omniture

CooTek Announces First Quarter 2020 Unaudited Results

2020-05-15 12:05 10140

SHANGHAI, May 14, 2020 /PRNewswire/ -- CooTek (Cayman) Inc. (NYSE: CTK) ("CooTek" or the "Company"), a fast-growing global mobile internet company, today reported unaudited financial results for the first quarter ended March 31, 2020.

First Quarter 2020 Highlights

  • Net revenue was US$107.0 million, an increase of 167% from US$40.0 million during the same period last year.
  • Gross profit was US$102.4 million, an increase of 181% from US$36.5 million during the same period last year.
  • Gross profit margin was 95.7%, an increase of 4.5% year-over-year.
  • Net loss was US$9.7 million, compared with net income US$0.2 million during the same period last year.
  • Adjusted net loss[1] (Non-GAAP) was US$8.8 million, compared with adjusted net income (Non-GAAP) of US$1.3 million during the same period last year.
  • The Company's portfolio products contributed approximately 98% of total revenues, with a focus on three main categories: online literature, scenario-base content apps, and casual games. Casual games accounted for approximately 32% of the Company's total net revenues.

March 2020 Operational Highlights

  • Average daily active users ("DAUs") of the Company's portfolio products[2] were 25.2 million, an increase of 9% from 23.1 million in March 2019. Average DAUs of the Company's casual games were 2.6 million, an increase of 100% from 1.3 million in December 2019.
  • Monthly active users ("MAUs") of the Company's portfolio products were 89.2 million, an increase of 49% from 59.8 million in March 2019. MAUs of the Company's casual games were 24.5 million, an increase of 136% from 10.4 million in December 2019.
  • Average DAUs of TouchPal Smart Input were 136.5 million, a decrease of 6% from 145.9 million in March 2019.
  • MAUs of TouchPal Smart Input were 178.8 million, a decrease of 7% from 192.3 million in March 2019
  • Average DAUs of the Company's global products[3] were 161.7 million, a decrease of 4% from 169.0 million in March 2019.
  • MAUs of the Company's global products were 268.0 million, an increase of 6% from 252.1 million in March 2019.

"Our strong results this quarter once again exceeded our expectations," commented Mr. Karl Zhang, CooTek's Co-Founder and Chairman. "Revenue for the quarter exceeded our guidance of $85 million by 26% and increased by 55% sequentially surpassing the US$100 million mark for the first time. Total MAUs of our content-rich portfolio of apps increased by nearly 20% sequentially to 89 million. This performance further demonstrates our ability to derive sophisticated user insights and drive growth . We aim to empower everyone to enjoy relevant content seamlessly and are confident in our ability to sustain high-growth momentum across all three content categories we are focused on: online literature, scenario-base content apps and casual games."

[1] "Adjusted net income (loss)" (Non-GAAP) is a non-GAAP measure, which is defined as net income (loss) excluding share-based compensation. For further information, please see "Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" at the bottom of this release.


[2] "portfolio products" is to the mobile applications that we develop and provide to our users and business partners, which exclude TouchPal Smart Input and TouchPal Phonebook.


[3] "global products" is to the mobile applications that we develop and provide to our users and business partners, which excludes TouchPal Phonebook. TouchPal Phonebook targets the Chinese domestic market and is different from TouchPal Smart Input and portfolio products that are designed for the global market (including China).

 

(in millions)

Portfolio Products


TouchPal Smart Input


Total


Including: Casual Games





DAUs

MAUs


DAUs

MAUs


DAUs

MAUs

Mar' 18

4.6

14.4


-

-


115.7

161.6

Jun' 18

7.3

22.2


-

-


125.4

171.7

Sep' 18

11.0

33.7


-

-


132.9

180.0

Dec' 18

16.9

46.1


-

-


140.8

190.5

Mar' 19

23.1

59.8


-

-


145.9

192.3

Jun' 19

27.6

65.1


-

-


143.7

190.4

Sep' 19

23.9

67.5


0.3

2.7


140.8

185.1

Dec' 19

24.7

74.6


1.3

10.4


137.6

182.8

Mar' 20

25.2

89.2


2.6

24.5


136.5

178.8

First Quarter 2020 Financial Results

Net Revenues

(in US$ thousands, except percentage)

