Wowo Limited (the “Company” or “JM Wowo”) (NASDAQ:JMU), a leading
B2B online e-commerce platform that provides integrated services to
suppliers and customers in the foodservice industry in China, today
announced its unaudited financial results for the third quarter of
2016 ended September 30, 2016.
Disclaimer: When preparing the unaudited
condensed consolidated financial statements for the three months
and nine months ended September 30, 2016, the Company revisited the
presentation of revenue for the period of January 1 to June 30,
2016, and concluded that certain revenue recognized on a gross
basis disclosed in the earning release dated August 22, 2016 for
the second quarter of 2016 should have been presented on a net
basis in accordance with relevant US GAAP. Accordingly, the Company
revised revenue and cost of revenues for the three months ended
June 30, 2016 to reflect such change of gross presentation to net
presentation.
Third Quarter 2016
Highlights
- Revenues in the third quarter of 2016 were $19.8 million, an
increase of 30.7% from $15.2 million in the second quarter of
2016.
- Gross loss increased to $145,000 in the third quarter of 2016,
from a gross loss of $45,000 in the second quarter of 2016.
- B2B online platform recorded gross billing of RMB 3,194 million
(US$479 million) in the third quarter of 2016, measured in terms of
gross merchandise value (“GMV”), increasing 99.8% from gross
billing of RMB1,598 million (US$240 million) in the second quarter
of 2016.
- Active customer accounts increased to 33,214 as of September
30, 2016, increasing 1.3% from 32,775 as of June 30, 2016.
- Third-party sellers on the Company’s JMU online marketplace
slightly increased to 14,094, compared to 14,085 in the second
quarter of 2016.
Ms. Xiaoxia Zhu, Co-chairperson and Chief
Executive Officer commented, “We are pleased to report third
quarter earnings results with double-digit growth in sales and
robust GMV growth. Our third quarter revenue was driven by the
increase in order volume from our growing online direct sales
business and an increase in our corporate client base as well as
seasonal factors. During the third quarter, 90% of our total sales
came from top black card membership holders, which are largely
comprised of renowned catering companies.”
“To better serve our clients with premium
product choices, we raised the supplier entry requirement of our
online platform in the third quarter. Despite fewer suppliers, we
continue to add major companies in the food and hospitality
industry to our supplier list, including Pacifaith International
Trade (Shanghai) Co. Ltd., Shanghai Liangyou Haishi Oils & Fats
Industry Co. Ltd., Shanghai Yimin NO.1 Foods (Group) Co. Ltd.,
NISSEI Shanghai Co. Ltd. and Shanghai Bangjie Hotel Supplies
Company Co. Ltd., among others.”
“As we experience rapid growth in our user base,
we continue our focus on improving the user experience. Currently,
we are developing a technical solution to connect our online
platform with the ERP systems of restaurant chain customers to
streamline purchasing transactions, which we believe will further
drive our gross billing once the new system launches. In addition,
we are recruiting senior operational and R&D talent to our team
to improve operating efficiency and R&D capabilities. Our
corporate governance has also been strengthened with the
appointment of Dr. Gang Yu to our Board as an Independent Director.
We believe his management expertise and proven leadership will
assist JM Wowo with its long-term growth plans. Finally, in an
effort to communicate more closely with investors, we launched our
redesigned investor relations website recently to better reflect
our most current business services.”
Recent Corporate Highlights
- In September, the Company updated its mobile app and wechat
service account to fulfill customer’s procurement needs. The mobile
app is currently available in Android and the iOS App Store. JM
Wowo’s wechat service account has passed system burst capacity test
and is capable of hosting 400 customer orders simultaneously.
- On September 3rd, 2016, the Company announced that it entered
into a strategic cooperation agreement with Shanghai Chunmin
Internet Financial Information Service Co., Ltd. (“Chunmin”), to
jointly build a supply chain finance company to provide JM Wowo’s
B2B customers related services, including order factoring, credit
granting service on the platform, financing and leasing as well as
other aspects of supply chain finance services.
- In September, Xiao Nan Guo acquired a 9.82% stake in JM Wowo
for a total consideration of HK$368,396,837 (approximately US$47.5
million) from the Company's existing shareholders. This transaction
priced the Wowo’s ordinary shares at HK$2.6 per share
(approximately US$6.0 per American depositary share of the
Company).
- In August, JM Wowo announced that the Company has appointed Dr.
Gang Yu as an Independent Director.
- In July 2016, the Company relocated its corporate headquarters
to Bay Valley, Shanghai.
