Hello, friends from the investment community. Welcome to IGG's investor meeting for the announcement of its 2026 interim results. Today's presentation and Q&A session will be conducted in Mandarin. In addition, the PowerPoint has been uploaded to the investor relations section of igg.com. Before the meeting begins, please allow me to introduce the management team present today. Mr. Xu Yuan, Executive Director and Chief Operating Officer.
Hello, investors.
Ms. Jessie Shen, Executive Director and Chief Financial Officer.
Hello, investors.
Today's meeting will consist of two parts. First, the management team will introduce the group's business and financial performance for the first half of 2026. There will be a Q&A session. Now, let's welcome Mr. Xu to present the group's 2026 interim results. Mr. Xu, please.
Sure. Thank you all for joining our 2026 interim results presentation. First of all, on behalf of IGG, I would like to thank you all for your continued support. In the first half of 2026, our total revenue reached HKD 2.9 billion, representing a 6% increase year-on-year compared with 2025, and a 4% increase half-on-half. In terms of profit, we achieved HKD 310 million. The standout performer this time was our game Doomsday: Last Survivors. Its monthly gross billings, quarterly gross billings, monthly profit, all continued to reach new highs. During the period, it contributed HKD 700 million in revenue, representing a 33% year-on-year increase. In addition, our two other games also delivered solid contributions. Viking Rise contributed HKD 350 million, while our classic title Lords Mobile contributed HKD 1.02 billion.
Doomsday has been gaining steady momentum since the beginning of this year, starting in January. It reached new record highs in gross billings twice in January and May respectively, and this was not achieved by simply spending heavily on advertising. Rather, it was driven by our R&D efforts. Over the past year or two, we have continued to iterate the game and introduce a great deal of innovation. In fact, in the first half of this year, we even completely overhauled and redeveloped the early stage gameplay. All these efforts have finally delivered solid results, leading to significant improvements in the game's retention rate and payer conversion rate, while also cutting the advertising payback period substantially by half. Therefore, we expect the game's revenue to continue to achieve sustained growth in the second half of this year.
For our app business, monthly active users reached 71 million, and revenue came in at HKD 570 million, representing a 7% year-on-year increase. It is precisely the R&D success achieved by Doomsday in the first half of the year that has given us confidence in the future. Therefore, for the interim dividend, we have decided to distribute HKD 0.164 per share to reward our shareholders, representing 60% of our profit. Now we will move on to the PowerPoint section. Please turn to page seven. Let's start with page seven. In terms of our gross billing performance, both our game and app businesses remained generally stable in the first half of the year. Our average monthly gross billings remained at HKD 490 million. While Doomsday's average monthly gross billings reached HKD 120 million, setting a new historical high.
Lords Mobile also contributed HKD 180 million every month. The app business achieved average monthly gross billings of HKD 95 million. Please turn to page eight, which shows the operating data for our core games. The data disclosed here is as of June 30th. Let me take a look. We can see that Lords Mobile had 6 million monthly active users, Doomsday: Last Survivors had 2.5 million, Viking Rise had 2.2 million, and Fate War had 400,000. Let's move on to page nine, which covers our app business. First, our monthly active users reached 71 million, remaining stable year-on-year. Revenue reached HKD 570 million, representing a 7% year-on-year increase. Let's now turn to page 11 of the PowerPoint, which covers our interim results analysis.
Looking first at our consolidated revenue, in the first half of the year, it reached HKD 2.878 billion, while gross profit came in at HKD 2.449 billion. At the same time, our gross margin also increased to 85%, up two percentage points year-over-year. Our administrative expenses and R&D expenses were relatively higher in the first half. Administrative expenses were HKD 192 million, up 21% year-over-year. R&D expenses were HKD 447 million, an increase of 13% year-over-year. This was mainly because we added new overseas incubation teams and projects, which led to corresponding increases in R&D and administrative expenses. In terms of net profit, we recorded net profit of HKD 313 million, representing a slight decrease of 4% year-over-year. Now let's turn to page 12. This page shows our cash position, which remained very solid.
We currently hold HKD 2.0 billion in cash and cash equivalents. Driven by the company's operations, our net cash inflow from operating activities was HKD 290 million. Now let's turn to page 13, which shows the group's total assets. The group's total assets currently stand at HKD 4.3 billion. Of this, current assets were HKD 2.59 billion, and non-current assets were HKD 1.72 billion. Now let's turn to page 14 on share repurchases and dividends declared. This time, we have decided to declare a dividend of HKD 0.164 per share, with a total dividend amount representing 60% of our profit for the first half. Together with the share repurchases we carried out early this year, the overall payout and repurchase ratio accounted for around 61% of our profit.
