Gridsum Reports Unaudited Financial Results for First Half of 2020
First Half of 2020 Highlights
- Net revenues increased 1% to RMB129.4 million (
US$18.3 million ), from RMB128.4 million in the comparable period of 2019. - Net loss attributable to
Gridsum's ordinary shareholders was RMB180.7 million (US$25.6 million ), compared with RMB284.9 million in the same period of 2019.
First Half of 2020 Financial Results
REVENUES: Net revenues increased 1% to RMB129.4 million (
Enterprise revenues were
E-Government and other revenues increased 307% to RMB48.5 million (
COST OF REVENUES: Cost of revenues increased 18% to RMB44.6 million (
GROSS PROFIT AND GROSS MARGIN: Gross profit decreased 6% to RMB84.8 million (
OPERATING EXPENSES: Total operating expenses decreased 38% to
- Sales and marketing expenses decreased 36% to
RMB48.3 million (US$6.8 million ) fromRMB75.0 million in the comparable period of 2019. The decrease was primarily due to aRMB18.3 million decrease in staff costs, aRMB4.3 million decrease in entertainment expenses, and aRMB2.3 million decrease in travel expenses. - Research and development expenses decreased 49% to
RMB94.1 million (US$13.3 million ) fromRMB183.1 million in the comparable period of 2019. The decrease primarily reflected the Company moving past the peak of front-end investment into its industrial AI and IIoT platforms. - General and administrative expenses decreased 23% to
RMB90.0 million (US$12.7 million ) fromRMB116.8 million in the comparable period of 2019. The decrease was primarily due to aRMB9.8 million decrease in staff costs.
LOSS FROM OPERATIONS: Loss from operations was RMB147.6 million (
NET LOSS ATTRIBUTABLE TO GRIDSUM'S ORDINARY SHAREHOLDERS: Net loss attributable to Gridsum's ordinary shareholders was RMB180.7 million (
NON-GAAP NET LOSS ATTRIBUTABLE TO GRIDSUM'S ORDINARY SHAREHOLDERS: Non-GAAP net loss attributable to Gridsum's ordinary shareholders, which is defined as net loss attributable to Gridsum's ordinary shareholders before share-based compensation expenses, was RMB159.7 million (
EBITDA: Loss before interest, income tax, depreciation and amortization was RMB125.5 million (
ADJUSTED EBITDA: Adjusted loss before interest, income tax, depreciation and amortization, which excludes share-based compensation expenses, was RMB104.4 million (
NET LOSS PER ADS ATTRIBUTABLE TO GRIDSUM'S ORDINARY SHAREHOLDERS: Net loss per ADS attributable to Gridsum's ordinary shareholders was RMB5.22 (
NON-GAAP NET LOSS PER ADS ATTRIBUTABLE TO GRIDSUM'S ORDINARY SHAREHOLDERS: Non-GAAP net loss per ADS attributable to Gridsum's ordinary shareholders was RMB4.61 (
Each ADS represents one Class B ordinary share. For purposes of determining net loss per ADS attributable to Gridsum's ordinary shareholders, the weighted average number of ordinary shares for the first half of 2020 was 34,622,313. As of June 30, 2020, the total number of ordinary shares outstanding was 34,658,013.
Balance Sheet
As of June 30, 2020, the Company had cash and cash equivalents of RMB10.4 million (
Recent Developments
Going-Private Transaction
On
Pursuant to the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each ordinary share of the Company (each, a "Share") issued and outstanding immediately prior to the Effective Time will be cancelled and cease to exist in exchange for the right to receive
The Board, acting upon the unanimous recommendation of a committee of independent directors established by the Board (the "Special Committee"), approved the Merger Agreement and the Merger and resolved to recommend that the Company's shareholders vote to authorize and approve the Merger Agreement and the Merger. The Special Committee negotiated the terms of the Merger Agreement with the assistance of its financial and legal advisors.