- In July, JM Wowo’s consolidated affiliated entity in China,
Shanghai Zhongmin Supply Chain Management Co., Ltd., is among the
first group of 94 Shanghai-based trading companies that received
the ‘Regional Headquarters Certificate’ from the Shanghai
government, recognizing it as one of the key trading companies
headquartered in Shanghai.
- In July, the Company entered into a strategic partnership with
Chongqing Haier Home Appliance Sales Co., Ltd. Shanghai Branch. JM
Wowo customers can purchase a full line of Haier products with
supporting services on JM Wowo’s online marketplace.
- On July 18th, the Company entered into a strategic cooperation
agreement with Taetea Group, a leading tea company that produces,
distributes and sells Pu’er tea with over 2,200 retail outlets in
Asia.
Third Quarter 2016 Financial
Performance
As previously announced, in September 2015, JM
Wowo divested Wowo Group Limited, the Company’s group buying and
other non-foodservice-related businesses in an effort to build one
of China's largest internet foodservice platforms, improve its
profitability and streamline its business operations.
Revenues were $19.8 million for
the third quarter of 2016, an increase of 30.7% from $15.2 million
in the second quarter of 2016. The growth of revenue in the third
quarter 2016 was mainly due to the larger order volume from
corporate clients through our online direct sales business.
Cost of revenues was $20.0
million in third quarter 2016, an increase of 31.3% from $15.2
million in the second quarter of 2016, which is generally in-line
with the growth of the Company’s revenues.
Gross loss for the third
quarter of 2016 was $145,000, compared to gross loss of $45,000 in
second quarter 2016. The increase in gross loss was mainly due to
increased share-based compensation granted to senior technology
staff in the third quarter of 2016.
Selling and marketing expenses
in the third quarter 2016 increased 98.4% to $4.2 million from $2.1
million in the second quarter of 2016. As a percentage of total
revenue, selling and marketing expense was 21.4% and 14.1% in the
third and second quarter of 2016, respectively. The increase in
marketing expenses was primarily due to client promotion activities
in the third quarter.
General and administrative
expenses in third quarter 2016 were $3.6 million, an
increase of 2.8% compared to $3.5 million in the second quarter of
2016. The increase in general and administrative expenses was
mainly due to the increase in share-based compensation to
administrative staff in the third quarter of 2016. As a percentage
of total revenues, general and administrative expenses was 18.0%
and 22.9% in the third and second quarter of 2016,
respectively.
Loss from operations in the
third quarter of 2016 was $7.9 million, an increase of 40.7% from
$5.7 million in the second quarter of 2016.
Net loss attributable to the
Company in the third quarter of 2016 was $7.4 million, an
increase of 45.2% as compared to $5.1 million in the second quarter
of 2016. Non-GAAP net loss attributable to the Company, which
excludes amortization of acquired intangible assets, impairment of
goodwill, share-based compensation and related provision for income
tax benefits, was $5.1 million compared to $3.5 million in the
second quarter of 2016. For the quarter ended September 30, 2016
and June 30, 2016, the Company’s weighted average number of
ordinary shares used in computing loss per ordinary share was
1,476,208,670 and 1,476,208,670, respectively.
As of September 30, 2016, the Company’s cash and
cash equivalents was $8.8 million, a decrease of 21.3% as compared
to $11.2 million as of December 31, 2015. The decrease in cash and
cash equivalents was mainly due to the operating cost and the
growth of the Company’s online direct sales which requires cash
outflow for products procurement. Working capital was $2.6 million
as compared to $16.1 million as of December 31, 2015. Total
shareholders’ equity was $277.2 million and $304.7 million as of
September 30, 2016 and December 31, 2015, respectively.
Note 1: Non-GAAP measures
To supplement our consolidated financial
statements presented in accordance with U.S. generally accepted
accounting principles (“GAAP”), we use various non-GAAP financial
measures that are adjusted from results based on U.S. GAAP to
exclude amortization of acquired intangible assets, impairment of
goodwill, share-based compensation and related provision for income
tax benefits.
Reconciliations of our non-GAAP financial
measures to our U.S. GAAP financial measures are shown in tables at
the end of this earnings release, which provide more details about
the non-GAAP financial measures.
Our non-GAAP financial information is provided
as additional information to help investors compare business trends
among different reporting periods on a consistent basis and to
enhance investors' overall understanding of the historical and
current financial performance of our continuing operations and our
prospects for the future. Our non-GAAP financial information should
be considered in addition to results prepared in accordance with
U.S. GAAP, but should not be considered a substitute for or
superior to U.S. GAAP financial results. In addition, our
calculation of this non-GAAP financial information may be different
from the calculation used by other companies, and therefore
comparability may be limited.
