ChinaNet Online Holdings, Inc. (Nasdaq:CNET) ("ChinaNet" or the
"Company"), an integrated online advertising, precision marketing
and data-analysis and management services platform, announced today
financial results for the second quarter of 2017.
Summary Financials
Second Quarter 2017 Financial Results (USD)
(Unaudited) |
|
2017 |
2016 |
CHANGE |
Sales |
$10.5 million |
|
$8.4million |
|
+24.5 |
% |
Gross Profit |
$1.7 million |
|
$2.5 million |
|
-31.9 |
% |
Gross Margin |
16.2% |
|
29.6% |
|
-45.3 |
% |
Net Loss Attributable
to ChinaNet |
($0.8) million |
|
($1.3) million |
|
38.4 |
% |
EPS from continuing
operations* (Basic & Diluted) |
($0.07) |
|
($0.11) |
|
36.4 |
% |
*Per share amount for the three months ended June, 2016 has been
retroactively restated to reflect the Company’s 1 for 2.5 reverse
stock split, which was effective on August 19, 2016.
For the three months ended June 30, 2017, total revenues
increased to $10.5 million from $8.4 million in the prior year,
primarily due to the increase from search engine marketing and data
service revenue during the quarter.
During the quarter, revenues from internet advertising and data
services was $2.5 million, which decreased 56.7% from $5.7 million
in the second quarter of 2016. ChinaNet continues to focus on
integrating and upgrading its internet advertising and data service
to SME clients and investing in developing new service modules for
clients, and believes that the launch of new services in future
will help to increase market penetration and recurring revenues.
The decline was offset by an increase in search engine marketing
and data service revenue of 188.9% from $2.8 million in the second
quarter of 2016 to $8.0 million in the second quarter of 2017. This
increase was supported by the CloudX system, which drove more
precision marketing and ROI for clients.
Gross profit for the quarter ended June 30, 2017 was $1.7
million, compared to $2.5 million in the second quarter of 2016, a
decrease of 31.9%. Gross margin was 16.2%, down from 29.6% in 2016,
primarily due to the increase in relative lower margin revenues
from search engine marketing and data service during the quarter.
Internet advertising and data service gross margin remained 43% in
the second quarter of 2017 as in 2016.
Operating expenses decreased by 39.1% to $2.1 million for the
three months ended June 30, 2017. Sales and marketing expenses
decreased by 22.4% to $0.8 million. General and administrative
expenses decreased by 45.9% to $1.0 million. Loss from operations
was $0.4 million in the second quarter of 2017, an improvement of
57.3% compared to a loss of $1.0 million in the second quarter of
2016.
Net loss attributable to ChinaNet for the three months ended
June 30, 2017 was $0.8 million and loss per share from continuing
operations was $0.07, compared to a net loss of $1.3 million and
loss per share from continuing operations of $0.11 in the second
quarter of 2016. The weighted average diluted shares outstanding
for the three months ended June 30, 2017 was 12.0 million shares
versus 11.4 million for the three months ended June 30, 2016.
First Half 2017 Financial Results (USD)
(Unaudited) |
|
2017 |
2016 |
CHANGE |
Sales |
$17.8 million |
|
$13.5 million |
|
+31.6 |
% |
Gross Profit |
$3.0 million |
|
$4.1 million |
|
-27.5 |
% |
Gross Margin |
16.7% |
|
30.4% |
|
-44.9 |
% |
Net Loss Attributable
to ChinaNet |
($1.9) million |
|
($2.7) million |
|
30.3 |
% |
EPS from continuing
operations* (Basic & Diluted) |
($0.16) |
|
($0.23) |
|
30.4 |
% |
*Per share amount for the six months ended June, 2016 has been
retroactively restated to reflect the Company’s 1 for 2.5 reverse
stock split, which was effective on August 19, 2016.
Revenues for the six months ended June 30, 2017 were $17.8
million, an increase of 31.6% from $13.5 million for the same
period a year ago, which was primarily an increase in search engine
marketing and data service revenue.
