(Hong Kong, 26 August 2021) NetDragon Websoft Holdings Limited (“NetDragon” or the “Company”;Hong Kong Stock Code: 777), a global leader in building internet communities, today announced itsfinancial results for the first half of 2021. NetDragon’s management team will hold a conference call andwebcast at 10:00am Hong Kong time on 27th August 2021 to discuss the results and recent businessdevelopments.Mr. Dejian Liu, Chairman of NetDragon, commented, “We are excited about our overall achievements inthe first half of 2021 and the strong momentum of both our gaming and education business. Our revenueincreased by 18.9% year-on-year (“YoY”), reaching RMB3.4 billion, and at the same time we achieved a59.2% YoY increase in operating profit. The outstanding operating performance is a testimony to ourunique core competencies built over years of investment in our people, technologies and infrastructure.”“Our education business recorded one of our strongest growth performances in recent years. Riding onits global market leadership position, our flagship classroom technology subsidiary Prometheancontinued to gain further market share, resulting in a 25.2% YoY revenue growth on the back of fast-growing market demand for classroom technology. We also continued to make progress with theexecution of our country strategy with the recent signing of a MOU with the Ministry of Education inThailand to launch the English Smart Classroom Lab project, where we will deliver a unique blendedlearning solution targeting the English-learning use case. In addition to Egypt and Thailand, where wesee our largest near-term revenue opportunities, we are in discussion to pursue multiple opportunities inseveral other countries. Given our strong business performance and our confidence in the outlook, wehave also recently started to commence the planning work for the public listing of our educationbusiness².”“Our gaming business returned to double digit growth in both revenue and core segmental profit. Wecontinued to see rising players’ activities and engagement in our flagship IP Eudemons, with the MAU forthe IP increasing by 5.5% YoY, which led to strong revenue growth for the IP. Our flagship gameEudemons Online achieved yet another record high in monthly revenue of over RMB290 million. Our twoflagship mobile games, Eudemons Online Pocket Version and Eudemons Online Mobile, also sawsignificant increase in their MAU and DAU.Meanwhile, we continued to execute various growthinitiatives for our two other flagship IPs, Conquer and Heroes Evolved, with the objective of building asolid foundation to drive long-term growth. Looking forward, we have a robust pipeline of new gamingtitles which will further expand and diversify our portfolio.”“We are also committed to maximizing the capital return for our shareholders and at the same time beable to invest in our future. To follow through on this long-term commitment, we would like to take the

1 3-year share buy-back program is up to a total repurchased amount of US$300 million and subject to the buy-back mandateapproved by the Shareholders at the annual general meeting in each year, being 10% of the issued share capital, the RulesGoverning the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Hong Kong Codes on Takeovers andMergers and Share Buy-Backs.
2 Shareholders of NetDragon and potential investors should note that the possible public listing of NetDragon’s education businessas mentioned is still at preliminary stage; and if it proceeds, it will be subject to approvals from, among others, the relevantregulatory authorities including but not limited to the Hong Kong Stock Exchange, the final decision of the Board, market and otherconditions. There is no assurance that the aforementioned possible public listing will proceed or as to when it may take place.Shareholders of NetDragon and potential investors are reminded to exercise caution when dealing in the securities of NetDragon.

opportunity to announce that our board has authorized (1) a committed 3-year share buy-back program¹ with a total repurchased amount of up to US$300 million, and (2) the increase of our interim dividend by60% to HK$0.40 per ordinary share. Our decision to commit to this share buy-back program andincreasing our cash dividend underscores our confidence in the long-term business outlook and ourfuture cash generation abilities. We will implement these measures while maintaining a strong balancesheet and liquidity profile, as we expect our free cash flow generated each year will be more thansufficient to fund the share buy-back and dividends combined. Meanwhile, our net cash as of end of thefirst half sits at RMB4.1 billion, which will enable us to capitalize on strategic and acquisition opportunitiesgoing forward.”

