Revenue Increased 24% from Q2 2022, as
Remark AI Secured Major Partnerships for Smart Cities
LAS
VEGAS, Aug. 14, 2023 /PRNewswire/ -- Remark
Holdings, Inc. (NASDAQ: MARK), a diversified global technology
company with leading artificial intelligence ("AI") solutions and
digital video analytics, today announced its financial results for
its second quarter fiscal 2023 ended June
30, 2023. For complete details of the consolidated financial
statements and accompanying management's discussion and analysis,
please see Remark's filings with the SEC (www.sec.gov).
Management Commentary
"In the second quarter of 2023, we made significant strides in
synergizing with various smart city initiatives that focus on
leveraging technology and innovation to enhance urban living," said
Kai-Shing Tao, Chairman and Chief
Executive Officer of Remark Holdings. "Notably, we successfully won
an initial 30-month subscription agreement to implement our mobile
SSP product in Brazil for facial
and license plate recognition, showcasing efficacy and value in a
real-world setting and solidifying our solutions as practical and
impactful. Furthermore, we have secured several strategic
technology partnerships, with more to come, that will help us
quickly scale our innovative solutions and extend their reach into
existing and new markets as we head into the second half of the
year."
"Previously, we discussed how China's reopening would significantly bolster
our revenue opportunities. Despite press reports discussing an
economic downturn in China, Remark
achieved a 24% year-over-year increase in revenue for Q2,
reflecting the restoration of the previous growth trajectory, while
we continue to pursue growth in the Americas and in the UK and
European markets. Investment in AI continues to grow in all markets
because customers see an immediate return on investment, reducing
expenses while increasing operational efficiencies and performance.
Our goal remains to be EBITDA breakeven exiting the fourth quarter
of 2023," concluded Mr. Tao.
Fiscal Second Quarter 2023 Business Highlights
- Remark AI announced a strategic sales and development
partnership with WaitTime, a core partner of Cisco and Intel,
targeting crowd-behavior analytics. The partnership relies on
Remark's advanced AI-powered Smart Safety Platform ("SSP")
expanding upon the metadata gathered by WaitTime to conduct
additional valuable analytics that allows the venue operator to
better analyze behavioral patterns and match them with suitable
customer services.
- Remark AI won an initial $6.0
million, 30-month recurring revenue subscription contract to
provide Rio De Janeiro police cars
with license plate and mobile facial recognition capabilities.
- Remark AI joins NVIDIA's Metropolis ecosystem optimizing its AI
solutions for their most recent and powerful GPUs. Working in
conjunction with NVIDIA's sales team, Remark's SSP will be marketed
to their customers AI-driven video analytics to deliver real-time
analytics for public safety and vehicle traffic congestion
reduction, including crowd density, traffic analytics, and anomaly
detection within public spaces.
- Remark AI entered into a partnership with the DSSL Group to
support the delivery of SSPs to smart city projects, providing
positive changes to the dynamics and delivery of public sector
services by providing increased safety in public spaces, buildings,
assets, and a more efficient place overall with a dashboard that
supports enhanced situational awareness for security and law
enforcement teams with real-time event alerts, advanced attribution
video search features, traffic analytics, and anomaly
detection.
- Remark AI deployed its Smart Campus solutions to an additional
43 educational campuses in China,
bringing total installations to more than 700 campuses and helping
protect more than 1.4 million students, contributing approximately
$0.7 million in revenue.
- During the second quarter, Remark AI completed installation at
25 sites toward its second 60-site project with existing Smart
Construction project clients, contributing $2.4 million revenue.
Fiscal Second Quarter 2023 Financial Results
- Revenue for the second quarter of 2023 totaled $3.2 million, reflecting a 24% increase from
$2.6 million during the same quarter
in 2022.
-
- The increase in revenue primarily resulted from more project
completions in China in the 2023
second quarter than in the same quarter of 2022 as Remark was able
to work with its vendors and customers to begin restarting and
accelerating work that was not possible during the Zero-COVID
period when the strict preventative measures were ongoing through
the end of 2022. The majority of the completed work was related to
Remark's Smart Construction projects and Smart Campus
projects.
- Gross profit remained relatively unchanged at approximately
$0.7 million for the three months
ended June 30, 2023.
- The company's operating loss was unchanged at $4.0 million in the 2023 second quarter compared
to the same period of 2022. A $0.7
million decrease in general and administrative expense
resulted from a $0.5 million
reduction in stock-based compensation expense and a $0.4 million decrease in business development
expense. The company recorded a total of $0.4 million of asset impairments in the 2023
second quarter compared to having no impairments in the same
quarter of 2022, partially offsetting the decrease in general and
administrative expense, while increases in sales and marketing
expense and in technology and development expense also partially
offset the decrease in general and administrative expense.