Gross profit was $3.0 million, a decrease of 27.5% for the first
six months of 2017, and gross profit margin of 16.7%, compared to
30.4% in 2016. Operating expenses decreased by 31.6% to $4.4
million compared to $6.5 million for the first six months of 2016.
The Company reported an operating loss of $1.5 million in the first
half of 2017 compared to an operating loss of $2.4 million in the
first half of 2016.
Net loss attributable to ChinaNet common shareholders and net
loss per share was $1.9 million and $0.16 for the six months ended
June 30, 2017.
Balance Sheet and Cash Flow
The Company had $1.8 million in cash and cash equivalents as of
June 30, 2017, compared to $3.0 million as of December 31, 2016,
working capital of $6.3 million compared to $6.9 million as of
December 31, 2016, and a current ratio of 1.7 to 1, compared 1.9 to
1 as of December 31, 2016. Total shareholders' equity of ChinaNet
was $21.2 million at June 30, 2017 compared to $22.2 million at
December 31, 2016.
The Company generated approximately $1.3 million of cash
outflows from operations for the six months ended June 30, 2017
compared to a $0.3 million of cash inflows for the six months ended
June 30, 2016.
Business Updates
In January 2017, ChinaNet announced the launch of its updated
comprehensive website www.chinanet-online.com, reflecting
ongoing efforts to provide up-to-date information for customers,
investors and shareholders. The new ChinaNet website has been
redesigned to be more dynamic, user-friendly and content rich. The
website allows visitors to efficiently access information needed
regarding ChinaNet's profile and history, products and services,
and investor relations content including press releases and SEC
reporting. The website now also includes enhanced video, including
a compressive overview of the Company's business which can be
viewed directly
at: http://www.chinanet-online.com/english_index.html
Conference Call DetailsDate: Wednesday,
August 16, 2017 Time: 8:30 a.m. EDT Toll-free dial-in number:
1-800-263-8506 International dial-in number: 1-719-457-2642
Conference ID: 3341576Webcast:
http://public.viavid.com/index.php?id=125967
A replay of the conference call will be available
after 11:30 a.m. Eastern time through September 16,
2017.
Toll-free replay number: 1-844-512-2921 International replay
number: 1-412-317-6671 Replay ID: 3341576
About ChinaNet Online Holdings, Inc.
ChinaNet Online Holdings, a parent company of ChinaNet Online
Media Group Ltd., incorporated in the BVI (ChinaNet), is an
integrated online advertising, precision marketing and
data-analysis and management services platform. ChinaNet provides
prescriptive analysis for its clients to improve business outcomes
and to create more efficient enterprises. The Company leverages an
optimization framework, provided by its comprehensive data-analysis
infrastructure, to blend data, mathematical, and computational
sciences into an outcome management platform for which it monetizes
on a per client basis. ChinaNet uniquely optimizes and prescribes
its clients decision making processes based on its proprietary
ecosystem. For more information,
visit www.chinanet-online.com.
Safe Harbor
This release contains certain "forward-looking statements"
relating to the business of ChinaNet Online Holdings, Inc., which
can be identified by the use of forward-looking terminology such as
"believes," "expects," "anticipates," "estimates" or similar
expressions. Such forward-looking statements involve known and
unknown risks and uncertainties, including business uncertainties
relating to government regulation of our industry, market demand,
reliance on key personnel, future capital requirements, competition
in general and other factors that may cause actual results to be
materially different from those described herein as anticipated,
believed, estimated or expected. Certain of these risks and
uncertainties are or will be described in greater detail in our
filings with the Securities and Exchange Commission. These
forward-looking statements are based on ChinaNet's current
expectations and beliefs concerning future developments and their
potential effects on the Company. There can be no assurance that
future developments affecting ChinaNet will be those anticipated by
ChinaNet. These forward-looking statements involve a number of
risks, uncertainties (some of which are beyond the control of the
Company) or other assumptions that may cause actual results or
performance to be materially different from those expressed or
implied by such forward-looking statements. ChinaNet undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required under applicable securities
laws.
