BEIJING, Nov. 14, 2017 /PRNewswire/ -- China Finance
Online Co. Limited ("China Finance Online", or the "Company",
"we", "us" or "our") (NASDAQ GS: JRJC), a leading web-based
financial services company that provides Chinese retail investors
with online access to securities trading services, wealth
management products, securities investment advisory services, as
well as financial database and analytics services to institutional
customers, today announced its unaudited financial results for the
third quarter and first nine months ended September 30, 2017.
Third Quarter 2017 Financial Highlights
- Net revenues were $10.7
million, up from $9.6 million
in the second quarter of 2017
- Equity brokerage business grew 155.4% year-over-year and 50.6%
quarter-over-quarter
- Gross margin was 44.9%, compared with 73.9% in the third
quarter of 2016
- Total cash and cash equivalents, restricted cash and short-term
investments were $36.1 million as of
September 30, 2017
- Net losses attributable to China Finance Online were
$8.5 million, compared with a net
loss of $8.3 million in the second
quarter of 2017
- Lingxi Robo-Advisor outperformed most of its peer robo-advisor
products in the Chinese market with average return of 9.8% in the
first 9 months of 2017
First Nine Months of 2017 Highlights
- Net revenues were $29.0
million, a decrease of 54.5% compared with $63.8 million in the first nine months of
2016
- Net losses attributable to China Finance Online were
$28.4 million, compared with a net
income of $11.2 million in the first
nine months of 2016
Mr. Zhiwei Zhao, Chairman and CEO
of China Finance Online, commented, "We continue to recover on our
top line as our intelligent-finance driven fintech business shows
solid traction and our brokerage related business maintains strong
growth momentum. We are experiencing over 30% sequential increase
in our financial information division. At the end of October, our
Alexa rating also reached into the top 60 in China and top 500 globally."
"As the Chinese stock market experienced solid growth in 2017,
the overall investor confidence has improved substantially. We
recently rolled out our cloud-based software products for
enterprise users. These products feature proprietary financial
engineering with artificial intelligence, big data and cloud
computing to enable investment researchers and sophisticated
investors to improve investment efficiency and optimize investment
decisions and empower professional investment advisors to better
serve their clients. These intelligent products have already been
well received by large financial institutions. We expect to
generate revenue from enterprise software subscription business in
the coming quarters. We remain confident that we will turn a
positive net cash-flow in the fourth quarter. With our strong
fintech capability and state-of-the-art products, we are well
positioned to ride the next wave of the bull market in China." Mr. Zhao concluded.
Third Quarter 2017 Financial Results
Net revenues were $10.7
million, compared with $17.1
million during the third quarter of 2016 and $9.6 million during the second quarter of 2017.
During the third quarter of 2017, revenues from financial services,
the financial information and advisory business, and advertising
services contributed 70%, 24% and 5% of the net revenues,
respectively, compared with 82%, 13% and 4%, respectively, for the
corresponding period in 2016.
Revenues from financial services were $7.5 million, compared with $14.0 million during the third quarter of 2016
and $6.4 million during the second
quarter of 2017. Revenues from financial services mainly represent
equity and commodities brokerage services. The equity brokerage
business grew 155.4% year-over-year and 50.6% quarter-over-quarter.
The year-over-year decrease of revenues from financial services was
mainly due to a decline in revenues from the Company's commodities
brokerage services after the suspension of new commodities trading
by precious metal exchange in China. Revenue from commodities brokerage
declined by 97.6% year-over-year.
Revenues from the financial information and advisory
business were $2.6 million, an
increase of 19.2% from $2.2 million
during the third quarter of 2016 and 30.4% from $2.0 million in the second quarter of 2017.
Revenues from the financial information and advisory business were
comprised of subscription services from individual and
institutional customers. The year-over-year increase of revenues
from financial information and advisory business was mainly due to
the increase in subscription revenue from individual investors.
Revenues from advertising were $0.6
million, compared with $0.7
million in the third quarter of 2016 and $0.9 million in the second quarter of 2017.
Gross profit was $4.8
million, compared with $12.6
million in the third quarter of 2016 and $5.1 million in the second quarter of 2017. Gross
margin in the third quarter of 2017 was 44.9%, compared with 73.9%
in the third quarter of 2016 and 52.9% in the second quarter of
2017. The year-over-year and quarter-over-quarter decreases in
gross margin were mainly due to revenue mix changes associated with
the Company's transition to increased services for equity capital
market.
