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 third quarter of 2017.
Summary Financials
Third Quarter 2017 Financial Results (USD)
(Unaudited) |
|
2017 |
|
2016 |
|
CHANGE |
Sales |
$13.5
million |
|
$11.9
million |
|
+13.6
% |
Gross Profit |
$1.4
million |
|
$2.0
million |
|
-32.9
% |
Gross Margin |
10.1% |
|
17.0% |
|
-41.0
% |
Net Loss Attributable
to ChinaNet |
($2.1)
million |
|
($1.5)
million |
|
-41.8
% |
EPS from continuing
operations (Basic & Diluted) |
($ 0.17) |
|
($0.13) |
|
-33.4
% |
|
|
|
|
|
|
For the three months ended September 30, 2017, total revenues
increased to $13.5 million from $11.9 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 $2.3 million, which decreased 49.1% from $4.4 million
in the third 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 49.9% from $7.5 million in the third
quarter of 2016 to $11.3 million in the third 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 September 30, 2017 was $1.4
million, compared to $2.0 million in the third quarter of 2016, a
decrease of 32.9%. Gross margin was 10.1%, down from 17.0% in 2016,
primarily due to the increase in relative lower margin revenues
from search engine marketing and data service during the
quarter.
Operating expenses decreased by 0.6% to $3.4 million for the
three months ended September 30, 2017. Sales and marketing expenses
decreased by 34.3% to $0.7 million. General and administrative
expenses increased by 32.3% to $2.3 million. Loss from operations
was $2.0 million in the third quarter of 2017, compared to a loss
of $1.4 million in the third quarter of 2016.
Net loss attributable to ChinaNet for the three months ended
September 30, 2017 was $2.1 million and loss per share from
continuing operations was $0.17, compared to a net loss of $1.5
million and loss per share from continuing operations of $0.13 in
the third quarter of 2016. The weighted average diluted shares
outstanding for the three months ended September 30, 2017 was 12.1
million shares versus 11.4 million for the three months ended
September 30, 2016.
Nine Months 2017 Financial Results (USD)
(Unaudited) |
|
2017 |
|
2016 |
|
CHANGE |
Sales |
$31.3
million |
|
$25.4
million |
|
+23.2
% |
Gross Profit |
$4.3
million |
|
$6.1
million |
|
-29.3
% |
Gross Margin |
13.8% |
|
24.1% |
|
-42.6
% |
Net Loss Attributable
to ChinaNet |
($4.0)
million |
|
($4.2)
million |
|
+4.8 % |
EPS from continuing
operations (Basic & Diluted) |
($0.33) |
|
($0.36) |
|
+8.4 % |
|
|
|
|
|
|
Revenues for the nine months ended September 30, 2017 were $31.3
million, an increase of 23.2% from $25.4 million for the same
period a year ago, which was primarily an increase in search engine
marketing and data service revenue.
Gross profit was $4.3 million, a decrease of 29.3% for the first
nine months of 2017, and gross profit margin of 13.8%, compared to
24.1% in 2016. Operating expenses decreased by 21.0% to $7.8
million compared to $9.9 million for the first nine months of 2016.
The Company reported an operating loss of $3.5 million in the
compared to an operating loss of $3.8 million for the first nine
months of 2016.
Net loss attributable to ChinaNet common shareholders and net
loss per share was $4.0 million and $0.33 for the nine months ended
September 30, 2017.
Balance Sheet and Cash Flow
The Company had $1.2 million in cash and cash equivalents as of
September 30, 2017, compared to $3.0 million as of December 31,
2016, working capital of $5.2 million compared to $6.9 million as
of December 31, 2016, and a current ratio of 1.6 to 1, compared 1.9
to 1 as of December 31, 2016. Total shareholders' equity of
ChinaNet was $19.7 million as of September 30, 2017 compared to
$22.3 million at December 31, 2016.
The Company generated approximately $2.7 million of cash
outflows from operations for the nine months ended September 30,
2017 compared to a $1.9 million of cash outflows for the nine
months ended September 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
In August 2017, ChinaNet was awarded the nomination of Vice
President of the first China E-Commerce Industry Alliance (CEIA).
The China E-Commerce Industry Alliance (CEIA) is a nation-wide
business association that consists of China’s e-commerce industry
web portals, industry professionals, industry leaders, and elite
enterprises. CEIA commits to supporting e-commerce applications,
renovation programs to facilitate cross-border cooperation and the
integration of social resources to promote industry support and
collaboration. The establishment of the CEIA is beneficial to solve
many problems faced by fast-growing enterprises and enterprises in
transition in the e-commerce industry.
