BEIJING, Sept. 9, 2019 /PRNewswire/ -- Gridsum Holding
Inc. ("Gridsum" or the "Company") (NASDAQ:GSUM), a leading provider
of cloud-based big-data analytics and artificial intelligence
("AI") solutions in China, today
reported its unaudited financial results for the second quarter
ended June 30, 2019.
Highlights
- Net revenues decreased by 38% to RMB69.7
million (US$10.2 million) from
RMB112.4 million in the comparable
period of 2018.
- Net loss attributable to Gridsum's ordinary shareholders
decreased to RMB123.5 million (US$18.0 million) from RMB132.2 million in
the comparable period of 2018.
Second Quarter 2019 Financial Results
REVENUES: Net revenues decreased by 38%
to RMB69.7 million (US$10.2
million) from RMB112.4 million in the comparable
period of 2018.
Enterprise revenues decreased by 40% to RMB60.4
million (US$8.8 million)
from RMB100.7 million in the comparable period of 2018,
primarily due to the Company's ongoing strategic evolution to
achieve a more optimal revenue mix by proactively optimizing its
Search Engine Marketing (SEM) business toward higher return
opportunities and a slowdown in the Chinese economy.
E-Government and other revenues decreased by 25% to RMB9.9
million (US$1.4 million)
from RMB13.2 million in the comparable period of 2018,
mainly due to the lengthening sales cycles and lower budgeted
spending by the Chinese government for legal services solutions as
a result of government reorganization efforts which began in
2018.
COST OF REVENUES: Cost of revenues
was RMB19.9 million (US$2.9
million), compared with RMB22.8 million in the
comparable period of 2018.
GROSS PROFIT AND GROSS MARGIN: Gross profit
decreased by 44% to RMB49.7 million (US$7.2 million) from RMB89.6 million in
the comparable period of 2018, while gross margin decreased to
71.4% from 79.7%. This was mainly due to a change in revenue mix as
well as a time-lag between the Company's restructuring/optimization
of its revenue mix and its cost structure.
OPERATING EXPENSES: Total operating expenses
were RMB181.7 million (US$26.5
million), compared with RMB203.3 million in the
comparable period of 2018.
- Sales and marketing expenses were RMB38.1 million (US$5.6
million), compared with RMB40.1
million in the comparable period of 2018. The decrease was
primarily due to a RMB4.0 million
decrease in staff and other costs, which was partially offset by a
RMB1.0 million increase in
share-based compensation expenses.
- Research and development expenses were RMB87.9 million (US$12.8
million), compared with RMB119.9
million in the comparable period of 2018. 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 were RMB55.7 million (US$8.1
million), compared with RMB43.3
million in the comparable period of 2018. The increase was
primarily due to a RMB8.7 million
increase in share-based compensation expenses, a RMB5.4 million increase in office leasing costs
and a RMB5.3 million increase in
staff costs, which were partially offset by a RMB12.9 million decrease in professional service
fees.
LOSS FROM OPERATIONS: Loss from operations
was RMB132.0 million (US$19.2
million), compared with RMB113.7 million in the comparable period of
2018.
NET LOSS ATTRIBUTABLE TO GRIDSUM'S ORDINARY
SHAREHOLDERS: Net loss attributable
to Gridsum's ordinary shareholders was RMB123.5
million (US$18.0 million), compared
with RMB132.2 million in the comparable period of 2018.
Net loss attributable to Gridum's ordinary shareholders narrowed
due to a decrease in research and development expenses, gain on
change in fair value of derivative liabilities and income tax
benefit.
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 RMB103.2
million (US$15.0 million),
compared with RMB123.1 million in the comparable period
of 2018.
EBITDA: Loss before interest, income tax,
depreciation and amortization was RMB119.6
million (US$17.4 million),
compared with RMB113.1 million in the comparable period
of 2018.
ADJUSTED EBITDA: Adjusted loss before
interest, income tax, depreciation and amortization, which excludes
share-based compensation expenses, was RMB99.3
million (US$14.5 million),
compared with RMB104.0 million in the comparable period
of 2018.
NET LOSS PER ADS ATTRIBUTABLE TO GRIDSUM'S ORDINARY
SHAREHOLDERS: Net loss per ADS attributable
to Gridsum's ordinary shareholders was RMB3.60
(US$0.52), compared
with RMB4.29 in the comparable period of 2018.