Finally, let's briefly go through the two games that may potentially be launched in the second half of this year. We'd like to give everyone a quick preview. First, please turn to pages 18 and 19, and then on page 20, we have another game with the code name Project SA. This is a fantasy-themed SLG game. Next, please turn to page 21, followed by page 22, and then page 23. This is another new game of ours called Project AA. This is a cartoon-style, post-apocalyptic, zombie-themed SLG game. These two games reflect our new R&D strategy, which can be summarized as inheritance and extension. We will distill the essence of success from our own successful titles, apply it to different themes, and extend it to create additional games. Both Project SA and Project AA are based on the core strengths of Doomsday: Last Survivors.
These are two brand-new games derived from that foundation. We expect that at least one of them should be launched in the second half of this year. To conclude, the biggest highlight in the first half of the year was the development progress of Doomsday: Last Survivors. After more than a year of continuous testing and iteration, both ROI and retention improved significantly. As a result, we reached new highs twice in the first half of the year. Looking into the second half, we expect continued growth and aim to challenge an even higher revenue level. As for our app business, we will continue to pursue a steady and healthy development model, scaling the business further while improving profitability.
In addition, as we just mentioned, at least one of these two next-generation SLG titles is expected to launch in the second half of the year, and we look forward to seeing it achieve strong success. Thank you, everyone.
Thank you, Mr. Xu. Next, we will move on to the Q&A session. We will take questions from both the phone line and the online platform. For investors joining us online, please submit your questions in writing by typing them into the Q&A section on the live stream page. We will read them out shortly. First, we will take questions from investors joining by phone. If you would like to ask a question through the conference call system, please follow the operator's instructions to get ready. Now, I would like to invite the conference assistant to facilitate this part of the session.
Hello, everyone. If you would like to ask a question, please press the star followed by one on your phone and wait for your turn. Please press the star key first, followed by the number one. After you hear the prompt tone, please begin asking your question. Thank you. Hello, everyone. If you would like to ask a question, please press the star followed by one on your phone and wait for your turn. Please press the star key first, then the number one. After you hear the prompt tone, please begin asking your question. Thank you. Next, we will invite the participant with the phone number ending in 9526 to ask a question. Participant with the phone number ending in 9526, you may now ask your question.
Sorry, I was on mute just now. Thank you management for taking my questions. This is Xinyao from CICC. I have two questions for management. First, the company just shared some updates on the two pipeline products, SA and AA. Could you please further elaborate on your expectations for these two products? In terms of the plan timeline, when in the second half should we expect to see a product launch, for example, around the end of Q3 or toward the end of Q4? Also, could management please introduce the teams behind these two products as they currently stand?
Yes. For one of these two games, our current plan is to launch it in Q4 around late November. Based on what we see now, it will most likely be AA. In Q1 next year, probably after the Chinese New Year, we may launch SA. As for the two teams, they are both essentially under the Doomsday team. They are two additional teams that were extended from the same department. As we just mentioned, the development of these two games also incorporates a lot of the so-called essence and best practices that we have distilled from Doomsday. Then we combine those with different themes and develop these two new games through various rounds of market validation and market testing. Based on what we are seeing so far, their day one retention performance is better than that of Doomsday.
This is also one of the reasons why we have relatively high expectations for these two games. Thank you.
Okay, thank you. My second question is for the company, how do you view the impact and changes that AI may bring to game development and publishing? In terms of our company's expenses, how should we think about the trend going forward?
AI mainly helps us in two areas. One is advertising placement, right? Because advertising placement today is different from before. In the past, it may have relied more on manual work, so the volume of creatives was not that large. Now, with the introduction of AI, including AI-driven data analysis and automated ad placement, this has changed. Overall, the volume of creatives can expand to dozens of times or even hundreds of times what it was before. So AI has significantly improved our labor efficiency, and it has also enhanced our advertising placement efficiency. We can also see that with the introduction of AI, overall, our screening of creatives has become faster, and the feedback on metrics such as CPI and ROI generated by these creatives is also coming in much more quickly than before. So this has made our overall advertising placement efficiency better.
