ECMOHO Limited (Nasdaq: MOHO) (“ECMOHO” or the “Company”), a
leading integrated solutions provider in the non-medical health and
wellness market in China, today announced its unaudited financial
results for the first quarter ended March 31, 2020.
First Quarter 2020 Financial
Highlights
- Total net revenues were US$61.2 million, compared with US$63.9
million in the same quarter last year.
- Operating loss was US$5.6 million, compared with operating
income of US$0.8 million in the same quarter last year.
- Non-GAAP operating loss was US$5.3 million, compared with
Non-GAAP operating income of US$1.1 million in the same quarter
last year.
- Net loss was US$4.6 million, compared with net income of US$0.3
million in the same quarter last year.
- Non-GAAP net loss was US$4.3 million, compared with net income
of US$0.6 million in the same quarter last year.
- Basic and diluted net loss per American Depositary Share
(“ADS1”) attributable to ECMOHO Limited’s ordinary shareholders
were US$0.13 and US$0.13, respectively, compared with US$0.01 and
US$0.01, respectively, for the same period of 2019.
- Non-GAAP basic and diluted net loss per ADS attributable to
ECMOHO Limited’s ordinary shareholders were US$0.12 and US$0.12,
respectively, compared with net earnings per ADS of US$0.01 and
US$0.01, respectively, for the same period of 2019.
First Quarter 2020 Operational
Highlights
- Number of brands offered by the Company increased to 76 as of
March 31, 2020, from 70 as of December 31, 2019.
- Number of cumulative paying consumers was 8.6 million as of
March 31, 2020.
- Repeat purchase rate2 reached 38% in the three months ended
March 31, 2020, from 35% in the three months ended December 31,
2019.
1 Each ADS represents four Class A ordinary shares of the
Company.
2 “Repeat purchase rate” refers to the percentage of paying
consumers in the period indicated who had made more than one
purchase with us in such period or in prior periods.
“So far, 2020 has been a year of significant
challenges and also one of opportunities. We believe that the
year 2020 marks the beginning of a new era for China’s health and
wellness industry,” commented Ms. Zoe Wang, Founder and Chief
Executive Officer of ECMOHO. “The COVID-19 pandemic has gone
far beyond everyone’s expectations and had a significant and
unprecedented impact on China’s economy and society, pushing many
offline stores toward financial difficulties or shutdowns. As
a result of the Chinese government’s effective virus containment
measures, the COVID-19 pandemic in China appears to have been
brought under control and the economy and society have gradually
re-commenced operations from mid-March 2020. We have noticed
that the pandemic has caused consumers to spend more on managing
personal and family health and wellness, which offers growth
opportunities for the health and wellness industry. In the
long run, we believe that the impact of the COVID-19 pandemic is
likely to also alter the behavior of consumers and the operation
models of enterprises, making digital adoption and transformation
an increasing necessity.”
“These opportunities are in line with our view
on the digitalization in our industry. Over the past several
years, we have been committed to developing our technology
infrastructure and pursuing digitalization upgrades, which we
believe will provide us with growth opportunities. In the
future, in addition to continuing to enrich our globally-sourced
product portfolio for Chinese consumers, we plan to enhance our
ability to provide participants in the non-medical health and
wellness industry supply chain with comprehensive digital and
technology solutions such as Software-as-a-Service (SaaS), and
Customer Relationship Management (CRM), which are supported with
our years of experience in marketing, our industry insight, rich
resources in SKUs and logistics, and strong analytics abilities
based on our consumer database. We believe our expertise will
help us assume a leading position in our market, and provide a
source of strong revenue growth in the future.”
“Like many businesses in China and around the
world, we were also impacted by the COVID-19 pandemic in the first
quarter of 2020. We experienced increases in expenditure on
operations, such as air freight expense per unit and we were unable
to resume full operations until the middle of March 2020.
Nevertheless, on the back of the State Council’s guideline to
continue to implement the Healthy China initiative announced in
July 2019, we are still confident that there is growth potential in
China’s health and wellness industry in the long run.”
First Quarter 2020 Financial
Results
Total net revenues were US$61.2
million, a decrease of 4.2% from US$63.9 million in the same
quarter in 2019 with increases in product sales offset by declines
in other revenues. Total net revenues calculated in Renminbi
declined by 0.9% year-over-year and declined further in US dollar
terms as a result of the Renminbi’s depreciation year-over-year.
