Glory Star New Media Group Holdings Limited (NASDAQ: GSMG) (the
“Company”), a leading mobile and online digital media and
entertainment company in China, today announced the financial
results of its acquired company, Glory Star New Media Group Limited
(“Glory Star”) for the full year ended December 31, 2019. The
information provided in this release solely represents the
historical financial information of Glory Star prior to the closing
of the February 14, 2020 business combination between TKK Symphonic
Acquisition Corp., the Company’s predecessor, and Glory Star which
can be found in the Company’s Current Report on Form 8-K/A filed
with the Securities and Exchange Commission on March 31, 2020.
Full Year 2019 Operating
Highlights
- Downloads of the CHEERS App1
exceeded 85 million for the year ended December 31, 2019, compared
to 12 million for the year ended December 31, 2018.
- Average daily active users
(“DAUs”)2 of the CHEERS App increased to 1.9 million from 0.4
million in the full year of 2018.
- Glory Star’s e-Mall sold over
13,180 Stock Keeping Units (“SKUs”), recording over RMB133.76
million (US$19.36 million) in gross merchandise value (“GMV”) 3
through its CHEERS App in the same period.
Full Year 2019 Financial
Highlights
- Revenues increased by 16.7% to
US$65.8 million from US$56.4 million in the full year of 2018.
- Income from operations increased by
94.4% to US$26.8 million from US$13.8 million in the full year of
2018.
- Operating margin expanded to 40.8%
from 24.5% in the full year of 2018.
- Net income attributable to Glory
Star’s shareholders increased by 94.5% to US$26.3 million from
US$13.5 million in the full year of 2018.
- Net margin expanded to 40.0% from
24.0% in the full year of 2018.
“In February 2020, we successfully brought Glory
Star to the international stage by completing our business
combination with TKK Symphony Acquisition Corporation,” commented
Mr. Bing Zhang, Chairman and Chief Executive Officer of Glory Star.
“Our robust financial and operating results in 2019 were driven by
our innovative business model, increasingly competitive value
propositions, and ability to capitalize on the growing market
opportunity. We also remained committed to bolstering our
production capabilities for tailored content and increasing our
collaborations with experienced producers to develop popular
network dramas. Notably, by leveraging our professionally-generated
content, we have attracted an increasing number of users to our
CHEERS App, as evidenced by the sevenfold increase in CHEERS app
downloads on a year-over-year basis and the 365.9% growth in DAUs
for 2019. As a result of such improvements, we significantly
increased the GMV for our CHEERS App during the full year of
2019.”
“At the beginning of 2020, the coronavirus
outbreak has resulted in quarantines, travel restrictions, and the
temporary closure of offline activities both in China and abroad.
Moreover, as the epidemic continues to accelerate the shift of
consumption habits from offline to online, we have experienced
rapid growth in our active user base and mobile application
downloads during the period. This trend provides further evidence
in the viability and growth potential of our business model going
forward. As such, we plan to continue enriching our content
library, augmenting our e-commerce services, and fortifying our
ecosystem through active user base expansion. We remain confident
that the combination of our healthy ecosystem along with our
improving profitability and operating efficiency has positioned us
well to capture the immense growth potential of the new media
industry in China.”
Mr. Ian Lee, Chief Financial Officer of the
Company, added, “Glory Star’s steady revenue growth and continuing
margin expansion highlighted its strong financial performance in
2019. Additionally, Glory Star was also able to leverage the
popularity of its premium content to further enhance Glory Star’s
brand influence, which helped to reduce its reliance on third-party
advertising and marketing activities for brand promotion. As a
result, Glory Star further reduced its total operating expenses to
US$38.9 million, or 59.2% of revenue, in 2019 from US$42.6 million,
or 75.5% of revenue, in 2018. Looking ahead, as Glory Stare
continue to improve its operating efficiency, Glory Star will also
heighten its investment into the improvement of its product
offerings to further sustain its healthy growth momentum.”