That is one aspect, helping with advertising placement. The other aspect is helping us produce advertising creatives. For example, Seedance in mainland China has very strong video production capabilities. So as long as we provide the original source materials, the efficiency of producing ad creatives can be 10x or 20 x higher than before, or even more. At the same time, AI also has very strong HTML5 programming capabilities. So things that were very difficult to make in the past, such as playable app ads, for example, can now be created much more easily. In the past, being able to make one or two of these in a month was already pretty good. Now we may be able to produce dozens or even hundreds of them in a month. This is also a broader change taking place across the game publishing industry. Thank you.
Okay. I have one more small question. How should we think about the outlook for our period expenses going forward, including areas such as R&D expenses, as well as sales and marketing expenses?
Yes. In terms of R&D expenses, we are actually gradually reducing them. The increase in the first half of this year was because we had an overseas project underway. For this year, we will also have a budget of around $15 million for that. Next year, this budget will be cut in half. So overall, this should lead to a meaningful decline in our R&D expenses as well as our administrative expenses. At the same time, this year, we will continue to introduce more AI into both game development and operations. This should also allow us to further reduce our R&D and administrative expenses.
Understood. Thank you. I have no further questions on my side. Thank you.
Okay. Thank you.
Hello, everyone. If you would like to ask a question, please press the star followed by one on your phone and wait for your turn. Please press the star key first, then the number one. After you hear the prompt tone, please begin asking your question. Thank you. We will now take a question from the participant with the phone number ending in 0213.
Hello, Mr. Xu. Good morning. I have two questions regarding the performance of our existing games. First, Doomsday: Last Survivors has shown truly outstanding performance. We have also done a great job in game content development and version iteration. I would like to ask Mr. Xu about the general operational plan and version update schedule for the second half of the year. Additionally, one of the key factors behind the product's success is its IP collaboration. I wonder if Mr. Xu could share a bit more with us on this topic.
For Doomsday, we expect it to maintain sustained growth throughout the second half of the year. We are currently projecting a target of approximately $19 million - $20 million for December. We also have a major update plan for September, which will include significant adjustments to the onboarding experience for new players. This should result in a significantly higher retention rate. As mentioned earlier, the day one retention rates from the initial testing of our two new games, Project AA and Project SA, are both better than those of Doomsday. This has also put considerable pressure on the Doomsday team. Because within IGG, if a game's performance metrics fall behind other titles, its marketing budget will be reallocated to those better-performing games. As you can imagine, they are continuously working hard to improve. They cannot afford to let other teams get ahead of them.
They have a major update plan for September as well. On the IP collaboration front, we have actually done a significant number of crossovers this year, including the Attack on Titan collaboration at the beginning of the year, as well as some smaller ones, such as with tokidoki. Most recently, the highly successful Odysseus Returns story crossover we just launched in August. In the second half of the year, we will continue to pursue this approach of collaborating with third-party IPs, as evidenced by the Odysseus Returns story crossover we launched in early August, which was extremely successful. Not only did it bring in a significant number of new users, but it also drove Doomsday to its highest-ever single-day revenue, approaching $1 million. This is a strategy we will continue to carry forward. We will be partnering with even more brand IPs going forward.
At the same time, as Doomsday's revenue scale continues to grow, I believe we will be in an even stronger position to attract larger IPs to collaborate with us. Thank you.
Thank you. I should also note that I forgot to introduce myself earlier. I am Nelson from Citi. My second question is regarding our game Fate War. Fate War has been launched for approximately a year now. I am curious whether the team has drawn any operational learnings from the past year, and what the future marketing strategy looks like for this title, as well as whether any of those learnings will be applied to your next-generation SLG product. Thank you.
Yes. Fate War's performance is actually tracking very closely behind Doomsday, and the team has been continuously optimizing the game. Because Doomsday's metrics have consistently outperformed Fate War, the marketing budget has continued to be allocated toward Doomsday. That said, Fate War's day one retention has actually reached the threshold required for promotion. As for day seven retention, we came very close to hitting the threshold in mid-August, just a little behind. So it's right on the edge. Very close now. Our development team will continue to work on improving day seven and day 30 retention, with the goal of bringing both metrics at least up to Doomsday's level. At that point, we'll look to scale up promotion for Fate War.
In the meantime, the game remains very stable, contributing approximately $2 million in revenue per month. Thank you.
Thank you, Mr. Xu. That's all from my end. Thank you.
Great. Thank you.
We'll now move on to questions submitted online. The first question asks how the company assesses the future revenue trajectory of Viking Rise, and whether there are any plans to scale back user acquisition spending going forward. Thank you.
