ZW Data Action Technologies Inc. (Nasdaq: CNET) (the "Company"), an
integrated online advertising, precision marketing, data analytics
and other value-added services provider serving enterprise clients,
today announced its unaudited financial results for the three and
six months ended June 30, 2023.
Second Quarter 2023 Financial
Results
Revenues
For the second quarter of 2023, revenues
increased by approximately $2.88 million, or 41.4%, to $9.82
million from $6.95 million for the same period last year. The
increase in revenues was primarily attributable to the increase in
our main stream service revenues, i.e. distribution of the right to
use search engine marketing services as a result of the end of the
peak infection wave of COVID-19 in the first fiscal quarter of 2023
where business activities and performance are gradually getting
back to normal in the second fiscal quarter; and a portion of our
clients’ ad consumption shifts from using our ad portal placement
services to using our search engine marketing service.
Cost of revenues
Total cost of revenues increased by
approximately $2.91 million, or 41.3%, to $9.93 million for the
second quarter of 2023 from $7.03 million for the same period last
year. The increase in cost was related to cost associated with
distribution of the right to use search engine marketing service we
purchased from key search engines, which was in line with the
increase in the related revenues.
Gross loss and gross loss margin
Gross loss was approximately $0.11 million for
the second quarter of 2023, compared to $0.08 million for the same
period last year. Overall gross loss margin rate was 1% for both
the second quarter of 2023 and 2022.
Operating expenses
Sales and marketing expenses was approximately
$0.05 million for the second quarter of 2023, compared to $0.08
million for the same period last year. The decrease in sales and
marketing expenses was mainly attributable to the gradual downsize
of the sales team in our Hubei office during the period, as part of
management’s cost reduction plan in fiscal 2023.
General and administrative expenses decreased by
approximately $1.32 million, or 52.8%, to $1.18 million for the
second quarter of 2023 from $2.50 million for the same period last
year. The decrease in general and administrative expenses was
mainly attributable to the decrease in allowance for expected
credit losses of approximately $0.79 million; the decrease in
amortization of administrative assets of approximately $0.44
million, primarily due to impairment loss recognized against
intangible assets by the end of fiscal 2022; and the decrease in
other administrative expenses of approximately 0.09 million, as a
result of the cost reduction plan executed by management.
Operating loss
Loss from operations was approximately $1.34
million for the second quarter of 2023, compared to $2.71 million
for the same period last year. Operating loss margin was 14% for
the second quarter of 2023, compared to 39% for the same period
last year.
Other income/(expenses), net
Total other expenses, net was approximately
$0.07 million for the second quarter of 2023, compared to total
other income, net of $1.00 million for the same period last year.
The decrease was primarily attributable to the decrease in gain of
the change in fair value of warrant liabilities.
Net loss and loss per share
Net loss was approximately $1.40 million, or
loss per share of $0.19, for the second quarter of 2023. This was
compared to a net loss of $1.71 million, or loss per share of
$0.24, for the same period last year.
First Half 2023 Financial
Results
Revenues
For the first half of 2023, revenues increased
by approximately $1.54 million, or 10.5%, to $16.14 million from
$14.60 million for the same period last year. The increase in
revenues was primarily attributable to the increase in our main
stream service revenues, i.e., distribution of the right to use
search engine marketing services.
Cost of revenues
Total cost of revenues increased by
approximately $2.02 million, or 13.9%, to $16.56 million for the
first half of 2023 from $14.54 million for the same period last
year. The increase in cost of revenues was primary attributable to
the increase in costs associated with distribution of the right to
use search engine marketing service we purchased from key search
engines during the period, which was in line with the increase in
the related revenues.
Gross profit/(loss) and gross profit/(loss)
margin
Gross loss was approximately $0.43 million for
the first half of 2023, compared to a gross profit of $0.05 million
for the same period last year. Overall gross loss margin was 2.6%
for the first half of 2023, compared to a gross profit margin of
0.4% for the same period last year.
Operating expenses
Sales and marketing expenses decreased by
approximately $0.06 million, or 36.7%, to $0.09 million for the
first half of 2023, compared to $0.15 million for the same period
last year. The decrease in sales and marketing expenses was mainly
attributable to the gradual downsize of the sales team in our Hubei
office during the period, as part of management’s cost reduction
plan in fiscal 2023.