The Merger is currently expected to close in the first quarter of 2021 and is subject to customary closing conditions, including the receipt of certain PRC governmental approvals and the approval of the Merger Agreement by an affirmative vote of holders of Shares representing at least two-thirds of the voting power of the Shares present and voting in person or by proxy at a meeting of the Company's shareholders. The Rollover Securityholders have each agreed to vote all of the Shares and ADSs they beneficially own, which represent approximately 68% of the voting rights attached to the outstanding Shares as of the date of the Merger Agreement, in favor of the authorization and approval of the Merger Agreement and the Merger. If completed, the Merger will result in the Company becoming a privately held company, and its ADSs will no longer be listed on The Nasdaq Global Select Market.
On
Convertible Note Settlement
On
On
Pursuant to the Settlement Agreement, the Company shall pay or cause to be paid to
Under the Settlement Agreement,
COVID-19
Since the beginning of 2020,
Government efforts to contain the spread of the coronavirus through lockdowns of cities, business closures, travel restrictions and emergency quarantines, among others, and responses by businesses and individuals to reduce the risk of exposure to infection, including reduced travel, cancellation of meetings and events, and implementation of work-at-home policies, among others, have caused significant disruptions to the global economy and normal business operations across a substantial list of sectors and countries. The foregoing adversely affected business confidence, consumer sentiment and economic activity, and have been, and may continue to be, accompanied by significant volatility in financial and commodity markets. The spread of the coronavirus is also likely to have broader macroeconomic implications, including reduced levels of economic growth and possibly a global recession, the effects of which will likely be felt well beyond the time the spread of infection is contained.
Substantially all of the Company's operations are conducted in
In particular, the outbreak of COVID-19 has caused a significant number of the Company's marketing automation customers to reduce their marketing budgets, which has negatively affected the Company's marketing-related solutions revenues and financial performance generally. Consequently, the COVID-19 outbreak and any measures to combat the spread of the virus, and their aftermath, has adversely affected, and may continue to adversely affect, the Company's business operations, financial condition, operating results and cash flow.
Following the outbreak of COVID-19, the Company has seen particular and immediate impacts in its operations, including a significant slowdown in the customer sales origination and renewal cycle, increased timeframes to accomplish key tasks and incremental challenges in collecting accounts receivable in a timely manner. It has hence caused material negative impacts to the Company's net revenues and liquidity position. The Company expects these and other negative impacts as a result of COVID-19 to continue to adversely affect our business operations, results of operation and financial position through 2020 and potentially in future periods, and the magnitude of the impact will depend on future developments, which are highly uncertain and cannot be predicted.
Exchange Rate
This announcement contains translations of certain RMB amounts into
Use of Non-GAAP Financial Measures
In evaluating the Company's business, the Company considers and uses the following non-GAAP financial measures as supplemental measures to review and assess the Company's operating performance: non-GAAP net loss attributable to
The Company presents these non-GAAP financial measures because they are used by the Company's management to evaluate the Company's operating performance and formulate the Company's business plans. These non-GAAP financial measures enable the Company's management to assess the Company's operating results without considering the impact of non-cash charges, including depreciation expenses and share-based compensation, and without considering the impact of non-operating items such as interest income and expenses and income tax expenses. The Company also believes that the use of these non-GAAP measures facilitates investors' assessment of the Company's operating performance.
These non-GAAP financial measures are not defined under
The Company compensates for these limitations by reconciling the Company's non-GAAP financial measures to the most directly comparable
About Gridsum
For more information, please visit http://www.gridsum.com/.
Safe Harbor Statement
This announcement contains forward-looking statements. These forward-looking statements are made under the "safe harbor" provisions of the
Investor Relations
ir@gridsum.com
Christensen
In China
Mr. Eric Yuan
Phone: +86-10-5900-1548
Email: Eyuan@christensenir.com
In U.S.