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 RMB3.01 (US$0.44), compared
with RMB3.99 in the comparable period of 2018.
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 second quarter of 2019 was
34,315,488. As of June 30, 2019, the total number of ordinary
shares outstanding was 34,460,747.
Balance Sheet
As of June 30, 2019, the Company had cash and cash
equivalents of RMB65.6 million (US$9.6 million), and restricted cash
of RMB1.3 million (US$0.2
million).
Second Quarter 2019 Review
The Company's performance in the second quarter of 2019
continued to reflect the Company moving through resolution of some
of the challenges, originating in 2018, where a number of events
and issues negatively impacted the Company's business and
performance. Additionally, revenue and growth momentum continued to
be impacted by the slowdown in the Chinese economy.
The Company's restructuring of its sales and service functions
continues to gain traction and is creating a more optimal revenue
mix with a focus on higher-return opportunities. Following
significant investments in its industrial AI and IIoT platforms
throughout 2018, revenue from the Company's IIoT business continued
to gain strong growth momentum during the quarter and accounted for
a low double-digit percentage of total revenues in the quarter.
Recent Development
On July 16, 2019, the Company
announced that its board of directors (the "Board") had received a
preliminary non-binding proposal letter, dated July 15, 2019, from Guosheng Qi, Chairman of the
Board and the Chief Executive Officer of the Company, Guofa Yu, a director and the Chief Operating
Officer of the Company, and their respective affiliated entities,
and Beta Dynamic Limited, an affiliate of Hammer Capital Private
Investments Limited, proposing to acquire the Company in a going
private transaction for US$3.80 in
cash per American depositary share (each representing one Class B
ordinary share of the Company), or US$3.80 in cash per ordinary share.
On July 22, 2019, the Company
announced that the Board had formed a special committee (the
"Special Committee") comprised of three independent directors Mr.
Dannis Cheuk Yin Lee, Mr.
Xudong Gao and Mr. Feng Lu, to evaluate the proposal and any other
alternative transactions. Mr. Lee had been appointed as Chairman of
the Special Committee.
On August 9, 2019, the Company
announced that the Special Committee retained Orrick, Herrington
& Sutcliffe LLP as its legal counsel in connection with its
review and evaluation of the proposal.
At this time, no decisions have been made with respect to
Gridsum's response to the proposal or any other alternative
transaction. There can be no assurance that any definitive offer
will be made, that any agreement will be executed or that the
proposal or any other alternative transaction will be approved or
consummated.
Exchange Rate
This announcement contains translations of certain RMB amounts
into U.S. Dollars ("US$") at specified rates solely for the
convenience of the reader. Unless otherwise stated, all
translations from RMB to US$ were made at the rate
of RMB6.8650 to US$1.00, the
noon buying rate in effect on June 28, 2019 in the H.10
statistical release of the Federal Reserve Board. The Company makes
no representation that the RMB or US$ amounts referred could be
converted into US$ or RMB, as the case may be, at any particular
rate or at all.
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 Gridsum's ordinary shareholders,
non-GAAP net loss per share attributable to Gridsum's ordinary
shareholders, non-GAAP net loss per ADS attributable to Gridsum's
ordinary shareholders, EBITDA and adjusted EBITDA. The presentation
of these non-GAAP financial measures is not intended to be
considered in isolation or as a substitute for the financial
information prepared in accordance with U.S. GAAP. Non-GAAP net
loss attributable to Gridsum's ordinary shareholders is net loss
attributable to Gridsum's ordinary shareholders before share-based
compensation, non-GAAP net loss per share attributable to Gridsum's
ordinary shareholders is the per share equivalent and non-GAAP net
loss per ADS attributable to Gridsum's ordinary shareholders is the
per ADS equivalent, EBITDA is net loss before interest income and
expenses, income tax expenses and depreciation expenses, and
adjusted EBITDA is EBITDA before share-based compensation.
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 U.S.
GAAP and are not presented in accordance with U.S. GAAP. These
non-GAAP financial measures have limitations as analytical tools.
