Luokung Reports 2021 Year-end Financial Results, Reports Record Annual Revenues of $145.1 Million

Company to Host Conference Call on Thursday, May 12, 2022, at 8:00 a.m. ET

BEIJING, May 12, 2022 /PRNewswire/ -- Luokung Technology Corp. (NASDAQ: LKCO) ("Luokung" or the "Company"), a leading spatial-temporal intelligent big data services company and provider of interactive location-based services ("LBS") and high-definition maps ("HD Maps") in China, today announced results for the year ended December 31, 2021.

2021 Year-end Financial Highlights:

• Revenues of $145.1 million, compared to $18.3 million for 2020, primarily driven by increased contributions from the LBS advertising business
  
  
• Net loss of $61.5 million, compared to net loss of $40.1 million for 2020, primarily as a result of increased research and development ("R&D") expenses related to the hiring of additional staff and ongoing investment in related to autonomous driving-related business efforts.
  
  
• Basic and diluted loss per share of $0.21, compared to basic and diluted loss per share of $0.18 for 2020

Management Commentary

Mr. Xuesong Song, Chairman and CEO, stated, "We are pleased to have achieved record top line growth of $145.1 million in 2021, which is more than seven times total revenue in the prior year. This was primarily driven by significant growth in our LBS advertising business as a result of the integration and improvement of geographic information points of interest (POI), characteristic areas of interest (AOI) and other data with AI algorithms, which subsequently led to a growing customer base and increased demand. We also reported increased revenue contributions from our smart transportation and software and services businesses. Since closing the acquisition of eMapgo Technology (Beijing) Co., Ltd. ('EMG') in the first half of 2021, we have successfully integrated EMG's portfolio of technological services into Luokung. As anticipated, EMG has opened up opportunities for the Company in the areas of smart transportation, smart natural resource asset management and Internet LBS and related smart industry services. Our revenue growth was further supported by the tangible results of our research and development efforts, and with the addition of more than 500 employees to our R&D staff, we look forward to continuing to strengthen Luokung's strategic position and competitive advantages in our three core business pillars and to expanding our industrially recognized portfolio of products and services."

Mr. Song continued, "Our gross profit margin increased to 11.1% in 2021 from 4.3% in 2020. With the continuous optimization of our self-developed LBS intelligent advertisement placement platform in 2021, we expect gross profit margin will improve over time as we offered value-added services. As the Company continues to diversify its revenue streams with increased contributions from smart transportation and software and services, which tend to be higher margin businesses, we anticipate improving our margin profile. Luokung made significant investments in R&D and in the growth of our business in 2021, which led to increased cost of services and operating expenses. In 2022, we anticipate R&D investments as a percentage of total revenues to remain stable as that of 2021."

Mr. Song concluded, "We remain optimistic about our growth prospects from all lines of business in 2022 with the positive momentum we built in 2021. In recent months, we announced the strategic acquisition of Beijing Hongda Jiutong Technology Development Co., Ltd ('Hongda Jiutong'), which we anticipate enhancing the long-term development and growth of our business. We look forward to deepening our relationships with existing partners and establishing new partnerships that span across various industries and diverse application scenarios. In 2022, Luokung announced exciting business developments, including the successful integration of EMG's mapping services into two of Ford Motor Company's ('Ford') new vehicle models, and the launch of our remote sensing holographic spatial-temporal portfolio of products and services, both of which we believe will serve as growth drivers for Luokung."

Recent Operational Developments

• In February 2022, Luokung announced that its operating affiliate, EMG, began providing mapping services for two new Ford vehicle models—the Ford EVOS and Mustang Mach-E—both of which are equipped with Ford's BlueCruise active drive assist system, which supports L2 autonomous driving function as defined by SAE International. EMG provided approximately $2.5 million of services during the third quarter of 2021.
  
  
• In March 2022, Luokung announced the signing of an agreement pursuant to which the Company's operating affiliate, Beijing Zhong Chuan Shi Xun Technology Limited, has agreed to acquire Hongda Jiutong, a leading big data service provider for intelligent transportation and connected vehicles in China. The Company expects to close this transaction by the end of the second quarter of 2022.
  
  
• In April 2022, Luokung announced the launch of its remote sensing holographic spatial-temporal portfolio of products and services for natural resource monitoring and carbon sink accounting, including applications such as real 3D natural resource spatial-temporal holograms, dynamic monitoring of natural ecological carbon sinks, forestry carbon sink remote sensing intelligent accounting and measurement, farmland protection remote sensing AI monitoring and crop growth and disaster monitoring. Select products have been successfully applied as pilot projects in Huangshan and Jixi, Anhui Province, in Jixian, Heilongjiang Province and in other county-level regions.
  