A charity event hosted by ChinaNet, the China Welfare
Foundation, and Tencent that started in September raised a total of
3.16 million RMB in three days. The charity promotes
entrepreneurship and support for college students in creating new
business leading to new employment or entrepreneurship
opportunities for millions.
ChinaNet’s subsidiary 28.com released an update to its free
smartphone application “28” for entrepreneurs seeking business
opportunities in China. 28’s updated version 3.0 enables aspiring
and seasoned entrepreneurs to search and sort new business
opportunities by categories including “Newest Projects”, “Hot
Projects”, “Quality Projects”, and “Project Ranking” as well as new
and enhanced membership functions. 28’s 3.0 now has over 100,000
average active users per month, with over 180,000 downloads since
its update. Over 10,000 new users are being added each month. In
total, the app has close to 1,000,000 users.
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) |
|
|
|
|
September 30,
2017 |
|
December 31, 2016 |
|
|
|
(US $) |
|
(US $) |
|
|
|
(Unaudited) |
|
|
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
|
$ |
1,234 |
|
|
$ |
3,035 |
|
Term
deposit |
|
|
|
- |
|
|
|
3,056 |
|
Accounts
receivable, net |
|
|
|
4,653 |
|
|
|
3,322 |
|
Other
receivables, net |
|
|
|
2,863 |
|
|
|
- |
|
Prepayment and deposit to suppliers |
|
|
|
5,450 |
|
|
|
4,754 |
|
Due from
related parties, net |
|
|
|
234 |
|
|
|
213 |
|
Other
current assets |
|
|
|
95 |
|
|
|
95 |
|
Total current assets |
|
|
|
14,529 |
|
|
|
14,475 |
|
|
|
|
|
|
|
Long-term
investments |
|
|
|
949 |
|
|
|
1,340 |
|
Property and equipment,
net |
|
|
|
341 |
|
|
|
471 |
|
Intangible assets,
net |
|
|
|
6,653 |
|
|
|
7,264 |
|
Goodwill |
|
|
|
5,195 |
|
|
|
4,970 |
|
Deferred tax
assets |
|
|
|
1,473 |
|
|
|
1,522 |
|
Total Assets |
|
|
$ |
29,140 |
|
|
$ |
30,042 |
|
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Short-term bank loan |
|
|
$ |
753 |
|
|
$ |
721 |
|
Accounts
payable |
|
|
|
625 |
|
|
|
102 |
|
Advances
from customers |
|
|
|
2,267 |
|
|
|
1,420 |
|
Accrued
payroll and other accruals |
|
|
|
529 |
|
|
|
685 |
|
Due to
new investors related to terminated security purchase
agreements |
|
|
|
923 |
|
|
|
884 |
|
Payable
for purchasing of software technology |
|
|
|
429 |
|
|
|
411 |
|
Taxes
payable |
|
|
|
3,089 |
|
|
|
2,910 |
|
Other
payables |
|
|
|
715 |
|
|
|
487 |
|
Total current liabilities |
|
|
|
9,330 |
|
|
|
7,620 |
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
Long-term borrowing from a director |
|
|
|
132 |
|
|
|
126 |
|
Total Liabilities |
|
|
|
9,462 |
|
|
|
7,746 |
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
ChinaNet
Online Holdings, Inc.’s stockholders’ equity |
|
|
|
|
|
Common
stock (US$0.001 par value; authorized 50,000,000 shares;
issued |
|
|
|
|
|
|
|
|
|
and
outstanding 12,340,542 shares and 12,158,542 shares at
September |
|
|
|
|
|
|
|
|
|
30, 2017
and December 31, 2016, respectively) |
|
|
|
12 |
|
|
|
12 |
|
Additional paid-in capital |
|
|
|
29,769 |
|
|
|
29,285 |
|
Statutory
reserves |
|
|
|
2,607 |
|
|
|
2,607 |
|
Accumulated deficit |
|
|
|
(14,325 |
) |
|
|
(10,362 |
) |
Accumulated other comprehensive income |
|
|
|
1,504 |
|
|
|
700 |
|
Total ChinaNet Online Holdings, Inc.’s stockholders’
equity |
|
|
|
19,567 |
|
|
|
22,242 |
|
|
|
|
|
|
|
Noncontrolling interests |
|
