On August 27, Hong Kong-listed company CMGE (0302.HK) announced its interim results for 2025. The report revealed that CMGE achieved operating revenue of RMB 763 million in the first half of the year, with an adjusted net loss of RMB 638 million during the period. The losses were primarily attributed to significant marketing and promotional expenses for new games "Age of Empires: Mystery" launched in January 2025 and "Sword and Fairy World" launched in February 2025, substantial one-time severance costs from optimization of the development team for "Sword and Fairy World" and CMGE's organizational structure, as well as write-offs of certain expired prepaid contracts and impairment of financial assets due to underperforming investee companies.

Despite facing short-term challenges, CMGE's core strategic adjustments have shown significant results, with business fundamentals remaining solid. During the reporting period, CMGE's overseas business revenue surged 33.2% year-on-year, with revenue share achieving a historic breakthrough of 30%. The mini-game business delivered exceptional performance, emerging as a robust new growth engine. Most importantly, benefiting from new game revenue contributions and continuous cost reduction and efficiency enhancement measures, CMGE's operating cash flow turned positive at RMB 108 million, establishing a solid foundation for operational turnaround in the second half of the year.

**Overseas Business Revenue Share Exceeds 30%, Mini-Games Become New Growth Engine**

During the reporting period, CMGE's global expansion strategy began showing results, with overseas business revenue reaching RMB 235 million, up 33.2% year-on-year. The proportion of total revenue increased substantially from 14.1% in the same period last year to 30.8%, becoming a core driver of CMGE's performance growth. Among these, the action mobile game "Battle Through the Heavens: Peerless" launched in Hong Kong, Macau, Taiwan, and Singapore-Malaysia regions in April, topping the iOS free charts in multiple regions within its first month, validating the strong appeal of premium Chinese anime IP in overseas markets. Additionally, "Minotaur GO" reached the top of Apple Store free charts in Hong Kong, Taiwan, and Singapore within four days of launch. The Vietnamese version of "Douluo Continent: Shrek Academy" achieved first place on Vietnam's Apple Store free chart and ninth place on the revenue chart in its first month, while securing second place on Google Store free chart and fifteenth place on revenue chart. "Douluo Continent: Reverse Space-Time" Hong Kong, Macau, and Taiwan version, licensed to Yishu Games for distribution, achieved first place on Taiwan's Apple Store game free chart and nineteenth place on revenue chart in its first month, while securing third place on Hong Kong's Apple Store free chart and ninth place on revenue chart.

The mini-game business segment, as CMGE's important growth point for 2025, delivered impressive performance. "Age of Empires: Mystery," launched in January, achieved cumulative revenue exceeding 100 million within three months of launch through excellent product quality and refined operations, with its WeChat game revenue ranking climbing from 24th in the first month to 10th, becoming a dark horse in the annual mini-game market. Meanwhile, existing mini-games such as "Sky Battle Chronicles" and "Hammer Elimination" continued contributing steady profits, collectively establishing CMGE's leading advantage in the mini-game sector.

Regarding key performance indicators, as of June 30, 2025, CMGE's total new registered users reached 42.824 million. Monthly average active users numbered approximately 11.573 million; monthly average paying users approximately 833,000; ARPPU reached RMB 152.7. Both monthly average active users and monthly average paying users declined due to some older games entering later lifecycle stages and new games still in user conversion ramp-up period.

**Rich Reserve of Premium IP Games**

Despite not achieving expected results with core self-developed project "Sword and Fairy World," CMGE's IP premium game global distribution business progressed steadily. During the reporting period, CMGE launched multiple new titles in mainland China, including "Three Thousand Fantasy World" and "New Romance of the Three Kingdoms: Cao Cao's Biography." The pixel-style card game "Three Thousand Fantasy World," featuring thirteen national-level IPs, topped Apple Store free charts in its first month; the strategy board game "New Romance of the Three Kingdoms: Cao Cao's Biography" earned high recognition from core players through superior quality, maintaining high ratings across multiple platforms and demonstrating long-term operational potential. The officially licensed mobile game "Naruto: Konoha Master," launched in July, also topped iOS free charts in its first month.