One of the key limitations of using these non-GAAP financial
measures is that they do not reflect all items of income and
expense that affect the Company's operations. Interest income and
expenses, income tax expenses, depreciation expenses and
share-based compensation have been and may continue to be incurred
in the Company's business and are not reflected in the presentation
of adjusted EBITDA. Further, these non-GAAP financial measures may
differ from the non-GAAP financial measures used by other
companies, including Gridsum's peer companies, so their utility for
comparison purposes may be limited.
The Company compensates for these limitations by reconciling the
Company's non-GAAP financial measures to the most directly
comparable U.S. GAAP financial measures, which should be considered
when evaluating the Company's performance. Investors are encouraged
to review the Company's financial information in its entirety and
not rely on a single financial measure. A reconciliation of these
non-GAAP financial measures to their closest U.S. GAAP financial
measures appears at the end of this release.
About Gridsum
Gridsum Holding Inc. (NASDAQ: GSUM) is a leading provider of
cloud-based big-data analytics and AI solutions for multinational
and domestic enterprises and government agencies in China. Gridsum's core technology, the Gridsum
Big Data Platform and the Gridsum Prophet: Enterprise AI Engine, is
built on a distributed computing framework and performs real-time
multi-dimensional correlation analysis of both structured and
unstructured data. This enables Gridsum's customers to identify
complex relationships within their data and gain new insights that
help them make better business decisions. The Company is named
"Gridsum" to symbolize the combination of distributed computing
(Grid) and analytics (sum). As a digital intelligence pioneer, the
Company's mission is to help enterprises and government
organizations in China use data in
new and powerful ways to make better-informed decisions and be more
productive.
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 U.S. Private Securities Litigation Reform Act of
1995. These statements can be identified by terminology such as
"may," "will," "expects," "anticipates," "aims," "future,"
"intends," "plans," "believes," "estimates," "likely to" and
similar statements. Forward-looking statements involve inherent
risks and uncertainties. Many factors could cause actual results to
differ materially from those contained in any forward-looking
statement, including but not limited to unexpected difficulties in
pursuit of our goals and strategies, unpredictability of demand for
new solutions we have developed, difficulties keeping and
strengthening relationships with customers, potential difficult
expanding our customer base or securing new orders from existing
customers, potentially costly research and development activities,
liquidity and the availability of additional capital when needed,
and weaknesses of our internal controls, competition in the digital
intelligence market, PRC governmental policies relating to media,
software, big data, the internet, internet content providers and
online advertising; and general economic and business conditions .
Further information regarding these and other risks is included in
Gridsum's annual report on
Form 20-F and other reports filed with, or furnished to, the U.S.
Securities and Exchange Commission. All information provided in
this press release is as of the date of this press release, and
Gridsum undertakes no duty to update such information except as
required under applicable law.
Investor Relations
Gridsum
ir@gridsum.com
Christensen
In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
Email: carnell@christensenir.com
In U.S.
Mr. Tip Fleming
Phone: +1 917 412 3333
Email: tfleming@christensenir.com
GRIDSUM
HOLDING INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(All amounts in
thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
December 31,
|
June 30,
