Perfect World Q1 2010 Profit Up 42% YoY
Perfect World PR, 5/17/10
Chinese online game developer and operator Perfect World (Nasdaq: PWRD) has announced its unaudited financial results for the first quarter ended March 31, 2010, with total revenues up 47% YoY and 2% QoQ to reach RMB 625 mln (USD 91.6 mln).
Net income attributable to shareholders was RMB 305.2 mln (USD 44.7 mln), up 41.6% YoY and 12.7% QoQ.
Online game operation revenues were RMB 569.7 mln (USD 83.5 mln) up 51.0% YoY and 5.2% QoQ. The sequential growth in online game operation revenues was primarily attributable to the continued popularity of some of Perfect World's existing games and a series of successful in-game promotions and marketing activities.
Overseas licensing revenues were RMB 53.4 mln (USD 7.8 mln) in Q1 2010, up 11.3% YoY and down 13.5% QoQ. The decrease from the fourth quarter of 2009 was mainly attributed to a decline in usage-based royalty fees due to adverse seasonality in certain overseas markets, and a decrease in initial license fees as Perfect World did not commercially launch any game in overseas markets in Q1 2010.
The aggregate average concurrent users (ACU) for games under operation in mainland China was approximately 993,000 in Q1 2010, up 61.5% YoY and down 14.2% QoQ. Active paying customers (APC) for games operated in mainland China under the item-based revenue model was approximately 1,670,000 in Q1 2010, up 14.1% YoY and down 23.7% QoQ. Average revenue per active paying customer (ARPU) for games operated in mainland China under the item-based revenue model was RMB 306, up 25.4% YoY and 37.2% QoQ. Quarterly decreases in ACU and APC were mainly due to some technical complications that occurred during some major updates on a recently launched new game, as well as the adverse seasonality factors and more aggressive anti-cheating efforts adopted by Perfect World. However, Perfect World still managed to increase ARPU by 37.2% from the fourth quarter through a series of successful promotions.
Film, television and other revenues were RMB 2.0 mln (USD 0.3 mln) in Q1 2010, as compared to nil in Q1 2009 and down 55.6% QoQ.
In May 2010, Perfect World acquired a majority stake in US-based PC game developer Runic Games at the consideration of approximately USD 8.4 mln. Runic Games has a team of experienced developers, including leads on "Diablo," "Diablo II," "Diablo II: Lord of Destruction," "Fate," "Hellgate: London" and "Mythos." Runic Games has developed and released a single-player action-RPG "Torchlight," and is currently developing the MMORPG version of "Torchlight." This strategic investment will allow Perfect World to further enhance its strong R&D capabilities, and leverage Runic Games' creative and professional development team to create global titles through enhanced control and a closer collaboration.
In April 2010, Chengdu Perfect World Network Technology Co., Ltd. ("Chengdu PW Network"), an entity controlled by Perfect World, exercised an option to acquire an additional stake in Ye Net, a web game developer and operator. Following the completion of the transaction, Perfect World's effective equity stake in Ye Net will be increased to 80%. This investment provides Perfect World with enhanced control and greater flexibility in generating synergies between the web game business and Perfect World's core business.
The report also stated that Perfect World established a wholly-owned subsidiary in Europe, but gave no further details.
Based on current operations, total revenues for the second quarter of 2010 are expected to be between RMB 594 mln and RMB 625 mln, representing an increase of 14% to 20% YoY, and a flat to mild decline on a sequential basis.
To see Perfect World's full earnings report, please click here.
Editor's Note: According to Perfect World's investor factsheet, the European subsidiary, Perfect World Europe B.V., was established in January 2010, while in the Q1 2010 earnings call CEO Michael Chi said it was registered in Amsterdam and will begin operations in Q3 2010.
Keywords: Ye Net guidance Perfect World ARPU Internet profit revenue Runic Games ACU APC PWRD Q1 2010 online gaming fiscal report M&A overseas Perfect World Europe single-player game Torchlight
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