Meitu releases 2020 annual results: Full-year of profit achieved for the first time since it was founded, with adjusted net profit of RMB 60.9 million2021-03-25
Meitu released its 2020 annual results on March 25th, 2021, which showed continuing operations revenue in 2020 grew 22% year-over-year to RMB 1.194 billion and gross profit increased by 13.5% year-over-year to RMB 793.9 million.
Meitu generated an adjusted net profit of RMB 60.9 million from continuing operations attributable to owners of the company. It’s Meitu’s first time to achieve a full-year of profit in its history.
In the second half of 2020, the company's operations were stable and positive, achieving total revenue of RMB 637 million, an increase of 14.2% from the first half of the year; net profit for the second half of 2020 was RMB 36 million, an increase of 44.6% from the first half of the year.
Revenue grew 22.1% year-over-year, achieving a full-year of profit
Revenue in 2020 grew 22.1% year-over-year to RMB 1.194 billion, driven by rapid growth in revenue from premium subscription services and in-app purchases.
Notably, the proportion in total revenue from non-online advertising continued to increase in 2020, rising to 43.0% from 23.2% year-over-year, among which revenue from premium subscriptions and in-app purchases rapidly grew by 140.1% year-over-year to RMB 206.5 million, with the proportion in total revenue rising to 17.3% from 8.8% year-over-year. Revenue from other business grew by 177.1% to RMB 261.6 million, with the proportion rising from 9.7% to 21.9% year-over-year. This is strong evidence that Meitu’s new monetization models are showing early success as Meitu enters a positive cycle in revenue growth.
Thanks to the new business models responsible for growth in both revenues and gross, Meitu generated an adjusted net profit of RMB 60.9 million attributable to owners of the company, achieving the first full-year of profit since the company was founded.
Healthier revenue structure, new businesses growth generated
Meitu’s 2020 annual results showed that revenue from online advertising grew to RMB 680.7 million. The number of advertisers on the platform continued to grow year-over-year, and Meitu achieved significant revenue growth from non-cosmetic key account clients in industries such as e-commerce, apparel, and food and beverage.
Revenues from premium subscription services and in-app purchases increased to RMB 206.5 million from RMB 85.987 million in 2019, maintaining a long-term rapid growth trend. Meitu rolled out this monetization model initially on their overseas image editing apps, AirBrush and BeautyPlus. After receiving initial success, Meitu replicated the new monetization model to their flagship Chinese apps, the Meitu App and BeautyCam, at the end of 2020. In December 2020, Meitu had more than 1.7 million active paying subscribers across these apps.
Other business revenue rapidly increased to RMB 261.6 million from RMB 94.395 million in 2019. Among them, the KOL and KOC Influencer Marketing Solutions (IMS) business made up 71.1% of revenue, contributing significantly to the total.
Another newly incubated business of Meitu, MeituEve, made a qualitative leap, becoming the second largest revenue line of the Others segment in 2020. MeituEve was incubated in 2019 and focuses on professional grade AI skin analysis and beauty-related SaaS. Its first-generation product was well-received among global skincare brands and beauty salons. Meitu is now researching and developing a second generation product that aims to provide more stable and precise analysis to cover the needs of medical beauty institutions.
Meitu's revenue structure has become much healthier. While its original online advertising business is growing steadily, premium subscription services have become the second strongest sector of growth, with the third sector being fueled by Meitu’s new businesses that have gradually become a new conduit of substantial growth in revenue.
Connecting PGC and UGC, new breakthroughs in the self-owned content ecology
The Meitu App reached a historical peak of over 31 million active users during the 2021 Lunar New Year holiday, 13% higher than the peak achieved in 2020. Successful implementation of the “Meitu Templates” feature was the main driver of active user growth, with the feature representing a new breakthrough in Meitu's self-owned content ecology.
With the "Meitu Templates" feature, users can skip the step-by-step image editing process by quickly applying templates and sharing the results on social media. This feature fits perfectly with the positioning of the Meitu App as an image beautification app, and has promoted an increase in social media engagement on the platform. Meitu’s data shows that on Lunar New Year's Eve more than 120 million images were saved using the Meitu App, with the amount of "Meitu Templates" saves showing an increase of 9 times higher than average, while the total number of the Meitu App community users showed an increase of 98% year-on-year.
In addition, Meitu launched the Meitu Creator Platform (MCP) in 2020. With the new platform, the Meitu App can now support itself with the Professional Generated Content (PGC) produced through the Meitu Creator Platform and the User Generated Content (UGC) produced through its Templates feature, creating a content system that includes professional creators, designers, users, and brands, and transforming the app from a single image editing tool to a platform that can generate beauty-related content and lead the overall development of aesthetics.
Thanks to new breakthroughs in their content ecosystem, the Meitu App's user engagement level continues to rise. The average daily usage time of social users increased from 13.6 minutes in the second half of 2019 to 16.1 minutes in the second half of 2020.
Further empowering the beauty industry by launching SaaS services
Meitu’s vision is “to empower the beauty industry and make beauty more accessible to our users”. To this end, Meitu are launching software-as-a-service (“SaaS”) solutions to empower the beauty industry, and in particular, cosmetic and skincare brands and medical aesthetics providers. Meitu has identified three areas which they believe they have the ability to add value for the industry, namely, artificial intelligence (“AI”) technology, marketing and customer reach, and supply chain management.
Powered by MeituEve ’s proprietary AI algorithms, MeituEve ’s products are able to accurately identify one’s skin quality and condition, and recommend skincare solutions to users. In turn, this technology helps clients obtain more customer insights and ultimately increase sales.
Currently, MeituEve ’s flagship panoramic skin analyzer has been deployed in over 200 cities globally and MeituEve has entered into strategic cooperation agreements with top global brands, including Christian Dior and Shiseido.
Marketing and Customer Reach
With a significant userbase and rich KOL & KOC content marketing solutions, it’s no surprise that Meitu is able to provide advertisers with social advertising and marketing services across multiple social media platforms. In early 2021, Meitu also built a team specifically focused on enabling the medical aesthetic industry to reach potential customers and drive sales.
Supply Chain Management
One of Meitu’s joint-venture companies, Meidd, is currently providing Enterprise Resource Planning (“ERP”) and Customer Relationship Management (“CRM”) solutions for over 10,000 cosmetic stores in China. Building on that, it has recently also expanded into providing supply chain SaaS services for its clients.
As an outlook for 2021, with premium subscription services and in-app purchases business continuing to ramp up, Meitu expects revenues to continue to grow. Meitu will continue to explore and develop its "beauty strategy" and work with its partners to integrate the beauty ecosystem and provide more diverse products and services to help users become more beautiful in all aspects.
As Gary Ngan, Meitu’s Chief Financial Officer, recently stated, “We made active strategic upgrades in 2020, improved our business structure, and achieved the first full-year of profit since the company was founded. In the future, we will seize the opportunities brought by SaaS to serve the beauty industry in all aspects so we can continue to create long-term value for our shareholders”.