Global Mofy AI Limited (GMM) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Global Mofy AI Limited Fiscal Year 2024 Earnings Conference Call. [Operator Instructions] After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, [indiscernible]. Please go ahead.

Thank you, operator. Welcome, everyone, to Global Mofy's Fiscal Year 2024 Financial Results Conference Call, covering the period between September 30, 2023, and September 30, 2024. Thank you all for joining us on such short notice. My name is [indiscernible], and I am the company's Securities and Affairs representative. Today, I'll be presenting our prepared comments and then followed by a Q&A session with our CTO, Ms. Wenjun Jiang and CFO, Mr. Chen Chen. This past year has been an exciting time of growth and transformation for Global Mofy. We've undertaken significant strategic changes and made remarkable progress since the last fiscal year end result call. During today's presentation we will discuss our performance, financial results and strategic initiatives. Before we begin on this prepared comments, we remind you to review our forward-looking statements disclaimer, which is noted as a forward-looking statements as of today's presentation and the results press release, we issued. These statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated. For detailed information, please refer to our SEC filings. As a reminder today's conference call is being recorded, and a replay will be made available later today on the company's IR website. Financially, Global Mofy delivered record-breaking results with FY 2024, achieving total revenues of $41.4 million, a 53.8% increase compared to the prior year. Our gross profit reached $20.8 million and net income was $12.1 million, reflecting strong operational performance. We maintained a 50.3% gross margin overall, demonstrating the efficiency and scalability of our business model. During the fiscal year, we successfully completed a follow-on offering of $10 million in January 2024, as well as the Private Placement Financing of $2.5 million in October 2024, further strengthening our capital position and ability to invest in growth initiatives. We also expanded our 3D digital assets bank significantly, growing from more than 30,000 assets in FY 2023 to over 100,000 assets as of September 30, 2024. This growth underscores our ongoing commitment to innovation and market leadership. We will cover more detailed information in just a moment. Given we have a lot of new investors on the call today, we thought it would be helpful to take a minute to review our business. At the core Global Mofy is an AI technology-driven technology solutions provider specializing in virtual content production and 3D digital asset development. We collaborate with both upstream and downstream partners in the digital content industry, utilizing advanced artificial intelligence and 3D reconstruction technologies. Our mission is to efficiently create high-precision digital versions of characters, things and props from the physical world, implementing them across various application scenarios with offices in Beijing, Zhejiang and California. We are dedicated to driving the growth and development of the global digital content and entertainment sectors. Since our IPO last October, we have made significant strides in expanding our digital asset bank and enhancing our market presence. According to Frost & Sullivan reports, Global Mofy now ranks among China's leading digital asset bank. Let's quickly review our company road map. In 2024, Global Mofy made significant strides for future growth. First, we launched the Gausspeed Generative AI platform in collaboration with the NVIDIA Omniverse and Heartdub secured $12.5 million in total and financing through strategic initiatives, established a vocational education institute and the $69 million fund with our partners. We also funded our U.S. subsidiary, GMM Discovery LLC to further expand our global footprint. Our strategic transformation is focused on enhancing core competencies and integrating AI technology into traditional processes, enabling more efficient cost-effective solutions for our clients. We remain dedicated to providing high-quality virtual content production and 3D digital asset development solutions. We'll cover these initiatives in greater detail later in the presentation. Global Mofy has received significant recognition for our innovation and contributions to the global digital content industry. Most recently, in 2023, we were honored as a Council members of the Industrial and Information Technology Metaverse development organization and received the most valuable investment Chinese Concept stock awards. And in 2024, we further solidified our position by becoming a member unit of the MIIT Industrial Brand Promotion Organization and receiving the best CEO awards as [ Ninth Street ] Home Finance, Capital Markets Annual Conference and listed company award ceremony. This accolade underscores our commitment to innovation, quality and customer satisfaction are also reflecting the industry's recognition of Global Mofy as the leader in digital concept innovation. Now let's turn to our mission, vision and values, which defines who we are as a company and guide us through everything we do. We aim to empower creativity through the innovative use of AI and digital technology. This mission drives our efforts to push boundaries and redefine what's possible in the digital content industry. Our vision is clear, which is to drive technology advancements while cultivating a culturally rich cooperate environment and our value includes faster innovation encouraging both ideas and groundbreaking solutions. And secondly, we prioritize and exceed customer expectations as always delivering value