Financial Report is Out | CLOUD MUSIC's Q1 Net Profit Greatly Exceeds Expectations! Gaming Revenue Increases Both MoM and YoY

On Thursday, May 25th, CLOUD MUSIC released its Q1 report, which showed that the company's revenue for the quarter was 25 billion yuan, slightly exceeding the market's expected 24.806 billion yuan. This is an increase from the same period last year, which had revenue of 23.556 billion yuan. The adjusted net profit for the quarter was 7.6 billion yuan, greatly exceeding the market's expected 5.697 billion yuan and last year's 5.118 billion yuan. The gross profit was 14.9 billion yuan, a year-on-year increase of 16%.

Breaking it down:

CLOUD MUSIC's net revenue from games and related value-added services for the quarter was 20.1 billion yuan, a year-on-year increase of 7.6%. Among them, net revenue from online game operations accounted for 92.7% of this part of the revenue, and revenue from mobile games accounted for 72.3% of net revenue from online games, both of which increased compared to the previous quarter;

Youdao's net revenue was 1.1633 billion yuan, a year-on-year decrease of 3.1%;

CLOUD MUSIC's net revenue was 1.9598 billion yuan, a year-on-year decrease of 5.2%; the gross profit margin increased significantly from 12.2% in the same period last year to 22.4%;

Net revenue from innovation and other businesses was 1.8576 billion yuan, a year-on-year increase of 12.8%.

In terms of gross profit, CLOUD MUSIC stated that the gross profit margin of games and related value-added services increased compared to the previous quarter, mainly due to the increase in online game revenue, such as "Egg Party", and the one-time confirmation of copyright fees for several agent games in the previous quarter's operating costs. The year-on-year increase was mainly due to the increase in online game revenue, such as "Egg Party", which was launched in May 2022.

Youdao's gross profit margin decreased compared to the previous quarter, mainly due to seasonal factors and the adverse impact of the epidemic in this quarter, which led to a decrease in net revenue from intelligent hardware. The year-on-year decrease was mainly due to the decrease in net revenue from learning services.

CLOUD MUSIC's gross profit margin increased compared to the previous quarter and the same period last year, mainly due to the continuous improvement of cost control.

The gross profit margin of innovation and other businesses decreased compared to the previous quarter, mainly due to seasonal factors, and the net revenue from strict selection e-commerce and advertising business decreased. The year-on-year increase was mainly due to the growth of net revenue from strict selection e-commerce.

In terms of the AI trend that the market is most concerned about, CLOUD MUSIC stated that it is still continuing to research and develop key self-developed technologies such as AI large models in the first quarter, with research and development investment of 3.7 billion yuan, accounting for 15% of revenue. At the same time, CLOUD MUSIC has used self-developed technologies such as AI to achieve a 90% improvement in key links in digital content production.