Glory Star New Media Group Holdings Limited (NASDAQ: GSMG) (“Glory
Star” or the “Company”), a leading mobile and online digital media
and entertainment company in China, today announced its financial
results for the first quarter ended March 31, 2020.
First Quarter 2020 Operating
Highlights
- Downloads of the CHEERS App1 exceeded 100.5 million as of March
31, 2020, compared to 17.2 million as of March 31, 2019.
- Average daily active users (“DAUs”)2 of the CHEERS App
increased to 4.1 million from 0.5 million in the same period of
2019.
- The Company’s e-Mall carried over 9,602 Stock Keeping Units
(“SKUs”) as of March 31, 2020, and recorded over RMB40.6 million
(US$5.8 million) in gross merchandise value (“GMV”)3 through its
CHEERS App in the first quarter of 2020.
First Quarter 2020 Financial
Highlights
- Revenues were US$9.8 million as compared to US$13.8 million in
the same period of 2019.
- Income from operations was US$2.9 million as compared to US$4.4
million in the same period of 2019.
- Operating margin reduced to 29.7% from 32.3% in the same period
of 2019.
- Net income attributable to Glory Star New Media Group Holdings
Limited’s shareholders was US$2.9 million as compared to US$4.1
million in the same period of 2019.
- Net margin was 29.1% as compared to 30.1% in the same period of
2019.
Mr. Bing Zhang, Founder and Chief Executive
Officer of Glory Star, commented, “In the face of the COVID-19
novel coronavirus outbreak, we delivered a solid operating
performance, advanced our flagship e-commerce platform, and drove
user base growth. We also maintained our content leadership by
focusing on the creation of original, professionally produced
content in the areas of lifestyle, culture, and fashion. As such,
we continued to have success in converting content viewers into
CHEERS App users, which was illustrated by an excess of 100.5
million CHEERS App downloads, in total, as of March 31, 2020,
compared to 17.2 million CHEERS App downloads, in total, by the end
of the prior-year period. Moreover, as a result of our platform
stickiness and engaging content, MAUs in the period grew by 7% on a
sequential basis. Our healthy growth trajectory also continued to
fuel GMV growth as illustrated by more than US$3.0 million in GMV
for the month of March.”
“Undoubtedly the outbreak of COVID-19 has had a
substantial impact on both the overall market environment and our
business in the quarter. As a result of the outbreak, we
experienced a noticeable dampening of advertising demand as well as
a slowdown in our copyrights business during the quarter. The
decline in both businesses was not only a result of the economic
slump, but also largely a result of our decision to put our own
employees first, as we encouraged staff to work from home and
follow the government’s policies. Due to this decision, we were
less able to film those TV series and short online videos that form
a crucial component of our revenue generation capabilities.
Nevertheless, our unique business model, swelling user base, and
content production leadership will continue to serve as competitive
advantages going forward, enabling us to overcome these short-term
uncertainties and replenish our revenue streams as conditions
gradually normalize.”
Mr. Ian Lee, Chief Financial Officer of Glory
Star, added, “In a challenging macro environment, we remained
prudent in our finances during the period. As part of our focus on
controlling costs, we leveraged the increasing influence of our
CHEERS App platform to reduce our expenditure on those payments to
various channel owners for broadcast advertisements. Going forward,
as our professional content production restarts and the advertising
environment becomes gradually more favorable, we are confident that
we will pick up where we left off.”
First Quarter 2020 Financial
Results
Revenues in the first quarter
of 2020 were US$9.8 million as compared to US$13.8 million in the
same period of 2019, mainly due to the impact of COVID-19 and its
negative effect on the Company’s advertising revenues as well as a
decline in copyrights revenues. The decrease was partially offset
by an uptick in revenues generated from the copyright licensing of
the Company’s internally produced TV show series, custom content
production, and CHEERS e-Mall marketplace service, which was first
launched in April 2019.
Advertising revenues in the first quarter of
2020 decreased by 24.2% to US$7.9 million from US$10.4 million in
the same period of 2019 due to sluggish advertising demand as well
as the decline in online short videos and live streaming,
attributable to more difficult filming conditions as a result of
COVID-19 during that period. The decrease in the Company’s revenues
was also due to a decline in copyrights revenues as the Company
only earned copyright revenues from one TV channel in the first
quarter of 2020 as compared to three channels in the same period of
2019. As such, copyrights revenues decreased by 63.6% to US$1.0
million from US$2.7 million in the same period of 2019.
Total operating expenses in the
first quarter of 2020 decreased by 26.3% to US$6.9 million from
US$9.3 million in the same period of 2019.