Our non-GAAP information (including non-GAAP
loss from operations and net loss attributable to the Company)
which is adjusted from results based on U.S. GAAP to exclude
amortization of acquired intangible assets, impairment of goodwill,
share-based compensation and related provision for income tax
benefits. A limitation of using these non-GAAP financial measures
is that amortization of acquired intangible assets, impairment of
goodwill, share-based compensation and related provision for income
tax benefits have been and may continue to be for the foreseeable
future significant recurring expenses in our results of operations.
We compensate for these limitations by providing reconciliations of
our non-GAAP financial measures to our U.S. GAAP financial
measures. Please see the reconciliation tables at the end of this
earnings release.
Conference Call Information
The Company will hold a conference call at 8:00
am ET (9:00 pm Beijing/Hong Kong time) on November 22, 2016 to
discuss its third quarter 2016 results. Listeners may access the
call by dialing:
US (Toll free): +1 855-298-3404Hong Kong (Toll
free): 800-905-927China: 4001-200-539
Access code: 8875306
A webcast will also be available through the
Company's investor relations website at http://ir.ccjmu.com.
A replay of the call will be available through
November 29, 2016 by dialing:
US: +1-866-846-0868Hong Kong: 800-966-697China:
4001-842-240Access code: 8875306
About JM Wowo
JM Wowo currently operates China’s leading B2B
online e-commerce platform that provides integrated services to
suppliers and customers in the catering industry. With the help of
Internet and cloud technologies, JM Wowo has the vision to reshape
the procurement and distribution pattern and build a fair business
ecosystem in the catering industry in China. JM Wowo is further
promoting the use of its platform for small- and medium-sized
restaurants and restaurant chains in China.
Through cooperation with national and local
industry associations and reputable restaurant groups across China,
JM Wowo has formed a leading industrial alliance and has great
resource leverage in China’s catering industry. JM Wowo works
closely with suppliers and customers in the catering industry,
providing one-stop procurement services, as well as other
value-added services.
Safe Harbor StatementThis
announcement contains forward-looking statements. These statements
are made under the “safe harbor” provisions of the U.S. Private
Securities Litigation Reform Act of 1995. These forward-looking
statements can be identified by terminology such as “aim”,
“anticipate”, “believe”, “estimate”, “expect”, “going forward”,
“intend”, “ought to”, “plan”, “project”, “potential”, “seek”,
“may”, “might”, “can”, “could”, “will”, “would”, “shall”, “should”,
“is likely to” and the negative form of these words and other
similar expressions. Among other things, statements that are not
historical facts, including statements about JM Wowo’s beliefs and
expectations, the business outlook and quotations from management
in this announcement, as well as JM Wowo’s strategic and
operational plans, are or contain forward-looking statements.
Forward-looking statements involve inherent risks and
uncertainties. A number of factors could cause actual results to
differ materially from those contained in any forward-looking
statement, including but not limited to the following: The general
economic and business conditions in China may deteriorate. The
growth of Internet and mobile user population in China might not be
as strong as expected. JM Wowo’s plan to enhance customer
experience, upgrade infrastructure and increase service offerings
might not be well received. JM Wowo might not be able to implement
all of its strategic plans as expected. Competition in China may
intensify further. All information provided in this press release
is as of the date of this press release and are based on
assumptions that we believe to be reasonable as of this date, and
JM Wowo does not undertake any obligation to update any
forward-looking statement, except as required under applicable
law.
