Solid Performance in Its First Annual Results after Listing;
Net Profit Increases 35.9% to RMB24,900,000 in 2016

HONG KONG —┬áVixtel Technologies Holdings Limited (“Vixtel Technologies” or “Group”, stock code: 8342), the market leader in China’s Application Performance Management (“APM”) industry, was listed on The Stock Exchange of Hong Kong Limited on 15 December 2016, which greatly enhanced the Group’s corporate image and customer awareness of their products. Moving forward, the Group will continue to invest in research and development to promote the integration of newly designed version with their customers’ specific systems and network environment of APM technology and to actively expand their user base. Meanwhile, the Group also plans to expand the APM business from large enterprises to small and medium-enterprises through the new SaaS platform and to enhance the growth of the APM online service revenue of the Group.

For the telecom operator APM business, the Group plans to:

1. develop the application of APM technologies in OTT and IPTV video, seize the current trend of rapid development of online video services and expand the Group’s market share and revenue in the industry.
2. invest in big data analysis technologies, make full use of accumulated millions of user data of the Group and provide customers with value-added services based on user behavior, user portrait and user perception.

In SaaS, the Group’s focus will be on:

1. improving the channels and means of marketing, establishing a sub-industry and multi-level distributor system and expanding the user base.
2. establishing partnerships with leading companies in converged communications, CDN and cloud computing industry and promoting the Group’s online services through system integration approach. In overseas markets, the Group will carefully examine countries and regions which are suitable for the Group’s products and sales channels, and take Southeast Asia as the core place to promote the Group’s products and services.

Leveraging its market leadership in the APM industry and stable customer base, the Group’s first annual results since its listing recorded a solid performance, as all major financial parameters for the year ended 31 December 2016 significantly improved compared with last year. During the period, the Group’s revenue grew considerably 44.1% year-on-year to approximately RMB74.3 million (2015: approximately RMB51.5 million). Benefiting from the increase in revenue generated from system integration services, the Group’s gross profit increased approximately 40.9% to approximately RMB44.0 million (2015: approximately RMB31.2 million). Gross profit margin was approximately 59.2%. Excluding one-off listing expenses, the Group’s net profit increased by approximately 35.9% to approximately RMB24.9 million (2015: approximately RMB18.3 million), and the net profit margin was approximately 33.6%. As at 31 December 2016, the Group’s cash and cash equivalents were approximately RMB89.1 million (31 December 2015: approximately RMB 20.4 million).

Business Review

System integration services
This segment provides system integration services by tailor-making APM products to allow customers to better manage and monitor their applications and networks. During the review period, through effective marketing efforts and its good reputation among the customers, the Group’s customer base further expanded to cover more enterprises in telecommunications as well as the radio and television industry. This has led to a remarkable year-on-year growth in revenue of approximately 62.4% generated from this segment to approximately RMB43.4 million.

Sales of standard hardware and software
The Group from time to time sells hardware and standard APM products that purchased from third parties to customers who do not require tailor-making services. During the review period, revenue generated from this segment soared approximately 353.5% to approximately RMB12.3 million, primarily due to the fact that one of the customers has deployed huge amount of hardware agents to fully cover its province for the Internet application performance monitoring and management.

Software development services
The Group’s software development services typically involve developing customized supporting software for upgrade and expansion of the APM products already integrated with their customers’ systems and networks. Thanks to the increased customer base of the Group, and an increasing demand for software development services to upgrade and expand their existing APM systems, revenue derived from this segment increased by approximately 21.2% to approximately RMB8.5 million.

Technical services
This segment provides operational support for the Group’s APM products, system maintenance, network analysis and optimization, and research study of specific topics on application and network performance. As the Group allocated more resources to the promotion of new products and technologies of this segment, during the review period, revenue derived from technical services decreased to approximately RMB10.0 million.

Chairman Mr. Yue said, “Although the economy saw downward pressure in 2016, by capitalizing on our leading core products and services, we were able to seize the opportunity arising from the booming APM market in China and achieved satisfactory results. Looking ahead, APM technologies and markets will continue to be a keen focus for technological innovation and investment in the IT industry and we have strong confidence in the development prospects of China’s APM industry. The rapidly increasing take-up of the Internet of Things and cloud computing is further driving market demand for Internet APM business. Recognizing these trends, we continue to strengthen our in-house research and development capabilities and expand our user base to further consolidate our current industry-leadership position. At the same time, as we capture the growth opportunities in China, we are also strategically expanding our market overseas so as to realize the long term goal of becoming an internationally-leading APM products and services provider and generate better returns for our shareholders.”