General and administrative expenses decreased by
approximately $1.93 million, or 47.8%, to $2.11 million for the
first half of 2023 from $4.05 million for the same period last
year. The decrease in general and administrative expenses was
mainly attributable to the decrease in allowance for expected
credit losses of approximately $0.49 million; the decrease in
amortization of administrative assets of approximately $0.89
million, primarily due to impairment loss recognized against
intangible assets by the end of fiscal 2022; and the decrease in
other administrative expenses of approximately $0.55 million, as a
result of the cost reduction plan executed by management.
Operating loss
Loss from operations was approximately $2.65
million for the first half of 2023, compared to $4.26 million for
the same period last year. Operating loss margin was 16% for the
second quarter of 2023, compared to 29% for the same period last
year.
Other income, net
Total other income, net decreased to
approximately $0.10 million for the first half of 2023 from $1.83
million for the same period last year. The decrease was primarily
attributable to the decrease in gain of the change in fair value of
warrant liabilities.
Net loss and loss per share
Net loss was approximately $2.55 million, or
loss per share of $0.35, for the first half of 2023. This was
compared to a net loss of $2.43 million, or loss per share of
$0.34, for the same period last year.
Financial Condition
As of June 30, 2023, the Company had cash and
cash equivalents of approximately $2.00 million, compared to $4.39
million as of December 31, 2022. Accounts receivable, net was
approximately $1.05 million as of June 30, 2023, compared to $1.75
million as of December 31, 2022. Working capital was approximately
$5.47 million as of June 30, 2023, compared to $6.61 million as of
December 31, 2022.
Net cash used in operating activities was
approximately $0.86 million for the first half of 2023, compared to
$2.14 million for the same period last year. Net cash used in
investing activities was approximately $1.46 million for the first
half of 2023, compared to $0.48 million for the same period last
year.
About ZW Data Action Technologies
Inc.
Established in 2003 and headquartered in
Beijing, China, ZW Data Action Technologies Inc. (the “Company”)
offers online advertising, precision marketing, data analytics and
other value-added services for enterprise clients. Leveraging its
fully integrated services platform, proprietary database, and
cutting-edge algorithms, the Company delivers customized,
result-driven business solutions for small and medium-sized
enterprise clients in China. The Company also develops blockchain
enabled web/mobile applications and software solutions for clients.
More information about the Company can be found
at: http://www.zdat.com/.
Safe Harbor Statement
This release contains certain "forward-looking statements"
relating to the business of ZW Data Action Technologies 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 ZW Data Action Technologies
Inc.’s current expectations and beliefs concerning future
developments and their potential effects on the Company. There can
be no assurance that future developments affecting ZW Data Action
Technologies Inc. will be those anticipated by ZW Data Action
Technologies Inc. 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. ZW Data Action
Technologies Inc. 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.
For more information, please contact:
Sherry ZhengWeitian Group LLCEmail:
shunyu.zheng@weitian-ir.comPhone: +1 718-213-7386
ZW DATA ACTION TECHNOLOGIES INC.CONSOLIDATED
BALANCE SHEETS(In thousands, except for number of shares and per
share data) |
|
|
June 30,2023 |
|
December 31,2022 |
|
|
(US $) |
|
(US $) |
|
|
(Unaudited) |
|
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
2,000 |
|
$ |
4,391 |
Accounts receivable, net of allowance for credit loss of $3,715 and
$3,760, respectively |
|
|
1,045 |
|
|
1,745 |
Prepayment and deposit to suppliers |
|
|
4,346 |
|
|
4,567 |
Other current assets, net |
|
|
3,043 |
|
|
1,610 |
Total current assets |
|
|
10,434 |
|
|
12,313 |
|
|
|
|
|
Long-term investments |
|
|
1,000 |
|
|
1,596 |
Operating lease right-of-use
assets |
|
|
1,498 |
|
|
1,761 |
Property and equipment,
net |