Wowo
Limited |
Unaudited
Condensed Consolidated Statements of Operations |
(US dollars in
thousands, except share number and per share data) |
|
|
|
Three months ended |
|
|
June 30, 2016 |
|
September 30, 2016 |
Revenues |
|
|
15,176 |
|
|
|
|
19,836 |
|
Cost of revenues |
|
|
15,221 |
|
|
|
|
19,981 |
|
Gross loss |
|
|
(45 |
) |
|
|
|
(145 |
) |
Operating expenses: |
|
|
|
|
|
Selling and marketing |
|
|
2,135 |
|
|
|
|
4,236 |
|
General and administrative |
|
|
3,469 |
|
|
|
|
3,565 |
|
|
|
|
|
|
|
Total operating expenses |
|
|
5,604 |
|
|
|
|
7,801 |
|
Loss from operations |
|
|
(5,649 |
) |
|
|
|
(7,946 |
) |
Interest income |
|
|
5 |
|
|
|
|
5 |
|
|
|
|
|
|
|
Loss before provision for income
taxes |
|
|
(5,644 |
) |
|
|
|
(7,941 |
) |
Provision for income tax benefits |
|
|
540 |
|
|
|
|
530 |
|
Net loss attributable to Wowo
Limited |
|
|
(5,104 |
) |
|
|
|
(7,411 |
) |
Net loss attributable to holders of
ordinary shares of Wowo Limited |
|
|
(5,104 |
) |
|
|
|
(7,411 |
) |
|
|
|
|
|
|
Net loss per ordinary shares |
|
|
|
|
|
Basic |
|
|
(0.0035 |
) |
|
|
|
(0.0050 |
) |
Diluted |
|
|
(0.0035 |
) |
|
|
|
(0.0050 |
) |
Weighted average shares used in calculating net
loss per ordinary shares |
|
|
|
|
|
Basic |
|
|
1,476,208,670 |
|
|
|
|
1,476,208,670 |
|
Diluted |
|
|
1,476,208,670 |
|
|
|
|
1,476,208,670 |
|
|
Wowo
Limited |
Unaudited
Condensed Consolidated Balance Sheets |
(US dollars in
thousands) |
|
|
December 31, |
|
September 30, |
|
2015 |
|
2016 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
|
11,152 |
|
|
|
8,773 |
|
Accounts receivable, net |
|
3,748 |
|
|
|
2,475 |
|
Inventories, net |
|
94 |
|
|
|
1,526 |
|
Prepaid expenses and other current assets |
|
25,282 |
|
|
|
17,786 |
|
Amounts due from related parties |
|
807 |
|
|
|
406 |
|
Total current assets |
|
41,083 |
|
|
|
30,966 |
|
Long-term equity investment |
|
- |
|
|
|
750 |
|
Property and equipment, net |
|
478 |
|
|
|
1,877 |
|
Acquired intangible assets, net |
|
50,563 |
|
|
|
39,884 |
|
Goodwill |
|
250,650 |
|
|
|
242,541 |
|
|
|
|
|
Total assets |
|
342,774 |
|
|
|
316,018 |
|
Current liabilities: |
|
|
|
Accounts payable |
|
3,831 |
|
|
|
3,706 |
|
Accrued expenses and other current
liabilities |
|
19,971 |
|
|
|
18,204 |
|
Advance from customers |
|
828 |
|
|
|
1,983 |
|
Amounts due to related parties |
|
320 |
|
|
|
4,476 |
|
Total current liabilities |
|
24,950 |
|
|
|
28,369 |
|
Non-current liabilities: |
|
|
|
Other non-current liabilities |
|
502 |
|
|
|
502 |
|
Deferred tax liabilities-non-current |
|
12,641 |
|
|
|
9,971 |
|
Total liabilities |
|
38,093 |
|
|
|
38,842 |
|
Shareholders' equity: |
|
|
|
Ordinary shares |
|
14 |
|
|
|
14 |
|
Additional paid-in capital |
|
630,470 |
|
|
|
631,178 |
|
Accumulated deficit |
|
(326,711 |
) |
|
|
(343,520 |
) |
Accumulated other comprehensive
(loss)/income |
|
908 |
|
|
|
(10,496 |
) |
Total Wowo Limited shareholders'
equity |
|
304,681 |
|
|
|
277,176 |
|
Total liabilities and
equity |
|
342,774 |
|
|
|
316,018 |
|
|
Wowo Limited |
Reconciliation of Non-GAAP financial measures
to comparable GAAP measures |
(US Dollars in thousands) |
|
Three Months
Ended |
|
June 30, 2016 |
|
September 30, 2016 |
|
|
|
|
Loss from
operations |
|
5,649 |
|
|
|
7,946 |
|
Net loss
attributable to Wowo Ltd. |
|
5,104 |
|
|
|
7,411 |
|
|
|
|
|
Share-based
compensation |
|
- |
|
|
|
708 |
|
Amortization of
acquired intangible assets |
|
2,161 |
|
|
|
2,118 |
|
Provision for income
tax benefits |
|
(540 |
) |
|
|
(530 |
) |
Impairment of
goodwill |
|
- |
|
|
|
- |
|
|
|
|
|
Non-GAAP loss
from operation (a)(b)(d) |
|
3,488 |
|
|
|
5,120 |
|
Non-GAAP net
loss attributable to Wowo
Ltd.(a)(b)(c)(d) |
|
3,483 |
|
|
|
5,115 |
|
|
|
|
|
(a) Adjustment to
exclude share-based compensation |
(b) Adjustment to
exclude amortization of acquired intangible assets |
(c) Adjustment to
exclude provision for income tax benefits |
(d) Adjustment to
exclude impairment of goodwill |
Contact:
Lichao Zhao, IR Director
Wowo Limited
zhaolichao@ccjmu.com
Tel: +86-185-1627-8876
Bill Zima
ICR Inc.
bill.zima@icrinc.com
Tel: +1(203)-682-8200
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