- Cost of revenues in the first quarter of 2020
decreased by 39.2% to US$5.0 million from US$8.2 million in the
same period of 2019, which was in line with the decrease in
revenues. Gross margin in the first quarter of 2020 improved to
48.8% from 40.3% in the same period of 2019, as the Company reduced
expenditures on payments to various channel owners for broadcast
advertisements and relied more heavily on its own CHEERs App
platform, which has already attracted a large number of users, to
provide advertising services.
- Sales and marketing expenses in the first
quarter of 2020 were US$0.4 million compared to US$0.3 million in
the same period of 2019. As a percentage of revenues, sales and
marketing expenses in the first quarter of 2020 were 3.9% as
compared to 1.9% in the same period of 2019, which was due to the
increase of coupons and reward points provided to users on CHEERS
e-Mall to stimulate platform consumption.
- General and administrative expenses in the
first quarter of 2020 were US$1.3 million compared to US$0.6
million in the same period of 2019. As a percentage of revenues,
general and administrative expenses in the first quarter of 2020
were 13.2% compared to 4.6% in the same period of 2019. This
increase was mainly attributable to higher professional service
fees incurred after being listed as a public company as well as an
increase in bad debt expense in the period.
- Research and development expenses in the first
quarter of 2020 were US$0.2 million compared to US$0.2 million in
the same period of 2019. As a percentage of revenues, research and
development expenses in the first quarter of 2020 were 2.1%
compared to 1.4% in the same period of 2019. Despite the decline in
the Company’s revenues during the first quarter of 2020 due to the
impact of COVID-19, the Company continued to invest in the
information technology of its CHEERS e-Mall platform, which led to
an increase in research and development expenses as a percentage of
revenues. This indicates that the Company strongly values
maintaining its leadership in technology and has continued to
strengthen its technology and research and development
capabilities.
Income from operations in the
first quarter of 2020 was US$2.9 million compared to US$4.4 million
in the same period of 2019. Operating margin in the first quarter
of 2020 reduced slightly to 29.7% from 32.3% in the same period of
2019.
Net income attributable to Glory Star
New Media Group Holdings Limited’s shareholders in the
first quarter of 2020 was US$2.9 million compared to US$4.1 million
in the same period of 2019. Net margin in the first quarter of 2020
reduced slightly to 29.1% from 30.1% in the same period of
2019.
Basic and diluted earnings per
share in the first quarter of 2020 were both US$0.06. In
comparison, the Company’s basic and diluted earnings per share in
the same period of 2019 were US$0.10 and US$0.09, respectively.
As of March 31, 2020, the Company had
cash and cash equivalents of US$10.0 million,
compared to US$1.3 million as of March 31, 2019.
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 TV 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
StatementCertain 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. The forward-looking
statements contained in this release are also subject to other
risks and uncertainties, including those more fully described in
the Company’s filings with the Securities and Exchange Commission
(“SEC”), including the Company’s Annual Report on Form 10-K filed
with the SEC on March 31, 2020, the Current Report on Form
8-K/A(Amendment No. 2) filed with the SEC on March 31, 2020, which
may be amended from time to time, and in our Quarterly Report on
Form 10-Q for the period ending March 31, 2020. 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.
ContactsGlory
Star New Media Group Holdings LimitedIan LeeEmail:
ianlee@yaoshixinghui.com
ICR Inc.Jack WangTel: +1 (646) 308-0546Email:
gsnm@icrinc.com
GLORY STAR NEW MEDIA GROUP HOLDINGS
LIMITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In U.S.
dollars in thousands, except share and per share
data)(Unaudited)
|
|
For the Three Months Ended March 31, |
|
|
|
2019 |
|
|
2020 |
|
Revenues |
|
$ |
13,753 |
|
|
$ |
9,757 |
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
(8,212 |
) |
|
|
(4,991 |
) |
Selling and marketing |
|
|
(259 |
) |
|
|
(379 |
) |
General and administrative |
|
|
(639 |
) |
|
|
(1,287 |
) |
Research and development |
|
|
(197 |
) |
|
|
(206 |
) |
Total operating expenses |
|
|
(9,307 |
) |
|
|
(6,863 |
) |