CHINANET ONLINE HOLDINGS, INC. |
CONSOLIDATED BALANCE SHEETS |
(In thousands, except for number of shares and
per share data) |
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2017 |
|
2016 |
|
|
(US $) |
|
(US $) |
|
|
(Unaudited) |
|
|
Assets |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
1,816 |
|
|
$ |
3,035 |
|
Term
deposit |
|
|
3,129 |
|
|
|
3,056 |
|
Accounts
receivable, net |
|
|
5,091 |
|
|
|
3,322 |
|
Prepayment and deposit to suppliers |
|
|
4,693 |
|
|
|
4,754 |
|
Due from
related parties, net |
|
|
229 |
|
|
|
213 |
|
Other
current assets |
|
|
183 |
|
|
|
95 |
|
Total current
assets |
|
|
15,141 |
|
|
|
14,475 |
|
|
|
|
|
|
Long-term
investments |
|
|
1,373 |
|
|
|
1,340 |
|
Property and equipment,
net |
|
|
382 |
|
|
|
471 |
|
Intangible assets,
net |
|
|
6,823 |
|
|
|
7,264 |
|
Goodwill |
|
|
5,090 |
|
|
|
4,970 |
|
Deferred tax
assets |
|
|
1,444 |
|
|
|
1,522 |
|
Total
Assets |
|
$ |
30,253 |
|
|
$ |
30,042 |
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Short-term bank loan |
|
$ |
738 |
|
|
$ |
721 |
|
Accounts
payable |
|
|
130 |
|
|
|
102 |
|
Advances
from customers |
|
|
2,519 |
|
|
|
1,420 |
|
Accrued
payroll and other accruals |
|
|
467 |
|
|
|
685 |
|
Due to
new investors related to terminated security purchase
agreements |
|
|
905 |
|
|
|
884 |
|
Payable
for purchasing of software technology |
|
|
421 |
|
|
|
411 |
|
Taxes
payable |
|
|
3,019 |
|
|
|
2,910 |
|
Other
payables |
|
|
675 |
|
|
|
487 |
|
Total current
liabilities |
|
|
8,874 |
|
|
|
7,620 |
|
|
|
|
|
|
Long-term
liabilities: |
|
|
|
|
Long-term
borrowing from a director |
|
|
129 |
|
|
|
126 |
|
Total
Liabilities |
|
|
9,003 |
|
|
|
7,746 |
|
|
|
|
|
|
Equity: |
|
|
|
|
ChinaNet
Online Holdings, Inc.’s stockholders’ equity |
|
|
|
|
Common
stock (US$0.001 par value; authorized 50,000,000 shares; issued and
outstanding 12,265,542 shares and 12,158,542 shares at June 30,
2017 and December 31, 2016, respectively) |
|
|
12 |
|
|
|
12 |
|
Additional paid-in capital |
|
|
29,633 |
|
|
|
29,285 |
|
Statutory
reserves |
|
|
2,607 |
|
|
|
2,607 |
|
Accumulated deficit |
|
|
(12,238 |
) |
|
|
(10,362 |
) |
Accumulated other comprehensive income |
|
|
1,167 |
|
|
|
700 |
|
Total
ChinaNet Online Holdings, Inc.’s stockholders’ equity |
|
|
21,181 |
|
|
|
22,242 |
|
|
|
|
|
|
Noncontrolling interests |
|
|
69 |
|
|
|
54 |
|
Total
equity |
|
|
21,250 |
|
|
|
22,296 |
|
|
|
|
|
|
Total
Liabilities and Equity |
|
$ |
30,253 |
|
|
$ |
30,042 |
|
|
CHINANET ONLINE HOLDINGS, INC. |
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS |
|
|
(In thousands, except for number of shares and
per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
Three Months Ended June 30, |
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
(US $) |
|
(US $) |
|
(US $) |
|
(US $) |
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
From
unrelated parties |
|
$ |
17,662 |
|
|
$ |
13,276 |
|
|
$ |
10,417 |
|
|
$ |
8,264 |
|
|
|
From
related parties |
|
|
102 |
|
|
|
220 |
|
|
|
83 |
|
|
|
172 |
|
|
|
Total revenues |
|
|
17,764 |
|
|
|
