FAST NEWS: Flowing Cloud’s Profit Soars on Metaverse Gains
The latest: “Metaverse-concept stock” Flowing Cloud Technology Ltd. (6610.HK) on Tuesday said it expects to report its revenue rose 68% to 84.8% to between 1 billion yuan ($146 million) and 1.1 billion yuan last year, as its profit before tax jumped 141.1% to 198.5% to between 210 million yuan and 260 million yuan.
Looking up: The profit increase mainly owed to growth for its augmented reality and virtual reality (AR/VR) marketing services and content businesses, its business expansion and an increase in its overall gross margin.
Take Note: Expenses from the company’s listing last October and foreign exchange losses due to the appreciation of the Chinese yuan negatively impacted its pre-tax profit.
Digging Deeper: Flowing Cloud started as video game developer Ophyer Technology in 2008. In 2015, it became a supplier of enterprise-focused AR/VR apps, which are a main component of metaverse applications. The company’s three main revenue streams now come from its AR/VR marketing services, AR/VR content and AR/VR software-as-a-service (SaaS) businesses. To better position itself to capture opportunities in the developing metaverse, the company changed its name to Flowing Cloud Technology in December 2021, and its IPO prospectus quoted the term “metaverse” more than 300 times. The company’s listing made it the first “metaverse stock” on the Hong Kong Stock Exchange.
Market Reaction: Flowing Cloud shares rose on Wednesday to close up 4.1% at HK$4.28 by the midday break. They are now nearly double their IPO price of HK$2.21.
Translation by Jony Ho
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