Throughout the first half of the year, we've been running various tests and optimizations on our user acquisition strategy for Viking Rise. On the development side, the team has also been working on optimizations and content updates. As a result, we have seen some fluctuations in the game's monthly revenue in the near term. At this point, the adjustments are largely complete, and the game's revenue has stabilized. Going forward, we're still hoping the team can continue to improve the game's metrics. At which point, we'd be in a position to ramp up user acquisition spending. Because at the moment, looking at its retention and ROI metrics, the game is sitting in what we'd call a maintenance phase. To get it into an acceleration phase, we'd still need to see some meaningful improvement in long-term retention and medium-term ROI.
For the time being, we'll be focused on keeping Viking Rise on a steady, stable trajectory, and allocating more of our marketing resources into Doomsday: Last Survivors, with the goal of getting the game to the next level first. Then we'll revisit and adjust our user acquisition spend on Viking Rise based on how the game's optimization progress plays out. Thank you.
The next question asks how the company views the life cycle of Lords Mobile and its revenue trajectory going forward.
Lords Mobile has proven to be an extremely resilient title in terms of life cycle, and we do not expect to see any significant revenue decline over the next few years. We have also been putting a lot of work into improving the onboarding experience lately. The idea being that if we can get early retention up, we can bring in more new users, grow DAU, and keep revenue on a more stable footing going forward. As we mentioned earlier, our R&D strategy is about distilling the key success factors from our proven titles, and we are not just feeding those learnings from Doomsday: Last Survivors into the Project AA and Project SA projects. We have also been taking what has worked in terms of early retention design and applying those same lessons to Lords Mobile.
Lords Mobile has also been continuously evolving in line with that direction, and we expect to see some encouraging results within this year. Thank you.
The next question asks about the company's plans for the future development of its app business. The second part of the question asks about the expected revenue trajectory and user growth targets going forward.
At this stage, our approach to growing the app business has been fairly measured and methodical, focused on building steadily and sustainably. The goal is to grow revenue steadily while simultaneously expanding our user base. Going forward, we will continue to take that same steady, disciplined approach with a focus on scaling up revenue over time. On the user side, our MAU currently stands at 71 million. Our near-term target is to break through the 80 million mark and then continue pushing toward an even larger scale from there. Thank you.
The next question asks how the company views the casual gaming market and whether there are any titles currently in development in that category. Thank you.
In the global market, casual games have long been one of the largest and most established categories overseas. We are very optimistic about this category, particularly the Merge-2 genre, which has been hugely popular over the past couple of years. There is still significant room for growth in both gameplay mechanics and monetization within this genre. In terms of our product pipeline, alongside our SLG titles, Merge-2 casual games represent another key development direction for IGG. These titles are currently still in development, so please stay tuned. Thank you.
The next question asks how the company views its financial performance outlook for the second half of the year. Thank you.
For the second half of the year, we expect our existing core games and app business to continue delivering steady, resilient performance. Doomsday: Last Survivors is expected to be a meaningful driver of growth, while our other titles will continue to contribute steady revenue and cash flow. That is our overall outlook for the second half of the year. Thank you.
The next question asks about the company's dividend distribution plans going forward.
In terms of our dividend, we expect to largely continue along the lines of what we announced for this year's interim dividend, an interim dividend of 30% plus a special dividend of 30%. Of course, this will also take into account any capital needs or investment opportunities the company may have at that point. If cash flow remains stable and there are no other uses for the capital, we would generally look to follow the same approach as this year's interim dividend, returning 60% of profits to shareholders. Thank you.
The next question has two parts. The first asks how management views the increasingly competitive SLG market and the rising cost of user acquisition. The second asks what impact this has had on the company's products and user acquisition ROI, and how the company plans to respond.
Looking at the current landscape, competition in the overseas SLG market is indeed intensifying. That said, the SLG category as a whole continues to maintain a steady growth trajectory and remains one of the key growth engines within the broader mobile gaming market. At IGG, our SLG titles are built with a long-term life cycle in mind. As a result, our approach to game design, global operations, and user acquisition tends to differ from most other game companies in the market. In fact, if you look at many of the top SLG titles out there, they tend to see revenue spike quickly after launch and then begin declining. With a typical revenue cycle of roughly two to three, maybe four years. But if you look at Lords Mobile, it's been resilient for over 10 years now. Doomsday is in its fourth year this year.
By conventional wisdom, a four-year-old game should already be in decline. Yet Doomsday: Last Survivors is currently at its peak and still trending upward. That's really a testament to our differentiated approach, both in how we operate our games and how we manage user acquisition. We're also leveraging AI to improve efficiency across our R&D, game operations, and marketing. At the same time, through our targeted user acquisition strategy and the inherent quality of our products, we aim to achieve longer life cycles and sustain our competitive edge over the long term. Thank you.