The decrease was mainly due to disruptions caused by the COVID-19
pandemic, as some of the Company’s employees were not able to
return to work as scheduled after the Lunar New Year public holiday
and the Company’s domestic logistics and transport service
providers, who experienced temporary shutdowns or worker
absenteeism, were unable to ship products for us.
Among brand partners, the Company saw revenue
growth from existing partners Gerber, Perrier, Wyeth
Pharmaceutical, Harbin Pharmaceutical and new partners Jiangzhong
Shiliao and Bayer. The growth in these brands was offset by
decreases in the sales of milk powder products, such as Abbott and
Wyeth Nutrition.
Cost of revenues was US$50.5
million, an increase of 6.5% from US$47.4 million in the same
quarter in 2019. The increase in cost of revenue was mainly
due to higher sales to online retailers which typically generate
lower gross profit.
Operating expenses were US$16.3
million, compared with US$15.7 million in the same quarter in
2019. Operating expenses represented 26.6% of total net
revenue, compared with 24.6% of total net revenues in the same
quarter in 2019.
- Fulfilment expenses were US$3.8 million, a
decrease of 2.6% from US$3.9 million in the same quarter in
2019. Fulfilment expenses declined primarily due to higher
sales recorded to online retailers, which generally have lower
fulfilment expenses per unit. The above mentioned decline of
fulfilment expense was offset by the increase in air freight
expense per unit due to the nonfunctional logistics system in the
first quarter. Fulfillment expenses represented 6.2% of total
net revenues, up slightly from 6.1% in the same quarter in
2019.
- Sales and marketing expenses were US$9.1
million, flat with the same quarter in 2019. Within sales and
marketing expenses, platform fees and labor expenses grew and these
increases were offset by a reduction in promotional expenses, which
was a result of the Company doing fewer promotional activities
during the COVID-19 pandemic. Sales and marketing expenses
represented 14.9% of total net revenues, up from 14.2% in the same
quarter in 2019.
- General and administrative expenses were
US$3.1 million, an increase of 40.9% from US$2.2 million in the
same quarter in 2019. The increase was primarily due to
higher professional service fees, higher labor expenses, and
insurance expense in the first quarter of 2020 and offset by (1) a
reduction in value added tax paid on inter-subsidiary transactions,
which resulted from the Company receiving approval for VAT tax
exemption for export of services in the second quarter of 2019, and
(2) reductions in entertainment and office expenses. General
and administrative expenses represented 5.1% of total net revenues,
up from 3.4% in the same quarter in 2019.
- Research and development expenses were US$0.3
million, representing a 40.0% decline from US$0.5 million in the
same quarter in 2019. The decline was primarily due to a
reduced headcount in the R&D department in the period.
Operating loss was US$5.6
million, compared with operating income of US$0.8 million in the
same quarter in 2019.
Non-GAAP operating loss was
US$5.3 million, compared with Non-GAAP operating income of US$1.1
million in the same quarter in 2019.
Net loss was US$4.6 million,
compared with net income of US$0.3 million during the same quarter
in 2019.
Non-GAAP net loss was US$4.3
million, compared with Non-GAAP net income of US$0.6 million during
the same quarter in 2019.
Net loss attributable to ECMOHO
Limited was US$4.4 million, compared with net income
attributable to ECMOHO Limited of US$0.3 million during the same
quarter in 2019.
Non-GAAP net loss attributable to ECMOHO
Limited was US$4.1 million, compared with Non-GAAP net
income attributable to ECMOHO Limited of US$0.6 million during the
same quarter in 2019.
As of March 31, 2020, the Company had US$53.0 million in cash,
cash equivalents and restricted cash, an increase from US$51.1
million as of December 31, 2019.
Inventory days in the first quarter of 2020
increased to 89 days from 62 days in the fourth quarter of
2019. The increase in inventory days were influenced by three
factors:
- At the end of the fourth quarter 2019, the Company had just
completed its double-eleven and double-twelve shopping events and
inventory days were therefore relatively low;
- During the first quarter of the calendar year the Company
generally experiences lower levels of sales activity due to the
Lunar New Year holiday, during which the volumes of online
purchases and logistical operations drop significantly due to
vacations and business closures;
- The Company pulled in some of its orders to its overseas
suppliers for the 618 shopping event from April to March, as a
precaution against potential disruptions in the supply
chain.