13,496 |
|
|
|
10,500 |
|
|
|
8,436 |
|
|
|
Cost of
revenues |
|
|
14,792 |
|
|
|
9,395 |
|
|
|
8,800 |
|
|
|
5,939 |
|
|
|
Gross
profit |
|
|
2,972 |
|
|
|
4,101 |
|
|
|
1,700 |
|
|
|
2,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
|
Sales and
marketing expenses |
|
|
1,659 |
|
|
|
1,943 |
|
|
|
825 |
|
|
|
1,063 |
|
|
|
General
and administrative expenses |
|
|
2,084 |
|
|
|
3,538 |
|
|
|
992 |
|
|
|
1,832 |
|
|
|
Research
and development expenses |
|
|
700 |
|
|
|
1,016 |
|
|
|
305 |
|
|
|
590 |
|
|
|
Total operating
expenses |
|
|
4,443 |
|
|
|
6,497 |
|
|
|
2,122 |
|
|
|
3,485 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(1,471 |
) |
|
|
(2,396 |
) |
|
|
(422 |
) |
|
|
(988 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses) |
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
|
37 |
|
|
|
53 |
|
|
|
18 |
|
|
|
26 |
|
|
|
Interest
expense |
|
|
(73 |
) |
|
|
- |
|
|
|
(37 |
) |
|
|
- |
|
|
|
Other
expenses |
|
|
(206 |
) |
|
|
(13 |
) |
|
|
(203 |
) |
|
|
(1 |
) |
|
|
Total other
(expenses)/income |
|
|
(242 |
) |
|
|
40 |
|
|
|
(222 |
) |
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before
income tax expense, noncontrolling interests and discontinued
operation |
|
|
(1,713 |
) |
|
|
(2,356 |
) |
|
|
(644 |
) |
|
|
(963 |
) |
|
|
Income
tax expense |
|
|
(113 |
) |
|
|
(152 |
) |
|
|
(113 |
) |
|
|
(180 |
) |
|
|
Loss from
continuing operations |
|
|
(1,826 |
) |
|
|
(2,508 |
) |
|
|
(757 |
) |
|
|
(1,143 |
) |
|
|
Loss from and
on disposal of discontinued operation, net of income
tax |
|
|
- |
|
|
|
(60 |
) |
|
|
- |
|
|
|
(14 |
) |
|
|
Net
loss |
|
|
(1,826 |
) |
|
|
(2,568 |
) |
|
|
(757 |
) |
|
|
(1,157 |
) |
|
|
Net
income attributable to noncontrolling interests from continuing
operations |
|
|
(50 |
) |
|
|
(123 |
) |
|
|
(32 |
) |
|
|
(123 |
) |
|
|
Net loss
attributable to ChinaNet Online Holdings, Inc. |
|
$ |
(1,876 |
) |
|
$ |
(2,691 |
) |
|
$ |
(789 |
) |
|
$ |
(1,280 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,826 |
) |
|
$ |
(2,568 |
) |
|
$ |
(757 |
) |
|
$ |
(1,157 |
) |
|
|
Foreign currency
translation gain/(loss) |
|
|
432 |
|
|
|
(478 |
) |
|
|
326 |
|
|
|
(590 |
) |
|
|
Comprehensive
loss |
|
$ |
(1,394 |
) |
|
$ |
(3,046 |
) |
|
$ |
(431 |
) |
|
$ |
(1,747 |
) |
|
|
Comprehensive income
attributable to noncontrolling interests |
|
|
(15 |
) |
|
|
(94 |
) |
|
|
(34 |
) |
|
|
(111 |
) |
|
|
Comprehensive
loss attributable to ChinaNet Online Holdings, Inc. |
|
$ |
(1,409 |
) |
|
$ |
(3,140 |
) |
|
$ |
(465 |
) |
|
$ |
(1,858 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share |
|
|
|
|
|
|
|
|
|
|
Loss from continuing
operations per common share |
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
$ |
(0.16 |
) |
|
$ |
(0.23 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.11 |
) |
|
|
Loss from discontinued
operations per common share |
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
$ |
- |
|
|
$ |
(0.01 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
|
11,990,950 |
|
|
|
11,350,971 |
|
|
|
11,999,304 |
|
|
|