|
|
191 |
|
|
249 |
Intangible assets, net |
|
|
2,665 |
|
|
3,264 |
Long-term deposits and
prepayments |
|
|
65 |
|
|
69 |
Deferred tax assets, net |
|
|
393 |
|
|
406 |
Total Assets |
|
$ |
16,246 |
|
$ |
19,658 |
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable * |
|
$ |
204 |
|
$ |
205 |
Advance from customers * |
|
|
912 |
|
|
739 |
Accrued payroll and other accruals * |
|
|
132 |
|
|
438 |
Taxes payable * |
|
|
3,131 |
|
|
3,248 |
Operating lease liabilities * |
|
|
255 |
|
|
347 |
Lease payment liability related to short-term leases * |
|
|
97 |
|
|
101 |
Other current liabilities * |
|
|
223 |
|
|
437 |
Warrant liabilities |
|
|
13 |
|
|
185 |
Total current
liabilities |
|
|
4,967 |
|
|
5,700 |
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
Operating lease liabilities-Non current * |
|
|
1,371 |
|
|
|
1,535 |
|
Long-term borrowing from a related party |
|
|
121 |
|
|
|
126 |
|
Total Liabilities |
|
|
6,459 |
|
|
|
7,361 |
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
ZW Data Action Technologies Inc.’s stockholders’ equity |
|
|
|
|
Common stock (US$0.001 par value; authorized 20,000,000 shares;
issued and outstanding 7,204,506 shares and 7,174,506 shares at
June 30, 2023 and December 31, 2022, respectively) |
|
|
7 |
|
|
7** |
Additional paid-in capital |
|
|
62,042 |
|
|
62,017** |
Statutory reserves |
|
|
2,598 |
|
|
|
2,598 |
|
Accumulated deficit |
|
|
(56,262 |
) |
|
|
(53,525 |
) |
Accumulated other comprehensive income |
|
|
1,402 |
|
|
|
1,200 |
|
Total stockholders’ equity |
|
|
9,787 |
|
|
|
12,297 |
|
|
|
|
|
|
Total Liabilities and Equity |
|
$ |
16,246 |
|
|
$ |
19,658 |
|
* Liabilities recognized as a result of
consolidating these VIEs do not represent additional claims on the
Company’s general assets.**Retrospectively restated for effect of
the 1-for-5 reverse stock split on January 18, 2023.
ZW DATA ACTION TECHNOLOGIES INC.CONDENSED
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, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(US $) |
|
(US $) |
|
(US $) |
|
(US $) |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
16,136 |
|
|
$ |
14,597 |
|
|
$ |
9,820 |
|
|
$ |
6,945 |
|
Cost of revenues |
|
|
16,561 |
|
|
|
14,544 |
|
|
|
9,931 |
|
|
|
7,026 |
|
Gross (loss)/profit |
|
|
(425 |
) |
|
|
53 |
|
|
|
(111 |
) |
|
|
(81 |
) |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
Sales and marketing expenses |
|
|
93 |
|
|
|
147 |
|
|
|
45 |
|
|
|
78 |
|
General and administrative expenses |
|
|
2,112 |
|
|
|
4,046 |
|
|
|
1,180 |
|
|
|
2,498 |
|
Research and development expenses |
|
|
18 |
|
|
|
124 |
|
|
|
- |
|
|
|
56 |
|
Total operating expenses |
|
|
2,223 |
|
|
|
4,317 |
|
|
|
1,225 |
|
|
|
2,632 |
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(2,648 |
) |
|
|
(4,264 |
) |
|
|
(1,336 |
) |
|
|
(2,713 |
) |
|
|
|
|
|
|
|
|
|
Other income/(expenses) |
|
|
|
|
|
|
|
|
Interest income |
|
|
151 |
|
|
|
75 |
|
|
|
79 |
|
|
|
29 |
|
Other expenses, net |
|
|
(14 |
) |
|
|
(28 |
) |
|
|
(9 |
) |
|
|
(19 |
) |
Impairment on long-term investments |
|
|
(209 |
) |
|
|
- |
|
|
|
(209 |
) |
|
|
- |
|
Change in fair value of warrant liabilities |
|
|
172 |
|
|
|
1,782 |
|
|
|
71 |
|
|
|
987 |
|
Total other income/(expenses) |
|
|
100 |
|
|
|
1,829 |
|
|
|
(68 |
) |
|
|
997 |
|
|
|
|
|
|
|
|
|
|
Loss before income tax
benefit |
|
|
(2,548 |
) |
|
|
(2,435 |
) |
|
|
(1,404 |
) |
|
|
(1,716 |
) |
Income tax benefit |
|
|
2 |
|
|
|
4 |
|
|
|
1 |
|
|
|
2 |
|
Net loss |
|
$ |
(2,546 |
) |
|
|
(2,431 |
) |
|
$ |
(1,403 |
) |
|
$ |
(1,714 |
) |
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(2,546 |
) |
|
$ |
(2,431 |
) |
|
|
(1,403 |
) |
|
$ |
(1,714 |
) |
Foreign currency translation
gain/(loss) |
|
|
202 |
|
|
|
(17 |
) |
|
|
283 |
|
|
|
5 |
|
Comprehensive
loss |
|
$ |
(2,344 |
) |
|
$ |
(2,448 |
) |
|
$ |
(1,120 |
) |
|
$ |
(1,709 |
) |
|
|
|
|
|
|
|
|
|
Loss per
share |
|
|
|
|
|
|
|
|
Loss per common share |
|
|
|
|
|
|
|
|
Basic and diluted** |
|
$ |
(0.35 |
) |
|
$ |
(0.34 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.24 |
) |
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted** |
|
|
7,185,114 |
|
|
|
7,097,440 |
|
|
|
7,195,605 |
|
|
|
7,114,726 |
|
**Retrospectively restated for effect of the
1-for-5 reverse stock split on January 18, 2023.
