Revenue recorded RMB1.233 billion, with overseas revenue up 3.6% and R&D investment up nearly 70%

Financial Summary:

• Total revenue was RMB1.233 billion;
• Gross profit margin increased from 38.5% to 40.6%;
• The total number of new registered users reached 38.37 million;
• Average monthly active users reached 12.78 million;
• Average monthly paying users reached 941,400;
• ARPPU reached RMB 218.3.

HONG KONG, Aug. 26, 2022 /PRNewswire/ -- CMGE Technology Group Limited ("CMGE" or the "Company", stock code: 0302), together with its subsidiaries and consolidated operating entities in the People's Republic of China (the "Group") is pleased to announce the interim results report of the Group for the six months ended 30 June 2022 (the "Reporting Period"). According to the report, the Group achieved total operating revenue of RMB1.233 billion in the first half of 2022; Gross profit margin increased from 38.5% to 40.6%.

In the first half of 2022, the Group has formed a core competitive intellectual property ("IP") game ecosystem of "IP resources – self-development and joint development - global publishing - proprietary IP operation - metaverse platform"by leveraging its advantages and accumulation in the field of game publishing and research and development and its advantageous IP resources, and has established three major business segments, namely IP game development and global publishing, proprietary IP operation and metaverse platform. During the first half of 2022, the total research and development expenses of the Group amounted to RMB204.3 million, representing a period-on-period increase of 65.1%. There were a total of 11 self-developed products in operation, and 10 self-developed products to be put into operation. The Group has also expanded its overseas game publishing business. As of 30 June 2022, the Group has launched 5 games in several overseas regions, revenue generated from overseas regions of the Group amounted to RMB227.6 million, revenue from overseas regions accounted for 18.5% of the Group's total revenue. Revenue from the Group's IP licensing business amounted to RMB30.8 million.

As of 30 June 2022, the total number of new registered users of the Group reached 38.37 million; the average monthly active users reached 12.78 million; the average monthly paying users reached 941,400; the ARPPU reached RMB218.3. In the first half of 2022, the Group was awarded the Most Influential Enterprise of "Golden Diamond Award" 2021, Fastest Growing Overseas Listed Companies and Shenzhen Top 100 Cultural Enterprise.

Breakthroughs in Overseas Business Major Games to be Launched in China

In the first half of 2022, the Group's performance declined mainly due to the postponement of obtaining licences as scheduled for various games planned to be published in the first half of 2022 by the Group such as Sword and Fairy: Wen Qing, Rakshasa Street: Chosen One and Cultivation Fantasy, as well as self-developed game World of Castellan led to the delay in the launch of these games. According to the financial report, the Group achieved revenue of RMB1.233 billion in the first half of 2022, representing a year-on-year decrease of 43.5%. With the normalisation of business licensing, the Group's performance is likely to improve significantly in the second half of the year. The Group has always adhered to the development direction of overseas gaming and implemented the global integrated publishing model since 2021. Several games launched in the overseas market have achieved outstanding performance and contributed to the corresponding performance growth.

Among these games, The Condor Heroes: Iron Blood and Loyal Heart was launched in Thailand and Vietnam in January and June 2022, respectively; In January and August 2022, Dynasty Warriors: Hegemony was launched in Hong Kong, Macau and Taiwan, Singapore, Malaysia and Southeast Asia, respectively. In the month of its launch, "True to the Three Kingdoms" ranked first on the Top Free Games List of Apple's App Store and Google Play Store in the Hong Kong, Macau and Singapore, first on the Best Selling Games List of Apple's App Store in Hong Kong and Macau, and ranked first on the Top Free Games List of Apple's App Store in Vietnam and the Philippines and third on the Best Selling Games List of Apple's App Store in Vietnam.

The development potential in overseas markets has brought higher overseas revenue to the Group. According to the announcement, for the six months ended 30 June 2022, the Group recorded revenue from overseas regions of RMB227.6 million, representing a year-on-year increase of 3.6%, and revenue from overseas regions accounted for 18.5% of the Group's total revenue.