Mr. Tip Fleming
Phone: +1 917 412 3333
Email: tfleming@christensenir.com
GRIDSUM HOLDING INC. |
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CONSOLIDATED BALANCE SHEETS |
||||
(All amounts in thousands, unaudited) |
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As of |
||||
December 31, |
June 30, |
June 30, |
||
2019 |
2020 |
2020 |
||
Assets |
RMB |
RMB |
USD |
|
Current assets: |
||||
Cash and cash equivalents |
25,206 |
10,420 |
1,475 |
|
Restricted cash |
1,389 |
40 |
6 |
|
Accounts receivable, net |
191,299 |
141,191 |
19,984 |
|
Prepayments and other current assets |
117,269 |
100,846 |
14,274 |
|
Notes Receivable |
3,753 |
1,144 |
162 |
|
Total current assets |
338,916 |
253,641 |
35,901 |
|
Non-current assets: |
||||
Investment in associates |
5,000 |
5,000 |
708 |
|
Property, equipment and software, net |
45,892 |
32,894 |
4,656 |
|
Intangible assets, net |
19,735 |
18,616 |
2,635 |
|
|
537 |
537 |
76 |
|
Deferred tax assets |
73,971 |
85,723 |
12,133 |
|
Operating lease right-of-use assets |
112,921 |
93,107 |
13,178 |
|
Total non-current assets |
258,056 |
235,877 |
33,386 |
|
Total assets |
596,972 |
489,518 |
69,287 |
|
Liabilities and Shareholders' Equity |
||||
Current liabilities: |
||||
Short-term bank loan |
38,000 |
39,151 |
5,541 |
|
Accounts payable |
78,776 |
6,992 |
990 |
|
Salary and welfare payables |
75,630 |
104,504 |
14,792 |
|
Taxes payable |
115,990 |
113,819 |
16,110 |
|
Deferred revenues |
11,328 |
32,770 |
4,638 |
|
Advances from customers |
16,130 |
29,476 |
4,172 |
|
Accrued expenses and other current liabilities |
95,701 |
173,484 |
24,555 |
|
Operating lease liabilities current |
39,219 |
38,375 |
5,432 |
|
Convertible note |
278,472 |
282,604 |
40,000 |
|
Total current liabilities |
749,246 |
821,175 |
116,230 |
|
Non-current liabilities: |
||||
Long-term borrowing |
99,274 |
106,390 |
15,059 |
|
Corporate bond |
18,545 |
19,058 |
2,697 |
|
Deferred tax liabilities |
175 |
156 |
22 |
|
Other non-current liabilities |
1,248 |
1,248 |
177 |
|
Operating lease liabilities non-current |
84,220 |
64,848 |
9,179 |
|
Derivative liabilitie non-current |
1,974 |
2,003 |
283 |
|
Total non-current liabilities |
205,436 |
193,703 |
27,417 |
|
Total liabilities |
954,682 |
1,014,878 |
143,647 |
|
Shareholders' (deficit)/equity: |
||||
Ordinary shares —Class A |
31 |
31 |
4 |
|
Ordinary shares —Class B |
202 |
202 |
29 |
|
Additional paid-in capital |
1,272,959 |
1,294,110 |
183,169 |
|
Statutory reserve |
12,903 |
12,903 |
1,826 |
|
Accumulated other comprehensive loss |
(37,858) |
-36,522 |
-5,169 |
|
Accumulated deficit |
(1,615,338) |
-1,796,084 |
-254,219 |
|
Total |
(367,101) |
-525,360 |
-74,360 |
|
Non-controlling interest |
9,391 |
|||
Total shareholders' (deficit)equity |
(357,710) |
-525,360 |
-74,360 |
|
Total liabilities and shareholders' equity |
596,972 |
489,518 |
69,287 |
|
|
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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
|||||
(All amounts in thousands, except for share, per share and per ADS data, unaudited) |
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For the Six Months Ended |
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|
|
|
|||
RMB |
RMB |
USD |
|||
Revenues: |
|||||
Enterprise |
118,257 |
81,943 |
11,598 |
||
e-Government and other |
11,901 |
48,467 |
6,860 |
||
Less: Business tax and surcharges |
(1,757) |
(1,029) |
(146) |
||
Net revenues |
128,401 |
129,381 |
18,313 |
||