Full Year 2019 Financial
Results
Revenue in the full year of
2019 increased by 16.7% to US$65.8 million from US$56.4 million in
the full year of 2018. As Glory Star continued to expand the active
user base of CHEERS mobile, primarily as a result of its explosive
growth in live shows, it drew an increasing number of active users
onto its platform, which increased Glory Star’s value proposition
to advertisers in turn. As a result, Glory Star’s advertising
revenue in the full year of 2019 increased by 38.7% to US$48.4
million from US$34.9 million in the full year of 2018. In addition,
Glory Star’s efforts to enhance its content production capabilities
to provide custom content meeting user and advertiser demands as
well as its work with experienced producers to develop popular
network dramas contributed to the year-over-year increase in
revenue.
Total operating expenses in the
full year of 2019 decreased by 8.5% to US$38.9 million from US$42.6
million in the full year of 2018.
- Cost of revenues
in the full year of 2019 decreased by 10.8% to US$31.9 million from
US$35.8 million in the full year of 2018. As a percentage of
revenues, cost of revenues in the full year of 2019 decreased to
48.5% from 63.5% in the full year of 2018. The reduction was mainly
due to the decrease of expenditure on payments to various channel
owners for broadcast advertisements, as Glory Star was able to
increasingly rely on CHEERS App, which has established a sizable
user base, for advertising services.
- Sales and marketing
expenses in the full year of 2019 decreased by 3.0% to
US$3.2 million from US$3.3 million in the full year of 2018, which
was primarily due to the reduction in advertising fees as Glory
Star was increasingly able to promote and maintain its brand
influence through its own platform and proprietary content, offset
by in the increase in e-Mall marketing expenses. As a percentage of
revenues, sales and marketing expenses in the full year of 2019
decreased to 4.8% from 5.8% in the full year of 2018.
- General and administrative
expenses in the full year of 2019 increased by 3.6% to
US$3.1 million from US$3.0 million in the full year of 2018, which
was mainly attributable to higher professional service fees related
to Glory Star’s previous business combination and listing. As a
percentage of revenues, general and administrative expenses in the
full year of 2019 decreased to 4.8% from 5.4% in the full year of
2018.
- Research and development
expenses in the full year of 2019 increased slightly to
US$0.7 million from US$0.5 million in the full year of 2018, which
was mainly attributable to the headcount increase in Glory Star’s
IT department during the year as Glory Star continued to enhance
its technological capabilities. As a percentage of revenues,
research and development expenses in the full year of 2019
increased to 1.1% from 0.9% in the full year of 2018.
Income from operations in the
full year of 2019 increased by 94.4% to US$26.8 million from
US$13.8 million in the full year of 2018. Operating margin in the
full year of 2019 expanded to 40.8% from 24.5% in the full year of
2018. These improvements were primarily driven by Glory Star’s
ability to grow its revenues while optimizing its operating
efficiency.
Net income attributable to Glory Star
New Media Group Limited’s shareholders in the full year of
2019 increased by 94.5% to US$26.3 million from US$13.5 million in
the full year of 2018. Net margin expanded to 40.0% in the full
year of 2019 from 24.0% in the full year of 2018.
As of December 31, 2019, Glory Star had
cash and cash equivalents of US$6.9 million,
compared to US$2.4 million as of December 31, 2018.
Net cash provided by operating
activities in the full year of 2019 was US$26.1 million,
as compared to US$10.6 million in net cash used in operating
activities for the full year of 2018.
About Glory Star New Media Group
Holdings LimitedGlory Star New Media Group Holdings
Limited is a leading mobile entertainment operator in China. Glory
Star’s ability to integrate premium lifestyle content, including
short videos, online variety shows, online dramas, live streaming,
its Cheers lifestyle video series, e-Mall, and mobile app, along
with innovative e-commerce offerings on its platform enables it to
pursue its mission of enriching people’s lives. The company’s large
and active user base creates valuable engagement opportunities with
consumers and enhances platform stickiness with thousands of
domestic and international brands.