1Q 2020


4Q 2019


1Q 2019


QoQ % Change


YoY % Change











Mobile Advertising Revenue

106,423


68,465


39,377


55%


170%

Other Revenue

590


519


660


14%


(11)%

Total Net Revenues

107,013


68,984


40,037


55%


167%

Net revenues were US$107.0 million, an increase of 167% from US$40.0 million during the first quarter of 2019 and an increase of 55% from US$69.0 million last quarter. The increase was primarily due to an increase in mobile advertising revenue.

Mobile advertising revenue was US$106.4 million, an increase of 170% from US$39.4 million during the first quarter of 2019 and an increase of 55% from US$68.5 million last quarter.

Portfolio products accounted for approximately 98%, TouchPal Smart Input accounted for approximately 0.2% and TouchPal Phonebook accounted for approximately 1% of total net revenues. Our portfolio products focus on three categories: online literature, scenario-base content apps and casual games. Online literature and scenario-base content apps accounted for approximately 66%, and casual games accounted for approximately 32% of total net revenue.

Cost and Operating Expenses


1Q 2020


4Q 2019


1Q 2019


QoQ %


YoY %

(in US$ thousands, except percentage)  

US$


% of
revenue


US$


% of
revenue


US$


% of
revenue


Change


change

















Cost of revenues

4,582


4%


3,866


6%


3,541


8%


19%


29%

Sales and marketing

102,436


96%


63,495


92%


27,378


68%


61%


274%

Research and development

6,847


6%


5,738


8%


6,616


17%


19%


3%

General and administrative

3,301


3%


2,752


4%


2,344


6%


20%


41%

Other operating income, net

(390)


(0)%


(644)


(1)%


(68)


(0)%


(39)%


474%

Total Cost and Expenses

116,776


109%


75,207


109%


39,811


99%


55%


193%

















Share-based compensation expenses by function
















Cost of revenues

53


0.0%


26


0.0%


18


0.0%


104%


194%

Sales and marketing

48


0.0%


45


0.1%


59


0.1%


7%


(19)%

Research and development

481


0.4%


242


0.4%


918


2.3%


99%


(48)%

General and administrative

359


0.3%


133


0.2%


148


0.4%


170%


143%

Total share-based compensation expenses

941


0.9%


446


0.7%


1,143


2.9%


111%


(18)%

Cost of revenues was US$4.6 million, an increase of 29% from US$3.5 million during the same period last year, and an increase of 19% from US$3.9 million last quarter. The sequential and year-over-year increase was mainly due to an increase in operational and maintenance-related expenses associated with the Company's expanding business, and partially offset by a decline in VoIP-related expenses.

Gross profit was US$102.4 million, an increase of 181% from US$36.5 million during the same period last year, and an increase of 57% from US$65.1 million last quarter. Gross profit margin was 95.7%, compared with 91.2% in the same period last year and 94.4% last quarter.

Sales and marketing expenses were US$102.4 million, an increase of 274% from US$27.4 million during the same period last year, and an increase of 61% from US$63.5 million last quarter. As a percentage of total revenue, sales and marketing expenses accounted for 96%, compared with 68% during the same period last year, and 92% last quarter. The sequential and year-over-year increases in sales and marketing expenses as a percentage of total net revenue was primarily due to increased investment in user acquisition that was in line with the Company's expanding business.

Research and development expenses were US$6.8 million, an increase of 3% from US$6.6 million during the same period last year and an increase of 19% from US$5.7 million last quarter. The sequential increase was primarily due to an increase in costs associated with technology R&D staff and share-based compensation expenses. As a percentage of total net revenue, research and development expenses accounted for 6%, compared with 17% during the same period last year and 8% last quarter.

