On October 26, Blue Cursor released its performance report for the 3rd quarter of 2023. 23Q3 achieved revenue of 14.32 billion yuan, an increase of 45.2% over the previous year. The single-quarter revenue reached a new high, achieving net profit of 0.3 billion yuan, -86.5% year-on-year, and net profit of 0.6 billion yuan, minus non-return net profit of -12.0%. Affected by non-recurring projects and impairment losses, the company's profit side was under pressure.
In 23Q3, the revenue for the single quarter reached a new high, and the overseas business grew strongly. In Q3 in '23, the company achieved revenue of 14.32 billion yuan, +45.2% year-on-year. In the first three quarters of 2023, the blue cursor achieved revenue of 36.31 billion yuan, an increase of 36.7% over the previous year. It is already close to the total revenue of 36.68 billion yuan last year, providing a stable basis for the company's annual performance growth. The company's overseas business grew strongly. In the first half of '23, overseas advertising was 15.87 billion yuan, an increase of 32.6% over the previous year. In the third quarter, the continued strength of the overseas business achieved rapid growth and large-scale effects. Chinese brands accelerated their global layout, further unleashed their business potential, achieved rapid growth, and showed a good recovery and growth trend. 23Q3 The company's gross profit margin was 3.0%, down 0.5pct from the previous year. We believe that the decline in the company's gross margin may be related to changes in the company's revenue structure. The company's overseas business, which had a relatively low gross margin, achieved rapid growth in the third quarter.
Investment in R&D continues to increase. The profit side is under pressure due to non-current projects and impairment losses. The company's overall 23Q3 cost ratio remained relatively stable. The sales/management/R&D expense ratio was 1.5%/0.9%/0.2%, respectively, and remained flat, 0.3 pct//0.2 percent, respectively, and increased 0.1 pct from year to year. The company continued to increase R&D investment. The company continued to increase R&D investment. 23Q3 R&D expenses were 0.2 billion yuan, up 137.6% year on year.
On the profit side, the 23Q3 company achieved net profit of 0.3 billion yuan, -86.5% year-on-year, and net profit after deducting non-return net profit of 0.6 billion yuan, -12.0% year-on-year. The company's non-recurring profit and loss affected profits, and the company lost $60 million due to changes in fair value in 23Q3. At the same time, 23Q3's total asset impairment loss/credit impairment loss of $26 million also had an adverse impact on the profit side.
The growth rate of accounts receivable at the end of the third quarter of '23 was lower than the year-on-year growth rate of revenue in the previous three quarters, and operating cash flow improved year over year. The company's accounts receivable book balance at the end of the third quarter of '23 was $9.0 billion, up 35.4% from the end of '22, and the growth rate was lower than the year-on-year growth rate of operating income in the first three quarters of '23. Cash flow from operating activities improved significantly year on year. In Q3, the company's net cash flow from operating activities had a net inflow of 170 million yuan, up 329.6% year on year. The ratio of net cash flow from operating activities to revenue was 1.2%, up 0.77pct year on year.
The All in AI strategy reshapes AIGC and the blue cursor, and the marketing industry model “Blue AI” accelerates cost reduction and efficiency. Based on AI? The strategic layout is based on deep marketing and R&D technology accumulation. In September of this year, Blue Cursor released the marketing industry model “Blue AI,” which connected to many top partners such as Microsoft Cloud, Baidu, and Zhipu AI, and was applied by all employees within Blue Cursor. As a leading and implemented industry model in the marketing field, Blue AI will not only change traditional marketing methods, accelerate cost reduction and efficiency, but also promote asset construction and accumulation in the marketing industry in the AI era. Currently, the blue cursor has basically achieved 100% of all types of work and all employees using AI, improving overall business efficiency by more than 35%. In particular, the overseas business can basically achieve efficiency improvements of 600%-800%.
The metaverse “human-store” ecosystem is complete, and Blue Universe released the immersive exploration experience brand MakeMake. The blue universe revolves around people, goods, and markets, and comprehensively lays out the three business segments of virtual reality, Web 3.0, and AIGC. At the virtual reality level, we focus on virtual IP operations, virtual content production, and the creation of naked eye 3D/VR/AR. At the Web3.0 level, based on MEME, we explore the application and implementation of blockchain in the field of marketing; at the AIGC level, we launched two SaaS products, Blue Label Smart Broadcast and Dual Action, focusing on the implementation of generative AI technology in marketing scenarios. On October 23, Blue Universe officially released MakeMake, an immersive exploration experience brand. Based on the core genetic advantages of deep practice and content capabilities in the metaverse business, Blue Universe focuses on the discovery and production of global IP, with a strategic layout around introduction, development, distribution and operation.
Profit forecast: We expect operating income for 2023-2025 to be 464.19/515.25/56.677 billion, respectively, and net profit of 314/4.92/598 billion yuan, corresponding to a price-earnings ratio of 56.2/35.9/29.5 times, respectively.
Risk warning: The impact of macroeconomic changes and industry regulation on advertising, uncertainty about advertisers' willingness to launch, new business development progress falling short of expectations, risk of impairment of goodwill, and AI business falling short of expectations.