Flowing Cloud Technology Ltd. released its 2025 annual results, showing a sharp deterioration in profitability despite ongoing expansion in new business lines.
Financial Performance • Revenue fell 21.2% year-on-year to RMB783.90 million, driven by weaker demand for AR/VR marketing solutions and content production. • Gross profit decreased 23.9% to RMB152.32 million; group gross margin slipped to 19.4% (2024: 20.1%). • Net loss widened to RMB365.62 million (2024: RMB43.70 million) after a RMB117.47 million impairment on trade receivables, a 50.3% jump in selling expenses, and a near-tripling of R&D spending. • Basic loss per share expanded to RMB3.43 from RMB0.48. • No dividend was proposed.
Segment Highlights • AR/VR marketing services remained the largest revenue contributor at RMB487.38 million (-15.0%), as domestic advertising budgets contracted and average spend per client fell 25.6%. • AR, VR & AI content revenue slipped 10.5% to RMB189.11 million, with margin pressure from higher production costs. • Platform services revenue surged to RMB57.69 million (+1,803.5%) on new telecom contracts, though margin was only 3.5%. • Live promotion services, launched in 2025, added RMB17.76 million at a 24.6% margin. • Integrated marketing collapsed 90.6% to RMB16.83 million following a strategic scale-back; AR/VR SaaS revenue dropped 63.6% to RMB8.07 million.
Cost Structure • Cost of revenue declined 20.6% to RMB631.59 million; traffic acquisition remained the largest component at RMB430.83 million, or 68.2% of total cost. • R&D expenses rose to RMB229.79 million, reflecting investment in AI-generated 3D content and motion-capture technology. • Selling and distribution expenses climbed to RMB132.46 million due to higher promotion outlays, while administrative expenses fell 32.5% to RMB34.60 million.
Balance Sheet and Liquidity • Trade receivables increased to RMB695.04 million with an ECL allowance of RMB174.70 million; receivables over one year represented 26.4% of the total. • Prepayments fell to RMB635.01 million after utilization of advertising-traffic advances. • Cash and bank balances stood at RMB62.02 million (2024: RMB162.42 million); short-term borrowings rose to RMB113.00 million. • The company remained in a net cash position, so no gearing ratio was reported.
Operational Outlook Management will prioritise: 1. Deeper integration of AI and XR to raise AIGC efficiency and lower 3D content costs. 2. Commercialisation of digital humans and digital assets to tap China’s expanding digital-economy opportunities.
Corporate Actions • Two share placings in 2025 raised a combined HK$146.15 million for R&D, sales expansion, and working capital. • A 1-for-20 share consolidation became effective on 5 December 2025. • No material acquisitions; the company cut its stake in Hebei Yichen Industrial Group to 1.16% post-period.
Annual General Meeting The AGM is scheduled for 9 June 2026; the register of members closes from 4 June to 9 June 2026.