General and administrative expenses were $3.2 million, a decrease of 32.4% from
$4.8 million in the third quarter of
2016, and a decrease of 16.6% from $3.9
million in the second quarter of 2017. The year-over-year
and quarter-over-quarter decreases were mainly attributable to more
stringent expense control measures.
Sales and marketing expenses were $6.9 million, a decrease of 46.3% from
$12.9 million in the third quarter of
2016, and a decrease of 5.2% from $7.3
million in the second quarter of 2017. The year-over-year
and quarter-over-quarter decreases were mainly attributable to the
reductions in headcounts and sales commissions in the commodity
brokerage operation during the third quarter of 2017.
Research and development expenses were $3.8 million, slightly higher than $3.7 million in the third quarter of 2016, but
lower than $4.3 million in the second
quarter of 2017. The Company continues to maintain a team of senior
software engineers and capital market professionals to support
further development in fintech capability.
Total operating expenses were $14.0
million, a decrease of 34.4% from $21.3 million in the third quarter of 2016, and a
decrease of 11.0% from $15.7 million
in the second quarter of 2017.
Loss from operations was $9.2
million, compared with a loss from operations of
$8.1 million in the third quarter of
2016 and a loss from operations of $10.7
million in the second quarter of 2017.
Net loss attributable to China Finance Online was
$8.5 million, compared with a net
loss of $3.6 million in the third
quarter of 2016 and a net loss of $8.3
million in the second quarter of 2017.
Fully diluted loss per American Depository Shares ("ADS")
attributable to China Finance Online was $0.37 for the third quarter of 2017, compared
with fully diluted loss per ADS of $0.16 for the third quarter of 2016 and fully
diluted loss per ADS of $0.37 for the
second quarter of 2017. Basic and diluted weighted average numbers
of ADSs for the third quarter of 2017 were 22.7 million, compared
with basic and diluted weighted average number of ADSs of 22.7
million for the third quarter of 2016. Each ADS represents five
ordinary shares of the Company.
First Nine Months of 2017 Financial Results
Net revenues for the first nine months of 2017 were
$29.0 million, a decrease of 54.5%
compared with $63.8 million in the
first nine months of 2016.
Gross profit for the first nine months of 2017 was
$13.9 million, a decrease of 72.5%
compared with $50.7 million in the
first nine months of 2016.
Net loss attributable to China Finance Online for
the first nine months of 2017 was $28.4
million, compared to a net income of $11.2 million in the first nine months of
2016.
Fully diluted losses per ADS attributable to China Finance
Online was $1.25 for the first
nine months of 2017, compared with fully diluted earnings of
$0.44 for the first nine months of
2016.
As of September 30,
2017, total cash and cash equivalents, restricted cash and
short-term investments were $36.1
million.
Total shareholders' equity of China Finance Online was
$61.8 million as of September 30, 2017.
Recent Developments
- Rifa receives licenses for asset management and investment
advisory in Hong Kong (Type 4, 5,
9 licenses)
The Company's wholly owned subsidiary, Rifa Asset Management
Limited ("Rifa"), has received approval by the Securities and
Futures Commission ("SFC") of Hong
Kong for its Type 9 License, Type 4 License and Type 5
License. SFC is the independent statutory body in charge of
regulating the securities and futures markets in Hong Kong. The Type 9 License allows Rifa to
manage a portfolio of securities or futures contracts for clients
on a discretionary basis. The Type 4 License allows Rifa to give
investment advice to clients relating to the sale and purchase of
securities. The Type 5 License allows Rifa to give investment
advice to clients relating to the sale and purchase of futures
contracts.
- Lingxi Robo-Advisor recorded leading performance in comparison
to its peer robo-advisor products in the Chinese market
During the first nine months of 2017, the Company's Robo-Advisor
product, Lingxi, posted an average return of 9.8% with average
drawdown rate of 1.5% and significantly outperformed the Shanghai
Composite Index in return with a significantly lower drawdown.
According to China Finance Online's internal research, Lingxi's
first nine months' performance also beat most of its peer products
in the market for its better return with a lower drawdown. One of
the best-performing strategies by Lingxi produced a return of 16.6%
in the first nine months, on track to achieve a strong annual
return of 25%. During the third quarter, sales of Robo-Advisor
products increased by 400% with active users nearly doubled. Since
its inception in late 2016, Lingxi provides Chinese retail
investors with a wide array of investment combinations and
personalized global asset allocations through Chinese domestic
mutual funds. In late October of 2017, the Company also introduced
the Lingxi Platinum Product targeting mass affluent investors in
China.