that goes beyond the ordinary. Finally, our ambition is to build the world's largest digital asset bank, leveraging our extensive and growing collection of high-precision 3D digital assets, we aim to lead a new era of AI-driven digital experiences and set the standard for future of this industry. Let's now move on to the core advantages that set Global Mofy apart from our competitors as we focus on growth and building value for shareholders. One for our most exciting innovations in 2024 was Gausspeed, our Generative-AI video generation platform, developed in collaboration with NVIDIA Omniverse. Gausspeed debuted in 2024 as a flagship R&D product. What sets Gausspeed apart from other Generative AI solution is that it has been developed from the ground up to meet the rigorous demands of industrial grade production. Gausspeed leverages advanced AI technology and trained on a massive digital asset base, which includes over 100,000 high-precision industrial-grade 3D digital assets. This extensive training data sets ensures that Gausspeed can generate visuals that are not only realistic, but also meet the high standards of the film industry. Key features of Gausspeed include professional-grade visual generation, storyboard and shot design, precise preproduction planning and [ editable ] assets, we are confident in Gausspeed's ability to transform the film-making industry, providing a powerful AI-driven tool and intensive creativity and efficiency. As mentioned before, we also have a vast and diverse collection of high-precision 3D digital assets. Our assets cover various categories such as characters, themes and props, spanning multiple domains, including nature, science, fiction, historical errors and architecture. This extensive library is continuously updated to include the latest trends and technologies in digital concentration. Another of our core advantage is our Mofy Lab, which integrates multiple independently developed software systems covering digital concentration, visual effects processing, project management at AI technology applications. These systems demonstrate our leading position in technological innovation and further intense our core competitiveness. Lastly, but not least, let's talk about our proprietary intellectual property bank, which is the cornerstone of Global Mofy success. We own a significant number of proprietary registered IP developed by a highly experienced R&D team, each with over 10 years of industry expertise. Our team is committed to continuous innovation, having at least 10 new IPs each year. As of fiscal year 2024, we have accumulated an impressive total of 45 independent IPs. This growing portfolio reflects our ongoing investments in research and development, ensuring that we stay at the forefront of digital content and technology advancements. Now that you may have a close picture of our strengths, let's briefly review the industry opportunity we face. China is the second largest entertainment and media market globally projected to grow from $226 billion in 2022 to $305 billion in 2027, at a compounded annual growth rate of 6.1%, highlighting significant opportunities. The global 3D models market is also expanding rapidly, expected to grow from $1.16 billion in 2024 to about $2.72 billion by 2032, at a CAGR of 11.2%, driven by demand in film, gaming and virtual reality. Generative AI is also set to explosive growth. By 2030, North America's market is projected to reach $130.7 billion and China to $31.12 billion, both with CAGR exceeding 40% with advanced technologies like Gausspeed platforms and a robust digital asset bank. Global Mofy is well positioned to seize these opportunities and lead the digital content industry forward. And now let's take a closer look at our business model and how we deliver value to our clients. Our business model leverages Generative AI technology and our robust digital asset bank to offer high-quality, efficient and cost-effective content production through a streamlined, scalable and systematic virtual technology process services. We ensure comprehensive support through a synergy of its Mofy Lab providing customers with full process management on production output, quality control. Operating digital asset development and related services, focusing on creating high- precision 3D models for various applications and licensing. This includes film, gaming and virtual reality. Our extensive build up digital asset bank and advance technologies that offer efficient and cost-effective production. Our strategic partnerships with leading technology companies also enables us to integrate cutting-edge tools and processes enhancing our ability to deliver innovative solutions to our clients. Notably, in 2024, we have four several key partnerships that has significantly bolstered our technological capabilities and market reach. Shown in the graph, we partnered with NVIDIA Omniverse and Heartdub technology, leveraging their advanced [ business ] engine and technologies push the development of our Gausspeed Generative AI platform. Additionally, also in the first half of 2024 Global Mofy was selected as a partner IT second lead program, showcasing our strengths in technology -- technological innovation and business expansion. Some of our prior customers and partners are also listed on the right of this page in no specific order. And let's now take a look at some of the major events that shaped FY 2024. These milestones represent critical steps in our growth journey and showcase how we are delivering on the strategic objectives. There are a few more highlights from fiscal year 2024. Basically, we have launched a $59 million fund as mentioned before, with strategic partners for the growth opportunities in AI digital economy and entertainment sectors. Each