Looking ahead to the second half, CMGE has sufficient product reserves. The self-developed new legend-category title "Codename: Dark Legend" will launch soon after fine-tuning, expected to continue the success of its predecessor "Legend World: Thunder Dominance." The self-developed Three Kingdoms-themed strategy mobile game "City Lord World" is distributed overseas by Wanxin Buzhi. On July 31, 2025, its overseas version "Three Kingdoms: Heroes Ablaze" officially launched in Hong Kong, Macau, Taiwan, Singapore, and Malaysia, with subsequent launches planned for Vietnam and South Korea.

In overseas markets, "Douluo Continent: Reverse Space-Time" will enter Southeast Asia, while "Douluo Continent: Shrek Academy" and "Dynasty Warriors: Overlords" will expand into South Korean and Japanese markets respectively, with overseas business growth momentum expected to continue.

**30th Anniversary of Sword and Fairy IP Accelerates Value Release, Deepening Full Industry Chain Layout**

As CMGE's core asset, the operation of the "Sword and Fairy" IP welcomed value explosion during its 30th anniversary. During the reporting period, Sword and Fairy IP licensing revenue reached RMB 33.1 million, up 134.8% year-on-year. With the addition of Super Competitive Group, acceleration in Sword and Fairy's business development in IP operation services, themed business planning and execution, and derivative product design and development is expected, with both parties providing mutual resource support, close integration, and mutual benefit across the IP industry chain.

Surrounding the 30th anniversary celebration, CMGE planned diversified activities throughout the year. Animated series collaborations with Tencent Video and Bilibili for "Sword and Fairy III," "Sword and Fairy IV," and "Sword and Fairy I" progressed successively; original live-action series "Sword and Fairy: Dust of Return" and "Sword and Fairy II Side Story: Memory Biography" began preparation; the "Sword and Fairy Together" national touring themed comic convention covered ten provinces, attracting tens of thousands of fans for offline interaction; in derivatives, new products in collaboration with brands like Suplay were well-received, partnering with March Beast to explore offline channels. In vocal arts, deep cooperation with China Literature achieved joint production of "Sword and Fairy" radio drama. Partnering with "Xiaoju Chang" to develop a new version of Yue opera "Sword and Fairy," conveying Sword and Fairy's unique Eastern aesthetics to the public through "intangible cultural heritage" methods.

In gaming, besides the steady development of "Sword and Fairy IV" remaster, on July 9, CMGE and KayingNetworkannounced renewed licensing for "Sword and Fairy: New Beginning" under Kaying Network and signed a new Sword and Fairy IP card RPG game, with the product entering development phase in 2026. "Sword and Fairy: New Beginning" is a turn-based RPG combat game distributed and operated by Kaying Network under official "Sword and Fairy" IP licensing. The game debuted on WeChat mini-programs in 2023, quickly becoming a representative product in the mini-game market after launch. The deep industry chain layout of Sword and Fairy IP continues converting into substantial commercial value and brand influence.

**Actively Embracing Change, Focusing on Web3 to Explore New Growth Curves**

Looking forward, CMGE will continue deepening its "business focus + cost control" strategy, continuously improving operational efficiency through AIGC technology applications and refined management, consolidating foundations in areas of expertise, sensitively grasping new market opportunities, and seeking balance between risk and return. CMGE is confident about achieving operational profitability in the second half of 2025.

Simultaneously, CMGE actively embraces technological transformation with forward-looking Web3 field deployment. CMGE is accelerating the RWA (Real World Assets) blockchain plan for the "Sword and Fairy" IP and plans to launch Web3 aggregated payment tools and decentralized esports platform "KKFun Esports," aiming to capitalize on Hong Kong's Web3 policy opportunities and pioneer new growth curves. Recently, CMGE has reached strategic cooperation with Hong Kong stablecoin sandbox pilot issuers, OSL Group, and Pangu among industry leaders, marking the Web3 strategy's entry into critical implementation phase.

CMGE will focus on its gaming core business, optimize product structure, deepen IP operations, and actively explore frontier technologies. The company expects solid business fundamentals in the second half of 2025 to provide strong support for achieving profitability targets.