ECMOHO Limited (Nasdaq: MOHO) (“ECMOHO” or the “Company”), a
leading integrated solutions provider in the rapidly growing
non-medical health and wellness market in China, today announced
its preliminary unaudited financial data for the fourth quarter and
the full year ended December 31, 2019. The preliminary unaudited
selected financial data and operating data presented below are
subject to change and the changes may be material.
2019 Full-Year Preliminary Unaudited
Selected Financial Data:
- Total net revenues were between US$329 million and US$330
million, an increase of approximately 65% to 66%
year-over-year.
- The revenue increase was primarily attributable to sales growth
from mother and child care products, health supplements and food,
and personal care products. Top growth contributors included brand
partners Wyeth Nutrition, Gerber, Abbott, Perrier, and A.H.C.
- Operating income was between US$6.1 million and US$6.7 million,
a decrease of 10% to 18% year-over-year. Operating margin was
between 1.8% and 2.0%, down from 3.8% in 2018.
- Operating margin declined due to declines in product sales
gross margin. This was primarily a result of mother and child care
products and health food, which had lower gross margins, making up
a larger percent of total product sales revenue.
- Share-based compensation expenses totaled US$1.6 million in
2019, compared with US$0.4 million in 2018.
- Net income was between US$3.1 million and US$3.7 million, a
decrease of 40% to 49% year-over-year.
- Basic and diluted net earnings per American Depositary Share1
(“ADS”) attributable to ECMOHO Limited’s ordinary shareholders were
approximately US$0.11 and US$0.09, respectively, compared with
basic and diluted net loss per ADS of US$1.03 and US$1.03,
respectively, for 2018.
- Inventory days decreased from 99 days in 2018 to 78 days in
2019, as a result of the changes in product mix and improvements
the Company made in its inventory management.
Fourth Quarter 2019 Preliminary
Unaudited Selected Financial Data
- Total net revenues were between US$103 million and US$104
million, an increase of approximately 31% to 32% from the same
quarter in 2018.
- The revenue increase was primarily attributable to sales growth
from mother and child care products, health supplements and food,
and personal care products. Top growth contributors included brand
partners Wyeth Pharmaceutical, An-Su, Wyeth Nutrition, Perrier,
Nestle NAN and Jiangzhong Shiliao.
- Operating income was between US$0.4 million and US$1.0 million,
a decrease of 78% to 91% year-over-year. Operating margin was
between 0.4% and 1.0%, down from 5.8% in the same quarter of
2018.
- Operating margin declined due to declines in product sales
gross margin. This was primarily a result of health food and
household health products, which had lower gross margin, making up
a larger percent of total product sales revenue.
- Share-based compensation expenses totaled US$0.5 million,
compared with US$0.4 million in the same quarter of 2018.
- Net income was between a loss of US$0.5 million and an income
of US$0.1 million, a decrease of 97% to 113% from the same quarter
in 2018.
- Inventory days in the fourth quarter decreased to 65 days from
97 days in the first nine months of this year. The reduction in
inventory days is associated with the Company’s approach to
maintain lower inventory levels outside of the months leading up to
the main shopping events in China, Singles Day (November 11) and
Double 12 (December 12).
Fourth Quarter 2019 Operational
Highlights
- The number of major brand partners2 reached 8 in 2019 from 5 in
2018.
- Number of brands increased to 70 as of December 31, 2019, from
64 as of September 30, 2019.
- Number of brand partners decreased to 39 as of December 31,
2019, from 40 as of September 30, 2019.
- Number of cumulative paying consumers was 8.2 million as of
December 31, 2019, up from 7.6 million as of September 30,
2019.
1 Each ADS represents four Class A ordinary
shares.
2 A major brand partner is defined as a brand
partner whose products contributed over US$10 million in revenue in
a given period.
“We have not yet completed our year-end
financial closing, due to disruptions caused by the COVID-19
outbreak, including preventing our employees from returning to work
for some time. Nevertheless, we wish to provide our investors with
some preliminary results to the extent we are able to do so. We are
pleased to report a solid quarter to finish the 2019 calendar year.
We ended the year with a strong revenue growth of approximately 66%
year-over-year. As the COVID-19 outbreak continues to have a
significant impact on China’s broader economy and several other
major economies around the world, our business has faced short-term
challenges but also long-term opportunities for future
development”, commented Ms. Zoe Wang, Founder and Chief Executive
Officer of ECMOHO.
“Over the course of last year, we experienced
strong growth due to significant growth of our major brand
partners. In 2019, we increased the number of major brand partners
to eight from five in 2018. We have also continued to build closer
relationships with major brand partners, as we believe our major
brand partners will increasingly rely on the integrated services we
provide during these uncertain times and into the future.”
