Chinese online game developer Giant Interactive's (GA) unaudited financial results for the first quarter ended March 31, 2008 show net revenue was CNY471.6 million, an increase of 48.7% over the first quarter 2007 and an increase of 8.5% over the fourth quarter 2007.
Giant Interactive Chairman and CEO Yuzhu Shi commented in a prepared statement, "Our growth in the first quarter 2008 was driven by the addition of offline interactive community features and by our sales and marketing expansion efforts. Throughout the first quarter, we witnessed positive reactions to ZT Online's ‘Neighboring Friends' expansion pack, which completed roll out in January and is aimed at increasing interactivity among players, which in turn enhances the stickiness of the in-game community. This expansion pack played an integral role in increasing the popularity of ZT Online, which reached a record high of over 1.5 million peak concurrent users on March 1, 2008. These achievements are a testimony to our gamer-first ideology and the continued growth momentum of our flagship game."
Gross profit increased sequentially by CNY48.0 million and year-over-year by CNY131.6 million to CNY420.8 million. Gross margin for the first quarter 2008 was 89.2%, down slightly from 91.2% in the first quarter 2007 and an increase of 3.5% over the fourth quarter 2007. The increase in gross margin quarter-over-quarter was mainly due to the decrease in cost of services and the continuous rise in our revenue. Total operating expenses of CNY99.8 million represented an increase of 6.3% from CNY93.9 million in the fourth quarter 2007, and an increase of 139.5% from CNY41.7 million in the first quarter 2007.
Net income for the first quarter 2008 was CNY338.7 million, a year-over-year increase of 36.5% from CNY248.1 million, and a sequential increase of 1.5% from CNY333.8 million. Net income margin was down slightly to 71.8% for the first quarter 2008, as compared to 78.2% in the first quarter 2007 and 76.8% in the preceding quarter. Cash and cash equivalents as of March 31, 2008 fell to CNY5.83 billion from CNY7.29 billion as of December 31, 2007.