CooTek Announces First Quarter 2020 Unaudited Results
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$100 million mark for the first time. Total MAUs of our content-rich portfolio of apps increased by nearly 20% sequentially to 89 million. This performance further demonstrates our ability to derive sophisticated user insights and drive growth . We aim to empower everyone to enjoy relevant content seamlessly and are confident in our ability to sustain high-growth momentum across all three content categories we are focused on: online literature, scenario-base content apps and casual games."
[1] "Adjusted net income (loss)" (Non-
GAAP) is a non-GAAP measure, which
is defined as net income (loss)
excluding share-based compensation.
For further information, please see
"Non-GAAP Financial Measures" and
"Reconciliations of GAAP and non-
GAAP results" at the bottom of this
release.
[2] "portfolio products" is to the
mobile applications that we develop
and provide to our users and business
partners, which exclude TouchPal
Smart Input and TouchPal Phonebook.
[3] "global products" is to the mobile
applications that we develop and
provide to our users and business
partners, which excludes TouchPal
Phonebook. TouchPal Phonebook targets
the Chinese domestic market and is
different from TouchPal Smart Input
and portfolio products that are
designed for the global market
(including China).
(in
Portfolio Products TouchPal Smart
millions) Input
Total Including:
Casual Games
DAUs
MAUs
DAUs
MAUs
DAUs
MAUs
Mar' 18 4.6 14.4 115.7 161.6
Jun' 18 7.3 22.2 125.4 171.7
Sep' 18 11.0 33.7 132.9 180.0
Dec' 18 16.9 46.1 140.8 190.5
Mar' 19 23.1 59.8 145.9 192.3
Jun' 19 27.6 65.1 143.7 190.4
Sep' 19 23.9 67.5 0.3 2.7 140.8 185.1
Dec' 19 24.7 74.6 1.3 10.4 137.6 182.8
Mar' 20 25.2 89.2 2.6 24.5 136.5 178.8
First Quarter 2020 Financial Results
Net Revenues
(in
US$
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 US$ % of US$ % of Change change
revenue revenue revenue
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 4Q 1Q QoQ % YoY %
2020 2019 2019 Change 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, March 31,
2019 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
$1,931 as of March 31, 2020,
respectively 27,255 36,537
Prepaid expenses and other
current assets 7,848 8,191
Total current assets 95,641 115,325
Property and equipment, net 5,669 5,573
Intangible assets, net 268 308
Other non-current assets 259 304
TOTAL ASSETS 101,837 121,510
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable 37,878 66,441
Short-term bank borrowings 9,013 8,923
Accrued salary and benefits 5,598 3,549
Accrued expenses and other
current liabilities 5,956 7,146
Deferred revenue 3,888 8,410
Total current liabilities 62,333 94,469
Other non-current liabilities 596 562
TOTAL LIABILITIES 62,929 95,031
Unaudited Condensed Consolidated Balance Sheets (continued):
(in thousands, except for share and per share data)
As of
December 31, March 31,
2019 2020
---
US$
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
