NetDragon Websoft Inc. Announces First Quarter 2013 Financial Results

Total Revenues up 50.5% YoY; Net Profit up 108.3% YoY
Mobile Business Experienced Rapid Growth

[3 June, 2013, Hong Kong] NetDragon Websoft Inc. (“NetDragon”, Stock code: 777), a leading developer and operator of online games and mobile internet platforms in China, today announced its financial results for the first quarter ended 31 March, 2013 and is scheduled to hold a conference call and live webcast on June 3, 2013 at 7:00pm Hong Kong Time / 7:00am Eastern Daylight Time to review the company’s performance and recent business developments.

First Quarter 2013 Financial and Operational Highlights
  • Total revenues were RMB 356.7 million, an increase of 7.8% over the fourth quarter of 2012 (“QoQ”) and an increase of 50.5% over the first quarter of 2012(“YoY”);
  • Revenue from Online Games was RMB 212.0 million, a decrease of 7.5% QoQ and an increase of 10.7% YoY;
  • Revenue from Mobile Internet was RMB 144.7 million, an increase of 42.0% QoQ and an increase of 218.8% YoY;
  • Gross profit was RMB 310.1 million, an increase of 4.5% QoQ and an increase of 48.6% YoY;
  • Operating profit was RMB 128.1 million, an increase of 6.3% QoQ and an increase of 77.4% YoY;
  • Non-GAAP operating profit1 was RMB175.5 million, an increase of 26.6% QoQ and an increase of 114.1% YoY;
  • Profit attributable to the owners of the Company was RMB 111.8 million, an increase of 100.4% YoY;
  • Non-GAAP profit attributable to owners of the Company was RMB 136.2 million, an increase of 26.4% QoQ and an increase of 84.1% YoY;
  • Profit for the period was RMB116.4 million, an increase of 108.3% YoY;
  • Non-GAAP profit for the period was RMB 140.8 million, an increase of 30.8% QoQ and an increase of 90.1% YoY;
  • Basic earnings per share were RMB 22.19 cents, diluted EPS were RMB 16.91 cents;
  • Peak concurrent users (“PCU”) for online games were 445,000, a decrease of 14.6% QoQ and a decrease of 25.8% YoY;
  • Average concurrent users (“ACU”) for online games were 237,000, a decrease of 17.4% QoQ and a decrease of 20.2% YoY.

1 See “Non-GAAP Financial Measures” section for more details on the reasons for presenting these measures

Mr. Liu Dejian, Chairman and Executive Director of NetDragon, commented: “The first quarter of 2013 witnessed NetDragon’s continued growth in total revenues and net profit. Total revenues grew 7.8% quarter over quarter to RMB 356.7 million, and net profit up 108.3% year over year. We are pleased to see our duel-engine strategy on online games and mobile Internet businesses has been paid off as evidenced by our strong results. The stable structure as a result of the two businesses mutually supporting each other is expected to strongly enhance our company’s long-term development.”

“As for our online games business, our company further optimized the resource allocation for projects, and focused more on depth development of core titles while maintaining a steady flow of new products in the development pipeline, with the aim of consolidating the existing gamer base through the company’s core games, and laying the groundwork for new player acquisition. In addition, NetDragon has launched EPs in different languages to strengthen our key titles’ revenue in overseas markets. In this quarter, overseas sales from game markets saw a 9.4% rise quarter-over-quarter.”

“2013 is essential to the establishment of mobile internet footprint. Although Internet companies have accelerated the pace of their engagement in mobile segment, our mobile business maintained the leading position across the industry through our pioneering efforts and ongoing innovation. Mobile delivered revenue up to RMB 144.7 million in this quarter, an increase of 42.0% quarter-over-quarter. Notably, 91 Wireless’ platforms exceeded over 10 billion accumulated app downloads, evidencing its user stickiness and superiority over competitive offerings. The company continues to focus on strengthening the advantages of 91 Assistant and HiMarket platforms while steadily driving proprietary research and development of mobile games and software products and providing more vertical apps to stay in tune with users’ increasingly diversified needs. For all this, we are continuing to broaden cooperation with the industry’s leading vendors. The management believes that with the continuous increasing user base and user loyalty, our mobile business is anticipated to delivering more revenue and further pleasant surprises.”

