Corporate Presentation October 2018
Disclaimer This presentation is prepared by NetDragon Websoft Holdings Limited (the “Company”) solely for information purposes and is not to be construed as a solicitation of an offer to buy or sell any securities of the Company in any jurisdiction. Information is given in summary form and does not purport to be complete. This presentation is prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. In this connection, information in this presentation is not investment advice and is not intended to be used as a basis for making an investment decision. This presentation may contain forward-looking statements that are based on current expectations of the Company’s management about future events and past performance. These expectations are, however, subject to known and unknown risks, uncertainties and assumptions, many of which are outside the control of the Company, and may involve significant elements of subjective judgment and assumptions as to future events that may or may not be correct. Past performance is no guarantee of future performance. Therefore, there is no assurance that actual results or performance will not differ materially from future results or performance expressed or implied by the forward-looking statements. Information in this presentation is made only as at the date of this presentation unless otherwise stated and subject to change without notice. None of the Company’s directors, employees or agents undertakes any obligation to correct or update information in this presentation as a result of new information, future events or otherwise. 2
Pioneer in Building Online Communities 2007 1999 2014 IPO in HK Founded by Group Acquired 2015 Chairman Liu Dejian cherrypicks Acquired 2018 2017 ChiVox Acquired Edmodo Acquired JumpStart 2013 2015 Sold 91 to 2017 2003 Acquired Promethean Baidu for Included in Sold 17173.com to US$1.9B Hang Seng Sohu for US$20.5M 2016 Composite Large JV with ARHT Cap & Mid Cap Index 3
Building Global Online Communities • User Acquisition Track Record : Largest 3rd party smartphone appstore 91 Wireless with 200M+ users Expertise in Online Communities • Strong Monetization : 300M+ gamers, recorded over RMB1,600M of gaming revenue in 2017 Cutting-Edge • Developed and applied innovative VR, AR, AI, big data and speech Technologies assessment technologies to gaming and education businesses • Globalized team of 6,000+ headcounts, with >60% R&D staff • Significant presence in China (Fuzhou, HK) and the US (Silicon Valley, Seattle, Global Team Los Angeles) with 10+ regional offices in countries including UK, India, Germany, Canada and Thailand 4
Synergy between Gaming & Education Community Building Big Data Technology Application MAU ARPU Understand Drive Gamer Gaming Data Analytics Gamer Patterns Engagement 9M RMB585 VR Countries 180 Optimize Increase Gamer AI AR Gaming Conversion Experience Understand Students’ Drive Student Data Analytics Interests, Engagement Education Speech Strengths & Big MAU ARPU Weaknesses Data 5M TBD Increase Learning Provide Countries Efficiency & Personalized 200 Experience Learning 5
Education
Snapshot of Key Metrics: Coverage 1.3M 190+ 50K+ Classrooms Countries Schools 10M 640K 2M+ Teachers Installed Base Students taught by Teachers WAU Estimated Teachers WAU (In China – our 101 Edu PPT (In Overseas – our ActivInspire (In Overseas – our ActivInspire lesson delivery software) lesson delivery software)* lesson delivery software)* 7 * Estimated weekly active teachers using our ActivInspire lesson delivery software based on a third party survey conducted by Hanover Research in May 2018 (estimated with 95% confidence level)
Snapshot of Key Metrics: Usage 90M+ 5M+ 1M+ Registered Users MAU DAU 650M+ 129 618M+ Learning resources Learning resources created and created and shared shared per minute 8
Our Complete Product Ecosystem Teacher- Lesson Lesson Resources Student-Parent Content Homework Preparation Delivery Sharing Communica- Marketplace tions 9
Our Three-Pronged Strategy Monetize Continue our Users with market leadership Internet in front-of-class hardware as Services gateway to gain Engage users with users killer offerings that empower them to connect, share and socialize in a learning context 10
Our Three-Pronged Strategy – First… Continue our market leadership in front-of-class hardware as gateway to gain users 11