General and administrative expenses were US$3.3 million, an increase of 41% from US$2.3 million during the same period last year and an increase of 20% from US$2.8 million last quarter. The sequential increases were mainly due to a reversal of bad debt provision of US$0.6 million during the fourth quarter of 2019. The year-over-year increase was mainly due to a rise in costs associated with G&A staff and share-based compensation expenses. As a percentage of total net revenue, general and administrative expenses accounted for 3%, compared with 6% during the same period last year and 4% last quarter.

Other operating income, net was US$0.4 million, compared with other operating income, net US$0.07 million during the same period last year and other operating income, net US$0.6 million last quarter.

Impairment loss of investments was nil, compared with nil during the same period last year and US$0.5 million last quarter. Considering a deterioration in the investee's financial performance and the uncertainty of its ability to generate sufficient cash flow to operate, the Company decided to make a full provision of US$0.5 million in the fourth quarter of 2019.

Net loss was US$9.7 million, compared with net income of US$0.2 million during the same period last year and a net loss of US$6.6 million last quarter.

Adjusted net loss was US$8.8 million, compared with adjusted net income of US$1.3 million in the same period last year and adjusted net loss of US$6.2 million last quarter. The sequential increase of the adjusted net loss was mainly due to increased investments in user acquisition.

In US$ thousands, except percentage

1Q
2020


4Q
2019


1Q
2019


QoQ %
Change


YoY %
change











Net (loss) income

(9,738)


(6,646)


172


47%


(5,762)%

Add: Share-based Compensation related to share options and restricted share units

941


446


1,143


111%


(18)%

Adjusted Net (Loss) Income (Non-GAAP)

(8,797)


(6,200)


1,315


42%


(769)%

Basic and diluted net loss per ADS were US$0.16 and US$0.16, and basic and diluted Adjusted net loss (Non-GAAP) per ADS were US$0.14 and US$0.14.

Balance Sheet and Cash Flows

As of March 31, 2020, cash, cash equivalents and restricted cash were US$70.0 million, compared with US$60.0 million as of December 31, 2019.

Net cash inflow from operating activities during the first quarter of 2020 was US$15.0 million, compared with net cash outflow from operating activities of US$3.3 million for the same period in 2019 and net cash inflow from operating activities of US$3.2 million during the last quarter. Cash inflow from operating activities during the first quarter of 2020 was mainly due to working capital utilization improvements and was partially offset by a loss from operations.

Share Repurchase Plan

On November 20, 2019, the Company announced a new share repurchase program (the "2019 Program") whereby the Company is authorized to repurchase its class A ordinary shares in the form of ADSs with an aggregate value of up to US$6 million during the 6-month period starting from November 20, 2019. As of March 31, 2020, the Company had used an aggregate of US$5.1 million to repurchase 0.9 million ADSs under the 2019 Program and recorded as treasury stock.

The Company will early terminate the 2019 Program on May 18, 2020, and take effect a new share repurchase program on the same day. In the new share repurchase program, the Company is authorized to repurchase its class A ordinary shares in the form of American depository shares with an aggregate value of up to US$20 million during the 12-month period starting from May 18, 2020. The Company expects to fund the repurchases under this program with its existing cash balance.

"We announce a new share repurchase program which reflects our confidence in the long-term growth and the value of our business" commented Mr. Karl Zhang, CooTek co-founder and Chairman.

Effects of COVID-19

The outbreak of COVID-19 could cause the Company's advertising and marketing customers to reduce their advertising budgets because these customers experienced various degrees of temporary shutdowns in the first quarter of 2020. In addition, while CooTek has resumed its operations, the extent of the disruption and the related impact on its financial results and business outlook depends on the future developments of the global pandemic.

As of March 31, 2020, CooTek had US$70.0 million in cash, cash equivalents, and restricted cash. Cash and cash equivalents primarily consist of cash on hand, demand deposits and short-term floating rate financial instruments which can be freely withdrawn or used and have original maturities of three months or less when purchased. Restricted cash consists of bank deposits used to guarantee payment processing services provided by banks. The Company believes this level of liquidity is sufficient to navigate an extended period of uncertainty.