2021 First Half Financial Highlights

• Revenue was RMB3,356.2 million, representing an 18.9% increase YoY.
• Revenue from the gaming business was RMB1,847.5 million, representing 55.0% of theGroup’s total revenue and registering a 12.2% increase YoY.
• Revenue from the education business was RMB1,407.6 million, representing 41.9% of theGroup’s total revenue and registering a 23.7% increase YoY.
• Gross profit was RMB2,233.9 million, representing a 19.5% increase YoY.
• Core segmental profit³ from the gaming business was RMB1,069.2 million, representing a13.3% increase YoY.
• Core segmental loss³ from the education business was RMB265.8 million, representing a 29.6%improvement YoY.
• EBITDA was RMB892.1 million, representing a 42.4% increase YoY.
• Non-GAAP operating profit⁴ was RMB753.9 million, representing a 48.1% increase YoY.
• Profit attributable to owners of the Company was RMB430.7 million, representing a 28.0%increase YoY.
• Non-GAAP profit attributable to owners of the Company⁴ was RMB566.7 million, representing a26.1% increase YoY.
• Net cash balance was RMB 4.1 billion as at 30 June 2021.
• The Company declared an interim dividend of HK$0.40 per ordinary share for the six monthsended 30 June 2021, representing a 60% increase YoY.

3 Core segmental profit (loss) figures are derived from the Company’s reported segmental profit (loss) figures (presented inaccordance with Hong Kong Financial Reporting Standard (“HKFRS”) 8), but exclude non-core/operating, non-recurring orunallocated items including government grants, finance costs of financial instruments, intercompany finance costs, impairment loss(net of reversal), impairment of intangible assets and interest in an associate, fair value change and exchange loss on financialassets at fair value through profit or loss (“FVTPL”), fair value change and exchange difference on derivative financial instrumentsand interest and exchange difference on convertible and exchangeable bonds.
4 To supplement the consolidated results of the Group prepared in accordance with HKFRSs, the use of non-GAAP measures isprovided solely to enhance the overall understanding of the Group’s current financial performance. The non-GAAP measures arenot expressly permitted measures under HKFRSs and may not be comparable to similarly titled measures for other companies. Thenon-GAAP measures of the Group exclude share-based payments expense, amortisation of intangible assets arising on acquisitionof subsidiaries, impairment of intangible assets and interest in an associate, fair value gain of financial assets at FVTPL, fair valuechange on derivative financial instruments, finance costs, interest income on pledged bank deposits and exchange difference onfinancial assets at FVTPL, bank borrowings, convertible and exchangeable bonds and derivative financial instruments.

Segmental Financial Highlights

Gaming Business

During the period, our gaming business continued the momentum from the second half of last year withboth revenue and core segmental profit returning to double digit growth. Revenue of gaming businessincreased by 12.2% YoY to RMB1,847.5 million, while core segmental profit increased by 13.3% YoY to1,069.2 million.Eudemons, our flagship IP, continued to achieve strong performance with revenue growing 14.1% YoYand 5.3% sequentially. The growth was driven primarily by new gameplay techniques, enriched contentsand implementation of effective localized operations in overseas markets. During the period, EudemonsOnline Pocket Version and Eudemons Online Mobile achieved combined MAU and DAU increase of25.7% and 20.1%, respectively, as we finetuned our user acquisition strategy, enhanced the quality ofuser engagement and launched three new expansion packs together with robust marketing activities. Wealso continued to run IP crossovers including a partnership with the movie “Godzilla vs. Kong’’ to boostplayers’ spending.Conquer Online recorded a revenue growth of 3.7% YoY. We continue to see tremendous globalopportunities for the Conquer IP as we aim to replicate the successful model in Egypt to multiplecountries. This started to bear fruit in countries such as the Philippines, the US, Canada and SaudiArabia in the first half, and while we scale our revenue in these markets, we expect to enter into morecountries, particularly in Latin America and Southeast Asia, in the second half of the year.We continued to implement our growth initiatives for Heroes Evolved IP, including increasing ourinvestment in hero skins as well as enriching the RPG gameplay, resulting in a 24.5% YoY revenueincrease for the Heroes Evolved PC Version. We have also made positive progress with our mobilestrategy for this IP, including strengthening the gameplay and monetization of Heroes Evolved PocketVersion, as well as developing a PC-mobile cross platform version.In the context of recent regulatory trend in the gaming sector, NetDragon has been actively responding tothe regulatory changes, and we have taken all necessary steps to ensure that our gaming business is incompliant with all the relevant regulations. During the first half of 2021, players under 18 years of agecontributed less than 1% of our gaming revenue, and therefore the anti-addiction regulatory measures