Business Outlook
As the various COVID-19 pandemic containment
measures in China were eased beginning in late-March 2020, consumer
demand has shown signs of recovery. In particular, demand for
health supplement and food, mother and child care products, and
personal care products has rebounded since April 2020. The
Company expects total net revenues in the second quarter of 2020 to
be between US$100 million and US$102 million, representing a growth
rate of approximately 14.3% to 16.6% from the second quarter in
2019. The Company estimates that it incurred a net loss in
the second quarter of 2020 as a result of residual impact of the
COVID-19 pandemic.
The above outlook is based on current market
conditions and reflects the Company’s current and preliminary
estimates, which are subject to substantial uncertainty.
Use of Non-GAAP Financial
Measures
The Company uses non-GAAP financial measures in
evaluating its business. For example, the Company uses
non-GAAP income/(loss) from operations, non-GAAP operating margin,
non-GAAP net income/(loss), non-GAAP net margin, non-GAAP net
income (loss) attributable to ordinary shareholders of ECMOHO
Limited and non-GAAP net income (loss) attributable to
ordinary shareholders of ECMOHO Limited per ADS, as
supplemental measures to review and assess its financial and
operating performance.
The presentation of these non-GAAP financial
measures is not intended to be considered in isolation, or as a
substitute for the financial information prepared and presented in
accordance with U.S. GAAP. Non-GAAP income/(loss) from operations
is income/(loss) from operations excluding the impact of
share-based compensation expenses. Non-GAAP operating margin is
non-GAAP income from operations as a percentage of total net
revenues. Non-GAAP net income/(loss) is net income/(loss)
excluding the impact of share-based compensation expenses.
Non-GAAP net margin is non-GAAP net income as a percentage of total
net revenues. Non-GAAP net income (loss) attributable to
ordinary shareholders of ECMOHO Limited is net income
(loss) attributable to ordinary shareholders of ECMOHO Limited
excluding the impact of share-based compensation expenses.
Non-GAAP net income (loss) attributable to ordinary shareholders of
ECMOHO Limited per ADS is non-GAAP net income (loss) attributable
to ordinary shareholders of ECMOHO Limited divided by weighted
average number of shares used in calculating net income (loss) per
ordinary share multiplied by four.
The Company presents the non-GAAP financial
measures because they are used by the Company’s management to
evaluate the Company’s financial and operating performance and
formulate business plans. Non-GAAP income/(loss) from
operations and non-GAAP net income/(loss) enable the Company’s
management to assess the Company’s financial and operating results
without considering the impact of share-based compensation
expenses. The Company also believes that the use of the
non-GAAP measures facilitates investors’ assessment of the
Company’s financial and operating performance.
The non-GAAP financial measures are not defined
under U.S. GAAP and are not presented in accordance with U.S.
GAAP. The non-GAAP financial measures have limitations as
analytical tools. One of the key limitations of using
non-GAAP income/(loss) from operations, non-GAAP net income/(loss),
non-GAAP net income (loss) attributable to ordinary shareholders
of ECMOHO Limited, and non-GAAP net income (loss) attributable
to ordinary shareholders of ECMOHO Limited per ADS is
that they do not reflect all items of income and expense that
affect the Company’s operations. Share-based compensation
expenses have been and may continue to be incurred in the Company’s
business and is not reflected in the presentation of non-GAAP
income/(loss) from operations and non-GAAP net income/(loss).
Further, the non-GAAP measures may differ from the non-GAAP
measures used by other companies, including peer companies, and
therefore their comparability may be limited. In light of the
foregoing limitations, the non-GAAP income/(loss) from operations,
non-GAAP operating margin, non-GAAP net income/(loss), non-GAAP net
margin, non-GAAP net income (loss) attributable to ordinary
shareholders of ECMOHO Limited and non-GAAP net income
(loss) attributable to ordinary shareholders of ECMOHO
Limited per ADS for the period should not be considered in
isolation from or as an alternative to income/(loss) from
operations, operating margin, net income/(loss), net margin, net
income (loss) attributable to ordinary shareholders of ECMOHO
Limited and net income (loss) attributable to ordinary
shareholders of ECMOHO Limited per ADS, or other
financial measures prepared in accordance with U.S. GAAP.
The Company compensates for these limitations by
reconciling the non-GAAP financial measures to the nearest U.S.
GAAP performance measures, which should be considered when
evaluating the Company’s performance. For reconciliations of
these non-GAAP financial measures to the most directly comparable
GAAP financial measures, please see the section of the accompanying
tables titled “Reconciliations of GAAP and Non-GAAP Results.”
