With the rapid development of Web3, artificial intelligence, and AIGC technology, providing technical support for metaverse digital marketing, the metaverse digital marketing sector is gradually becoming popular. On February 25, Everbright Digital, a metaverse digital marketing company from Hong Kong, submitted its initial public offering (IPO) application to the U.S. Securities and Exchange Commission (SEC), further heating up the metaverse digital marketing sector. The company plans to issue 1.5 million shares at a price of $4 to $5 per share, raising $7 million. Based on the midpoint of the proposed price range, Everbright Digital's market value will reach $119 million. Currently, the metaverse is gradually becoming a new space for brands and users to connect and interact. Many brands are realizing the value of metaverse digital marketing and are increasing their investments in this field. The M generation, represented by those born after 1995, are the natives of the metaverse, and their acceptance and demand for metaverse digital marketing are high, which has also driven the rapid development of this industry. As metaverse digital marketing becomes increasingly popular, can Everbright Digital's IPO take advantage of this momentum? Revenue Surge, Profit Fluctuations According to Zhitong Finance APP, Everbright Digital was established in 2021 and is a comprehensive marketing solution provider deeply involved in the metaverse and related technologies in Hong Kong. The company generates revenue by providing tailored marketing solutions to meet specific customer needs in the context of the continuous evolution of new media formats. Its digital marketing solutions include virtual world stimulation, virtual reality (VR) and augmented reality (AR) design and creation, creative event planning and management, IP character creation, and social media marketing. Since its establishment, Everbright Digital has served over 20 corporate clients from various industries, including real estate developers, concert organizers, public charities, and other domestic and international clients. More than 50% of the company's revenue comes from providing 3D simulation and augmented reality services to real estate developers in Hong Kong. In the past two years, as public acceptance of metaverse digital marketing has increased, Everbright Digital's revenue has also shown explosive growth. According to the prospectus data, the company achieved revenues of $815,100 and $2,825,500 in 2022 and 2023, respectively, a year-on-year increase of 246.6%. By the first half of 2024, the company's revenue continued to show explosive growth, reaching $1,431,700, an increase of 753.2% compared to $167,800 in the same period of 2023. However, compared to the explosive growth in revenue, the "other side" of Everbright Digital's performance is the fluctuation in net profit—reportedly, the company's net profit was $419,500 and $925,600 in 2022 and 2023, respectively, a year-on-year increase of 120.6%. In the first half of 2023 and the first half of 2024, the company's net profit was -$140,600 and $396,200, respectively, turning from loss to profit It is worth noting that, possibly due to the company being in the "light asset industry," both the gross profit margin and net profit margin of the company are at a high level. From 2022 to 2023, the company's gross profit margins were 69.7% and 55.1%, respectively, while the net profit margins were 51.5% and 32.8%, respectively. Although the profitability shows fluctuations, it remains at a high level overall. In addition, regarding cash flow, although revenue has grown significantly and profitability remains high, the company's cash flow is not as abundant as it appears on the surface: from 2022 to the first half of 2024, Everbright Digital's ending cash and cash equivalents were USD 1.8 million, USD 399.3 million, and USD 446.7 million, respectively. Overall, although Everbright Digital has experienced explosive revenue growth due to industry trends, the not-so-abundant cash flow indicates that going public in the U.S. could be an important way for the company to "replenish its blood." Rapid Industry Development, Competitive Pressure Cannot Be Underestimated In recent years, although the marketing solutions market in Hong Kong has been briefly impacted by COVID-19, it has still maintained stable growth. The overall market size has grown from HKD 23 billion in 2018 to HKD 30.4 billion in 2023, and it is expected to grow to HKD 40.4 billion by 2028, with a compound annual growth rate of 5.9% from 2023 to 2028. It is important to note that before 2020, traditional marketing solutions were the largest sub-market. However, after that, due to the impact of the pandemic, traditional marketing solutions, such as event marketing and outdoor marketing, faced obstacles. In contrast, as digital transformation intensifies across various industries, digital marketing solutions have experienced rapid growth, becoming the fastest-growing sub-market in the marketing solutions industry. According to relevant industry data, the digital marketing solutions market in Hong Kong reached HKD 15.05 billion in 2023. Among them, the digital space marketing solutions market became one of the fastest-growing sub-markets between 2018 and 2023, with a compound annual growth rate of 38.60%, and the market size in 2023 was HKD 200 million. (Source: Everbright Digital prospectus) However, it is worth mentioning that due to the highly fragmented nature of the marketing solutions market in Hong Kong and the large number of participants, the competitive pressure faced by Everbright Digital from the industry cannot be underestimated. According to the prospectus, there are currently over 3,500 companies in the marketing solutions market in Hong Kong, employing approximately 13,000 professionals. This includes large digital marketing companies and multinational corporations, as well as many small and medium-sized enterprises. From the perspective of the competitive landscape's three-dimensional matrix, the competitive pressure arising from the development of the competitive environment faced by Everbright Digital is also evident In terms of ecological hierarchical competition, at the infrastructure layer: Unity, Epic Games (with a market share of 62% for Unreal Engine); at the platform operation layer: Meta Horizon (100 million MAU), Roblox (220 million DAU); at the application service layer: Publicis Groupe (acquired WPP's virtual marketing team), and O'Malley Metaverse Lab. In terms of company type comparison, tech giants: Meta (with over 20% of ad revenue from Reels), Tencent's full-scale internet layout; traditional 4A: Dentsu Group invested $500 million to build a metaverse department. In terms of regional market structure, North America accounts for 58% of the market share, Europe is tightening regulations (the DSA bill has increased compliance costs for digital advertising by 23%), and the Asia-Pacific region is gradually becoming a major growth pole. Thus, Everbright Digital has also proposed in its growth strategy that the company will gradually enter the digital marketing solutions market in the Asia-Pacific region to increase the number of clients, and strengthen its core capabilities through continuous research and development, such as planning to increase R&D investment to enhance the company's data analysis and process automation. It plans to develop customized data models and algorithms to help segment target audiences, personalize content, and optimize marketing campaigns, thereby helping the company gain insights from marketing data. In summary, in the metaverse digital marketing track, although the industry has rapidly developed under the "tailwind" of VR and AR technologies, just as "to forge iron, one must be strong oneself," Everbright Digital still needs more impressive performance to support its claims