5 Segmental operating expenses exclude unallocated expenses/income such as depreciation, amortization and exchange differencethat have been grouped into SG&A categories on the Company’s reported consolidated financial statements, but cannot beallocated to specific business segments for purpose of calculating the segmental profit (loss) figures in accordance with HKFRS 8.

are not expected to have a material impact on our business. In addition, we have also obtained thenecessary gaming license approval for new games that we are planning to launch in the near term.Looking forward, we will continue to drive revenue and profit growth by maximizing our IP value andoptimizing our game portfolio through the launch of new games. Our pipeline is robust with multiple newgames under development and testing, including Eudemons Mobile 2 and Under Oath (a new IP). In thecoming months, we also expect to make meaningful progress in strengthening the Neopets IP throughstrong marketing initiatives, as well as the planned launch of a new Neopets Match-3 game.

Education Business

In the first half of 2021, our education business recorded a YoY growth of 23.7% to RMB 1,407.6 million.The revenue growth combined with our cost management effort resulted in the core segmental loss of theeducation business to narrow significantly by 29.6% YoY to RMB 265.8 million. Under the backdrop ofthe Covid-19 outbreak, the demand for blended learning solutions and EdTech continued to pick upduring the period. Governments around the world have been on the forefront to promote online educationand distance learning to ensure students’ learning is undisrupted. We believe that COVID-19 pandemichas resulted in a paradigm shift where a blended learning model to make quality education availableanywhere, anytime has become a necessity and this trend will sustain in the long run.Leveraging the favourable macro trend, Promethean achieved significant sales growth in 1H2021, with aYoY growth of 28.1% in shipment units. Product mix enhancement served to drive ASP growth, whichtogether with cost discipline resulted in increase of our gross margin from 27.1% to 33.0% YoY.Promethean continued to maintain its position as the largest player in the international K-12 interactivepanel market⁶ as its market share increased by 3.5 percentage points HoH to 24.5%. In particular,Promethean gained market share in its top three major markets including the U.S., the U.K., andGermany.⁷ With a strong sales backlog at the end of the first half, we are confident in our revenue growthfor Promethean in 2H2021 as it further consolidates its leadership position in the market.We continued to make progress with the execution of our country strategy. Our discussion in Egypt is ontrack towards securing our first large-scale order under the signed MOU. And in August, we achievedanother milestone in bringing our blended learning solutions to a key ASEAN country. We signed a MOUwith the Office of the Basic Education Commission under the Ministry of Education Thailand to launch theEnglish Smart Classroom Lab Project. This project will aim to help students in Thailand take advantage ofour technologies to gain deep understanding of the English language while ensuring that students at ruralarea get the same quality education as students in big cities. We have also been in discussion to pursuemultiple opportunities in several other countries, as well as exploring acquisitions and investmentopportunities that would accelerate the expansion of our geographical footprints.In China, the “Opinions on Further Alleviating the Burden of Homework and After-school Tutoring forStudents in Compulsory Education” (the “Opinions”) were announced by the General Office of the CPCCentral Committee and the General Office of the State Council on 24th July 2021 and have affected manyEdTech companies in China. However, NetDragon is not negatively impacted as we have no after-schooltutoring business. On the contrary, as our business model focus in China has always been on to-G andto-B markets, the current regulatory environment is expected to bring us new market opportunities asgreater emphasis is now put on strengthening in-school education. In the first half, we signed a strategiccooperation framework agreement with the National Center for Educational Technology (“NCET”), a unitdirectly affiliated to the Chinese Ministry of Education, to develop more education products and projects