Thank you, Mr. Xu. The next question is regarding the company's capital expenditure plans for the second half of this year. Thank you.
Capital expenditure for the second half of the year is expected to be broadly in line with the first half of the year, with no significant changes anticipated. However, we may evaluate the procurement of AI-dedicated servers, estimated at a maximum of $1 million-$2 million , such as NVIDIA GB200 or H200 units to support research and development and enhance R&D efficiency. This represents a potential investment.
Thank you. Moving to the next question. Could management explain the drivers behind the growth in gross profit margin for the first half of the year? Furthermore, will it be further enhanced in the future? Thank you.
The expansion in gross profit margin was primarily driven by the reduction in channel costs across the platforms, which had a positive impact on overall gross margin. We continuously optimize our overall operating expenses, which contributed to elevating the group's gross profit margin from approximately 83% in the same period last year to 85%. Looking ahead, I believe there remains room for further improvement in gross profit margin. This is a clear trajectory we have observed following nearly seven to eight months of dedicated efforts this year. Thank you.
Regarding the next question, given that SLG games rely heavily on interactions between players and guilds, is the company considering increasing the integration of AI elements? Specifically, would this include introducing AI players to enhance interaction, alleviate real-time online pressure for human players, and reduce user acquisition costs? Thank you.
We focus on introducing features like AI assistance and AI NPCs to help players onboard more quickly. As for incorporating AI players, our research indicates that players engage with SLG titles like IGG's not only for entertainment, but also for social connection. They value making real friends, connecting globally to battle online, meeting offline during travels, and forming genuine relationships. Our player base overwhelmingly prefers interacting with real human players. Consequently, we currently have no plans to introduce AI players and will instead limit AI integration to AI assistance and AI NPCs. Thank you.
Thank you, Mr. Xu. The next question is: the company's share repurchase activity during the first half of the year was noticeably subdued. Could management share the core considerations behind this strategy? Additionally, are there any explicit share repurchase plans or budget allocations set for the second half of this year? Thank you.
Share repurchases were lower during the first half of the year, primarily because we executed a substantial dividend payout in March. This reflected our confidence in the company's future and our commitment to shareholder returns, which we believe provided sufficient confidence to the market. Looking to the second half, we will evaluate market dynamics and revenue performance to pursue our share repurchase plan as appropriate. However, specific targets regarding buyback volume or execution price ranges remain undetermined at this stage. Thank you.
Thank you, Mr. Xu. The next question is: will members of the management team continue to increase their shareholding in the company? Thank you.
That is certainly a possibility. During the first half of the year, our CEO, Mr. Cai, increased his shareholding by approximately 10 million shares. Last year, several directors, including myself and our CFO, also consistently purchased additional shares in the market. When management maintains strong confidence in the company's future, such actions are standard practice. Consequently, I believe our management team will likely continue to increase their holdings in IGG stock in the future. Thank you.
Thank you, Mr. Xu. The next question is: Will playable ads improve advertising efficiency? If so, could management share some approximate data or metrics with us? Thank you.
Yes. Playable ads definitely enhance advertising efficiency, and we conducted extensive testing on this format during the first half of the year. While specific performance metrics remain confidential, I can share that playable ads represent a rapidly growing share of our total ad creatives, a trend we expect to continue moving forward. Playable ads deliver superior conversion rates and highly effective user targeting. By allowing players to preview core gameplay and artistic style beforehand, users who ultimately download the game demonstrate significantly higher retention rates compared to traditional ad formats. Consequently, playable ads will become a core priority within our user acquisition strategy. Thank you.
Thank you. Moving to the next question. The domestic mini games market delivered a strong performance during the first half of the year, achieving 36% year-on-year revenue growth, the highest growth rate across all segments. Is the company considering launching mini game versions of its titles? Thank you.
Yes, we have indeed observed the compelling performance of the mini-game market. We are currently strategically positioning our product portfolio to launch mini game adaptations. Development is actively underway, so please stay tuned. We expect to roll out our own mini game titles in the near future. Thank you.
Thank you, Mr. Xu. Moving to the next question. The company's effective tax rate increased during the first half of the year. What are management's expectations for our effective tax rate in the future? Thank you.
