FAST NEWS: Games could power Newborn Town as core social revenue sags

The latest: Social networking platform Newborn Town Inc. (9911.HK) on Friday reported that revenue from its core social networking business totaled between 1.23 billion yuan ($170 million) and 1.26 billion yuan in the first half of 2023, down between 0.5% and 2.8% year-on-year.

Looking up: The company’s social networking business had 540 million cumulative downloads by the end of June, up about 6% from 509 million at the end of March. Its average monthly active users also rose 0.8% quarter-on-quarter in the second quarter to 22.5 million.

Take Note: Newborn Town noted that social networking revenue in the first half of the year was affected by content ecosystem adjustments in the first quarter. But following completion of those adjustments, its revenue actually grew year-on-year again in the second quarter.

Digging Deeper: Founded in 2009, Newborn Town operates multiple social platforms combining entertainment elements such as dating, group voice chats, livestreaming and short video. It was listed in Hong Kong on the last day of 2019. The company has previously focused on emerging markets such as the Middle East, Southeast Asia and South Asia, and entered developed economies such as Europe, the U.S., Japan and South Korea in 2021. It has also expanded its mobile gaming business in recent years. Revenue from its innovative businesses in the first half of the year totaled between 120 million yuan and 140 million yuan, up 10.9% to 29.3% year on year, making it a new growth engine.

Market Reaction: Newborn Town’s shares fell on Monday, closing down 0.7% at HK$1.38 by the midday break. The stock now trades near the lower end of its 52-week range.

Translation by A. Au

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