- Net loss totaled $5.9 million, or
$0.42 per basic and diluted share, in
the 2023 second quarter, compared to a net loss of $12.5 million, or $1.19 per basic and diluted share, in the same
quarter of 2022. Since operating loss was unchanged, the decrease
in net loss was primarily the result of the 2022 second quarter
including a $6.9 million loss on
investment that did not recur in the 2023 second quarter. A
decrease in interest expense because significantly less debt
principal was outstanding during the 2023 second quarter than
during the same period of the prior year was offset by an increase
in finance cost related to obligations to issue Remark common stock
as a result of the company's transactions with Ionic Ventures,
LLC.
- On April 12, 2023, Remark issued
the second of two debentures to Ionic Ventures pursuant to the
debenture purchase agreement that was signed by the two companies
on March 14, 2023. As of June 30, 2023, the company was obligated to issue
an estimated 5,711,148 shares of its common stock to Ionic
Ventures, representing an obligation with an estimated aggregate
fair value of $5.6 million. The total
obligation includes settlement of the issued debentures as well as
draws under Remark's equity line of credit with Ionic
Ventures.
- At June 30, 2023, the company's
cash balance totaled $0.2 million,
compared to a cash balance of $0.1
million at December 31, 2022.
Net cash used in operating activities was $5.2 million for the six months ended
June 30, 2023, a 53% decrease
compared to the $11.1 million Remark
used in operating activities during the same period in 2022.
Also, the company provided an update on the written notice it
received from the Nasdaq Listing Qualifications Department on
April 27, 2023, notifying Remark that
it did not meet continued listing standards pursuant to Nasdaq
Listing Rule 5550. As instructed by Nasdaq, on June 12, 2023, Remark submitted a plan to the
Nasdaq Listing Qualifications Department detailing how it expected
to regain compliance with the continued listing standards. After
reviewing the submitted plan, Nasdaq provided the company until
October 24, 2023 to regain compliance
with the continued listing standards.
Conference Call Information
Management will hold a
conference call this afternoon at 4:30 p.m.
Eastern Time (1:30 p.m. Pacific
Time) to discuss the Company's financial results and provide
an update on recent business developments. A question and answer
session will follow management's presentation.
The live conference may be accessed via telephone or online
webcast.
Date: Monday, August 14, 2023
Time: 4:30 p.m. Eastern time
(1:30 p.m. Pacific time)
Toll-Free Number: 844.826.3033
International Number: 412.317.5185
Conference ID: 10181544
Online Webcast:
https://viavid.webcasts.com/starthere.jsp?ei=1627436&tp_key=d61b36621d
Participants are advised to log in for the live webcast 10 minutes
prior to the scheduled start time.
A replay of the call will be available after 7:30 p.m. Eastern time on the same day through
August 18, 2023.
Toll-Free Replay Number: 844.512.2921
International Replay Number: 412.317.6671
Replay ID: 10181544
About Remark Holdings, Inc.
Remark Holdings, Inc. (NASDAQ: MARK) the industry leader in AI
powered analytics computer vision and smart agent solutions,
delivers an integrated suite of AI tools that help organizations
understand their customer demographics and behavior, while
monitoring, understanding and acting on potential security threats
in real time. Remark consists of an international team of sector
experienced professionals that have created award winning video
analytics. The company's GDPR-compliant and CCPA-compliant
solutions focus on sectors including government agencies,
hospitality, public safety, retail and transportation. The
company's headquarters are in Las Vegas,
Nevada, USA, with operational offices in New York and international offices in
London, England. For more
information, please visit our home page at
www.remarkholdings.com.
Forward-Looking Statements
This press release may contain forward-looking statements,
including information relating to future events, future financial
performance, strategies, expectations, competitive environment, and
regulations. Words such as "may," "should," "could," "would,"
"predicts," "potential," "continue," "expects," "anticipates,"
"future," "intends," "plans," "believes," "estimates," and similar
expressions, as well as statements in the future tense, identify
forward-looking statements. These statements involve known and
unknown risks, uncertainties, and other factors, including those
discussed in Part I, Item 1A. Risk Factors in Remark Holdings'
Annual Report on Form 10-K and Remark Holdings' other filings with
the SEC. Any forward-looking statements reflect Remark Holdings'
current views concerning future events, are based on assumptions,
and are subject to risks and uncertainties. Given such
uncertainties, you should not rely on any forward-looking
statements, which represent Remark Holdings' estimates and
assumptions only as of the date hereof. Except as required by law,
Remark Holdings undertakes no obligation to update or revise
publicly any forward-looking statements after the date hereof,
whether as a result of new information, future events, or
otherwise.