Business Outlook

For the second quarter of 2020, CooTek expects total revenue to be around US$120 million, representing a year-over-year increase of around 219%. This outlook is based on information available as of the date of this press release and reflects the Company's current and preliminary expectations, which are subject to change in light of various uncertainties, including those related to the ongoing COVID-19 pandemic.

Conference Call and Webcast

CooTek's management team will host a conference call at 8:00 AM U.S. Eastern Time on Friday, May 15, 2020 (8:00 PM Beijing Time on the same day), following the results announcement.

The dial-in details for the live conference call are:

United States: 1-888-346-8982
Hong Kong: 800-905-945
Mainland China: 4001-201-203
International: 1-412-902-4272

Please dial in 15 minutes before the call is scheduled to begin. When prompted, ask to be connected to the CooTek (Cayman) Inc. call.

A live webcast and archive of the conference call will be available on the Investor Relations section of CooTek's website at https://ir.cootek.com/.  

About CooTek (Cayman) Inc.

CooTek is a fast-growing mobile internet company with a global vision, offering mobile applications. Our mission is to empower everyone to enjoy relevant content seamlessly. The Company's user-centric and data-driven approach has enabled it to release appealing products to capture mobile internet users' ever-evolving content needs and helps it rapidly attract targeted users. CooTek has developed and brought to market content-rich mobile applications, focusing on three categories: online literature, scenario-base content apps and casual games.

Non-GAAP Financial Measure

To supplement the unaudited consolidated financial information prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"), the Company uses non-GAAP financial measure of adjusted net (loss) income that is adjusted from results based on GAAP to exclude the impact of share-based compensation, and Adjusted EBITDA that is net (loss) income excluding interest income and expense, income taxes, depreciation, and share-based compensation. The measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.

The Company believes that the non-GAAP measure help identify underlying financial and business trends relating to the Company's results of operations that could otherwise be distorted by the effect of certain expenses that the Company include in (loss) income from operations and net (loss) income. By making the Company's financial results comparable period over period, the Company believes adjusted net (loss) income and Adjusted EBITDA provides useful information to better understand the Company's historical business operations and future prospects and allows for greater visibility with respect to key metrics used by the management in financial and operational decision-making. In order to mitigate these limitations, the Company has provided specific information regarding the GAAP amounts excluded from the non-GAAP measure. The table at the bottom of this press release includes details on the reconciliation between GAAP financial measure that is most directly comparable to the non-GAAP financial measure the Company has presented.

Safe Harbor Statement

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and 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," "confident" and similar statements. CooTek may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about CooTek's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: CooTek's mission and strategies; future business development, financial conditions and results of operations; the expected growth of the mobile internet industry and mobile advertising industry; the expected growth of mobile advertising; expectations regarding demand for and market acceptance of our products and services; competition in mobile application and advertising industry; relevant government policies and regulations relating to the industry and the development and impacts of COVID-19. 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. All information provided in this press release is current as of the date of the press release, and CooTek does not undertake any obligation to update such information, except as required under applicable law.

For investor enquiries, please contact:

CooTek (Cayman) Inc.
Jacky Lin
Email: IR@cootek.com  

Christensen
In China
Mr. Christian Arnell
+86-10-5900-1548
carnell@christensenir.com

In US
Ms. Linda Bergkamp
+1-480-614-3004
lbergkamp@christensenir.com


 

CooTek (Cayman) INC.