Conference Call Information
The management will host a conference call on November 14, 2017 at 8:00
p.m. U.S. Eastern Time (9:00
a.m. Beijing/Hong Kong time on November 15, 2017). Dial-in details for the
earnings conference call are as follows:
US: 1-800-742-9301
Hong Kong: 800-906-648
Singapore: 800-616-2313
China: 800-870-0210 or
400-120-3170
Conference ID: 2858349
Please dial in 10 minutes before the call is scheduled to begin
and provide the conference ID to join the call.
A recording of the call will be available on China Finance
Online's website under the investor relations section.
In addition, a live and archived webcast of the conference call
will be available at
https://edge.media-server.com/m6/p/yqep9bcd.
About China Finance Online
China Finance Online Co. Limited is a leading web-based
financial services company that provides Chinese retail investors
with online access to securities trading services, wealth
management products, securities investment advisory services, as
well as financial database and analytics services to institutional
customers. The Company's prominent flagship portal
site, www.jrj.com, is ranked among the top financial websites
in China. In addition to the
web-based securities trading platform, the Company offers basic
financial software, information services and securities investment
advisory services to retail investors in China. Through its subsidiary, Shenzhen Genius
Information Technology Co. Ltd., the Company provides financial
database and analytics to institutional customers including
domestic financial, research, academic and regulatory institutions.
China Finance Online also provides brokerage services in
Hong Kong.
Safe Harbor Statement
This press release contains forward-looking statements which
constitute "forward-looking" statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and
as defined in the U.S. Private Securities Litigation Reform Act of
1995. The statements contained herein reflect management's current
views with respect to future events and financial performance.
These forward-looking statements are subject to certain risks and
uncertainties that could cause the actual results to differ
materially from those in the forward-looking statements, all of
which are difficult to predict and many of which are beyond the
control of the Company. These forward-looking statements can
be identified by terminology such as "will," "expects,"
"anticipates," "future," "intends," "plans," "believes,"
"estimates" and similar statements. Among other things, this
release contains the following forward-looking statements
regarding:
- our prospect and our ability to attract new users;
- our prospect on building a comprehensive wealth management
ecosystem through providing a fully-integrated online communication
and securities-trading platform;
- our prospect on stabilization in cash attrition and improvement
of our financial position;
- our initiatives to address customers' demand for intuitive
online investment platforms and alternative investment
opportunities; and
- the market prospect of the business of securities-trading,
securities investment advisory and wealth management.
Such statements involve certain risks and uncertainties that
could cause actual results to differ materially from those in the
forward-looking statements, which risk factors and uncertainties
include, amongst others, changing customer needs, regulatory
environment and market conditions that we are subject to; the
uneven condition of the world and Chinese economies that could lead
to volatility in the equity markets and affect our operating
results in the coming quarters; the impact of the changing
conditions of the mainland Chinese stock market, mainland Chinese
precious metals exchanges, Hong
Kong stock market and global financial markets on our future
performance; the unpredictability of our strategic transformation
and growth of new businesses; the prospect of our margin-related
business and the degree to which our implementation of margin
account screening and ongoing monitoring will yield successful
outcomes; the degree to which our strategic collaborations with
partners will yield successful outcomes; the prospects for
China's high-net-worth and
middle-class households; the prospects of equipping our customer
specialists with new technology, tools and financial knowledge;
wavering investor confidence that could impact our business; and
possible non-cash goodwill, intangible assets and investment
impairments may adversely affect our net income. Further
information regarding these and other risks is included in the
Company's filings with the U.S. Securities and Exchange Commission,
including its annual report on Form 20-F under "Forward-Looking
Information" and "Risk Factors". The Company does not undertake any
obligation to update any forward-looking statement as a result of
new information, future events or otherwise, except as required
under applicable law.
For more information, please contact:
China Finance Online
+86-10-8336-3100
ir@jrj.com
Kevin Theiss
(212) 521-4050
kevin.theiss@awakenlab.com
-- Tables Follow --
China Finance Online
Co. Limited
|
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In thousands of U.S.
