NewBorn Town Inc. Announced 2021 Annual Results

Revenue Doubled to RMB 2,359.8 million with Value-added Services Contributing 87.4%

Adjusted Net Profit Grew by 99.5% YoY to Reach RMB 309.0 million

MAU of Social Business Exceeded 20 million,Striving for Higher Profitability in 2022

HONG KONG,March 31,2022 -- Newborn Town Inc. (9911.HK),the flagship Chinese social networking company going global,is pleased to announce its audited consolidated results of the Company and its subsidiaries (collectively the ''Group'') for the year ended 31 December 2021 (the ''Year'').

RMB Million

For the year ended 31 December

2021

2020

Change

Revenue

2,359.8

1,181.6

+99.7%

Revenue from value-added services

2,062.4

657.5

+213.7%

Adjusted net profit

309.0

154.9

+99.5%

Percentage of R&D staff

61%

43%

+18 p.p.

Selling and marketing expenses

21%

41%

-20 p.p.

2021 was a fruitful year for Newborn Town. The Group continued its focus on the globalized social networking business and actively enhanced its product matrix. By launching its "Touched in 10 Seconds" product,Yumy,and extending the reach of the popular applications in MICO and YoHo,the Group expanded beyond the MENA and South Asian market,where it has long laid solid business foundations. Through the expansion into the mature markets of Europe and North America,the Group captured greater user value,which resulted in the exponential growth of revenue from value-added services. By the end of 2021,the Group's social products received over 344 million downloads. The number of monthly active users (MAUs) hit a record-breaking 21.79 million in December,representing a growth of nearly 100% over the average MAU of 2020,which helped push the Group to the next level.

During the Year,total revenue grew by 99.7% YoY to reach RMB2,359.8 million (2020: RMB1,181.6 million). Revenue from value-added services grew by 213.7% YoY,reaching RMB2,062.4 million (2020: RMB657.5 million),and continued to be the largest revenue contributor (87.4%). Leveraging on its growing business scale,the Group developed a mature and replicable operating system which significantly reduced the sales and marketing expenses to 21.4% of total revenue (2020: 40.9%),thus achieved an improved operating margin. The adjusted net profit of the Year was RMB309.0 million,representing a YoY increase of 99.5%.

The Group puts R&D,innovation,and operating efficiency as its top priorities. By forging a replicable business model and expanding localized operating teams across the globe,the Group possessed the ability to accurately capture the needs of users and boost their spendings on social products through its matrix of popular social applications. During the Year,the Group achieved the following:

Hero social networking products shined as the number of MAU hit 21.79 million

During the Year,Newborn Town strived to further tap into the field of open social networking. In addition to promoting its hero product to more markets,the Group also launched new products to expand its product matrix,and the products had made it to top of the charts in multiple countries.

MICO - The open social networking product: Achieved a big breakthrough in North American market as revenue tripled as compared to the previous year. MICO has been staying on the US Top 20 best-selling social Apps list,and the US has become the second largest revenue contributor. MICO has also entered the Top 10 best-selling social Apps lists of Canada,UK,Italy,and tens of countries in Europe and North America.

Yumy – The video social networking product: The Group's self-developed product with over 50 million downloads in the world,entering the Top 10 best-selling social Apps lists in 48 countries and regions.

YoHo – The audio social networking product: Revenue achieved a YoY growth of 120%. Notably,revenue contributed by Turkey grew by over 300% during the Year. The profitability of YoHo enhanced further as it entered the Top 10 best-selling social Apps lists of France,the US,and many other countries in the West.

Strengthened R&D capabilities to create replicable success

The R&D team has continued to consolidate the key aspects such as operation,algorithm and big data to significantly raise the accuracy of user analytics. During the Year,R&D expenses amounted to RMB131 million,representing a YoY increase of 123.6%. The number of R&D staff increased from 181 to 2020 to 337 in 2021,and now account for 61% of the Group (2020: 43%).

The results of R&D were remarkable. For instance,Yumy released 37 updates since its launch,during which the product has been tirelessly improved based on the paying ability of users,as well as the findings of life-cycle analyses of the product. Such efforts led to successful promotion over the potential markets with high-return,and were the keys for hitting over 50 million downloads in a short period of time.

To improve user retention rate,conversion ratio and average revenue per user (ARPU),the R&D team has also been introducing new functions to the social applications. YoHo's "customized gifts" perk is a great example. By allowing users to create unique effects of the gifts they send to friends or their favorite content creators,the entire chat room could share the users' joy and love for others.

Further invested in refinedgames and metaverse for diversified development

The Group will carry on with the strategy of refined games. By developing medium and hard-core games and extending the life cycle of the products,the Group seeks greater synergies between social networking and gaming products. Currently,Solar Creator,the Group's self-proprietary intelligent game development framework,can cater to the development needs of the gaming business. By combining its technical strengths in the field of AI,the Group seeks to lower the development costs and improve R&D efficiency.

With the rise of metaverse,the Group has been actively introducing metaverse-related content to its social networking products. In November 2021,the Group included the metaverse feature known as Meta Town in Yumy,and will introduce multiple virtual scenarios and other elements of the metaverse. Yumy could become the world's first to feature metaverse scenarios. Recently,the Group launched the world's first video social networking digital collectibles.

Mr. LIU Chunhe,Founder and Chairman of the Board of Newborn Town Inc.commented,"Moving forward,we will continue our focus on going global. In 2021,our overall strategy was to prioritize scale and growth. For 2022,we will emphasize on profitability as we grow further. We will improve the business model of our social networking products and put more efforts on product development and localized operations. Through improved promotion and marketing efforts,our refined games and other innovative businesses will also embrace growth."

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