Safe Harbor
Statement
Certain statements made in this release are
“forward looking statements” within the meaning of the “safe
harbor” provisions of the United States Private Securities
Litigation Reform Act of 1995. When used in this press release, the
words “estimates,” “projected,” “expects,” “anticipates,”
“forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,”
“will,” “should,” “future,” “propose” and variations of these words
or similar expressions (or the negative versions of such words or
expressions) are intended to identify forward-looking statements.
These forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside the Company’s control, that
could cause actual results or outcomes to differ materially from
those discussed in the forward-looking statements. Important
factors, among others, are: the ability to manage growth; ability
to identify and integrate other future acquisitions; ability to
obtain additional financing in the future to fund capital
expenditures; fluctuations in general economic and business
conditions; costs or other factors adversely affecting our
profitability; litigation involving patents, intellectual property,
and other matters; potential changes in the legislative and
regulatory environment; a pandemic or epidemic; and other factors
listed in the Company’s most recent reports on the Current Report
on Form 8--K filed on February 21, 2020, which may be amended from
time to time. The historical financial information contained in
this release solely relates to Glory Star and should be read in
conjunction with Glory Star’s audited consolidated financial
statements and notes thereto included in Glory Star’s Current
Report on Form 8-K/A(Amendment No. 2), dated March 31, 2020, which
may be amended from time to time. Glory Star’s results of
operations for the year ended December 31, 2019 are not necessarily
indicative of the Company’s operating results for any future
periods. The Company undertakes no obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
applicable law. Such information speaks only as of the date of this
release.
ContactsICR Inc.Jack WangTel:
+1 (646) 308-0546Email: gsnm@icrinc.com
GLORY STAR NEW MEDIA GROUP LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS (In U.S. dollars in
thousands, except share and per share data)
|
|
For the years ended December 31, |
|
|
|
2018 |
|
|
2019 |
|
Revenues |
|
$ |
56,356 |
|
$ |
65,777 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Cost of revenues |
|
|
35,777 |
|
|
31,901 |
|
Selling and marketing |
|
|
3,250 |
|
|
3,154 |
|
General and administrative |
|
|
3,024 |
|
|
3,134 |
|
Research and development |
|
|
502 |
|
|
749 |
|
Total operating expenses |
|
|
42,553 |
|
|
38,938 |
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
13,803 |
|
|
26,839 |
|
Other income (expenses): |
|
|
|
|
|
|
|
Interest expense, net |
|
|
(497 |
) |
|
(295 |
) |
Other income, net |
|
|
301 |
|
|
50 |
|
Total other expenses |
|
|
(196 |
) |
|
(245 |
) |
|
|
|
|
|
|
|
|
Income before income tax |
|
|
13,607 |
|
|
26,594 |
|
Income tax benefit (expenses) |
|
|
83 |
|
|
(191 |
) |
Net income |
|
|
13,690 |
|
|
26,403 |
|
Less: Net gain attributable to non-controlling
interests |
|
|
156 |
|
|
80 |
|
Net income attributable to Glory Star New Media Group
Limited’s shareholders |
|
$ |
13,534 |
|
$ |
26,323 |
|
|
|
|
|
|
|
|
|
Other comprehensive loss |
|
|
|
|
|
|
|
Unrealized foreign currency translation loss |
|
|
(1,036 |
) |
|
(974 |
) |
Comprehensive income |
|
|
12,654 |
|
|
25,429 |
|
Less: Comprehensive gain attributable to non-controlling
interests |
|
|
132 |
|
|
74 |
|
Comprehensive income attributable to Glory Star New Media
Group Limited’s shareholders |
|
$ |
12,522 |
|
$ |
25,355 |
|
|
|
|
|
|
|
|
|
Earnings per ordinary share |
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
6.77 |
|
$ |
13.16 |
|
|
|
|
|
|
|
|
|
Weighted average shares used in
calculating earnings per ordinary share |
|
|
|
|
|
|
|
Basic and diluted * |
|
|
2,000,000 |
|
|
2,000,000 |
|
____________* The
shares and per share data are presented on a retroactive basis to
reflect the reorganization.
