The company issued a 2019 performance announcement, achieving operating income of 3.26 billion yuan, down 15% from the same period last year, mainly due to increased competition in the live broadcast industry; the net profit was 53 million yuan, with an adjusted net profit of 72 million yuan. Driven by new business, revenue rose against the trend in the second half of 2019, up 13% from the same period last year and 20% from the previous year, with an adjusted net profit of 82 million yuan in the second half of the year. The company's main business and cash flow remain sound, and the layout of innovative products has achieved initial results. the average number of monthly active users of the group's products in 2019 is 29.81 million, an increase of 17% over the same period last year. In October 2019, the company completed the acquisition of Generation Z Social APP and laid out the cloud dating market APP. In the future, the company will continue to focus on the [interactive entertainment + social] strategic layout, and continue to drive the future development space with the gradual maturity of the innovative product matrix.
Financial performance: live broadcast business is accompanied by industry adjustment, and innovative products drive marginal improvement. In 2019, the live broadcast industry entered a deep reshuffle period, with total revenue of 3.269 billion yuan, down 15% from the same period last year, and gross profit of 889 million yuan, down 31.89% from the same period last year. Affected by innovative products, the group's overall gross profit margin fell by 7 percentage points to 27%, while the core APP Yingke live broadcast gross profit margin remained stable at 34%. The annual sales / management / financial expense rate was 15.1%, 5.21%, 1.01%, respectively, an increase of 3.21%, 1.45%, 0.28% over the same period last year. The company built Dazhong data system to enable multi-product matrix. In 2019, R & D expenditure totaled 331 million yuan, accounting for 10.12% of revenue, an increase of 4.03% over the same period last year. By the end of 2019, the company's total cash on hand reached 2.9 billion yuan, abundant cash flow, strong cash flow and continuous investment confirmed the strong liquidity of the company's product matrix.
Interactive entertainment: integrated layout of audio and video to promote the professionalization of anchors. In 2019, the company successfully built the audio and video industry center, provided strong product and technical support, and actively promoted the construction of guilds and the professionalization of anchors, increasing the contribution of professional anchors to income. With the gradual improvement of the product matrix and the improvement of the revenue structure, the company's main APP Yingke accounted for 84% of the revenue in 2019, compared with 97% in the same period last year, a decline of 13 percentage points. The live broadcast business adapts to the current traffic ecological environment, the strong promotion ability of the company and the continuous expansion of user scale are the moat of product competitiveness, and the layout of innovative products will help the company to further reduce its dependence on a single product.
Social matrix: social accumulation aims at Z-generation making friends, cloud dating "fate" focuses on sinking the market. The company acquired Generation Z APP for $85 million in October 2019, which focuses on the interest of young people. 80% of users are after 95-00. Currently, the number of daily active users is close to 1 million, and the retention rate is good. At the end of 2019, the company actively promoted the commercial exploration of Jimu. At present, it has launched the VIP member service with a monthly payment of 28 yuan, with value-added services, value-added interaction, live streaming, advertising and other ways to open up multi-faceted realization paths. Cloud matchmaking business APP has achieved large-scale user growth since its launch in June 2019, growing much faster than similar products, becoming the first product on the "cloud dating" track, and creating a "professional matchmaker" market. The cloud dating model set has the advantages of accurate and efficient matching, breaking the limitations of time and space, and intuitive video communication, which meets the strong needs of more than 200 million young people in small towns in the sinking market, and has great potential for growth.
Risk hints: the competition pattern is intensified; the scale of innovative products is small; the company's profitability is not up to expectations.