Corporate Presentation October 2018 Disclaimer This presentation is - PowerPoint PPT Presentation

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

Education

The Largest Global Learning Community The One-Stop Solution For the Next Generation of K12 Education 1.3M 190+ 400K+ 90M+ 5M+ 650M+ Classrooms Countries Schools Registered Users MAU Learning resources created and shared 4

Integrated across Education Value Chain Students / Parents Teachers Teacher- Lesson Lesson Resources Student-Parent Homework Tutoring Preparation Delivery Sharing Communica- tions In Class Post Class Classroom Interactive Content, Communications & On-Demand Delivery System Resource Sharing Tutoring 5

Re-inventing Education by Creating an Interactive Community 640K 1 Interactive Lesson Preparation & Delivery WAU teachers on ActivInspire 2M+ Installed base teachers on 101 Education PPT 1B+ Easy-to-use lesson Library of customizable Tools for-in-class In-class delivery through building tools to make courseware PPT, insert- assessments that allow Messages sent through Edmodo platform state-of-the-art hardware interactive and media- able mini learning modules for immediate student displays rich content and questions feedback 650M+ 2 Communications & Resource Sharing Shared assets & resources 7M+ Quizzes administrated 20M+ Messaging for Share & discover Real-time progress On-demand virtual students, teachers and resources monitoring tutoring groups Assignments completed 6

Value Proposition for Our Users Teachers ▪ ✓ Easy and efficient teaching preparation ✓ ▪ Rich resources of teaching content ✓ ▪ Enhances interaction between students and teachers ▪ ✓ Real-time progress monitoring Students Parents ✓ ▪ ▪ Community building and peer interaction ✓ Real-time progress monitoring ✓ ▪ Enhances engagement among students ✓ ▪ Easy-to-use communication tools with teachers and ✓ ▪ fellow parents Personalized learning through big data analysis ✓ ✓ ▪ ▪ Ability to react to problems On-demand assistance through on-line tutoring 7

Large Addressable Market and Untapped Market Opportunity 2017A Consumer Education Expenditure Classrooms with Interactive Displays 29% Global Market US$1,160bn Classroom Penetration US Market China Market US$293bn US$232bn Classrooms without Interactive Displays 71% Source: Euromonitor, Futuresource Consulting 8

Global Leader in K-12 Interactive Technologies* • Valuable long-term physical access to over 1.3M classrooms • Well-positioned to capture the shift to digital in classrooms as interactive panels are the gateway to bring users online • In-class delivery system enables insight in classroom engagement #1 EMEA #1 USA Global Market Share: 16% in 2Q18 *Source: Futuresource Consulting 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 Monetization Strategy Machine Live Advertising Learning Tutoring 11

Gaming

Gaming Business Snapshot RMB585 9 Million MAU Monthly ARPU 180 Countries 13

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 14

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 15

Gaming Pipeline IP GAME TITLE/CATEGORY PC MOBILE AR/VR √ PC & Mobile Cross-Platform Version √ 3D Eudemons Online √ H5 Game √ √ Third Person Shooting VR √ Trading Card Game √ Strategy MOBA Game √ SLG √ H5 Game √ 3D ARPG Game New IPs √ H5 Game 16

Financials

1H18 Results Revenue: RMB2.5 Billion Net Profit: RMB201 Million 3,000.0 250.0 2,469.9 200.7 2,500.0 200.0 2,000.0 1,775.3 150.0 (RMB million) (RMB million) 1,500.0 100.0 1,000.0 50.0 500.0 25.8 - - 1H17 1H18 1H17 1H18 18

Segmental Results Education Segment Gaming Segment 1,200.0 1,600.0 1,384.1 1,039.3 1,400.0 1,000.0 1,200.0 802.4 934.1 1,000.0 800.0 (RMB million) (RMB million) 800.0 600.0 524.4 600.0 400.0 334.1 400.0 200.0 200.0 - 1H17 1H18 (200.0) (158.7) - (189.2) 1H17 1H18 (400.0) Revenue Core Segmental Profit/(Loss) Revenue Core Segmental Profit/(Loss) 19

Condensed Income Statement (RMB million) 1H18 1H17 YoY (%) Revenue 2,469.9 1,775.3 +39.1% Education 1,384.1 934.1 +48.2% Gaming 1,039.3 802.4 +29.5% Gross Profit 1,402.1 1,033.3 +35.7% Selling & Marketing Expenses 332.6 292.5 +13.7% as a % of Revenue 13.5% 16.5% -3.0 ppts Administrative Expenses 409.5 344.9 +18.8% as a % of Revenue 16.6% 19.4% -2.8 ppts R&D Expenses 442.2 396.3 +11.6% as a % of Revenue 17.9% 22.3% -4.4 ppts Net Profit attributable to Shareholders 200.7 25.8 +678.8% 20

Segmental Financial Highlights (RMB million) Education Gaming 1H18 1H17 YoY (%) 1H18 1H17 YoY (%) Revenue 1,384.1 934.1 48.2% 1,039.3 802.4 29.5% Gross profit 421.5 273.2 54.3% 978.5 755.2 29.6% Gross profit margin (%) 30.5% 29.2% +1.3 ppts 94.1% 94.1% - Core Segmental profit (loss) 1 (158.7) (189.2) -16.2% 524.4 334.1 56.9% Segmental operating expenses 2 - Research and Development (214.5) (183.8) (222.4) (203.2) 16.7% 9.5% - Selling and Marketing (224.2) (192.1) 16.7% (102.6) (97.1) 5.7% - Administrative (113.0) (68.8) 64.2% (143.8) (133.9) 7.4% Note 1 ： Core segmental profit (loss) figures are derived from the Company’s reported segmental profit (loss) figures (presented in accordance with Hong Kong Financial Reporting Standard 8 (“HKFRS 8 ”) but exclude non- core/operating, non-recurring or unallocated items including government grants, fair value change and finance cost of financial instruments and fair value change of convertible preferred shares. Note 2: Segmental operating expenses exclude unallocated expenses such as depreciation and amortisation that have been grouped into SG&A categories on the Company’s reported consolidated financial statements but cannot be allocated to specific business segments for purpose of calculating the segmental profit (loss) figures in accordance with HKFRS 8. 21

Management Team

Visionary Leadership… Dejian Liu Dr. Simon Leung Group Founder and Chairman Vice Chairman, NetDragon; ▪ Ahead-of-the-curve product designer Chairman, Edmodo ▪ Conceived, successfully scaled and commercialized ▪ Former Chairman & CEO, Greater China, Microsoft “first - mover” ideas including: ▪ Former President, Asia Pacific, Motorola • 1st gaming portal (17173.com) ▪ Doctorate in business administration from Hong Kong • 1st “free -to- play” MMORPG (Eudemons Online) Polytechnic University and honorary doctorate in laws • Largest smartphone appstore (91 Wireless) from University of Western Ontario 23