According to the announcement of Feitian Cloud Motion (06610.HK) on August 23, during the period ending on June 30, 2024, the group expects to record (i) a decrease of approximately 25% in revenue compared to the period ending on June 30, 2023; and (ii) a decrease of approximately 45% in net income compared to the period ending on June 30, 2023.
The decrease in revenue and net income during the period is mainly attributed to the following factors: (i) the overall reduction in the budget of internet advertising clients due to the macroeconomic impact, resulting in a decline in revenue from augmented reality and virtual reality (AR/VR) marketing services, as well as a decrease in the gross margin of this business due to increased traffic costs; (ii) although the number of AR/VR content projects has increased, the market competition is fierce, resulting in a decrease in project unit price and gross margin; and (iii) a decline in the number of subscriptions and customized projects for AR/VR software-as-a-service (SaaS) business.