ZW DATA ACTION TECHNOLOGIES INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) |
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(US $) |
|
(US $) |
|
|
(Unaudited) |
|
(Unaudited) |
Cash flows from operating activities |
|
|
|
|
Net loss |
|
$ |
(2,546 |
) |
|
$ |
(2,431 |
) |
Adjustments to
reconcile net loss to net cash used in operating
activities |
|
|
|
|
Depreciation and amortization |
|
|
645 |
|
|
|
1,108 |
|
Amortization of operating lease right-of-use assets |
|
|
208 |
|
- |
|
134 |
|
Share-based compensation expenses |
|
|
83 |
|
|
|
84 |
|
Provision for allowances for credit losses |
|
|
455 |
|
|
|
947 |
|
Impairment on long-term investments |
|
|
209 |
|
|
|
- |
|
Change in fair value of warrant liabilities |
|
|
(172 |
) |
|
|
(1,782 |
) |
Disposal of fixed assets |
|
|
3 |
|
|
|
- |
|
Deferred taxes |
|
|
(2 |
) |
|
|
(4 |
) |
Other non-operating income |
|
|
(150 |
) |
|
|
(72 |
) |
Changes in operating
assets and liabilities |
|
|
|
|
Accounts receivable |
|
|
588 |
|
|
|
(290 |
) |
Prepayment and deposit to suppliers |
|
|
86 |
|
|
|
1,100 |
|
Due from related parties |
|
|
- |
|
|
|
60 |
|
Other current assets |
|
|
- |
|
|
|
29 |
|
Long-term deposits and prepayments |
|
|
- |
|
|
|
(51 |
) |
Accounts payable |
|
|
6 |
|
|
|
(513 |
) |
Advance from customers |
|
|
208 |
|
|
|
(402 |
) |
Accrued payroll and other accruals |
|
|
(303 |
) |
|
|
(220 |
) |
Other current liabilities |
|
|
23 |
|
|
|
311 |
|
Taxes payable |
|
|
(7 |
) |
|
|
8 |
|
Lease payment liability related to short-term leases |
|
|
- |
|
|
|
(41 |
) |
Operating lease liabilities |
|
|
(196 |
) |
|
|
(119 |
) |
Net cash used in operating activities |
|
|
(862 |
) |
|
|
(2,144 |
) |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Investment and advance to ownership investee entities |
|
|
(43 |
) |
|
|
- |
|
Proceeds from disposal of long-term investments |
|
|
433 |
|
|
|
- |
|
Repayment of short-term loans from ownership investee entities |
|
|
- |
|
|
|
12 |
|
Short-term loans to unrelated parties |
|
|
(2,000 |
) |
|
|
(2,600 |
) |
Repayment of short-term loans and interest income from unrelated
parties |
|
|
148 |
|
|
|
2,109 |
|
Net cash used in investing activities |
|
|
(1,462 |
) |
|
|
(479 |
) |
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
Net cash provided by/(used in) financing
activities |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Effect of exchange rate fluctuation on cash and cash
equivalents |
|
|
(67 |
) |
|
|
(96 |
) |
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
(2,391 |
) |
|
|
(2,719 |
) |
|
|
|
|
|
Cash and cash equivalents at beginning of the period |
|
|
4,391 |
|
|
|
7,173 |
|
Cash and cash equivalents at end of the period |
|
$ |
2,000 |
|
|
$ |
4,454 |
|
|
|
|
|
|
**Retrospectively restated for effect of the
1-for-5 reverse stock split on January 18, 2023.
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