianjian, Group Vice President and Executive Director Mr. Woodlau, Group Interim CFO Mr. Lin Chen, Group Senior Vice President Now, let's pass our time to Dr. Simon Leung to hold our presentation.

Okay, thank you. Good morning, good afternoon, good night, or whatever. So thank you for joining us today. Let me kind of, well, I'm not going to go through the agenda, because it's actually, you guys probably very familiar with the agenda. So what I'll do is actually I'll hit the highlights of our half-year results, and then I'll hand it over to Wood, and then we'll also go into the business. Good news is actually on the gaming side, We deliver growth half over half, which is actually very good news for us. It shows the resilience of our flagship IP, which is actually really good news. The second big one is actually something we discussed much earlier, but I think we are kind of wrapping it up as a product, which is the AI Workforce OS, which I will talk about a little bit. The cost reduction and in turn support the growth of our gaming business and also the education business going forward. Again, Lin Chen and I will talk about how to support our business going forward. Last but not least in gaming is actually AI continue to help not only on the cost side but also on the growth side. For mine, in education business in the US and In Europe, we're still facing a lot of headwinds because of domestic issues in the U.S., the two wars in both Ukraine and Iran. So it's actually facing a headwind. We successfully leveled our loss, our growth in global detail later on. Another milestone that we had is actually we delivered our latest product, which is AP10 for the premium market. and also the APLE to address the value market. The AP10 premium is actually quite critical because the support is at the third point I want to mention. The good news on SaaS is that we have grown our business year over year. This is going to be our future. When hardware gets commoditized, SaaS revenue is very important. The AP10 is actually designed to support all the SaaS businesses and so on, including deploying AI on our panel, which I will talk a little bit more about.

So with that, I'm going to turn it over to Wood to talk about the results. Thank you, Simon. Good morning, everyone. And I will walk you through the financial highlights for the first half of the 2026. And for the revenue, the total revenue of the group is $2.1 billion for the first half of 2026, which is done from 27% year-over-year. And for seven gaming and application services, the revenue was 1.6 billion, which is down about 5% YOY. But, you know, despite the YOY decline, we have seen a significant signal of stabilizing and recovery of all with a half-over-half growth by 3% for this half over the second half of the last year. And for Mind.ai, revenue was about $505 million, which due to the delayed pace of the industry-wide demand recovery. And for the constant exchange rate, the decrease was a little bit lower to about 70%. Goals project is about $1.5 billion, which is broadly in line with the revenue trend. And the core side, we continue to execute an AI strategy and the overall op-ed decreased about 80% to about 1.1 billion. And for B major op-ed and selling and marketing expenses decreased about 15% worldwide to about 213 million. And for the administrative expense decreased about 12% to about 416 million, reflecting our continuous effort to deploy AI applications. to enhance our internal strategy and internal efficiency. R&D expenses increased about 34% to about $409 million, which is mainly due to the operational deployment of our AI and 4E metrics, which support structural transformation and efficient games. As a result, our profit attributable to owner of the company was about $56 million. It increased 20% in six years. And I would like to draw your attention on the two major items here. First, we made an EDVN impairment provision for the first half about RMB 113 million, which reflects the EDVN price hit a multi-year low at around USD 100, 1,600 in the excess of our original N, which the EDVN price already covered a bit as of now. and secondly, the run-off service payment was decreased about 42% to about 86 million yuan a week, which indicates our operational structure is gradually reaching a new normal. Excluding these two factors, adjusted profit attributable to our owner of the company was about 254 million, which is down about 8% year-on-year, which is very stable given the market situation. Finally, our board has declared an interim dividend of about HKD 0.5 per share, which changed from last year, reflecting our commitment to our shareholders' return plan announced last March this year. Turning to the next page is our segmental financial highlights. And starting with programming and application services, and the revenue was about 1.6 billion USD year-on-year. Gold's profit is about 1.3 billion, which stands at about 12% this year, which with a gold profit margin is over 80%. And our core segmental profit was about 461 million, which is still a little bit lower compared with the same period last year. But, you know, age over age, the core segmental profit has already improved a The segmental operating expenses was reduced across key fee categories. For our R&D, the decrease is about 23%, and for the savings expenses, decrease is about 9%, and the administrative expenses is about 5%. Overall, the operating expenses for the gaming segment is down about 40%. As of the cost-saving impact, our AI strategy continued to 15%. Importantly, our core segmental profit improved half over half. are our business stabilizations and the operations pieces. Moving to the my.ai revenue is about $505 million, which stands about 21%, which mainly driven by a lower customer standing as, you know, the delayed time demand. Our fourth product was about $114 million, which stands only 40%, which have a The cost margin improved because of our cost savings charge. And our cost at mental losses level 2, about $126 million, which is down from the $195 million in the last year. The improvement was mainly supported by our continued cost reduction. R&D expenses is down about 27%. Marketing expenses is down about 25%. Administrative expenses is down about 56%. and overall the mind's operating expenses is down about 29% worldwide as we continue to optimize our cost structure while waiting for other industry demand recovery. So to conclude, although the top nine goals was under pressure in the first half, we made a solid progress in our cost control a bit under the AI strategy. So these actions help us to improve our operation efficiencies Hello everyone, I am very happy to introduce the performance of NetDragon Games in the first half of the year.