Preview of new stocks in US stocks| Shield Technology: Revenue of about $4.9 million USD is difficult to cover up the decline in performance quality.

In the first half of 2024, the global mobile gaming market showed a clear trend of recovery. Although global mobile game downloads declined by 4.5% year-on-year, revenue increased by 4.7% year-on-year. It can be seen that despite the gradual disappearance of the traffic dividends in the past few years, the monetization ability of existing players in applications is continuously increasing. Against the backdrop of industry recovery, Pyro AI Inc., a holding company of Hong Kong-based mobile game developer Shield Technology Limited, officially submitted an IPO to the U.S. Securities and Exchange Commission (SEC) on July 24th, with the stock code PYRO, applying for listing on Nasdaq. The company initially submitted a confidential application to the SEC on January 17, 2024, with Guotai Junan Securities being the sole bookrunner for this transaction. The company plans to issue 2.25 million shares of stock at a price of $4 to $5 per share, raising funds in the range of $9 million to $11.25 million. At the midpoint of the proposed price range, Shield Technology Limited's market value will reach $110 million. Authorized game revenue accounts for about sixty percent The prospectus shows that Shield Technology Limited was established in 2020 and is mainly engaged in mobile game and online game development, including game design, programming, graphics, and distributing the company's mobile and online games on various platforms. The company's core products include self-developed game development, third-party game authorization, and software game development services. As of the end of 2023, the company's games include Abyss, Mascot, SHIN HWA WORLD, gambling platforms, and card games, including seven authorized games. As of December 31, 2023, Shield Technology Limited employed 63 experienced staff, serving as producers, game designers, artists, game engine developers, and marketing personnel. According to Frost & Sullivan data, the company's number of game developers ranked in the top five in Hong Kong in 2023. For the 2022, 2023 fiscal years (fiscal year ending June 30 each year), and the first six months of the 2024 fiscal year (ending December 31, 2023), Shield Technology Limited had revenues of $2.7847 million, $4.8647 million, and $2.9719 million, respectively. The corresponding net profits were $15,590, $97,950, and $11,340. Overall, the company's performance is showing a positive growth trend. Looking at the business segments, during the reporting period, software game development revenue was approximately $83,900, $1.27 million, and $181,000, accounting for about 3%, 26.1%, and 6.1% of total revenue, respectively; revenues from self-developed games were about $0, $662,000, and $1.064 million, accounting for 0%, 13.6%, and 35.8% of total revenue, respectively; revenues from authorized games were approximately $2.701 million, $2.934 million, and $1.726 million, accounting for approximately 97%, 60.3%, and 58.1% of total revenue, respectively. In short, authorized games are the revenue backbone of Shield Technology Limited, accounting for nearly sixty percent of the company's revenue by the end of 2023. It is worth mentioning that during the reporting period, revenue from third-party authorized games was approximately $1.7 million, $1.7 million, and $2.9 million, accounting for 88%, 57%, and 60% of total revenue, respectively. Shield Technology Limited's revenue relies on third-party authorized games. The early termination of licensing agreements by third-party game developers would severely impact its liquidity. Additionally, Shield Technology Limited's revenue relies on a few popular games. By the end of 2023, the top five games contributed more than ninety percent of revenue. Relying on a few popular games resulted in a decreasing percentage of paying users for the company. During the period from 2022 to the first half of 2023, the proportion of paying users among players was approximately 9.6% and 6.83%. Although the performance is showing a growth trend, Shield Technology Limited's liquidity seems not optimistic. For the first half of 2022, and the first half of 2023, the net cash flows from operating activities were approximately $155,700 and $99,000, respectively, shrinking significantly; cash and cash equivalents were approximately $25,200 and $10,700, respectively. Despite revenue growth, cash flow is shrinking, indicating that the company's performance in terms of cash content is not high. Furthermore, the overseas market is an important source of revenue for Shield Technology Limited. During the first half of 2022 and 2023, gameplayers outside of Hong Kong contributed 25.4% of the total revenue to Shield Technology Limited. Therefore, in the company's future plans, the international market is an important part of the company's development. From this perspective, this may be one of the reasons for its choice to go public in the United States. Reviving amid the saturated gaming market? Going public in the saturated gaming market, Shield Technology Limited's listing indicates that the industry still has new opportunities. According to Gamma Data's 2023 China Gaming Industry Report, the actual sales revenue of the domestic gaming market in 2023 was 302.964 billion yuan, a year-on-year increase of 13.95%. According to the Game Working Committee, from January to June 2024, the actual sales revenue of the domestic gaming market was 147.267 billion yuan, a year-on-year increase of 2.08%; the number of game users was 674 million, a year-on-year increase of 0.88%. The market development tends towards stability and moderation. At the same time, the gaming industry has found new growth points, one of which is small games. The small game market has been favored by gaming companies in recent years, and leveraging the user base of mobile games in China, the more convenient and faster small games have become the most prominent track, experiencing a growth of 300% in 2023. Even the gaming enterprise Giant Engine once estimated that the overall market size of the Chinese small game market will further grow in 2024, with an overall expectation exceeding 60 billion yuan. Looking ahead, driven by key trends like cloud gaming, the global mobile gaming market is expected to continue to grow strongly, integrating AR/VR, and further geographical expansion in regions where smartphone usage is rapidly growing. With more immersive experiences of VR on mobile devices, the industry's prospects remain very strong. The global mobile gaming market is projected to grow from $179.4 billion in 2023 to269.2 billion dollars, with a compound annual growth rate of approximately 8.1%.Therefore, for many gaming companies such as Shield Warrior Technology, there are still more "open source" space and incremental market opportunities. The prospectus shows that Shield Warrior Technology plans to complete and launch its own platform in the first quarter of 2025 (calendar year), providing game players with its own games as well as high-quality games and interactive social media from other gaming companies. This IPO will also mostly prepare funds for new business strategies, with an expected net profit of $7.9 million to be obtained from this IPO, with 40% of the funds to be used for product development, including the construction of a proprietary game platform. In summary, although Shield Warrior Technology's performance is showing a growth trend, it mainly relies on licensed games, and with a decreasing number of paying users in the case of relying on a few games, the growth momentum appears weak. However, the improved industry environment will further enhance the bargaining chip for the IPO, potentially helping it achieve better investment expectations.