dollars)
|
|
Sep. 30,
2017
|
Dec. 31,
2016
|
Assets
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
30,601
|
66,151
|
Restricted
cash
|
-
|
2,484
|
Trust bank balances
held on behalf of customers
|
37,807
|
33,174
|
Accounts receivable,
net - others
|
12,709
|
14,411
|
Accounts receivable,
net - Margin clients
|
7,919
|
7,557
|
Short-term
investments
|
5,487
|
16,444
|
Prepaid expenses and
other current assets
|
9,352
|
8,240
|
Deferred tax assets,
current
|
1,223
|
1,370
|
Total current
assets
|
105,098
|
149,831
|
Long-term investments,
net
|
2,495
|
2,561
|
Property and
equipment, net
|
6,424
|
7,398
|
Acquired intangible
assets, net
|
99
|
397
|
Rental
deposits
|
1,233
|
1,292
|
Goodwill
|
108
|
109
|
Deferred tax assets,
non-current
|
21
|
33
|
Other
deposits
|
1,103
|
6,003
|
Total
assets
|
116,581
|
167,624
|
|
|
|
Liabilities and
equity
|
|
|
Current
liabilities:
|
|
|
Deferred revenue,
current (including deferred revenue, current of the consolidated
variable interest entities without recourse to China Finance Online
Co. Limited $6,374 and $5,286 as of September 30, 2017 and December
31,2016, respectively)
|
7,487
|
6,526
|
Accrued expenses and
other current liabilities (including accrued expenses and other
current liabilities of the consolidated variable interest entities
without recourse to China Finance Online Co. Limited $6,378 and
$26,352 as of September 30, 2017 and December 31, 2016,
respectively)
|
9,915
|
29,620
|
Contingent
liability (including contingent liability of the consolidated
variable interest entities without recourse to China Finance Online
Co. Limited nil and nil as of September 30, 2017 and December 31,
2016, respectively)
|
6
|
3,000
|
Amount due to
customers for trust bank balances held on behalf of
customers(including amount due to customers for trust bank balances
held on behalf of customers of the consolidated variable interest
entities without recourse to China Finance Online Co. Limited
$1,806 and $3,071 as of September 30, 2017 and December 31, 2016,
respectively)
|
37,807
|
33,174
|
Accounts payable
(including accounts payable of the consolidated variable interest
entities without recourse to China Finance Online Co. Limited $298
and $2,151 as of September 30, 2017 and December 31, 2016,
respectively)
|
7,931
|
8,746
|
Deferred tax
liabilities, current (including deferred tax liabilities, current
of the consolidated variable interest entities without recourse to
China Finance Online Co. Limited $593 and $234 as of September 30,
2017 and December 31, 2016, respectively)
|
595
|
236
|
Income taxes payable
(including income taxes payable of the consolidated variable
interest entities without recourse to China Finance Online Co.
Limited $(2) and $3,819 as of September 30, 2017 and December
31,2016, respectively)
|
(2)
|
3,828
|
Total current
liabilities
|
63,739
|
85,130
|
Deferred tax
liabilities, non-current (including deferred tax liabilities,
non-current of the consolidated variable interest entities without
recourse to China Finance Online Co. Limited nil and $72 as of
September 30, 2017 and December 31, 2016, respectively)
|
16
|
90
|
Deferred revenue,
non-current (including deferred revenue, non-current of the
consolidated variable interest entities without recourse to China
Finance Online Co. Limited $34 and $78 as of September 30, 2017 and
December 31, 2016, respectively)
|
417
|
609
|
Total
liabilities
|
64,172
|
85,829
|
Noncontrolling
interests
|
(9,407)
|
(4,370)
|
Total China Finance
Online Co. Limited Shareholders' equity
|
61,816
|
86,165
|
Total liabilities and
equity
|
116,581
|
167,624
|
China Finance Online
Co. Limited
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(in thousands of U.S.
