BabyTree Reports Financial Results for the Full Year 2018
BabyTree Reports Financial Results for the Full Year 2018
  • Roberta Chan
  • 승인 2019.03.28 02:17
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MAU reach 144.1 million in 2018
Achieves total revenues of RMB760.1 million in 2018
Adjusted net profit increases by 29.7% to RMB201.2 million in 2018

HONG KONG, March 27, 2019 -- BabyTree Group ("BabyTree" or the "Company", stock code: 1761.HK), the largest and most active maternity and child-focused (M&C) community platform in China, today announced its audited financial results for the full year ended December 31, 2018.

Full Year 2018 Highlights

  • Total online user base increased to an average 144.1 million total monthly active users (MAU) in 2018 from 139.0 million in 2017. Mobile users (including both WAP and mobile apps) constituted 61.5% of the overall user base in 2018. Average total MAUs on mobile apps increased to 22.7 million in 2018 from 16.8 million in 2017, representing growth of 35.1% year-over-year. Notably, in the fourth quarter of 2018, average MAUs on mobile reached 135.9 million and our average MAUs on mobile apps reached 32.1 million.
  • Total revenue increased to RMB 760.1 million for the year ended December 31, 2018 from RMB 729.6 million for the year ended December 31, 2017. Notably, revenue from the advertising business increased to RMB 596.2 million for the year ended December 31, 2018 from RMB 372.4 million for the year ended December 31, 2017, representing growth of 60.1% year-over-year.
  • Adjusted net profit for the year was RMB201.2 million in 2018, compared to RMB155.1 million in 2017, representing growth of 29.7% year-over-year.
  • Total cash and cash equivalents and short-term investments were RMB3,039.3 million as of December 31, 2018

"I'm pleased to report a strong set of results for 2018, which was a transformational year for BabyTree," said Huainan Wang, Founder and Chief Executive Officer at BabyTree. "In 2018, we remained dedicated to connecting and serving young families and continued to execute our four-pronged strategy of cementing product leadership through continual innovation and user life cycle extension; improving monetization and revenue diversification; consolidating our market share; and penetrating high growth international markets."

"With our successful listing in Hong Kong and the implementation of a series of initiatives to expand and enhance our products, generate new content and monetize traffic, we are making excellent progress on our mission to 'empower young families to enjoy the beautiful journey of life.' We are excited by the significant opportunities to build stronger M&C communities, both in China and globally, and look forward to creating more value for our users, partners and shareholders in the year ahead," added Mr. Huainan Wang.

Product Optimization and Life Cycle Extension

BabyTree is dedicated to connecting and serving young families and is the largest and most active M&C-focused online community platform in China by MAU. The Company's two primary online portals are Babytree Parenting and WeTime. These two online assets serve the four core needs of M&C users, namely learning, sharing, recording growth and shopping for M&C users.

In 2018, BabyTree continued to optimize its product portfolio by improving functionality and interactivity; and partnering with quality content providers to ensure that its platforms remain the go-to source of M&C-related information online. BabyTree extended the life cycle of users on BabyTree Parenting and WeTime by addressing the needs of older children and mothers in areas such as photo archiving and sharing, family travel, beauty care and career needs for growing families.

BabyTree also invested in two leading platforms in the WeChat ecosystem, BaMaYing and Momself, to extend the Company's user base to a broader age range and reach more family members. BaMaYing focuses on middle-class parents with children aged 2 to 12, and Momself addresses the emotional needs of mothers of all ages both of these WeChat based platforms further lengthen our users' life cycle. These complementary platforms will help to enrich content, strengthen influence in the WeChat ecosystem and enhance the Company's ability to monetize user traffic.

Monetization and Revenue Diversification Initiatives

BabyTree's generates revenues through three business segments – advertising, e-commerce, and content monetization. Total revenue increased to RMB760.1 million for the year ended December 31, 2018 from RMB729.6 million for the year ended December 31, 2017, representing a year-on-year increase of 4.2%. The increase was primarily due to an increase in revenue from advertising, partially offset by a decrease in revenue from e-commerce, as the Company began a strategic shift away from a self-operated e-commerce business to collaboration with Alibaba from the third quarter of 2018.

