Hong Kong–listed Netjoy (02131) reported audited results for the year ended 31 December 2024 showing top-line growth but a steep swing to loss, driven by weaker gross margins and large impairment charges.

Financial Highlights • Revenue climbed 4.64% year on year to RMB 3.15 billion, supported by broader media channel coverage and initial contributions from new businesses. • Gross profit fell 51.23% to RMB 122.28 million; gross margin contracted to 3.88% from 8.33% as user-traffic growth slowed and acquisition costs rose. • Reported loss was RMB 462.09 million versus a RMB 7.49 million profit in 2023; adjusted net loss totalled RMB 444.58 million. • Net loss margin deteriorated to –14.67% (2023: 0.25%). • Cash and bank balances stood at RMB 595.18 million; interest-bearing bank loans totalled RMB 603.15 million. Current ratio slipped to 1.55 (2023: 1.92); debt-to-asset ratio rose to 0.61.

Drivers of the Loss • Major impairment losses of RMB 308.88 million on trade receivables, prepayments and other receivables, largely tied to a 3C supply-chain project where RMB 143 million of prepayments became difficult to recover. • Fair-value and other expense items added RMB 60.43 million, up from RMB 6.04 million a year earlier. • Traffic acquisition costs increased 9.42% to RMB 2.85 billion, accounting for 94.2% of total cost of sales.

Segment Performance 1. Intelligent Marketing Solutions – Revenue: RMB 3.01 billion, +4.96% YoY, representing 95.47% of group sales. – Key account customers rose 29.29% to 1,408; new customers up 19.6% to 819. – Top industries: online games (29.5%), internet services (28.3%) and financial services (23.5%). – Segment gross margin declined to 1.6% (2023: 5.7%).

2. E-commerce Service Solutions – Revenue: RMB 70.81 million, +32.43% YoY. – GMV reached RMB 551 million. – Gross margin improved to 62.3% (2023: 58.2%). – Segment impacted by 3C supply-chain losses; related project terminated and legal recovery actions initiated.

3. Innovative Business (Micro-drama) – Revenue: RMB 71.76 million; gross margin 41.4%. – Produced 76 high-quality micro-dramas; user base on self-operated mini-program reached 45.95 million.

Operations and Technology • Peak monthly in-house video output exceeded 27,400 short videos, +28.33% YoY; AIGC tools cut image-material costs by 93% and boosted production efficiency. • Cloud service platform users rose to 7,231 enterprises; 34,269 production hours saved in 2024.

Strategic Outlook Netjoy will continue to pursue “platformisation, diversification and internationalisation,” prioritising AI-driven efficiency, expansion of e-commerce categories and overseas micro-drama distribution while strengthening internal controls after the supply-chain incident.

Subsequent Events • Trading in Netjoy shares was suspended on 1 April 2025. The Stock Exchange has set six resumption conditions, including completion of an independent forensic probe, reinforcement of internal controls and publication of all outstanding financial information, with a deadline of 30 September 2026 for resumption. • An external firm has been appointed for the investigation and an internal control consultant engaged for a comprehensive review.

Capital Management and Dividend • Capital expenditure fell sharply to RMB 0.21 million (2023: RMB 31.02 million). • No final dividend was proposed for 2024.

Governance and Compliance • Netjoy acknowledged deviations from certain Corporate Governance Code provisions due to the delayed annual general meeting and reporting timetable but stated that remedial measures are under way. • The company and its subsidiaries did not repurchase or dispose of any listed securities in 2024, apart from trustee purchases of 33.30 million shares (4.19% of issued capital) for the RSU scheme.