Preview of U.S. Stock Market New Stocks | Metaverse Digital Marketing Company Everbright Digital's "AB Side": Revenue Surges, Profit Fluctuates

With the rapid development of Web3, artificial intelligence, and AIGC technology, providing technical support for metaverse digital marketing, the metaverse digital marketing track is gradually becoming popular. On February 25, Metaverse digital marketing firm Everbright Digital from Hong Kong submitted an initial public offering (IPO) application to the U.S. Securities and Exchange Commission (SEC), further heating up the metaverse digital marketing track. The company plans to issue 1.5 million shares of stock at a price of $4 to $5 per share, raising $7 million. Based on the midpoint of the proposed offering price range, Everbright Digital's market value will reach $119 million. Currently, the metaverse is gradually becoming a new field for brands and users to connect and interact. Many brands have realized the value of metaverse digital marketing and are increasing their presence in this field. The M generation, represented by those born in the 1990s and 2000s, as the natives of the metaverse, have a high acceptance and demand for metaverse digital marketing, driving the rapid development of this industry. As metaverse digital marketing becomes more popular, can Everbright Digital's IPO capitalize on this trend? Revenue growth, profit fluctuations Everbright Digital was founded in 2021 and is a comprehensive marketing solutions provider deeply involved in the metaverse and related technologies in Hong Kong. The company generates revenue by providing tailored marketing solutions to meet the specific needs of customers in the background of evolving new media forms. The company's digital marketing solutions include virtual world stimulation, virtual reality (VR) and augmented reality (AR) design and creation, creative event planning and management, IP character creation, and social media marketing. Since its establishment, Everbright Digital has served more than 20 enterprise clients from different industries, including real estate developers, concert organizers, public charities, and other domestic and foreign clients. Over 50% of the company's revenue comes from providing 3D simulation and augmented reality services to real estate developers in Hong Kong. In the past two years, with the increasing acceptance of metaverse digital marketing by the public, Everbright Digital's revenue has shown explosive growth. According to the prospectus data, in 2022 and 2023, the company achieved revenues of $815,100 and $2.8255 million, respectively, a year-on-year increase of 246.6%. In the first half of 2024, the company's revenue continued to show explosive growth, reaching $1.4317 million, a 753.2% increase from the same period in 2023. However, compared to the explosive growth in revenue, Everbright Digital's performance in terms of net profits fluctuates. In 2022 and 2023, the company's net profits were $419,500 and $925,600, respectively, a 120.6% year-on-year increase. In the first half of 2023 and 2024, the company's net profits were -$140,600 and $396,200, respectively, showing a turnaround from losses to profits. It is worth noting that, perhaps due to the company's belonging to the "light asset industry," its gross profit margin and net profit margin are at relatively high levels. In 2022 and 2023, the company's gross profit margins were 69.7% and 55.1%, respectively, and the net profit margins were 51.5% and 32.8%, showing fluctuations in profitability but overall maintaining at a high level. In terms of cash flow, although revenue has increased significantly and profitability remains high, the company's cash flow is not as abundant as it may seem: Everbright Digital had cash and cash equivalents of $18,000, $399,300, and $446,700 at the end of 2022, 2023, and the first half of 2024, respectively. Overall, although Everbright Digital has seen explosive revenue growth riding the industry trends, its relatively low cash flow levels show that the US IPO may be an important avenue for the company to receive vital funding. Rapid industry development, significant competitive pressure In recent years, the marketing solution market in Hong Kong, albeit experiencing a brief impact from the COVID-19 pandemic, has maintained stable growth. The overall market size has increased from HK$23 billion in 2018 to HK$30.4 billion in 2023, and is expected to grow to HK$40.4 billion by 2028, with a compound annual growth rate of 5.9% from 2023 to 2028. It is important to note that before 2020, traditional marketing solutions had been the largest segment in the market, but afterwards, due to the impact of the pandemic, traditional marketing solutions such as event marketing and outdoor marketing were hindered. On the contrary, with the increasing digital transformation in various industries, digital marketing solutions saw rapid growth, becoming the fastest-growing segment in the marketing solution industry. According to industry data, the digital marketing solution market in Hong Kong reached HK$15.05 billion in 2023. Among them, the digital space marketing solution market became one of the fastest growing segments between 2018 and 2023, with a compound annual growth rate of 38.60%, reaching HK$200 million in 2023. However, it is worth mentioning that due to the highly diversified and numerous participants in the marketing solution market in Hong Kong, the competitive pressure faced by Everbright Digital from the industry is significant. According to the prospectus disclosure, there are currently over 3,500 enterprises in the marketing solution market in Hong Kong, employing approximately 13,000 professionals. This includes large digital marketing companies, multinational companies, as well as many small and medium-sized enterprises. From the three-dimensional competitive landscape matrix, the competitive pressure on Everbright Digital from the industry is significant.The growing pressure on environmental development is also evident at a glance.In terms of competition in the ecological hierarchy, at the infrastructure level: Unity, Epic Games (Unreal Engine market share 62%); at the platform operation level: Meta Horizon (100 million MAU), Roblox (220 million DAU); at the application service level: Publicis Groupe (acquisition of WPP virtual marketing team), Omei Metaverse Lab. In terms of corporate comparison, tech giants: Meta (Reels advertising revenue accounts for over 20%), Tencent's full-scale internet layout; traditional 4A: Dentsu Group investing 500 million USD to build a metaverse department. In terms of regional market landscape, North America holds 58% market share, European regulations are tightening (DSM law increases digital advertising compliance costs by 23%), and the Asia-Pacific region is gradually becoming a major growth pole. Therefore, Everbright Digital also proposes in its growth strategy that in the future, the company will gradually enter the Asia-Pacific region's digital marketing solution market, increase customer numbers, and strengthen core capabilities through continuous research and development, such as increasing R&D investment to enhance the company's data analysis and process automation. They plan to develop custom data models and algorithms to help segment target audiences, personalize content, optimize marketing activities, and help the company gain insights from marketing data. In conclusion, in the metaverse digital marketing race, although the industry has rapidly developed with the help of VR and AR technologies, like the saying goes, "ironing requires a hard base," Everbright Digital still needs more impressive performance to prove its worth.