All quarterly results referred to in the text,
tables and attachments to this press release are unaudited.
Exchange Rate Information
This press release contains translations of
certain Renminbi amounts into U.S. dollars at specified rates
solely for the convenience of readers. The exchange rate used
for translation on March 31, 2020 was US$1.00 = RMB7.0851,
representing the index rates stipulated by the People’s Bank of
China.
The Company makes no representation that the
Renminbi or U.S. dollar amounts referred could be converted into
U.S. dollar or Renminbi, as the case may be, at any particular rate
or at all.
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 statements
about its expectations for Company performance in 2020, its
strategy and industry outlook are forward-looking statements and
are 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 significant
volatility and disruption caused by the COVID-19 pandemic, 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 eight 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. Investor Relations Email:
IR@ecmoho.com
ECMOHO LIMITED UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands
of U.S. dollars)
|
As of December 31,2019 |
|
As of March 31,2020 |
|
US$ |
|
US$ |
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
49,099 |
|
|
51,021 |
|
Restricted cash |
2,000 |
|
|
2,004 |
|
Accounts receivable, net |
49,829 |
|
|
44,126 |
|
Inventories, net |
49,895 |
|
|
48,588 |
|
Prepayments and other current assets |
21,366 |
|
|
18,798 |
|
Total current
assets |
172,189 |
|
|
164,537 |
|
Property and equipment, net |
1,429 |
|
|
1,276 |
|
Intangible assets |
1,311 |
|
|
1,207 |
|
Operating lease right-of-use assets |
1,204 |
|
|
936 |
|
Deferred tax assets |
788 |
|
|
776 |
|
Other non-current assets |
1,539 |
|
|
1,644 |
|
Total
assets |
178,460 |
|
|
170,376 |
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Short term borrowings |
34,516 |
|
|
31,223 |
|
Accounts payable |
26,439 |
|
|
29,032 |
|
Amounts due to related parties |
16,233 |
|
|
14,971 |
|
Advances from customers |
1,043 |
|
|
1,200 |
|
Operating lease liabilities, current |
1,052 |
|
|
513 |
|
Salary and welfare payable |
719 |
|
|
761 |
|
Tax payable |
3,043 |
|
|
3,049 |
|
Accrued liabilities and other current liabilities |
10,517 |
|
|
9,906 |
|
Total current
liabilities |
93,562 |
|
|
90,655 |
|
Deferred taxes liabilities |
139 |
|
|
119 |
|
Operating lease liabilities, non-current |
69 |
|
|
12 |
|
Total
liabilities |
93,770 |
|
|
90,786 |
|
|
|
|
|
Stockholders’
equity: |
|
|
|
Class A Ordinary Shares, US$
0.00001 par value; 4,880,496,457 shares authorized at
December 31, 2019 and March 31, 2020; 63,567,099 shares issued and
outstanding at December 31, 2019 and March 31, 2020 |
1 |
|
|
1 |
|
Class B Ordinary Shares, US$
0.00001 par value; 75,150,400 shares authorized, issued and
outstanding at December 31, 2019 and March 31, 2020 |
1 |
|
|
1 |
|
Additional paid-in
capital |
105,944 |
|
|
106,265 |
|
Accumulated other
comprehensive loss |
(2,265 |
) |
|
(2,924 |
) |
Accumulated deficit |
(19,556 |
) |
|
(23,961 |
) |
Total ECMOHO Limited
shareholders’ equity |
84,125 |
|
|
79,382 |
|
Non-controlling interests |
565 |
|
|
208 |
|
Total shareholders’
equity |
84,690 |
|
|
79,590 |
|
Total liabilities,
mezzanine equity and shareholders’ equity |
178,460 |
|
|
170,376 |
|
|
|
|
|
ECMOHO LIMITED UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In
thousands of U.S. dollars, except for share and per ADS
data)
|
For Three Months Ended |
