Performance-based Marketing Business Sees Continuous Improvement in Profitability

Joy Spreader Group Inc., a leader in new media performance-based marketing, released an announcement on November 29 disclosing its unaudited financial and operating data for the nine months ended September 30, 2021. The announcement shows that Joy Spreader continued its strong growth and achieved revenue of HK$945 million (approx. US$121 million) and gross profit of HK$331 million in the first nine months of 2021, representing an increase of 61.1% and 94.5% respectively over the same period of last year.

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• Revenue grew steadily, with gross merchandise value (GMV) and revenue from the short-form video (SFV)-based e-commerce marketing business hitting a new high

The announcement shows that Joy Spreader maintained solid growth in revenue, posting revenue of HK$945 million for the first three quarters of 2021, higher than the full year revenue of 2020 (HK$924 million). Driven by the significant increase in the number of active marketing points on the DouYin short video platform and the average gross merchandise value (GMV) per marketing point, Joy Spreader’s short video e-commerce product marketing business achieved aggregated GMV of HK$897 million in the first three quarters of 2021, 3.5 times that of the same period of last year; and achieved operating revenue of HK$194 million, a 4-fold increase compared to the same period last year.

• Gross margin for the first three quarters stands at 35.1%, with profitability steadily improving

Serving as a leading company in the new media performance-based marketing industry, Joy Spreader’s profitability reflects both its strong business capability and the advancement in the technology of its model algorithm. In the first three quarters of 2021, the Company achieved a gross profit of HK$331 million, an increase of 94.5% YoY. Gross profit margin reached 35.1%, not only an improvement of approximately 6 percentage points from 29.1% in the first three quarters of 2020, but also a jump of 34.3% in the first half of 2021.

• The short video e-commerce marketing business, one of the company’s main drivers of growth, accounts for nearly 30% of gross profit

The short video e-commerce marketing business remained one of the performance highlights and drivers. In the first three quarters of 2021, the business achieved a gross profit of HK$108 million, an increase of 176.9% YoY. The contribution of this segment to the Company’s overall gross profit has increased from 22.8% in the first three quarters of 2020 to 32.4% in the first three quarters of 2021, putting it very close to representing one third. Based on the SFV-based e-commerce marketing business strategy put in place by Joy Spreader for the continued growth of the segment, the scale and contribution of this business is expected to further increase.

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As the gross margin of short video e-commerce marketing business is higher than the Company’s other businesses, the improvement in the contribution proportion of this segment will inevitably further enhance the overall gross margin.

• Interactive entertainment and other digital product marketing businesses saw solid growth, with improved average turnover per marketing point and gross profit, a result of having streamlined operations

Interactive entertainment and other digital product marketing businesses also made steady progress in the new industry environment, achieving an aggregated turnover of HK$2,712 million in the first three quarters, an increase of 108.3% YoY. Operating revenue stood at HK$750 million, an increase of 39.9% YoY.

Remarkably, in the first three quarters of 2021, the average turnover per marketing point for interactive entertainment and other digital product marketing businesses reached HK$4,087, up 25.6% from HK$3,254 YoY. Facing challenges brought about by the external environment such as tentatively tightened policies for versions of new games, Joy Spreader optimized model efficiency and improved the quality of selected products in a move to enhance turnover per marketing point, setting in motion the stable growth of interactive entertainment and other digital product marketing businesses.

• Increased investment in R&D to develop new businesses such as international e-commerce marketing and new media marketing for film and television

The announcement indicated that Joy Spreader invested HK$46.84 million in R&D in the first three quarters of 2021, 2.9 times that of the same period in 2020. R&D spending as a percentage of total revenue also increased from 2.8% to 5% over the same time periods.

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