Unaudited Condensed Consolidated Statement of Operations

(in thousands, except for share and per share data)



Three Months Ended


March 31,


December 31,


March 31,


2019


2019


2020


US$


US$


US$







Net revenues

40,037


68,984


107,013

Cost of revenues

(3,541)


(3,866)


(4,582)

Gross Profit

36,496


65,118


102,431

Operating expenses:






Sales and marketing expenses

(27,378)


(63,495)


(102,436)

Research and development expenses

(6,616)


(5,738)


(6,847)

General and administrative expenses

(2,344)


(2,752)


(3,301)

Other operating income, net

68


644


390

Total operating expenses

(36,270)


(71,341)


(112,194)

Income (loss) from operations

226


(6,223)


(9,763)

Impairment loss of investments


(500)


Interest income, net

362


55


23

Foreign exchange (loss) gain

(416)


22


2

Income (loss) before income taxes

172


(6,646)


(9,738)

   Income tax expense



Net income (loss)

172


(6,646)


(9,738)

Net income (loss) per ordinary share






Basic

0.00005


(0.002)


(0.003)

Diluted

0.00005


(0.002)


(0.003)

Weighted average shares used in calculating net income (loss) per ordinary share






Basic

3,181,144,897


3,129,987,962


3,104,677,914

Diluted

3,310,299,485


3,129,987,962


3,104,677,914

Non-GAAP Financial Data






Adjusted Net Income (Loss)

1,315


(6,200)


(8,797)

Adjusted EBITDA

1,422


(5,346)


(8,068)

 

 

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except for share and per share data)



As of


December 31,
2019


March 31,
2020


US$


US$





ASSETS




Current assets:




Cash and cash equivalents

59,906


69,966

Restricted cash

60


60

Short-term investment

572


571

Accounts receivable, net of allowance for doubtful accounts of $1,774 as of December 31, 2019 and $1,931 as of March 31, 2020, respectively

27,255


36,537

Prepaid expenses and other current assets

7,848


8,191

Total current assets

95,641


115,325

Property and equipment, net

5,669


5,573

Intangible assets, net

268


308

Other non-current assets

259


304

TOTAL ASSETS

101,837


121,510

LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities




Accounts payable

37,878


66,441

Short-term bank borrowings

9,013


8,923

Accrued salary and benefits

5,598


3,549

Accrued expenses and other current liabilities

5,956


7,146

Deferred revenue

3,888


8,410

Total current liabilities

62,333


94,469

Other non-current liabilities

596


562

TOTAL LIABILITIES

62,929


95,031

 

Unaudited Condensed Consolidated Balance Sheets (continued):

(in thousands, except for share and per share data)



As of


December 31,
2019


March 31,
2020


US$


US$





Shareholders' Equity:




Ordinary shares

31


31

Treasury Stock

(1,064)


(5,081)

Additional paid-in capital

194,972


196,076

Accumulated deficit

(153,598)


(163,336)

Accumulated other comprehensive loss

(1,433)


(1,211)

Total Shareholders' Equity

38,908


26,479

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

101,837


121,510

 

 

Unaudited Condensed Consolidated Statement of Cash Flows

(in thousands, except for share and per share data)



Three Months Ended


 March 31,


 December 31,


March 31,


2019


2019


2020


US$


US$


US$













Net cash (used in) provided by operating activities

(3,334)


3,237


14,960

Net cash used in investing activities

(524)


(1,235)


(769)

Net cash (used in) provided by financing activities

(4,049)


1,436


(3,854)

Net (decrease) increase in cash and cash equivalents

(7,907)


3,438


10,337

Cash, cash equivalents, and restricted cash at beginning of period

84,860


56,270


59,966

Effect of exchange rate changes on cash and cash equivalents

330


258


(277)

Cash, cash equivalents, and restricted cash at end of period

77,283


59,966


70,026

 

 

Reconciliations of GAAP and Non-GAAP Results

(in thousands, except for share and per share data)



Three Months Ended


 March 31,


December 31,


 March 31,


2019


2019


2020


 US$


US$


US$







Net income (loss)

172


(6,646)


(9,738)

Add:






Share-based compensation related to share options and restricted share units

1,143


446


941

Adjusted Net Income (Loss) (Non-GAAP)*

1,315


(6,200)


(8,797)

Add:






Interest income, net

(362)


(55)


(23)

Income taxes



Depreciation

469


909


752

Adjusted EBITDA (Non-GAAP)*

1,422


(5,346)


(8,068)


* The tax impact to the non-GAAP adjustments is zero.

 

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Source: CooTek
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