The Group will continue to implement its comprehensive overseas gaming strategy and adhere to its integrated global publishing model. The Group will establish Hong Kong, Macau, Taiwan (including Southeast Asia), Japan, Korea, Europe and the United States as its focused development regions to launch its game development and global publishing. Dynasty Warriors: Hegemony has been launched in Southeast Asia and Vietnam in August 2022 and will subsequently be launched in Korea in the second half of 2022. After launching in Vietnam, Soul Land: God of Battle Arise will also be launched in Korea in the second half of 2022. In the second half of 2022, the Group also plans to roll out Ultimate Judge: Bao Qingtian mobile game in Thailand, Cultivation Fantasy mobile game in Singapore, Malaysia, Hong Kong, Macau and Taiwan and a 3D card-idling mobile game Don't Say Goodnight to Fairy Tales in Hong Kong, Macau and Taiwan.

In the second half of 2022, the Group will also launch several major games in the Mainland China market. It is expected that The King of Fighters: All Stars will be launched in the PRC in late October, and will be launched in various countries and regions around the world; besides, The Gathering , Cultivation Fantasy , Sword and Fairy: Wen Qing and Rakshasa Street: Chosen One, Cultivation Fantasy, Call for Pioneers and Monopoly 11 are expected to be launched in the second half of 2022.

R&D investment increased by 65.1% year-on-year, which will usher in the harvest period of products

Games of the Group which have been launched before 2022, including the selfdeveloped games The World of Legend - Thunder Empire, Legend of Dragon City and card and board games, the self-published games The New Legend Of The Condor Heroes: Iron Blood and Loyal Heart and Soul Land: God of Battle Arise, and games jointly published with third parties, including One Piece: The Voyage, Dynasty Warriors: Hegemony, and other games that have been launched, continued to contribute to the Group's revenue and profits in the first half of 2022.

Among these games, Legend of Sword and Fairy 7, a self-developed game, its PC version achieved a sales volume of over 450,000 as of June 30, 2022, its cloud gaming version achieved a sales volume of over 210,000, and its console version was launched in Hong Kong, Macau, Taiwan, Southeast Asia, Japan and North America in August 2022. As of 30 June 2022, Monopoly 10 (大富翁10), a PC game, recorded a global sales volume of over 1.23 million, and was launched on platforms such as Xbox One, Xbox Series S, Xbox Series X, PlayStation 4 and PlayStation 5 in July 2022.

In the first half of 2022, the Group continued to increase the investment in research and development, with the number of research and development personnel reaching 632, and the research and development investment was RMB204 million, representing a year-on-year increase of 65.1%. Currently, a number of self-developed mobile games of Beijing Wenmai Hudong Technology Company Limited ("Wenmai Hudong"), a wholly-owned subsidiary of the Group, has entered the stage of pre-launch preparation. Among these games, Call for Pioneers has obtained its licence and is scheduled for launch in December 2022. Testing for Code: Soldiers will commence in the fourth quarter of 2022. Mobile game World of Castellan has enter the completion stage of final testing and will be launched officially after obtaining licence.

The Group has always been committed to investing in quality developers in the industry in order to supply the Group with competitive gaming products. During the first half of 2022, the Group completed its investment in Shanghai Zhoujing Network Technology Co., Ltd.("Shanghai Zhoujing"), and has become its controlling shareholder holding 51% of its equity interests. Shanghai Zhoujing is currently developing in full swing the cross-PC, console mobile-end game Code: Basketball 3v3, which will become an important game product type of the Group with long life cycle and is expected to be launched officially in the first half of 2023.

IP licensing developed steadily, and the IP influence of Legend of Sword and Fairy continued to increase

In terms of IP licensing, following the successful launch of the game Legend of Sword and Fairy 7, the Group established a strong presence for the cooperation of the Legend of Sword and Fairy IP throughout the industry chain, covering games, films and television, comics and animation, content literature, music, derivatives and real scene entertainment, and collaborated with top partners in related fields to jointly build the Legend of Sword and Fairy IP universe to achieve higher returns. According to the financial report, the Group's revenue from IP licensing amounted to approximately RMB 30.8 million in the first half of 2022.