“I strongly believe that our position as a
leading integrated solutions provider in the non-medical health and
wellness market in China remains solid despite the ongoing
macroeconomic uncertainty. In the longer term, we remain optimistic
about consumption growth in China, especially in the market in
which we operate. As our platform grows in scale and our
investments mature, we expect to continue to grow at a more rapid
pace than the industry average.”
Business Outlook
Due to the fast evolving COVID-19 pandemic and
the related business uncertainty and volatility, the Company is
unable at this time to reliably estimate the impacts of COVID-19 on
its financial performance and is withdrawing the previous guidance
for the financial year 2020 as disclosed to the market on November
25, 2019.
Over the period from late-January to mid-March
2020, the operations of the Company were disrupted, in part, by the
quarantine and travel restrictions imposed throughout China, which
resulted in over 40% of the Company’s employees being unable to
return to work as planned, disruptions in domestic logistics
operations and increases in international shipping rates. We
estimate that these disruptions and developments will have a
negative impact on the Company’s results in the first quarter of
2020. Because the outbreak is not yet contained in many parts
of the world, the Company has noted disruptions to product supplies
from its global brand partners in the coming months and rises in
international fulfilment expenses.
For the first quarter of 2020, the Company
expects net revenues to be approximately flat year-over-year, with
a net margin in the range of -7% and -9%. This outlook is based on
current market conditions and reflects the Company’s current and
preliminary estimates of market and operating conditions, which are
subject to substantial uncertainty.
Disclosure Regarding Preliminary
Unaudited Selected Financial Data
Only preliminary unaudited selected financial
data of the Company is currently available and has been disclosed
above. Additional financial data are not presently available
because we have not yet completed our year-end financial closing
due to the COVID-19 outbreak. This data may differ materially from
the full financial results for 2019 when we complete our financial
closing. The above data should be read in conjunction with the full
financial results to be released in the future. Shareholders and
investors are advised not to place undue reliance on the above
data.
Exchange Rate Information
This press release contains translations of
Renminbi amounts into U.S. dollars at specific rates solely for the
convenience of the reader. The conversion of Renminbi into U.S.
dollars in this press release is based on the exchange rate set
forth in the H.10 Statistical release of the Board of Governors of
the Federal Reserve System. The financial statements of the Group’s
entities using functional currency other than US$ are translated
from the functional currency to the reporting currency, US$. Assets
and liabilities of the Group’s subsidiaries incorporated in PRC are
translated into US$ at balance sheet date exchange rates, Income
and expense items are translated at average exchange rates
prevailing during the fiscal year, representing the index rates
stipulated by the People’s Bank of China. Translation adjustments
arising from these are reported as foreign currency translation
adjustments and are shown as accumulated other comprehensive
income/(loss) on the consolidated financial statement.
The exchange rate used for translation on
December 31, 2019 was US$1.00=RMB 6.9762, representing the index
rates stipulated by the People’s Bank of China.
Safe Harbor Statements
This news release contains 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. These
forward-looking statements can be identified by terminology such as
“will,” “expects,” “anticipates,” “future,” “intends,” “plans,”
“believes,” “estimates,” “target,” “going forward,” “outlook” and
similar statements. For example, the Company’s statement about its
expectations for Company performance in the full year of 2019 and
in 2020 is a forward-looking statement and is inherently uncertain.
Such statements are based upon management's current expectations
and current market and operating conditions, and relate to events
that involve known or unknown risks, uncertainties and other
factors, such as the Company’s expected growth of the online retail
industry in China, the Company’s expectations regarding demand for
and market acceptance of its products and services, the Company’s
expectations regarding its relationships with its brand partners
and e-commerce channels, and the level of consumer economic
activity in China, all of which are difficult to predict and many
of which are beyond the Company's control, which may cause the
Company's actual results, performance or achievements to differ
materially from those in the forward-looking statements. Further
information regarding these and other risks, uncertainties or
factors is included in the Company's filings with the U.S.
Securities and Exchange Commission. 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.
About ECMOHO Ltd.
ECMOHO is a leading integrated solution provider
in the rapidly growing non-medical health and wellness market in
China. The Company acts as the bridge between brand owners and
Chinese consumers by marketing and distributing health supplements
and food, mother and child care products, personal care products,
household healthcare equipment and other health and wellness
products. Through over seven years of operation, ECMOHO has built
an ecosystem where Chinese consumers are provided with customized
health and wellness solutions that include quality products and
trustworthy content.
For more information, please visit
http://ir.ecmoho.com/.
For investor and media inquiries, please
contact:
ECMOHO Ltd. Ms. Ellen Chiu
Email: ellenchiu@ecmoho.com
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