August 26, 2020 (Hong Kong) – Meitu, Inc. (“Meitu” or the “Company”), today announced its unaudited consolidated results for the six months ended June 30, 2020. Highlights for the period are as follows:

-Growth momentum of revenue accelerated. Revenue increased by 20.1% year over year to RMB557.5 million. Although the novel coronavirus (“COVID-19”) pandemic has impacted advertising revenue, such effect was offset by the growth in premium subscription business.

-Gross profit grew 15.5% year over year to RMB355.7 million. Gross margin was 63.8%, decreased slightly by 2.6 percentage points year over year.

-Total monthly active users across all Apps was 295.4 million in June 2020, increased by 4.6% compared with the end of 2019. In addition, user engagement of social App Meitu continued to increase, the average daily time spent of the social users grew from 13.6 minutes in the second half of 2019 to 15.4 minutes in the first half of 2020.

-Adjusted net profit attributable to owners of the Company was RMB24.9 million, maintaining a profitable trend since the fourth quarter of 2019.

Premium subscription services and in-App purchase recorded strong growth; marketing value of online advertising continued to increase

In the first half of 2020, the Company remained focused on laying the foundation for its vision of “empowering the beauty industry and making beauty more accessible to our users”. COVID-19 has spread around the globe, which caused different levels of impacts on the Company and created both opportunities and challenges to the Company. During the period, the Company continued to upgrade its strategy and adjusted the way it presents revenue, which aligns with its key business focus. In the first half of 2020, the Company generates revenues from (i) online advertising; (ii) premium subscription services and in-App purchases; (iii) Internet value-added services and (v) others.

Online Advertising

Revenue from online advertising was RMB318.5 million, representing a decrease of 12.1% year over year and 57.1% of total revenue, primarily due to the negative impact from the COVID-19 outbreak. Such impact is particularly pronounced during the first quarter, however, as the epidemic was gradually contained in Mainland China, advertising revenue started to pick up in February. In addition, revenue from overseas markets fluctuated in April, but started to stabilize afterwards. Meanwhile, the Indian government has banned 59 Chinese mobile apps including Meitu’s products in July, which may adversely impact the Company’s future revenue growth in the market, however, impact on Meitu’s overseas revenue due to the ban was minimal. In light of the global pandemic and uncertain political and economic outlook, we noticed that advertisers have applied a more prudent approach and adopted higher requirements when selecting advertising platforms. In the long run, the Company remains confident in the marketing value of its online advertising business.

In fact, before the COVID-19 pandemic, the Company has been able to increase ads fill-rate and acquire new customers for a number of consecutive quarters, leveraging on its enhanced advertising capabilities, refined unique beauty-related proposition and optimized auction algorithm. Meitu continued to enhance its strength and took advantage of the shelter-in-place period to: i) promote user page views and increase advertising inventories by establishing an influencer ecosystem surrounding its social Apps; ii) introduce new advertising products in order to enhance advertisers’ abilities to engage with their audience. As such, when the economy recovers, Meitu will be able to capture advertisers’ budgets with its strong position.

Premium subscription services and in-App purchases

In the first half of 2020, revenue from premium subscription services and in-App purchases remained a strong growth momentum. Revenue from the business was RMB84.1 million, representing a significant increase of 209.2% year over year and 15.1% of total revenue. This business recorded a double-digit growth in the second quarter of 2020 as compared with the first quarter of 2020, thanks to the Company’s effective user acquisition and improved monthly subscriber retention rate. In addition, the Company upgraded its backend system during the period to better evaluate and estimate the return on investment (“ROI”) of user acquisition for the business. As a result, the Company was able to identify and increase investment in regions and campaigns that could generate positive ROI, in order to drive further business growth.

Internet value-added services (“IVAS”) and others

IVAS primarily consist of a variety of mobile value-added services offerings. For example, Meitu leverages its platform and user base to promote mobile entertainment and related services, such as casual mobile games, online literatures, musical and video services for third-party partners, and shares revenues. In the first half of 2020, the Company improved its click-through rate and conversion rate through an optimized user experience and more accurate recommendation. Revenue from IVAS was RMB21.3 million, representing an increase of 37.3% year over year and 3.8% of total revenue.

“Others” business includes the businesses that are currently in incubation and other few traditional businesses. In the first half of 2020, revenue from others was RMB133.5 million, representing a year over year increase of 126.2% and 24.0% of total revenue.

Created quality content with the concept of beauty at its core; enhanced positioning of its social apps

In the first half of 2020, Meitu’s business division engages in AI skin analysis and beauty-related solutions, entered into a strategic cooperation with Christian Dior in the PRC. Users in the PRC of the Meitu App are able to analyse their skin condition through a selfie and receive Christian Dior skincare products recommendation based on their results.

Meanwhile, in order to reinforce the beauty-related positioning of Meitu App by adding more beauty-related content, the Company launched the Influencer Marketing Solutions (“IMS”) business in the first half of 2020. The IMS business aims to provide clients with influencers (including key opinion leaders (KOL) / key opinion consumers (KOC)) social advertising and marketing services across multiple social platforms. Leveraging Meitu’s extensive user resources, as well as its leading advantages in the image and short-video content creation market. The IMS business also provides services including recruiting, training, content production support, quality control and service settlement. The Company believes that this business will provide monetization opportunities for both Meitu and its influencers, and will promote the production and creation of quality content on the Meitu platform.

On the product side, the Company also launched new features to lower production thresholds and to facilitate content creation. For example, “Derivatives”, a tool for users to obtain the filters used in photos and videos on the Meitu platform, and  apply them on  their own photos and videos.

The Company conducted a number of testing in the e-commerce live streaming area in the first half of 2020 and expects to conduct more in the second half of 2020. The Company believes that this service will complement its strategy as more users tend to buy beauty products through live-streaming.

Second half of 2020 will be filled with opportunities and challenges; cautiously optimistic about remaining profitable for 2020 full year

Looking ahead, the Company expects revenue to grow continuously, driven mostly by the new IMS and premium subscription services and in-App purchases businesses. However, development trend and outlook of the advertising industry remain uncertain as affected by the global pandemic.

Meitu’s Chief Financial Officer Gary Ngan said, “In the first half of 2020, COVID-19 has clearly impacted the global economy negatively, and its outlook remains uncertain. However, the pandemic has also created opportunities for us which we have seized to lay a solid foundation for achieving the vision of 'empowering the beauty industry and making beauty more accessible to our users’. While we are cautiously optimistic about remaining profitable for the full year of 2020, we notice that the fluctuations in our revenue may affect such outlook. Those fluctuations may be inevitable amidst the pandemic and in the uncertain global market environment. We will continue to be vigilant and flexible, and strive to create long-term value for our shareholders.”

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