It is noted that in the first half of 2022, following the successful launch of the game Legend of Sword and Fairy 4 VR, the Group continued its cooperation with Immersive World and launched the VR game Legend of Sword and Fairy 1 VR on 15 July 2022, bringing a complete immersive experience for players. The Group will also launch the story mobile card game Sword and Fairy: Wen Qing in the second half of 2022. The large scale MMORPG mobile game, Legend of Sword and Fairy‧Yuanqi developed by the Group and Alibaba's Lingxi Games has also entered the final stage of testing.

In addition, The Sword and Fairy Chinese Traditional Festival Figures Series, first launched by the Group with Pop Mart, was released globally in April 2022; In January 2022, the Group has achieved huge success in its first launch of Legend of Sword and Fairy digital collections through the platform TheOne.Art; The shooting of Legend of Sword and Fairy 1, which was co-produced by the Group and Penguin Pictures, has officially been commenced in November 2021; while in cooperation with iQiyi, the shooting of Legend of Sword and Fairy 4, has been commenced in February 2022; In July 2022, the Group successfully held the 27th Anniversary of Legend of Sword and Fairy through Weibo livestreaming, delivering extensive visual and audio experiences to players. Through continuous investment in IP operation, the value of Legend of Sword and Fairy IP will be further enlarged. In the future, CMGE will create more high-quality content to reach young consumers interested in Chinese-style elements via various channels to enhance the reputation of Legend of Sword and Fairy among young people and further enrich the users' interactive experience.

Deepen the layout of metaverse

From the listing of Roblox to the renaming of Facebook as "Meta", the Metaverse has become the hottest concept in recent years as more and more Internet giants enter the market. The Group seized the opportunity of metaverse development and launched the project "Sword and Fairy World " more than two years ago, taking the lead in the metaverse field. Sword and Fairy World is China's first metaverse game featuring open world elements such as cross-PC, console, virtual reality device and mobile phone and the Chinese culture. It is also the first entertainment and social networking metaverse platform in China that features Chinese culture, offers in-depth virtual reality experience and allows players to play virtual characters with virtual reality equipment. The game Sword and Fairy World will commence first round of testing in the second half of 2022 and is scheduled for launch in the first half of 2023.

As an innovative concept that is extremely explosive at present, the metaverse has become the next development goal of various industries, and digital copyright is one of the key parts. In 2022, the Youyu Art platform, a newly launched business segment of the Group, was positioned as a "digital artwork copyright distribution platform" and received widespread attention from creators and investors. As of 30 June 2022, Youyu Art has reached cooperation with more than 80 well-known IP copyright owners and artists, covering trendy art, games, comics, and eSports.

Since its establishment, Youyu Art has successfully launched a number of digital artworks, including Chuangshi Huizhang*, MashiMaro and Pleasant Goat and Big Big Wolf. In the future, it will also be combined with the real economy to provide users who purchased digital copyrights with a variety of physical products such as digital copyright, 3D figures, T-shirts and Make Cup, which will stimulate the vitality of creative innovation and provide strong support for the Group to further deepen and improve its global layout.

In the future, the Group will usher in the harvest period of self-developed games, and a number of games will enter the testing or launch stage. In addition, the continuous development of Legend of Sword and Fairy IP brand is expected to drive the further growth of the Group's performance. At the same time, the orderly advancement of Sword and Fairy World and Youyu Art will bring Sword World closer to the goal of becoming China's first open world game + entertainment and social networking metaverse platform, and will effectively empower the real economy, achieve better social value, and in turn promote the Group to achieve high-quality and sustainable development.

About CMGE Technology Group Limited

CMGE Technology Group Limited is a leading IP-based game operator and publisher.  With IP as the core, the Company continues to provide high-quality games for global players through independent R&D and agency publishing, and actively develops an ecosystem around IP and CP to build an ecosystem around IP games. The Company was listed on Nasdaq on 25 September 2012, being the first mobile game company in China to be listed on the U.S. securities market; officially launched the privatisation in May 2015 and completed the delisting in August 2015; listed on the Main Board of the Hong Kong Stock Exchange on 31 October 2019. In May 2018, the Company acquired 51% equity interest in Beijing Softstar, and joined hands with Taiwan Softstar to conduct independent research and development on well-known IPs such as Legend of Sword and Fairy , Xuan Yuan Sword, Monopoly, Stardom and Empire of Angels, and further developed IP brand operation with a global vision, and built its own IP into a world-class cultural brand.