The increase in effective tax rate stems from our game incubator projects, which is currently in its initial investment phase and generating temporary operating losses. From accounting perspective, these losses have not been used to offset our current taxable profits. Consequently, the effective tax rate for the first half of the year appears elevated, but this is strictly a temporary situation. Once the incubator projects turn profitable, these accumulated tax losses can be utilized to deduct future income tax expenses. Therefore, we expect our long-term effective tax rate to remain within the range of 15%-20%. This elevation is not due to any structural shift, but rather a timing matter regarding tax loss recognition, which we plan to utilize as profitability kicks in. Thank you.
Thank you. Moving to the next question. Could management share insights on the ROI performance of the company's core SLG titles? Additionally, what is the approximate payback period for these games? Thank you.
Overall performance across our core SLG portfolio remains strong. Payback periods vary depending on game subgenres and underlying mechanics, but all metrics remain well within healthy ranges. Our core advertising principle is to allocate ad spend strictly when cost recovery is assured and target profitability is met. Among these titles, Doomsday: Last Survivors has demonstrated particularly outstanding performance following its major June update, effectively cutting its payback period nearly in half. While exact payback timelines remain proprietary, this significant reduction implies substantial upside potential for both future revenue and profit margins. Thank you.
Thank you, Mr. Xu. The next question is: What is the current progress of the company's AI comic drama business? Additionally, what are the key strategic plans and operational roadmap for this business segment in the second half of the year? Thank you.
We conducted extensive trials with our AI comic drama business during the first half of the year, and it remains in an exploratory phase. While the creative quality of our productions has reached a strong standard, achieving commercial success will require further exploration. As with game development, product creation and product marketing are two distinct operational domains. Having established a clear methodology for product creation, our focus now shifts to market distribution and user acquisition. Commercial success will ultimately depend on our marketing execution. We invite investors to stay tuned, and we will update the market as further progress is achieved. Thank you.
Thank you, Mr. Xu. The next question is: Is there room for further expansion in the company's profit margins in the future? Thank you.
There is certainly room for margin expansion. As previously mentioned, we are currently investing in several overseas projects, and these upfront expenses have temporarily weighed on our overall profitability. Looking ahead to next year, expenditures in these areas are projected to decrease by half, which will directly translate into improved profit margins. By the following year, once these initial investment phases conclude and begin generating positive returns, our profit margins should continue to trend upward. Therefore, based on our current outlook, we anticipate that the company's overall margin trajectory will remain on a sustained upward path. Thank you.
Thank you. Moving to the next question, could management share its expectations regarding the future grossing trends and projected peak performance for Doomsday: Last Survivors? Thank you.
We can only offer a short-term assessment at this stage. Based on our current marketing metrics and ROI performance, we anticipate sustained and healthy growth throughout the second half of the year. For year-end, as mentioned earlier, our target is to reach approximately $19 million- $20 million in monthly grossings. Beyond that time frame, we refrain from making long-term projections for now, preferring to focus first on attaining our near-term goals. We will provide further analysis on the long-term outlook during our next results briefing. Thank you.
Thank you. Moving to the next question, Doomsday: Last Survivors experienced a decline in monthly active users during the first half of the year. What is the expected future trend for its monthly active users? Thank you.
Following significant optimizations to core gameplay mechanics, the title achieved a substantial improvement in ROI. Enhancements in ROI performance naturally led us to reallocate our user acquisition budget across geographic markets. In earlier phases, lower ROI figures prompted us to acquire a higher volume of users from regions such as Southeast Asia and Latin America to maintain user scale given the significantly lower user acquisition cost, where the acquisition cost of a single user in Japan could yield 10- 20 users in Southeast Asia. As overall ROI metrics improved, we strategically scaled back user acquisition spending in Southeast Asia and Latin America, reallocating those funds toward higher ARPU markets, including North America, Europe, Japan, and South Korea. Consequently, while overall advertising expenditures remained stable or increased slightly, the unit volume of acquired users adjusted downwards due to higher regional acquisition costs.
This shift explains the step-down in MAU observed during the first half of the year, which reflects a deliberate portfolio optimization rather than organic user churn. This strategic pivot positions our player base on a much healthier and more monetizable foundation. Moving forward, we intend to expand MAU steadily from this optimized baseline. Given that developed markets currently deliver superior investment returns, North America, Europe, Japan, and South Korea will remain our primary target markets through at least the second half of the year. Thank you.
Thank you to our management team for the detailed answers, and thank you to all our investors for your active participation. Due to time constraints, this live webcast and conference call has now concluded. Thank you for your continued interest in the company. On behalf of IGG, I would like to thank you once again for attending today's call. Thank you.
Thank you, everyone.