of these achievements underscores our commitment to innovation, collaboration and sustainable growth as we continue to lead in the digital content space. Our management team also consists of professionals with extensive experience in their respective fields with the CEO, Mr. Hoagang Yang being a visionary leader and serial entrepreneur with extensive experience in the digital content and technology sectors, together ensuring the company's steady growth and innovative capabilities. Our team members also have strong expertise and rich practical experience in technological innovation, financial management, market expansion and operational optimization. Together, all working to drive Global Mofy's continued success. And now closer look at financial results for the fiscal year ended September 30, 2024. Total revenue for fiscal year 2024 increased by 53.8% to $41.4 million. This was driven by the prosperity of the movie and TV industry in China over the past two years, along with sustained demand for high-quality virtual content. Cost of revenues rose to $20.6 million up from $12.4 million last year in reflection of 53.8% revenue growth. This increase was necessary to maintain high-quality project execution amid our rapid revenue expansion. By prioritizing quality delivery, we have strengthened client relationships and reinforce our long-term competitiveness. Gross profit increased by 43.2% to $20.8 million driven by higher revenues and ongoing investments in sustainable development. Gross margin remained strong at 50.3%, highlighting effective cost control measures and a strategic shift towards higher margin through initial asset development-related services. Our net income for fiscal year 2024 was $12.1 million about an overall 29.4% net margin compared to $6.6 million in FY 2023, an impressive 89% increase. This growth was fueled by higher revenues, increased operational efficiency and disciplined cost management. R&D expenditures for FY 2024 totaled about $7.5 million reflecting a 109.8% increase from $3.6 million in FY 2023. These investments was primarily directed towards expanding our 3D digital asset library, which now includes over 100 assets -- 100,000 assets. Significantly progress was also made in advancing our Generative AI platform Gausspeed, which enhances our AI-driven content creation capabilities. These investments are essential for sustaining long-term growth, drive innovation and maintaining our competitive edge in the rapidly evolving digital content industry. And also, as of September 30, 2024, our total assets was above $59.2 million, again demonstrating the company's robust financial position. These results highlight our strong market position, operational excellence and successful strategic transformation. For more details, please refer to our SEC filings. Finally, Global Mofy experiencing rapid growth by leveraging advanced AI technologies expanding our 3D digital assets and strategically focusing on the booming digital entertainment market. There are some key components of our growth strategy. First of all, market expansion. We are entering international markets, focusing on Europe and North America. The strategic alliances as we form partnerships with leading companies to leverage strength or expand market share and enhance our products branding position, utilizing events AI and consistent branding, we aim to become a leader in the digital content industry by again showcasing our expertise in AI-driven solutions as 3D digital assets. R&D, as we always invest in R&D to drive innovation, focusing on AI-generated content and expanding our 3D digital asset bank. Customer experiences, we enhance customer experience through personalized services, user-friendly interfaces and excellent support. These strategies are designed to enhance our core competencies, drive innovation and again, deliver long-term value to our shareholders. Thank you all for your attention. And before we open the floor for questions, please note that our management team will be answering in Chinese. For any discrepancies between the translated response and the original answer, the original answer should be considered accurate. Please feel free to ask any questions you may have about the financial performance, strategic initiatives or market outlook. Operator, please open the line for questions.

[Operator Instructions] We will now take the first question from the line of Alice Wang from [indiscernible] Capital.

My question is, where are the main applications for your Generative AI platform built on 3D digital assets.

Thank you, Ms. Wang, and I will now direct the questions to our CTO Ms. Wenjun Jiang for answer.

[Foreign Language]

[Interpreted] Thank you, Ms. Wenjun Jiang, and I will now translate the answers for our investors. Ms. Wenjun Jiang have just said that initially, our platform is focused primarily on the entertainment industry including sectors such as film and television, advertising, ultra tourism, VR and AR. And also internally, we have already applied the platform to several practical projects, including film special effects production, creative design and digital presentation of cultural experiences. Through in-depth discussion with our partners before, we are also exploring how to expand the platform's applications to more diverse view that is education and training as well as virtual offices. As technology continues to advance and market demand growth, we plan to further upgrade the platform, extending its application to more industries and client groups and foster cross-industry integration bringing more innovative digital solutions to our customers.

Thank you, and you may proceed if you have more questions.

We will now take the next question from the line of Cecilia Lin from Golden Bridge.