During the first half of 2020, the Group strengthened its core business and continued enhancing its services resulting in outstanding financial performance for the period. Revenue for the first half of 2020 increased 66.2% to RMB348.2 million fuelled by increased sales from online products, 3C product e-commerce marketing, and the promotion business. The Group's gross profit was RMB94.5 million, for a year-on-year increase of 87.3% with gross margin doubling to 24.1% from 12.4% from the same period a year ago. The increase in gross margin was due to a greater portion of sales generated from higher margin e-commerce combined with an increase in players of higher-margin game products. The Group's net profit soared 123.3% to RMB61.4 million with net profit margin increasing to 17.6% from 13.1% in the same period last year.
Higher demand for we-media performance-based marketing business and improved results from live streamers drove strong revenue growth
During the Period, the Group generated approximately RMB316.6 million in revenue from its performance-based we-media marketing service of online products, representing a year-on-year increase of 60.8%. The increase in revenue was mainly generated from apps (game, arts and literature, finance, apps, and education) as more people turned to online entertainment during the COVID-19 outbreak. The Group recorded approximately RMB30.4 million in revenue for a triple digit year-on-year increase of 147.8% in its performance-based we-media marketing service of consumer goods. The increase in revenue was due to an increase in sales of 3C digital accessories which continues to experience high demand.
The sharp increase in revenue from online product promotion activities and apps was due to the significant increase in customers in the first half of 2020 which boosted demand for the we-media performance-based marketing business, as compared with the same period in 2019. Contributing to the significant increase in overall revenue was an increase in the average unit price and newly established marketing points recorded as a result of the Group's improved data algorithm and optimization efficiency combined with an increase in demand for higher-average unit price gaming and reading items during the COVID-19 outbreak.
Launched in October 2018, the 3C product e-commerce marketing and promotion business went from its initial business development in the first half of 2019 to a fast-growing period in the second half of the year. Revenue increased as a result of a combination of invigorating live streaming and more consumers choosing to shop from home due to the COVID-19 outbreak during the period. Live streaming offers a more dynamic and interactive experience for consumers thus driving increased sales. The Group continues to look for new products to offer as it expands its live streaming e-commerce, broadens the company's portfolio, and enhances the Group's overall profitability.
Diversified product structure and tailored product portfolios
The Group's online product providers mainly include marketing agents, app developers, online literature providers, Html 5 game providers, and mini-program developers. As of June 30, 2020, the Group cooperated with more than 161 marketers. The Group has an app portfolio covering more than ten categories that include games, videos, and utility apps; online literature products that include over 779 online books across 69 literary genres; and Html 5 game products that include more than 175 Html 5 games with genres covering role-playing games, strategy, action, and adventure.
Using its proprietary business intelligence technologies, Joy Spreader is able to offer a tailored product portfolio to target audiences through we-media publishers. The Group is able to accurately simulate the actual performance of marketing campaigns thus enabling them to recommend consumer products, and, in turn, ensure its continued profitability. As of June 30, 2020, the Group cumulatively provided services to a total of approximately 23,362 WeChat Official Accounts and approximately 233,620 user traffic entry points. The Group served a total of 4,127 WeChat Official Accounts, which enabled them to reach more than 737.0 million followers.
Developing short-form video we-media technology platforms and high value-added businesses
Joy Spreader is the first mover in the short-form video we-media monetization market, which is rapidly growing due to its effective monetization capabilities. Specifically, we-media publishers' strong demand for the service has made it a high-growth segment in the overall we-media monetization services market. The Group's in-depth experience in text-based we-media gives it an advantage over competitors in developing algorithms and technology platforms for short-form video we-media publishers. Leveraging this experience, the Group is developing Beauty Connector, a technology platform to serve marketers and we-media publishers on short-form video platforms. The Group has enhanced the platform's overall response speed and optimized interface visual interaction which improves its core matching recommendation algorithms.
The Group is further developing its high value-added businesses, such as short-form video and e-commerce. In recent years, the rapid development of short-form video has made it one of the largest internet traffic entry points. The Group is among the first batch of companies investing in this sector and is already experiencing the initial benefits. In the second half of the year, the Group will improve its information service capability for the short-form video business and provide comprehensive consolidation services to short-form video owners and advertisers in all aspects.
Mr. Zhu Zinan, Chairman and Chief Executive Officer of Joy Spreader Interactive Technology., Ltd commented, "We are committed to building an industry-leading quantitative information system and technology platform, pursuing system optimization and technology development. We have created high entry barriers through our significant data collection, efficient data analysis capabilities and advance proprietary technology platforms which enables us to create tailored product portfolios to attract target audiences. Additionally, the Group is enhancing its core competitive edges as it systematically improves its marketing service capabilities, and enhances its intelligent information optimization as it grows its business and expands its market share. The Group is also establishing a global we-media marketing services system to expand its performance-based we-media marketing service into overseas platforms of both international and domestic marketers who seek to promote products on overseas short-form video platforms. This will strengthen the Group's foundation for rapid development as it seizes new opportunities created amid current market conditions as well as continues to devote its efforts to create sustainable value and deliver better returns to its shareholders."
About Joy Spreader Interactive Technology. Ltd
Joy Spreader Interactive Technology. Ltd., established in 2008, is an algorithm-based and technology-driven company. It is one of the leading performance-based we-media marketing service providers in China as well. The Company focuses on leveraging business intelligence technologies to serve marketers and we-media publishers. Meanwhile, the Company provides performance and tailored product portfolio to marketers by distributing their products on a diverse we-media network.
This press release is issued by Porda Havas International Finance Communications Group for and on behalf of Joy Spreader Interactive Technology. Ltd.
For further information, please contact:
Porda Havas International Finance Communications Group
Terence Wong +852 3150 6786 terence.wong@pordahavas.com
Phoenix Fung +852 3150 6773 phoenix.fung@pordahavas.com
Renee Zheng +852 3150 6755 r.zheng@pordahavas.com
Suey Liu +852 3150 6753 suey.liu@pordahavas.com
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