First Quarter 2013 Business Highlights
Mobile Internet
  • 91 Wireless’ platforms had surpassed over 10 billion accumulated app downloads.
  • On March 27, 2013, 91 Wireless Websoft Limited converted each issued and outstanding preferred shares into fully-paid non-assessable ordinary shares at the conversion rate for each preferred share.
  • 91 Wireless’ HiMarket launched “Android Weekly” cooperation model, through which HiMarket collaborated with industry-leading e-reader vendors by providing content, in a move to enrich 91 content and enlarge our community base.
Online Games
  • As of the first quarter, NetDragon had 10 self-developed mobile games, by leveraging our existing superior resources and years of game R&D experience. More other self-developed mobile games are on track to be launched.
  • The iOS version of “Crazy Horde”, featured with fresh, lovely and artistic style based on the primitive society, entered beta testing in March 2013. Its Android version is expected to conduct testing in the second half of 2013, in an aim to roll out this game in global market.
  • NetDragon’s self-developed cultivated strategic game “War of Gods” launched the iOS paid version in January 2013. Inspired by Chinese myths, “War of Gods” integrates casual games and real-time combat mutual interaction.
  • NetDragon launched multilingual versions Conquer Online EP “The Oriental Assassin”, including versions in English, French, Spanish and Arabic.
Recent Developments and Business Outlook
Mobile Internet
  • iPhone 5.0 version of 91 Panda Reader was launched in May 2013. The version’s ease of use and speedy responsiveness contribute significantly to a highly improved overall user experience.
Online Games
  • Zero Online’s new Chinese EP “Doom Savior*” was launched on 31 May.
  • Eudemons Online’s new EP “Dawn of Romance” entered its open beta testing on 28 April. The new EP featured with a focus on love and marriage is meant to resonate with each player’s emotional side. The new EP received a warm response, evidencing the classic title’s ongoing popularity. Eudemons Online’s new Portuguese EP “Edge of Night” will also be launched in June.
  • The mobile version of “Age of Egmont”, “Age of Egmont: Pocket Version” entered the closed beta testing on 28 March. Versions with different game experiences will be offered through several platforms including PC, iOS and Android.
  • “Caliber of Spirit”, the world’s first next generation 3D MOBA online game based on NetDragon’s in-house developed S3 game engine, supports PC, web and mobile platforms and features seven industry-leading innovative technologies, has been available on Tencent’s game platform since May.
  • “Sky Battle*”, a 2.5D role-play mobile game based on NetDragon’s in-house developed C3 game engine, entered a non-data-deleted testing for its iOS version in May.

* Working titles

Financial Highlights:
Online Games

Non-GAAP Financial Measures
To supplement the consolidated results prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”), the use of certain non-GAAP measures is provided solely to enhance the overall understanding of current financial performance. These non-GAAP measures are not expressly permitted measures under HKFRSs and may not be comparable to similarly titled measures for other companies. The non-GAAP financial measures exclude share-based payments expense, amortisation of intangible assets arising on acquisition of subsidiaries, interest income on pledged bank deposit, exchange on loss pledged bank deposit, secured bank borrowing and convertible preferred shares, net gain on derivative financial instrument, net loss on disposal of held-for-trading investment, net loss on held-for-trading investments and finance costs.

Management Conference Call
NetDragon will host a management conference call and webcast to review its financial results for the first quarter ended March 31, 2013 on Monday, June 3, 2013 Hong Kong time.

Details of the live conference call are as follows:

Time: 7:00 PM Beijing / Hong Kong Time / 7:00 AM Eastern Daylight Time, June 3, 2013
International Toll 65-6723-9381
US Toll Free 1-866-519-4004
Hong Kong Toll Free 800-930-346
China Toll Free (for fixed line users) 800-819-0121
China Toll Free (for mobile users) 400-620-8038
Passcode NetDragon

A live and archived webcast of the conference call will be available on the Investor Relations section of NetDragon’s website at Participants in the live webcast should visit the aforementioned website 10 minutes prior to the call, then click on the icon for “1Q 2013 Results Conference Call” and follow the registration instructions.

About NetDragon Websoft Holdings Limited
NetDragon Websoft Inc. (HKSE: 0777) is a leading innovator and creative force in China’s online gaming and mobile internet industries. Established in 1999, we are a vertically integrated developer & operator of MMORPGs and a cutting-edge R&D powerhouse. We launched our first self-made online game Monster & Me in 2002, followed by multiple titles including Eudemons Online, Conquer Online and Heroes of Might & Magic Online. We are also China’s pioneer in overseas expansion, directly operating titles in overseas markets since 2003 in English, Spanish, Arabic and other languages. In the mobile Internet industry, we provide China’s leading marketplace for smartphone users, offering applications and content for the most popular mobile operating systems. NetDragon offers many well-known mobile Internet products and services, including 91 Assistant, HiMarket, 91 Launcher, 91 Panda Reader, and

For investor enquiries, please contact:
NetDragon Websoft Holdings Limited
Ms. Maggie Zhou
Senior Director of Investor Relations
Tel.: +852 2850 7266/ +86 591 8754 3120


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