11,358,971 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
**
Weighted average number of shares outstanding and per share amounts
for the six and three months ended June 30, 2016 have been
retroactively restated to reflect the Company’s 1 for 2.5 reverse
stock split, which was effective on August 19, 2016. |
CHINANET ONLINE HOLDINGS,
INC. |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands) |
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
(US $) |
|
(US $) |
|
|
(Unaudited) |
|
(Unaudited) |
Cash flows from
operating activities |
|
|
|
|
Net
loss |
|
$ |
(1,826 |
) |
|
$ |
(2,568 |
) |
Adjustments to
reconcile net loss to net cash (used in)/provided by operating
activities |
|
|
|
|
Depreciation and amortization |
|
|
707 |
|
|
|
760 |
|
Share-based compensation expenses |
|
|
348 |
|
|
|
1,135 |
|
Loss on
disposal of fixed assets |
|
|
- |
|
|
|
21 |
|
Reverse
of allowances for doubtful accounts |
|
|
(29 |
) |
|
|
- |
|
Loss on
deconsolidation of VIEs |
|
|
- |
|
|
|
9 |
|
Deferred
taxes |
|
|
113 |
|
|
|
152 |
|
Changes in
operating assets and liabilities |
|
|
|
|
Accounts
receivable |
|
|
(1,666 |
) |
|
|
(771 |
) |
Other
receivables |
|
|
(19 |
) |
|
|
1,325 |
|
Prepayment and deposit to suppliers |
|
|
173 |
|
|
|
612 |
|
Due from
related parties |
|
|
(10 |
) |
|
|
(25 |
) |
Other
current assets |
|
|
(37 |
) |
|
|
1 |
|
Accounts
payable |
|
|
24 |
|
|
|
(154 |
) |
Advances
from customers |
|
|
1,050 |
|
|
|
(388 |
) |
Accrued
payroll and other accruals |
|
|
(225 |
) |
|
|
(89 |
) |
Other
payables |
|
|
86 |
|
|
|
296 |
|
Taxes
payable |
|
|
38 |
|
|
|
86 |
|
Commitment and contingencies |
|
|
- |
|
|
|
(129 |
) |
Net cash (used
in)/provided by operating activities |
|
|
(1,273 |
) |
|
|
273 |
|
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
Payment
for office equipment and leasehold improvement |
|
|
(2 |
) |
|
|
(148 |
) |
Long-term
investment in and advance to cost/equity method investees |
|
|
- |
|
|
|
(754 |
) |
Payment
for purchasing of software technology |
|
|
- |
|
|
|
(1,991 |
) |
Proceeds
from disposal of VIEs |
|
|
- |
|
|
|
28 |
|
Cash
effect on deconsolidation of VIEs |
|
|
- |
|
|
|
(18 |
) |
Net cash used
in investing activities |
|
|
(2 |
) |
|
|
(2,883 |
) |
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
|
|
|
|
Net cash
provided by/(used in) financing activities |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Changes in cash and
cash equivalents included in assets classified as held for
sale |
|
|
- |
|
|
|
55 |
|
|
|
|
|
|
Effect of exchange rate
fluctuation on cash and cash equivalents |
|
|
56 |
|
|
|
(72 |
) |
|
|
|
|
|
Net decrease in
cash and cash equivalents |
|
|
(1,219 |
) |
|
|
(2,627 |
) |
|
|
|
|
|
Cash and cash
equivalents at beginning of the period |
|
|
3,035 |
|
|
|
5,503 |
|
Cash and cash
equivalents at end of the period |
|
$ |
1,816 |
|
|
$ |
2,876 |
|
|
|
|
|
|
Contact:
MZ North America
Ted Haberfield, President
Direct: +1-760-755-2716
Email: thaberfield@mzgroup.us
Web: www.mzgroup.us
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