|
March 31, |
|
March 31, |
|
2019 |
|
2020 |
|
US$ |
|
US$ |
Total net revenues |
63,862 |
|
|
61,162 |
|
Total cost of revenue |
(47,394 |
) |
|
(50,422 |
) |
Gross profit |
16,468 |
|
|
10,740 |
|
Operating expenses(1): |
|
|
|
Fulfillment expenses |
(3,876 |
) |
|
(3,774 |
) |
Sales and marketing expenses |
(9,157 |
) |
|
(9,176 |
) |
General and administrative expenses |
(2,207 |
) |
|
(3,088 |
) |
Research and development expenses |
(471 |
) |
|
(310 |
) |
Other operating income |
- |
|
|
1 |
|
Total operating expenses |
(15,711 |
) |
|
(16,347 |
) |
Operating income/(loss) |
757 |
|
|
(5,607 |
) |
Finance expense, net |
(505 |
) |
|
(547 |
) |
Foreign exchange (loss)/income, net |
(57 |
) |
|
33 |
|
Other income, net |
251 |
|
|
1,522 |
|
Income/(loss) before income tax expenses |
446 |
|
|
(4,600 |
) |
Income taxes profit/(expenses) |
(150 |
) |
|
16 |
|
Net income/(loss) |
296 |
|
|
(4,584 |
) |
Less: Net loss attributable to the non-controlling interest
shareholders and redeemable non-controlling interest
shareholders |
(26 |
) |
|
(179 |
) |
Net income/(loss) attributable to ECMOHO
Limited |
322 |
|
|
(4,405 |
) |
Less: Accretion on Series A convertible redeemable preferred shares
to redemption value |
(302 |
) |
|
- |
|
Less: Accretion to redemption value of redeemable non-controlling
interests |
(166 |
) |
|
- |
|
Net loss attributable to ECMOHO Limited’s ordinary
shareholders |
(146 |
) |
|
(4,405 |
) |
|
|
|
|
Net loss per share attributable to
ECMOHO Limited’s ordinary shareholders |
|
|
|
—basic |
(0.00 |
) |
|
(0.03 |
) |
—diluted |
(0.00 |
) |
|
(0.03 |
) |
|
|
|
|
Net loss per ADS attributable to ECMOHO Limited’s ordinary
shareholders |
|
|
|
—basic |
(0.01 |
) |
|
(0.13 |
) |
—diluted |
(0.01 |
) |
|
(0.13 |
) |
|
|
|
|
Weighted average number of Ordinary Shares |
|
|
|
—basic |
90,681,400 |
|
|
139,511,321 |
|
—diluted |
90,681,400 |
|
|
139,511,321 |
|
|
|
|
|
(1)Share-based compensation expenses are
allocated in operating expenses items as follows:
|
For Three Months Ended |
|
March 31, |
|
March 31, |
|
2019 |
|
2020 |
|
US$ |
|
US$ |
|
|
|
|
Fulfillment expenses |
- |
|
3 |
Sales and marketing expenses |
72 |
|
92 |
General and administrative expenses |
253 |
|
221 |
Research and development expenses |
- |
|
5 |
Total Share-based compensation expenses |
325 |
|
321 |
ECMOHO LIMITED
Reconciliations of GAAP and Non-GAAP
Results(In thousands of U.S. dollars, except for
share and per ADS data)
|
For Three Months Ended |
|
March 31, |
|
March 31, |
|
2019 |
|
2020 |
|
US$ |
|
US$ |
|
|
|
|
Operating income/(loss) |
757 |
|
|
(5,607 |
) |
Add: Share-based compensation expenses |
325 |
|
|
321 |
|
Non-GAAP Operating income/(loss) |
1,082 |
|
|
(5,286 |
) |
|
|
|
|
Net income/(loss) |
296 |
|
|
(4,584 |
) |
Add: Share-based compensation expenses |
325 |
|
|
321 |
|
Non-GAAP Net income/(loss) |
621 |
|
|
(4,263 |
) |
|
|
|
|
Net loss attributable to ECMOHO Limited’s ordinary
shareholders |
(146 |
) |
|
(4,405 |
) |
Add: Share-based compensation expenses |
325 |
|
|
321 |
|
Non-GAAP Net income/(loss) attributable to ECMOHO Limited’s
ordinary shareholders |
179 |
|
|
(4,084 |
) |
Non-GAAP net earnings /(loss) per
ADS attributable to ECMOHO Limited’s ordinary
shareholders |
|
|
|
—basic |
0.01 |
|
|
(0.12 |
) |
—diluted |
0.01 |
|
|
(0.12 |
) |
|
|
|
|
Weighted average number of Ordinary Shares |
|
|
|
—basic |
90,681,400 |
|
|
139,511,321 |
|
—diluted |
90,681,400 |
|
|
139,511,321 |
|
|
|
|
|
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