Newborn Town Inc. (9911.HK) revenue grew by 40.8% YoY to RMB 389.7 million and gross margin reached 67.1% in FY2019.

HONG KONG,March 31,2020 --Newborn Town Inc.(HKG: 9911),a fast-growing mobile applications developer and mobile advertising platform services provider in China,is pleased to announce the audited consolidated results of the Company and its subsidiaries (collectively the ''Group'') for the year ended 31 December 2019 (the ''Year'').

Strategically constructing a global traffic ecosystem with unlimited monetisation

During the Year,Newborn Town has leveraged on its self-developed Solo X product matrix targeting at the mobile users (Customer,C-end),and the advertising platform targeting at the businesses (Business,B-end) to accumulate a large group of users persistently. It has strategically aim at constructing a global traffic ecosystem with unlimited monetisation,and made a number of outstanding achievements in terms of financials and operations.

Financial Highlights for FY2019

During the Year,the Group's revenue was mainly contributed by three segments,namely,(I) Proprietary app traffic monetisation business,(II) Mobile advertising platform and related business and Value-added service (In-app purchase under Proprietary app traffic monetisation business). These segments contributed 59.5%,37.5% and 3.0%of the total revenue respectively.(2018: 32.7%,66.4%and 0.9%respectively).

Total revenue reached approximately RMB 389.7million(2018: RMB 276.7million),gross profit was approximately RMB261.5million (2018: RMB141.4million),profit for the year increased by 14.5%year-on-year to RMB68.4million (2018: approximately RMB 59.7million),adjusted net profit was approximatelyRMB109.4million(2018: RMB60.0million),with year-on-year increase of 82.3%.

Gross margin increased by 16p.p. to 67.1%,primarily because the gross profit of our proprietary app traffic monetisation business,which records a much higher gross profit margin than our mobile advertising platform business,accounted for a higher proportion of our total gross profit. Net profit margin was 17.6%. Adjusted net profit margin excluding the influence from items such as share-based compensation expense,listing expense,Interest income from the application monies locked-up during the initial public offering was 28.1%.

Operation Highlights for FY2019

Expanding traffic ecosystem creating an outstanding platform effect with continuous increase in users and traffic on advertising platform. Total number of users of the Solo X product matrix increased from 670 million in 2018 to 967 million in 2019. Among them,the total users of game products and daily active users recorded a respective year-on-year increase of 275.6% and 198.5%. Solo Math programmatic advertising platform has reached an average of 281 million mobile devices per day. In 2019,we served 200,000 advertisers and integrated 1.82 million publishers. Our global traffic ecosystem was based on the combination of Solo X product matrix and the advertising platform,together with the continuous advancement of the Solo Aware AI engine,to create synergy effect at B-end and C-end,thus achieving growth in revenue and profit.

Significant growth of product matrix enhanced proprietary traffic value. The depth ofNewborn Town's proprietary traffic pool has continued to ramp up,enhancing the traffic value and increasing the monetisation efficiency by 110.25% year-on-year. During the Year,we have achieved considerable progress in multiple segments,such as the multiplayer battle game Beetles.io squeezed into top 10 games in terms of daily downloads in Google Play over 17 countries and regions. The archery themed game Archery Go topped the App Store download list and game download list in 6 and 14 countries respectively.

Enhancement in programmatic technologies of advertising platform. During the Year,Solo Math has been basically converted into a programmatic platform. With steady development of the programmatic advertising business,the respective revenue of programmatic advertising as a percentage of our total revenue generated by mobile advertising platform has increased to 99.9% (2018: 94.1%). The Group has also been actively implementing the industry norms by improving the credibility of traffic and transparency of the traffic supply chain.

Continuous upgrade of Solo Aware AI engine. Withenlarged user scale of Solo X and accumulated user behaviour data,Solo Aware's tag database is gradually diversified and developing in-depth machine learning to make fast and targeted responses to users' behavior,thus providing global users with customized experience.

Chairman's quote

Chairman of Newborn Town Inc.,Mr. Liu Chunhe said,'In the end of 2019,Newborn Town has been listed on the Main Board of the Hong Kong Stock Exchange to grasp a variety of business opportunities. We are under rapid development and constructing the "Newborn Town mobile ecosystem",which consisted of a diversified,targeted mobile applications,and the fast-growing AI-supported advertising platform,Solo Math,in order to gather huge traffic and unleash the values of the users. Currently,our products serve almost 1 billion users in the world,covering over 200 countries and regions. In the future,we will further explore other mobile applications,such as games and social networking applications,as well as increasing the investment in the domestic market to achieve a larger scale global traffic ecosystem and long term,sustainable growth for the Group.'Development strategies in FY2020Implementing the 'Traffic+' strategy. Newborn Town expected that the growing number of global mobile internet users and further advancement of internet infrastructure will bring huge opportunities for the internet companies in exploring the overseas markets. Developers' demand on acquisition of overseas users will increase along with the advertising budgets. The Group will implement the 'Traffic+' strategy,including strengthening the product portfolio and improving the technology to expand the global traffic ecosystem,increase the ways of monetization and hence achieve rapid growth. Such strategies include the followings,Proprietary products will promote the expansion of traffic ecosystem. The Group will continue to dedicate to R&D and upgrades of products,focus on developing content-based products,creating high-frequency,high-stickiness and long-duration products in view of enhancing monetisation efficiency and gaining higher gross profit margin. As such,we will firstly deploy 'Traffic + Games' and 'Traffic + Social Networking' and intend to create large-scale,popular,diversified,and synergetic product matrix in these two segments.The efficiency of AI and middle platform will continue to improve. The Group will continue to devote to the R&D and application of AI technology,such as providing different game content and scene settings for game players based on their historical operation data,and will keep upgrading the AI technology and middle platform to draw up an efficient and standardised process in matrix R&D,data testing,rapid screening and resource reconfiguration,thereby greatly enhancing the overall work efficiencyAbout Newborn Town Inc.Newborn Town Inc. is a fast-growing high technology company in China,which operates a global AI information distribution platform,develop mobile applications and provide mobile advertising platform services. As at 31 December 2019,the services have covered over 200 countries and regions,with the total number of users reaching 967 million.