GLORY STAR NEW MEDIA GROUP LIMITED
CONSOLIDATED BALANCE SHEETS (In U.S. dollars in thousands, except
share and per share data)
|
|
As of December 31, |
|
|
2018 |
|
2019 |
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,437 |
|
|
$ |
6,919 |
|
Accounts receivable, net |
|
|
39,196 |
|
|
|
51,061 |
|
Prepayment and other current assets |
|
|
7,114 |
|
|
|
2,499 |
|
Total current assets |
|
|
48,747 |
|
|
|
60,479 |
|
Property and equipment, net |
|
|
538 |
|
|
|
331 |
|
Intangible assets, net |
|
|
18 |
|
|
|
14,683 |
|
Deferred tax assets |
|
|
732 |
|
|
|
533 |
|
Unamortized produced content, net |
|
|
2,949 |
|
|
|
1,657 |
|
Right-of-use assets |
|
|
- |
|
|
|
2,027 |
|
Total non-current assets |
|
|
4,237 |
|
|
|
19,231 |
|
TOTAL ASSETS |
|
$ |
52,984 |
|
|
$ |
79,710 |
|
|
|
|
|
|
|
|
|
|
Liabilities, Mezzanine equity and Shareholders’
Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Short-term bank loans |
|
$ |
10,199 |
|
|
$ |
718 |
|
Accounts payable |
|
|
661 |
|
|
|
4,546 |
|
Advances from customers |
|
|
245 |
|
|
|
610 |
|
Accrued liabilities and other payables |
|
|
5,770 |
|
|
|
6,134 |
|
Other taxes payable |
|
|
1,194 |
|
|
|
1,890 |
|
Operating lease liabilities -current |
|
|
- |
|
|
|
313 |
|
Due to related parties |
|
|
1,255 |
|
|
|
1,525 |
|
Total current liabilities |
|
|
19,324 |
|
|
|
15,736 |
|
Operating lease liabilities - non-current |
|
|
- |
|
|
|
1,718 |
|
Total non-current liabilities |
|
|
- |
|
|
|
1,718 |
|
Total liabilities |
|
$ |
19,324 |
|
|
$ |
17,454 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingences |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mezzanine equity |
|
$ |
9,031 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
|
|
|
Ordinary shares (par value of $0.01 per share; 5,000,000
shares authorized as of December 31, 2018 and 2019; 2,000,000
shares issued and outstanding as of December 31, 2018 and 2019,
respectively)* |
|
$ |
20 |
|
|
$ |
20 |
|
Subscription receivable |
|
|
(20 |
) |
|
|
(20 |
) |
Additional paid-in capital |
|
|
578 |
|
|
|
13,379 |
|
Statutory reserve |
|
|
418 |
|
|
|
431 |
|
Retained earnings |
|
|
23,840 |
|
|
|
49,547 |
|
Accumulated other comprehensive loss |
|
|
(608 |
) |
|
|
(1,576 |
) |
Total Glory Star New Media Group Limited shareholders’
equity |
|
|
24,228 |
|
|
|
61,781 |
|
Non-controlling interest |
|
|
401 |
|
|
|
475 |
|
Total equity |
|
|
24,629 |
|
|
|
62,256 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’
EQUITY |
|
$ |
52,984 |
|
|
$ |
79,710 |
|
|
|
|
|
|
|
|
|
|
* The shares
and per share data are presented on a retroactive basis to reflect
the reorganization.
_________________
1 Glory Star defines this metric as the total
number of downloads of the CHEERS App as of the end of the period.2
Glory Star defines daily active users, or DAUs, as a user who has
logged in or access Glory Star’s online video content and/or its
e-commerce platform using the CHEERS App, whether on a mobile phone
or tablet. Glory Star calculates DAUs using internal company data
based on the activity of the user account and as adjusted to remove
“duplicate” accounts.3 Glory Star defines gross merchandise value,
or GMV, as the volume of merchandise sold through its CHEERS App at
the end of the period.
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