Cost of revenues |
(37,792) |
(44,572) |
(6,309) |
||
Gross profit |
90,609 |
84,809 |
12,004 |
||
Operating expenses: |
|||||
Sales and marketing expenses |
(74,953) |
(48,315) |
(6,839) |
||
Research and development expenses |
(183,088) |
(94,098) |
(13,319) |
||
General and administrative expenses |
(116,764) |
(89,986) |
(12,737) |
||
Total operating expenses |
(374,805) |
(232,399) |
(32,894) |
||
Losses from operations |
(284,196) |
(147,590) |
(20,890) |
||
Foreign exchange loss |
(751) |
18 |
3 |
||
Interest expense, net |
(4,809) |
(41,859) |
(5,925) |
||
Other (expense)/income, net |
1,017 |
4,634 |
656 |
||
Amortization of debt discount |
(19,931) |
(7,388) |
(1,046) |
||
Gain on change in fair value of derivative |
10,328 |
||||
Loss before income tax |
(298,342) |
(192,185) |
(27,202) |
||
Income tax benefit |
12,817 |
11,439 |
1,619 |
||
Net loss |
(285,525) |
(180,746) |
(25,583) |
||
Less: Net income (loss) attributable to non-controlling |
(609) |
||||
Net loss attributable to |
(284,916) |
(180,746) |
(25,583) |
||
Net loss attributable to |
(284,916) |
(180,746) |
(25,583) |
||
Net loss |
(285,525) |
(180,746) |
(25,583) |
||
Foreign currency translation adjustment, net of tax |
10,032 |
1,336 |
189 |
||
Comprehensive loss |
(275,493) |
(179,410) |
(25,394) |
||
Less: Comprehensive income (loss) attributable to |
(609) |
||||
Comprehensive loss attributable to Gridsum |
(274,884) |
(179,410) |
(25,394) |
||
Weighted average number of ordinary shares |
|||||
Basic and diluted |
34,315,488 |
34,622,313 |
34,622,313 |
||
Net loss per ordinary share attributable to |
|||||
Basic and diluted |
(8.30) |
(5.22) |
(0.74) |
||
Net loss per ADS attributable to |
|||||
Basic and diluted |
(8.30) |
(5.22) |
(0.74) |
|
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RECONCILIATION OF GAAP AND NON-GAAP RESULTS |
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(All amounts in thousands, except for share, per share and per ADS data, unaudited) |
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For the Six Months Ended |
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|
|
|
||||||
RMB |
RMB |
USD |
||||||
Reconciliation of net loss attributable to |
||||||||
Net loss attributable to |
(284,916) |
(180,746) |
(25,583) |
|||||
Share-based compensation |
31,384 |
21,069 |
2,982 |
|||||
Non-GAAP net loss attributable to |
(253,532) |
(159,676) |
(22,601) |
|||||
Weighted average number of ordinary shares |
||||||||
Basic and diluted |
34,315,488 |
34,622,313 |
34,622,313 |
|||||
Net loss per ordinary share attributable to |
||||||||
Basic and diluted |
(8.30) |
(5.22) |
(0.74) |
|||||
Net loss per ADS attributable to |
||||||||
Basic and diluted |
(8.30) |
(5.22) |
(0.74) |
|||||
Non-GAAP net loss per ordinary share attributable |
||||||||
Basic and diluted |
(7.39) |
(4.61) |
(0.65) |
|||||
Non-GAAP net loss per ADS attributable to |
||||||||
Basic and diluted |
(7.39) |
(4.61) |
(0.65) |
|||||
Reconciliation of net loss to EBITDA and adjusted EBITDA |
||||||||
Net loss |
(285,525) |
(180,746) |
(25,583) |
|||||
Interest expense, net |
4,809 |
41,859 |
5,925 |
|||||
Income tax expenses |
(12,817) |
(11,439) |
(1,619) |
|||||
Depreciation and amortization expenses |
18,158 |
24,811 |
3,512 |
|||||
EBITDA |
(275,375) |
(125,515) |
(17,765) |
|||||
Share-based compensation |
31,384 |
21,069 |
2,982 |
|||||
Adjusted EBITDA |
(243,991) |
(104,446) |
(14,783) |
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