This article first appeared on GuruFocus .
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Operating Profit:Increased by 47% year-over-year to RMB164 million in the second half of 2025.
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Operating Margin:Grew to 7.9% in the second half of 2025, an increase of almost 3 percentage points year-over-year.
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Operating Expenses (OpEx):Decreased by 28% year-over-year to RMB1.3 billion in the second half of 2025.
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Full Year Revenue:RMB4.5 billion, down 26% year-over-year.
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Gaming and Application Services Revenue:Decreased by 30% to RMB3.3 billion.
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Mynd Revenue:Declined by 43% due to the disposal of the Singapore early education business.
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Gross Profit:RMB3.1 billion, down 20% year-over-year.
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Profit Attributable to Owners:RMB151 million for 2025.
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Adjusted Profit Attributable to Owners:Higher than the previous year, excluding one-off adjustments.
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Gaming and Application Services Gross Margin:Maintained at 87%.
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Core Segmental Profit Margin:Increased by 3.9 percentage points to 27.4%.
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Mynd Gross Margin:Stable at 25%.
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Segmental OpEx:Decreased by 22% year-over-year.
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Dividend Commitment:No less than HKD1 per year, with HKD0.50 announced for the second half of the previous year.
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Net Cash Return to Shareholders:No less than HKD600 million.
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Release Date: March 26, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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NetDragon Websoft Holdings Ltd ( STU:3ND ) achieved a significant improvement in profitability in the second half of 2025, with operating profit growing 47% year-over-year.
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The company has successfully optimized its cost structure, reducing operating expenses by 28% year-over-year in the second half of 2025.
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NetDragon Websoft Holdings Ltd ( STU:3ND ) is leveraging AI technology to enhance growth opportunities, particularly in the gaming and education sectors.
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The company has expanded its product line to increase its addressable market, with a focus on emerging markets in Africa and Asia.
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NetDragon Websoft Holdings Ltd ( STU:3ND ) received industry recognition, winning the Company of the Year award at BETT and the Best Show award at ISE.
Negative Points
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Revenue for 2025 decreased by 26% year-over-year, with significant declines in both gaming and application services and the Mynd business.
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The Mynd business faced a 43% revenue decline due to the disposal of the Singapore early education business and prolonged demand adjustments.
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The company experienced a gross profit decline of 20% year-over-year, reflecting challenges in maintaining revenue levels.
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NetDragon Websoft Holdings Ltd ( STU:3ND ) is operating in a challenging macroeconomic environment, with uncertainties in key markets such as the US and the Middle East.
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Despite cost optimizations, the Mynd business reported a core segmental loss of RMB358 million, indicating ongoing financial challenges.
Q & A Highlights
Q: What is the company's commitment regarding dividends and total returns for 2026? A: Simon Leung, Vice Chairman, stated that the company is committed to providing a dividend of no less than HKD1 and a total return of no less than HKD600 million for 2026. This commitment is similar to the previous year, and the company plans to maintain its cash level through segmental profit in gaming and cost optimization in Mynd.
Q: How is the company's progression with overseas business expansion, particularly with the Xishuangbanna partnership? A: Simon Leung mentioned that the partnership is progressing well, with new product announcements imminent for both Hong Kong and overseas markets. The company is also working on a localized large language model, which is expected to come to fruition this year.
Q: Is there a CapEx plan for AI-related development or investment? A: Hak Kin Lau, Financial Controller, stated that the company plans to increase its CapEx in the AI area, with an expected investment of RMB300 million, up from RMB115 million in 2025.
Q: What is the latest development of the Thailand project, and what are the targets for the second half? A: Simon Leung explained that the company is expanding its efforts in Thailand to use AI for teaching AI tools and assessing learning progress. The project is moving forward quickly, and the company is also helping enterprises pivot to new ways of recruiting talent.
Q: Besides Cameroon, what other national-level projects is the company working on? A: Simon Leung indicated that while Cameroon is a key project, the company is also engaged in discussions with several countries in Africa, the Middle East, and Southeast Asia. The focus is on projects where the company can add significant value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
