On July 30, Yingke issued a profit forecast announcement. The company expects revenue in the first half of this year to grow by 45-50% compared with the same period last year, an increase of about 20-25% compared with the same period last year, and a net profit of 5500-85 million yuan in the first half of this year (a loss recorded in the same period last year). The company's performance has gradually improved, mainly due to the rapid growth of revenue from innovative audio and video products and the soundness of the main live broadcast business. The company continues to improve its business ecology by relying on the twin engines of "interactive entertainment + social interaction".
The live broadcast service provides steady cash flow. In the first half of this year, affected by the epidemic, the demand for online entertainment surged. According to CNNIC statistics, the number of live broadcast users in China reached 560 million in March 2020, an increase of 163 million over the end of 2018, with a penetration rate of about 62%. The entry of the short video giant has intensified the competition in the live broadcast industry, and the company mainly focuses on the vertical field of "interactive entertainment" through differentiation, paying more attention to long-tail users. Recently, the company has also reached an exclusive strategic cooperation with ATV, becoming the exclusive webcast platform for the 32nd Miss Asia selection competition, further enriching the ecology of live content. In addition, under the tuyere of live broadcast, Yingke also lays out the mode of "live broadcast + e-commerce" to explore the profit model outside the live broadcast reward.
Social value is gradually released. The company has a wide range of layout in the social field, in which star products include interest social products and matchmaking social products. According to the statistics of the APP list of the research institute of Internet Weekly, Jimu ranks second on the list of social platforms of interest, and counterpart ranks seventh on the list of social platforms of marriage and love.
Generation Z is the main user of Jumu, accounting for more than 80% of users after 95-00, focusing on the brand tone of fashion culture. Generation Z has a strong demand for social interest, and this segment has great potential for growth in the future. At present, the number of daily active users of Jiemu has exceeded one million, and the next day it retains about 55%. The company plans to increase the marketing of Jiemu APP in the third quarter of this year, which is expected to further promote the growth of users. In terms of commercial realization, Jimu began to launch the subscription payment model at the end of 2019, and launched the live broadcast function in June this year, maintaining a relatively balanced development model. On the other hand, it is mainly through the cloud dating model to seize the sinking love and marriage market, which currently has about 260000 daily active users.
In addition, the company has also launched social products for the middle-aged and elderly, such as pomelo and StarStar, a two-dimensional interest community, to meet the entertainment and social needs of different user groups. The company's multi-matrix layout around the vertical social field will become a new growth point for the company. With the rapid growth of social products, the company's revenue will be more diversified, thus reducing its over-reliance on a single APP. In 2019, 84% of the revenue contributed by the main APP live broadcast was 97% in 2018.
The company has plenty of cash reserves. By the end of 2019, the company's cash and cash equivalents, deposits and bank financial balances totaled about 2.9 billion yuan. The company currently has a market capitalization of about 2.6 billion yuan (HK $2.93 billion). In addition, the company has carried out a number of share buybacks this year, and the company has sufficient cash reserves, which also provides financial guarantee for continuous repurchases and potential market mergers and acquisitions.