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
4,446 |
|
|
|
2,894 |
|
Other
(expenses) income: |
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(135 |
) |
|
|
(87 |
) |
Other (expenses) income, net |
|
|
(5 |
) |
|
|
30 |
|
Total other expenses |
|
|
(140 |
) |
|
|
(57 |
) |
|
|
|
|
|
|
|
|
|
Income before income tax |
|
|
4,306 |
|
|
|
2,837 |
|
Income
tax (expense) benefit |
|
|
(172 |
) |
|
|
5 |
|
Net income |
|
|
4,134 |
|
|
|
2,842 |
|
Less: net
loss attributable to non-controlling interests |
|
|
(9 |
) |
|
|
(59 |
) |
Net income attributable to Glory Star New Media Group
Holdings Limited’s shareholders |
|
$ |
4,143 |
|
|
$ |
2,901 |
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss) |
|
|
|
|
|
|
|
|
Unrealized foreign currency translation gain (loss) |
|
|
577 |
|
|
|
(1,087 |
) |
Comprehensive income |
|
|
4,711 |
|
|
|
1,755 |
|
Less:
comprehensive loss attributable to non-controlling interests |
|
|
- |
|
|
|
(67 |
) |
Comprehensive income attributable to Glory Star New Media
Group Holdings Limited’s shareholders |
|
$ |
4,711 |
|
|
$ |
1,822 |
|
|
|
|
|
|
|
|
|
|
Earnings
per ordinary share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.10 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
Weighted
average shares used in calculating earnings per ordinary share |
|
|
|
|
|
|
|
|
Basic |
|
|
41,204,025 |
|
|
|
45,504,828 |
|
|
|
|
|
|
|
|
|
|
Earnings
per ordinary share |
|
|
|
|
|
|
|
|
Dilutive |
|
$ |
0.09 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
Weighted
average shares used in calculating earnings per ordinary share |
|
|
|
|
|
|
|
|
Dilutive |
|
|
46,484,025 |
|
|
|
50,784,828 |
|
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
GLORY STAR NEW MEDIA GROUP HOLDINGS
LIMITED CONDENSED CONSOLIDATED BALANCE SHEETS (In U.S. dollars in
thousands, except share and per share data)
|
|
December 31, 2019 |
|
|
March 31, 2020 |
|
|
|
|
|
|
(Unaudited) |
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
6,919 |
|
|
$ |
9,961 |
|
Accounts receivable, net |
|
|
51,061 |
|
|
|
55,003 |
|
Prepayment and other current assets |
|
|
2,499 |
|
|
|
2,554 |
|
Total current assets |
|
|
60,479 |
|
|
|
67,518 |
|
Property and equipment, net |
|
|
331 |
|
|
|
269 |
|
Intangible assets, net |
|
|
14,683 |
|
|
|
14,051 |
|
Deferred tax assets |
|
|
533 |
|
|
|
596 |
|
Unamortized produced content, net |
|
|
1,657 |
|
|
|
1,342 |
|
Right-of-use assets |
|
|
2,027 |
|
|
|
1,907 |
|
Total non-current assets |
|
|
19,231 |
|
|
|
18,165 |
|
TOTAL ASSETS |
|
$ |
79,710 |
|
|
$ |
85,683 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Short-term bank loans |
|
$ |
718 |
|
|
$ |
3,672 |
|
Accounts payable |
|
|
4,546 |
|
|
|
5,095 |
|
Advances from customers |
|
|
610 |
|
|
|
498 |
|
Accrued liabilities and other payables |
|
|
6,134 |
|
|
|
5,569 |
|
Other taxes payable |
|
|
1,890 |
|
|
|
2,148 |
|
Operating lease liabilities -current |
|
|
313 |
|
|
|
333 |
|
Due to related parties |
|
|
1,525 |
|
|
|
1,999 |
|
Convertible promissory note - related party |
|
|
- |
|
|
|
1,400 |
|
Total current liabilities |
|
|
15,736 |
|
|
|
20,714 |
|
Long-term bank loan |
|
|
- |
|
|
|
1,271 |
|
Operating lease liabilities - non-current |
|
|
1,718 |
|
|
|
1,488 |
|
Total non-current liabilities |
|
|
1,718 |
|
|
|
2,759 |
|
TOTAL LIABILITIES |
|
$ |
17,454 |
|
|
$ |
23,473 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingences |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
|
|
|
Preferred shares (par value of $0.0001 per share; 2,000,000
authorized; none issued and outstanding) |
|
$ |
- |
|
|
$ |
- |
|
Ordinary shares (par value of $0.0001 per share; 200,000,000 shares
authorized as of December 31, 2019 and March 31, 2020; 41,204,025
and 50,898,866 shares issued and outstanding as of December 31,
2019 and March 31, 2020, respectively) |
|
$ |
4 |
|
|
$ |
5 |
|
Additional paid-in capital |
|
|
13,375 |
|
|
|
11,573 |
|
Statutory reserve |
|
|
431 |
|
|
|
431 |
|
Retained earnings |
|
|
49,547 |
|
|
|
52,448 |
|
Accumulated other comprehensive loss |
|
|
(1,576 |
) |
|
|
(2,655 |
) |
TOTAL GLORY STAR NEW MEDIA GROUP HOLDINGS LIMITED SHAREHOLDERS’
EQUITY |
|
|
61,781 |
|
|
|
61,802 |
|
Non-controlling interest |
|
|
475 |
|
|
|
408 |
|
TOTAL EQUITY |
|
|
62,256 |
|
|
|
62,210 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND EQUITY |
|
$ |
79,710 |
|
|
$ |
85,683 |
|
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
_________________
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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