  
• In May 2022, Luokung announced that its operating affiliate, Beijing BotAiot Intelligent Co., Ltd. ("BotAiot"), has signed a service contract to provide electronic blockchain data and certificate storage platform services, to improve the efficiency of highway transport infrastructure and equipment calibration and to enhance traffic flow rates.

2021 Financial Review – GAAP Results

Revenue 

For 2021, revenues increased to $145.1 million, compared to $18.3 million for 2020. The increase was primarily due to increased revenue contributions from the LBS advertising business, which was supported by improved advertising conversion due to a growing customer base and increased demand, as well as revenue growth in both the remote sensing and GIS data management service platform software and services and smart transportation businesses.

Cost of Revenues

Total cost of revenues increased to $129.0 million in 2021, compared to $17.5 million for 2020. The increase was primarily a result of increased traffic acquisition costs to meet the growth of revenue and increased salary and benefit expenses associated with the hiring of additional employees directly involved in data collection and processing and data collection costs during the period.

Operating expenses

Total operating expenses increased to $81.7 million in 2021, compared to $41.0 million for 2020. The increase was primarily driven by:

• a $36.1 million increase in R&D expenses attributable to increased salaries and share-based compensation for additional staff in the R&D department, software development expenses and amortization of intangible assets; and
• a $4.3 million increase in selling and marketing expenses related to increased compensation related to the hiring of additional marketing personnel and increased promotional and marketing expenses.

Loss from operations

Loss from operations was $65.6 million in 2021, compared to loss from operations of $40.3 million in 2020, as a result of the increased operating expenses described above.

Net loss

Net loss was $61.5 million, or $0.21 per share, in 2021, compared to net loss of $40.1 million, or $0.18 per share, for 2020. Weighted average shares outstanding for the year ended December 31, 2021, and 2020 were 334,907,324 and 221,984,037, respectively.

Balance Sheet Highlights

At December 31, 2021, Luokung's cash balance was $16.4 million, working capital deficit was $44.0 million and total shareholders' equity was $153.8 million, compared to a cash balance of $0.07 million, working capital deficit of $61.6 million and total shareholders' equity of $52.7 million, respectively, at December 31, 2020.

Conference Call and Webcast Information

Luokung will host a conference call at 8:00 a.m. Eastern Time on Thursday, May 12, 2022, during which management will discuss 2021 year-end results. Investors and analysts are welcomed to participate or send questions in advance.

To participate in the conference call, please use the following dial-in numbers:

A live webcast of the conference call can be accessed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=N22lRjLu. A replay will be available shortly after the call and will remain available for 90 days.

ABOUT LUOKUNG TECHNOLOGY CORP.

Luokung Technology Corp. is a leading spatial-temporal intelligent big data services company, as well as a leading provider of LBS and HD Maps for various industries in China. Backed by its proprietary technologies and expertise in HD Maps and multi-sourced intelligent spatial-temporal big data, Luokung established city-level and industry-level holographic spatial-temporal digital twin systems and actively serves industries including smart transportation (autonomous driving, smart highway and vehicle-road collaboration), natural resource asset management (carbon neutral and environmental protection remote sensing data service), and LBS smart industry applications (mobile Internet LBS, smart travel, smart logistics, new infrastructure, smart cities, emergency rescue, among others). The Company routinely provides important updates on its website: https://www.luokung.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Information regarding the Company's future growth prospects and the preliminary unaudited financial results contained in this press release may constitute forward-looking-information within the meaning of securities laws. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The financial estimates provided in this press release are to provide early guidance on the semi-annual financial performance of the Company and readers are cautioned that this information may not be appropriate for any other purpose. When relying on the Company's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events including that the Company has not finished its review of the full financial positions and the Company may continue to incur net losses. The Company has assumed that the material factors referred to herein will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. 

Other than as required under securities laws, we do not undertake to update this information at any particular time.

Forward-looking information contained in this press release, including with respect to any future growth, is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. All forward-looking information contained in this press release is expressly qualified in its entirety by this cautionary statement.

CONTACT:

The Company:
Mr. Jay Yu
Chief Financial Officer
Tel: +86-10-5327-4727
Email: ir@luokung.com  

Investor Relations:
Ms. Carolyne Sohn
Vice President
The Equity Group Inc.
Tel: 415-568-2255
Email: csohn@equityny.com  

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