Interactive Display Systems Our front-of-class interactive display panels for classrooms, together with our software, connects teachers and students into a new world of learning. 12
Global Leader in K-12 Interactive Technologies* • Revenue +57% YoY to US$196M in 1H18 • Gross margin ~30% • Operating margin ~7-8% • Market share (ex China) 34% in 1H18 #1 EMEA #1 USA *Source: Futuresource Consulting 13
Hardware as gateway to users creates significant entry barrier Hardware aggregates traffic and is a gateway to bring users online • Teachers and students are naturally our users upon hardware installation • 1.3 million classrooms with our interactive display systems installed • Long useful life varying from 5 to 12 years Captive environment with ultra long usage time • Classroom being a captive environment where students spent greater than 7 hours a day • Higher usage time than WhatsApp, Snapchat, Instagram, WeChat and almost all other popular social platforms Selling hardware into classrooms enables us to get insights in classroom engagement • Pioneer in interactive classrooms since 1999 • Enables us to gain insights into classroom engagement • With 20 years of experience in enabling interactive classrooms, nobody understands classroom engagement more than us 14
Sizable Untapped Market Opportunity Promethean Other Brands 3% 26% Developed Emerging Total Countries Countries Penetration % 67 - 92% 12-24% Classroom Total Classrooms 3M 40M 43M Penetration Classrooms with 2.4M 7.2M 9.6M Interactive Display % that remains 8 - 33% 76 - 88% unpenetrated Classroom without Interactive Displays Source: Futuresource Consulting 71% 15
Our Three-Pronged Strategy – Second… Engage users with killer offerings that empower them to connect, share and socialize in a learning context 16
Killer Offering #1 Interactive Lesson Preparation & Delivery Our interactive lesson preparation and delivery software offerings empower teachers to turn classroom into a highly engaged learning platform in a learning context because of the intensity of collaboration and sharing within the classroom using our software Our current user base: Overseas – an estimated 640K* teachers-WAU using ActivInspire, our lesson delivery software, covering approx. 10M students; 70% of these 640K teachers use our software at least 4 times a week* China – 2M+ installed base teachers for our flagship platform 101 Education PPT * Estimated weekly active teachers using our ActivInspire lesson delivery software based on a third 17 party survey conducted by Hanover Research in May 2018 (estimated with 95% confidence level)
Killer Offerings #2 and #3 Connect & Share; Homework & Assignments 1+ Billion Messages Connect & Communicate Share & Discover Homework & Assignment 7+ Million Quizzes 650+ Million Shared 100+ Million Quiz Answers Assets & Resources 20+ Million Assignments 18
Killer Offerings #4 and #5 (launching soon) Killer offering #4 – Machine Learning Killer offering #5 – Student-to-Student Chat Recommendation • To provide students with a coherent learning experience by enabling them to do homework, share and communicate with • Beta-launched AskMo – Free/Paid resource recommendations to each other all in one platform teachers & students • • Target to launch in 2H18 In the stream, tailored to the conversations Tutoring • Partnership with IBM Watson Education for AI-based Micro- Tutoring • Scalable lead-gen for 1-to-1 tutoring 19
Our Three-Pronged Strategy – Third… Monetize Users with Internet Services 20
Current Monetization – Advertising • Scale next year with new advertising models • E.g. US Army, FDA that are more than just CPM-based sales • Focus on a few large segments: Higher Education, Consumer Products (CPG), Entertainment 21
Future Monetization – Recurring Subscription Model Stay Tuned… Tutoring Machine Learning 22
Gaming
Gaming Business Snapshot RMB585 9 Million MAU Monthly ARPU 180 Countries 24
Eudemons Online Member of 10 Billion Club • One of the most legendary MMORPG in China • Accumulated gross revenue of over RMB10 billion • 5 months of monthly gross billings over RMB100 million during 1H18 • Accumulated more than 200 million gamers 25
Heroes Evolved 6 Million+ MAU • Top #2 MOBA mobile game in China • Registered users > 150M • Mobile MAU 4M • Multiple eSports events hosted by Information Centre of General Administration of Sports of China in 1H18 26
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