dollars, except share and ADS related data)
|
|
Three months
ended
|
Nine months
ended
|
|
Sep. 30,
2017
|
Sep. 30,
2016
|
Jun. 30,
2017
|
Sep. 30,
2017
|
Sep. 30,
2016
|
Net
revenues
|
10,739
|
17,062
|
9,615
|
29,026
|
63,820
|
Cost of
revenues
|
(5,921)
|
(4,454)
|
(4,526)
|
(15,097)
|
(13,166)
|
Gross
profit
|
4,818
|
12,608
|
5,089
|
13,929
|
50,654
|
Operating
expenses
|
|
|
|
|
|
General and
administrative(includes share-based compensation expenses of $558,
$1,214,$784, 2,179 and $4,241 respectively)
|
(3,220)
|
(4,766)
|
(3,863)
|
(11,195)
|
(15,331)
|
Sales and marketing
(includes share-based compensation expenses of $28, $(45), $22, $86
and $(103), respectively)
|
(6,948)
|
(12,927)
|
(7,331)
|
(22,622)
|
(35,657)
|
Product development
(includes share-based compensation expenses of $64, $(211), $22,
$147 and $(527), respectively)
|
(3,833)
|
(3,652)
|
(4,253)
|
(12,386)
|
(9,477)
|
Loss from impairment
of intangible assets
|
-
|
-
|
(292)
|
(292)
|
(1,111)
|
Loss from impairment
of goodwill
|
-
|
-
|
-
|
-
|
(6,642)
|
|
|
|
|
|
|
Total operating
expenses
|
(14,001)
|
(21,345)
|
(15,739)
|
(46,495)
|
(68,218)
|
Government
subsidies
|
-
|
650
|
-
|
230
|
1,194
|
Loss from
operations
|
(9,183)
|
(8,087)
|
(10,650)
|
(32,336)
|
(16,370)
|
Interest
income
|
59
|
212
|
119
|
252
|
833
|
Interest
expense
|
(1)
|
-
|
(1)
|
(3)
|
-
|
Short-term investment
income, net
|
102
|
(389)
|
(122)
|
65
|
(132)
|
Gain on the interest
sold and retained noncontrolling investment
|
-
|
2,246
|
1,147
|
409
|
20,568
|
Gain from sale of
equity method investment
|
-
|
-
|
111
|
111
|
-
|
Equity method
investment loss
|
(1)
|
(21)
|
(1)
|
(10)
|
(132)
|
Other income (loss),
net
|
68
|
47
|
(323)
|
(491)
|
104
|
Exchange gain (loss),
net
|
(38)
|
4
|
39
|
22
|
(80)
|
|
|
|
|
|
|
Income (loss) before
income tax benefit (provision)
|
(8,994)
|
(5,988)
|
(9,681)
|
(31,981)
|
4,791
|
Income tax benefit
(provision)
|
23
|
2,265
|
(5)
|
(494)
|
(852)
|
|
|
|
|
|
|
Net income
(loss)
|
(8,971)
|
(3,723)
|
(9,686)
|
(32,475)
|
3,939
|
Less: Net loss
attributable to the noncontrolling interest
|
(518)
|
(96)
|
(1,387)
|
(4,114)
|
(7,216)
|
Net income (loss)
attributable to China Finance Online Co. Limited
|
(8,453)
|
(3,627)
|
(8,299)
|
(28,361)
|
11,155
|
|
|
|
|
|
|
Net income
(loss)
|
(8,971)
|
(3,723)
|
(9,686)
|
(32,475)
|
3,939
|
Changes in foreign
currency translation adjustment
|
690
|
(524)
|
1,010
|
2,381
|
(1,824)
|
Net unrealized loss on
available-for-sale securities, net of tax effects of nil, ni, nil,
nil and nil respectively
|
(47)
|
-
|
(36)
|
(118)
|
-
|
Other comprehensive
income (loss), net of tax
|
643
|
(524)
|
974
|
2,263
|
(1,824)
|
Comprehensive income
(loss)
|
(8,328)
|
(4,247)
|
(8,712)
|
(30,212)
|
2,115
|
Less: comprehensive
loss attributable to noncontrolling interest
|
(518)
|
(96)
|
(1,387)
|
(4,114)
|
(7,216)
|
Comprehensive income
(loss) attributable to China Finance Online Co. Limited
|
(7,810)
|
(4,151)
|
(7,325)
|
(26,098)
|
9,331
|
|
|
|
|
|
|
Net income (loss) per
share attributable to China Finance Online Co. Limited
|
|
|
|
|
|
Basic
|
(0.07)
|
(0.03)
|
(0.07)
|
(0.25)
|
0.10
|
Diluted
|
(0.07)
|
(0.03)
|
(0.07)
|
(0.25)
|
0.09
|
Net income (loss) per
ADS attributable to China Finance Online Co. Limited
|
|
|
|
|
|
Basic
|
(0.37)
|
(0.16)
|
(0.37)
|
(1.25)
|
0.49
|
Diluted
|
(0.37)
|
(0.16)
|
(0.37)
|
(1.25)
|
0.44
|
Weighted average
ordinary shares
|
|
|
|
|
|
Basic
|
113,593,847
|
113,277,445
|
113,586,708
|
113,571,257
|
113,089,652
|
Diluted
|
113,593,847
|
113,277,445
|
113,586,708
|
113,571,257
|
127,223,768
|
Weighted average
ADSs
|
|
|
|
|
|
Basic
|
22,718,769
|
22,655,489
|
22,717,342
|
22,714,251
|
22,617,930
|
Diluted
|
22,718,769
|
22,655,489
|
22,717,342
|
22,714,251
|
25,444,754
|
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SOURCE China Finance Online Co., Ltd.