6 International K-12 interactive panel market excluding China
7 Based on the FutureSource Consulting Q2 2021 Interactive Display Global Report, incorporating actual shipment volumes(excluding China) of the Company

in the areas of virtual simulation technology, AI, online learning and gamified education for potentialrollout in certain regions across the country. Leveraging such in-depth cooperation with NCET, we are ina strong position to capitalize on the market opportunities arising from the new regulatory environmentthat favours partnership between government and corporates to improve in-school education qualityacross the country.Looking forward, we are optimistic about our growth trajectory in 2H2021 as we continue to build on ourmarket leadership position, our broad market coverage, and our ability to execute country-level rollouts.Furthermore, with the continuous growth in our top line and increasing operating leverage, we believethat the core segmental loss of our education business will continue to narrow in 2H2021.

Stock Buy-Back Program

The Board of the Company has authorized a committed share buy-back program of up to US$300 millionto be carried out within three years. The objective of the program is to maximize the capital return for ourshareholders and at the same time maintain the cash we need to invest in our future, including mergersand acquisitions, and to provide flexibility of responding effectively to strategic opportunities. With theannouncement of this program, we aim to return a substantial portion of our free cash flow to investors inthe next three years via a combination of share buy-back and dividends. Meanwhile, our net cash as ofJune 30, 2021 is RMB4.1 billion, which will enable us to capitalize on future acquisition, investment andstrategic opportunities.The detailed execution of the buy-back program will be on the open market carried out on the Hong KongStock Exchange in accordance with (and subject to limits prescribed by) NetDragon’s general mandate tobuy back Shares granted by its shareholders at the annual general meeting for the relevant year, theRules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the HongKong Codes on Takeovers and Mergers and Share Buy-Backs and in accordance with applicablesecurities laws. The extent to which the Company repurchases its shares, the number of shares and thetiming of any repurchases will depend on general market conditions, regulatory requirements, and otherconsiderations.

– End –

Management Conference Call and Webcast

NetDragon’s management team will hold a conference call and webcast at 10:00am Hong Kong time on27 August 2021 to discuss the results and recent business developments.

Details of the live conference call and webcast are as follows:

A live and archived webcast of the conference call will be available on the Investor Relations section ofNetDragon’s website at http://ir.nd.com.cn/en/category/webcast. Participants in the live webcast shouldvisit the aforementioned website 10 minutes prior to the call, then click on the icon for “2021 InterimResults Conference Call and Webcast” and follow the registration instructions.

About NetDragon Websoft Holdings Limited

NetDragon Websoft Holdings Limited (HKSE: 0777) is a global leader in building internet communitieswith a long track record of developing and scaling multiple internet and mobile platforms that impacthundreds of millions of users, including previous establishments of China’s first online gaming portal,17173.com, and China’s most influential smartphone app store platform, 91 Wireless.Established in 1999, NetDragon is one of the most reputable and well-known online game developers inChina with a history of successful game titles including Eudemons Online, Heroes Evolved and ConquerOnline. In recent years, NetDragon has also started to scale its online education business on the back ofmanagement’s vision to create the largest global online learning community, and to bring the “classroomof the future” to every school around the world. For more information, please visit ir.netdragon.com.

For investor enquiries, please contact:

NetDragon Websoft Holdings Limited

Ms. Maggie Zhou
Senior Director of Investor Relations
Tel：+852 2850 7266 / +86 591 8390 2825
Email：maggiezhou@nd.com.cn
Website：ir.netdragon.com

8 Substantially non-cash