Company Contacts
Fay Tian
Vice President of Investor Relations
F.Tian@remarkholdings.com
(+1) 626-623-2000
(+65) 8715-8007
REMARK HOLDINGS,
INC. AND SUBSIDIARIES
|
Consolidated Balance
Sheets
|
(dollars in thousands,
except share and per share amounts)
|
|
|
June 30,
2023
|
|
December 31,
2022
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Cash
|
$
208
|
|
$
52
|
Trade accounts
receivable, net
|
3,445
|
|
3,091
|
Inventory,
net
|
351
|
|
308
|
Deferred cost of
revenue
|
5,598
|
|
7,463
|
Prepaid expense and
other current assets
|
864
|
|
1,374
|
Total current
assets
|
10,466
|
|
12,288
|
Property and
equipment, net
|
1,422
|
|
1,699
|
Operating lease
assets
|
783
|
|
180
|
Other long-term
assets
|
187
|
|
269
|
Total
assets
|
$
12,858
|
|
$
14,436
|
Liabilities
|
|
|
|
Accounts
payable
|
$
9,125
|
|
$
9,602
|
Advances from related
parties
|
1,078
|
|
1,174
|
Obligations to issue
common stock
|
5,597
|
|
1,892
|
Accrued expense and
other current liabilities
|
8,189
|
|
7,222
|
Contract
liability
|
420
|
|
308
|
Notes
payable
|
16,480
|
|
14,607
|
Total current
liabilities
|
40,889
|
|
34,805
|
Operating lease
liabilities, long-term
|
398
|
|
56
|
Total
liabilities
|
41,287
|
|
34,861
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Stockholders'
Deficit
|
|
|
|
Preferred stock,
$0.001 par value; 1,000,000 shares authorized; zero
issued
|
—
|
|
—
|
Common stock, $0.001
par value; 175,000,000 shares authorized; 16,612,266 and
11,539,564 shares issued and outstanding at June 30, 2023 and
December 31, 2022, respectively
|
17
|
|
12
|
Additional
paid-in-capital
|
375,517
|
|
368,945
|
Accumulated other
comprehensive loss
|
(1,404)
|
|
(859)
|
Accumulated
deficit
|
(402,559)
|
|
(388,523)
|
Total stockholders'
deficit
|
(28,429)
|
|
(20,425)
|
Total liabilities and
stockholders' deficit
|
$
12,858
|
|
$
14,436
|
REMARK HOLDINGS,
INC. AND SUBSIDIARIES
|
Unaudited Condensed
Consolidated Statements of Operations and Comprehensive
Loss
|
(dollars in thousands,
except per share amounts)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue, including
amounts from China Business Partner
|
$
3,167
|
|
$
2,558
|
|
$
3,993
|
|
$
7,225
|
Cost and
expense
|
|
|
|
|
|
|
|
Cost of revenue
(excluding depreciation and amortization)
|
2,511
|
|
1,847
|
|
2,966
|
|
6,117
|
Sales and
marketing
|
387
|
|
188
|
|
753
|
|
336
|
Technology and
development
|
567
|
|
508
|
|
736
|
|
963
|
General and
administrative
|
3,244
|
|
3,933
|
|
6,077
|
|
7,872
|
Depreciation and
amortization
|
25
|
|
37
|
|
71
|
|
78
|
Impairments
|
392
|
|
—
|
|
392
|
|
—
|
Total cost and
expense
|
7,126
|
|
6,513
|
|
10,995
|
|
15,366
|
Operating
loss
|
(3,959)
|
|
(3,955)
|
|
(7,002)
|
|
(8,141)
|
Other income
(expense)
|
|
|
|
|
|
|
|
Interest
expense
|
(858)
|
|
(1,774)
|
|
(2,402)
|
|
(3,960)
|
Finance cost related
to obligations to issue common stock
|
(1,050)
|
|
—
|
|
(4,626)
|
|
—
|
Loss on
investment
|
—
|
|
(6,952)
|
|
—
|
|
(26,008)
|
Other gain,
net
|
(7)
|
|
152
|
|
(6)
|
|
151
|
Total other expense,
net
|
(1,915)
|
|
(8,574)
|
|
(7,034)
|
|
(29,817)
|
Net loss
|
$
(5,874)
|
|
$
(12,529)
|
|
$
(14,036)
|
|
$
(37,958)
|
Other comprehensive
income
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
(227)
|
|
(424)
|
|
(545)
|
|
(422)
|
Comprehensive
loss
|
$
(6,101)
|
|
$
(12,953)
|
|
$
(14,581)
|
|
$
(38,380)
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding, basic and diluted
|
14,132,862
|
|
10,515,777
|
|
13,819,643
|
|
10,515,777
|
|
|
|
|
|
|
|
|
Net loss per share,
basic and diluted
|
$
(0.42)
|
|
$
(1.19)
|
|
$
(1.02)
|
|
$
(3.61)
|
|
|
|
|
|
|
|
|
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SOURCE Remark Holdings, Inc.