|
|
111 |
|
|
|
54 |
|
Total equity |
|
|
|
19,678 |
|
|
|
22,296 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity |
|
|
$ |
29,140 |
|
|
$ |
30,042 |
|
|
CHINANET ONLINE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS (In thousands, except for number of shares
and per share data) |
|
|
|
Nine Months Ended September 30, |
|
Three Months Ended September 30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
(US $) |
|
(US $) |
|
(US $) |
|
(US $) |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
Revenues |
|
|
|
|
|
|
|
|
From unrelated parties |
|
$ |
31,171 |
|
|
$ |
25,017 |
|
|
$ |
13,509 |
|
|
$ |
11,741 |
|
From related parties |
|
|
116 |
|
|
|
381 |
|
|
|
14 |
|
|
|
161 |
|
Total revenues |
|
|
31,287 |
|
|
|
25,398 |
|
|
|
13,523 |
|
|
|
11,902 |
|
Cost of revenues |
|
|
26,955 |
|
|
|
19,269 |
|
|
|
12,163 |
|
|
|
9,874 |
|
Gross profit |
|
|
4,332 |
|
|
|
6,129 |
|
|
|
1,360 |
|
|
|
2,028 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
Sales and marketing expenses |
|
|
2,399 |
|
|
|
3,069 |
|
|
|
740 |
|
|
|
1,126 |
|
General and administrative expenses |
|
|
4,402 |
|
|
|
5,290 |
|
|
|
2,318 |
|
|
|
1,752 |
|
Research and development expenses |
|
|
1,012 |
|
|
|
1,530 |
|
|
|
312 |
|
|
|
514 |
|
Total
operating expenses |
|
|
7,813 |
|
|
|
9,889 |
|
|
|
3,370 |
|
|
|
3,392 |
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(3,481 |
) |
|
|
(3,760 |
) |
|
|
(2,010 |
) |
|
|
(1,364 |
) |
|
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
|
|
Interest income |
|
|
39 |
|
|
|
72 |
|
|
|
2 |
|
|
|
19 |
|
Interest expense |
|
|
(109 |
) |
|
|
(4 |
) |
|
|
(36 |
) |
|
|
(4 |
) |
Other expenses |
|
|
(208 |
) |
|
|
(112 |
) |
|
|
(2 |
) |
|
|
(99 |
) |
Total
other expenses |
|
|
(278 |
) |
|
|
(44 |
) |
|
|
(36 |
) |
|
|
(84 |
) |
|
|
|
|
|
|
|
|
|
Loss before
income tax expense, noncontrolling interests and discontinued
operation |
|
|
(3,759 |
) |
|
|
(3,804 |
) |
|
|
(2,046 |
) |
|
|
(1,448 |
) |
Income tax expense |
|
|
(115 |
) |
|
|
(155 |
) |
|
|
(2 |
) |
|
|
(3 |
) |
Loss from
continuing operations |
|
|
(3,874 |
) |
|
|
(3,959 |
) |
|
|
(2,048 |
) |
|
|
(1,451 |
) |
Loss from and
on disposal of discontinued operation, net of income
tax |
|
|
- |
|
|
|
(60 |
) |
|
|
- |
|
|
|
- |
|
Net
loss |
|
|
(3,874 |
) |
|
|
(4,019 |
) |
|
|
(2,048 |
) |
|
|
(1,451 |
) |
Net income attributable to noncontrolling interests from continuing
operations |
|
|
(89 |
) |
|
|
(144 |
) |
|
|
(39 |
) |
|
|
(21 |
) |
Net loss
attributable to ChinaNet Online Holdings, Inc. |
|
$ |
(3,963 |
) |
|
$ |
(4,163 |
) |
|
$ |
(2,087 |
) |
|
$ |
(1,472 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(3,874 |
) |
|
$ |
(4,019 |
) |
|
$ |
(2,048 |
) |
|
$ |
(1,451 |
) |
Foreign currency
translation gain/(loss) |
|
|
772 |
|
|
|
(630 |
) |
|
|
340 |
|
|
|
(152 |
) |
Comprehensive
loss |
|
$ |
(3,102 |
) |
|
$ |
(4,649 |
) |
|
$ |
(1,708 |
) |
|
$ |
(1,603 |
) |
Comprehensive income
attributable to noncontrolling interests |
|
|
(57 |
) |
|
|
(113 |
) |
|
|
(42 |
) |
|
|
(19 |
) |
Comprehensive loss
attributable to ChinaNet Online Holdings,
Inc. |
|
$ |
(3,159 |
) |
|
$ |
(4,762 |
) |
|
$ |
(1,750 |
) |
|
$ |
(1,622 |
) |
|
|
|
|
|
|
|
|
|
|
|
Loss per
share |
|
|
|
|
|
|
|
|
|
|
Loss from continuing
operations per common share |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.33 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.13 |