Revenue from the advertising business increased by 60.1% to RMB 596.2 million in 2018, primarily due to diversification of advertising sources, growth in mobile traffic and strategic cooperation with Alibaba. Advertising revenue from mobile apps continued to be the major source of revenue and accounted for 86.9% of total revenue from the advertising business for the year ended December 31, 2018. We are also pleased to report that revenue from advertising not directly relating to M&C as a percentage of our total revenue from advertising grew to 27.4% in 2018 from 22.8% in 2017. BabyTree will continue to broaden and extend our client base to areas such as auto-manufacturers, cosmetics and other product and services beyond M&C related products and services. Revenue from advertising attributable to Alibaba in 2018 (the first and partial year of our cooperation with Alibaba) was RMB44.9 million, representing 7.5% of the total revenue from advertising. BabyTree expects revenue from advertising attributable to Alibaba to increase in the future as the cooperation with Alibaba deepens.

In the e-commerce business segment, BabyTree formed a strategic partnership with Alibaba in June 2018 implemented a shift in its e-commerce strategy. With this partnership, BabyTree will focus resources on its core competencies of generating high quality content and nurturing a strong community, while leveraging Alibaba's industry-leading e-commerce capabilities to drive growth in this segment. BabyTree has formed a dedicated team to facilitate the integration of the e-commerce systems, which is still ongoing. The Company expects the two systems will be integrated in the second quarter of 2019. The cooperation with Alibaba will reduce back-end operational costs, enhance efficiency and provide users with a better buying experience with broader product selection and lower prices.

Revenue from content monetization increased by 15.9% in 2018. Many of BabyTree's users seek high quality content generated by leading experts and the Company has continued to enhance the quality of content provided. In 2019, BabyTree plans to transform from the single content purchase model into the subscription model in which users can enjoy a well-organized content library in a systematic manner.

Globalization Strategy

An important part of BabyTree's vision is to become a global company by leveraging its expertise in China to address the needs of young families in multiple international markets. In line with this strategy, BabyTree recently invested in Healofy, one of the fastest growing parenting communities in India. With over 20 million new births every year and massive growth in smartphone adoption, there is an incredible opportunity to serve young families in India. Healofy has an impressive portfolio of professionally generated content, video streaming capabilities, and a strong community of Indian mothers, and is well placed to serve this rapidly growing market. BabyTree will continue to look for opportunities to create a global parenting ecosystem through investments in high potential international markets.

Senior Management

BabyTree recently recruited two top talents with extensive experience working in multinational corporations in relevant industries. Mr. Siddharth Mathur was appointed as BabyTree's first Global Head of International Development, marking a significant step towards globalization. Mr. Mathur has significant expertise implementing globalization strategies and direct experience in the UK, the US, India, Singapore and other Southeast Asian countries. The Company also recently appointed Mr. James Chiu as Chief Operating Officer. Mr. Chiu previously held senior executive positions at various leading multinational companies in the healthcare, nutrition and fast-moving consumer goods industries including Abbott and Nestlé.

KEY FINANCIAL DATA

 

Year ended December 31

Year on year
change (%)

 

2018

2017

 
 

RMB '000

RMB '000

 

Revenue

760,103

729,624

4.2%

- Advertising

596,215

372,385

60.1%

- E-commerce

135,301

332,583

(59.3%)

- Direct sales

69,820

174,672

(60.0%)

- Marketplace

65,481

157,911

(58.5%)

- Content monetization

28,587

24,656

15.9%

       

Gross profit

599,450

461,098

30.0%

Gross margin

78.9%

63.2%

24.8%

Profit/(loss) for the year

526,227

(911,138)

N/A

Adjusted net profit (non-IFRS measure)

201,232

155,116

29.7%

For further information about BabyTree's operational and financial results for the full year 2018, please refer to the Annual Results Announcement for the year ended December 31, 2018 on the HKEXnews website (http://www.hkexnews.hk) or the investor relations section of BabyTree's website at ir.babytree.com/en

About BabyTree Group

BabyTree Group ("BabyTree" or the "Company") is a pioneer in developing an online community focused on young families in China. Established in 2007, it has now become the largest and most active M&C-focused community platform in China, with 144 million monthly active users (MAUs) in 2018. BabyTree's community platform offers a comprehensive suite of products and services that serve the four essential needs of China's young families: learning, sharing, recording and shopping. BabyTree's primary platforms include Babytree Parenting, its flagship platform; WeTime, a social recording medium and an online depositary of early education content and tools; and Meitun Mama, an M&C product-focused e-commerce platform.


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