) |
Loss from discontinued
operations per common share |
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
- |
|
|
$ |
(0.01 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
12,019,040 |
|
|
11,353,657 |
|
|
|
12,074,304 |
|
|
|
11,358,971 |
|
|
CHINANET ONLINE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands) |
|
|
|
Nine Months Ended September 30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
(US $) |
|
(US $) |
|
|
(Unaudited) |
|
(Unaudited) |
Cash flows from operating
activities |
|
|
|
|
Net loss |
|
$ |
(3,874 |
) |
|
$ |
(4,019 |
) |
Adjustments to reconcile net loss
to net cash used in operating
activities |
|
|
|
|
Depreciation and amortization |
|
|
1,067 |
|
|
|
1,170 |
|
Share-based compensation expenses |
|
|
484 |
|
|
|
1,718 |
|
Loss on disposal of fixed assets/other long-term assets |
|
|
- |
|
|
|
117 |
|
Provision for allowances for doubtful accounts |
|
|
1,254 |
|
|
|
- |
|
Loss on deconsolidation of VIEs |
|
|
- |
|
|
|
9 |
|
Deferred taxes |
|
|
115 |
|
|
|
155 |
|
Changes in operating assets and liabilities |
|
|
|
|
Accounts receivable |
|
|
(2,436 |
) |
|
|
(1,196 |
) |
Other receivables |
|
|
67 |
|
|
|
1,416 |
|
Prepayment and deposit to suppliers |
|
|
(470 |
) |
|
|
(1,172 |
) |
Due from related parties |
|
|
(11 |
) |
|
|
(24 |
) |
Other current assets |
|
|
(33 |
) |
|
|
16 |
|
Accounts payable |
|
|
506 |
|
|
|
(129 |
) |
Advances from customers |
|
|
764 |
|
|
|
(109 |
) |
Accrued payroll and other accruals |
|
|
(169 |
) |
|
|
(146 |
) |
Other payables |
|
|
36 |
|
|
|
403 |
|
Taxes payable |
|
|
46 |
|
|
|
66 |
|
Commitment and contingencies |
|
|
- |
|
|
|
(128 |
) |
Net cash used in
operating activities |
|
|
(2,654 |
) |
|
|
(1,853 |
) |
|
|
|
|
|
Cash flows from investing
activities |
|
|
|
|
Payment for office equipment and leasehold improvement |
|
|
(2 |
) |
|
|
(150 |
) |
Payment for purchasing of software technology |
|
|
- |
|
|
|
(1,977 |
) |
Term-deposit matured during the period |
|
|
3,118 |
|
|
|
- |
|
Long-term investment in and advance to cost/equity method
investees |
|
|
- |
|
|
|
(787 |
) |
Withdraw long-term investment in cost/equity method
investees |
|
|
441 |
|
|
|
- |
|
Short-term loan to an unrelated party |
|
|
(2,795 |
) |
|
|
- |
|
Proceeds from disposal of VIEs |
|
|
- |
|
|
|
28 |
|
Cash effect on deconsolidation of VIEs |
|
|
- |
|
|
|
(18 |
) |
Net cash provided
by/(used in)
investing activities |
|
|
762 |
|
|
|
(2,904 |
) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Proceeds from short-term bank loan |
|
|
441 |
|
|
|
456 |
|
Repayment of short-term bank loan |
|
|
(441 |
) |
|
|
- |
|
Net cash provided by
financing activities |
|
|
- |
|
|
|
456 |
|
|
|
|
|
|
Changes in cash and cash equivalents included in assets classified
as held for sale |
|
|
- |
|
|
|
132 |
|
|
|
|
|
|
Effect of exchange rate fluctuation on cash and cash
equivalents |
|
|
91 |
|
|
|
(88 |
) |
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
(1,801 |
) |
|
|
(4,257 |
) |
|
|
|
|
|
Cash and
cash equivalents at beginning of the period |
|
|
3,035 |
|
|
|
5,503 |
|
Cash and
cash equivalents at end of the period |
|
$ |
1,234 |
|
|
$ |
1,246 |
|
|
Contact:MZ North AmericaTed Haberfield,
PresidentDirect: +1-760-755-2716Email: thaberfield@mzgroup.us
Web: www.mzgroup.us
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