|
June 30,
|
|
2018
|
2019
|
2019
|
Assets
|
RMB
|
RMB
|
USD
|
Current
assets:
|
|
|
|
Cash and cash equivalents
|
92,684
|
65,567
|
9,551
|
Restricted cash
|
1,334
|
1,349
|
197
|
Accounts receivable, net
|
397,969
|
402,901
|
58,689
|
Prepayments and other current assets
|
294,904
|
268,465
|
39,107
|
Total current
assets
|
786,891
|
738,282
|
107,544
|
Non-current
assets:
|
|
|
|
Investment in associates
|
5,000
|
5,000
|
728
|
Property, equipment and software, net
|
62,328
|
53,633
|
7,813
|
Intangible assets, net
|
13,840
|
22,109
|
3,221
|
Goodwill
|
537
|
537
|
78
|
Deferred tax assets
|
46,359
|
62,466
|
9,099
|
Other non-current assets
|
435
|
434
|
63
|
Operating lease right-of-use assets
|
-
|
131,709
|
19,186
|
Total non-current
assets
|
128,499
|
275,888
|
40,188
|
Total
assets
|
915,390
|
1,014,170
|
147,732
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term
bank loan
|
5,000
|
60,000
|
8,740
|
Accounts payable
|
97,293
|
27,138
|
3,953
|
Salary and welfare payables
|
65,451
|
54,574
|
7,950
|
Taxes payable
|
110,529
|
114,644
|
16,700
|
Deferred revenues
|
36,126
|
47,640
|
6,940
|
Advances from customers
|
154,731
|
168,906
|
24,604
|
Accrued expenses and other current
liabilities
|
147,940
|
141,770
|
20,651
|
Derivative liabilities
|
596
|
19,059
|
2,776
|
Operating lease liabilities current
|
-
|
36,861
|
5,369
|
Convertible note
|
242,702
|
261,692
|
38,120
|
Total current
liabilities
|
860,368
|
932,284
|
135,803
|
Non-current
liabilities:
|
|
|
|
Long-term borrowing
|
-
|
91,948
|
13,394
|
Deferred tax liabilities
|
212
|
193
|
28
|
Operating lease liabilities non-current
|
-
|
104,889
|
15,279
|
Total non-current
liabilities
|
212
|
197,030
|
28,701
|
Total
liabilities
|
860,580
|
1,129,314
|
164,504
|
|
|
|
|
Shareholders'
(deficit)/equity:
|
|
|
|
Ordinary shares
—Class A
|
31
|
31
|
5
|
Ordinary shares
—Class B
|
177
|
200
|
29
|
Additional paid-in
capital
|
1,146,253
|
1,251,771
|
182,341
|
Statutory
reserve
|
12,903
|
12,903
|
1,879
|
Accumulated other
comprehensive loss
|
(35,496)
|
(25,464)
|
(3,709)
|
Accumulated
deficit
|
(1,077,409)
|
(1,362,327)
|
(198,445)
|
Total Gridsum
shareholders' (deficit)/equity
|
46,459
|
(122,886)
|
(17,900)
|
Non-controlling interest
|
8,351
|
7,742
|
1,128
|
Total shareholders'
(deficit)equity
|
54,810
|
(115,144)
|
(16,772)
|
Total liabilities and
shareholders' equity
|
915,390
|
1,014,170
|
147,732
|
GRIDSUM HOLDING
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
(All amounts in
thousands, except for share, per share and per ADS data,
unaudited)
|
|
|
|
|
|
For the Three
Months Ended
|
|
30-Jun-18
|
30-Jun-19
|
30-Jun-19
|
|
RMB
|
RMB
|
USD
|
Revenues:
|
|
|
|
Enterprise
|
100,676
|
60,381
|
8,796
|
e-Government
and other
|
13,204
|
9,879
|
1,439
|
Less:
Business tax and
surcharges
|
(1,487)
|
(576)
|
(84)
|
Net
revenues
|
112,393
|
69,684
|
10,151
|
Cost of
revenues
|
(22,812)
|
(19,936)
|
(2,904)
|
Gross
profit
|
89,581
|
49,748
|
7,247
|
Operating
expenses:
|
|
|
|
Sales and marketing expenses
|
(40,102)
|
(38,125)
|
(5,554)
|
Research and development
expenses
|
(119,907)
|
(87,947)
|
(12,811)
|
General and administrative
expenses
|
(43,296)
|
(55,652)
|
(8,107)
|
Total operating
expenses
|
(203,305)
|
(181,724)
|
(26,472)
|
Losses from
operations
|
(113,724)
|
(131,976)
|
(19,225)
|
Foreign exchange loss
|
(3,462)
|
(297)
|
(43)
|
Interest expense, net
|
(2,332)
|
(4,783)
|
(697)
|
Other (expense)/income, net
|
2,058
|
3,045
|
444
|
Amortization of debt discount
|
(5,995)
|
(10,415)
|
(1,517)
|
Gain
on change in fair value of
derivative
liabilities
|
-
|
10,824
|
1,577
|
Loss before income
tax
|
(123,455)
|
(133,602)
|
(19,461)
|
Income tax benefit
|
(8,873)
|
9,745
|
1,420
|
Net
loss
|
(132,328)
|
(123,857)
|
(18,041)
|
Less: Net loss
attributable to non-
controlling interests
|
(142)
|
(331)
|
(48)
|
Net loss
attributable to Gridsum Holding
Inc.
|
(132,186)
|
(123,526)
|
(17,993)
|
Net loss
attributable to Gridsum's
ordinary shareholders
|
(132,186)
|
(123,526)
|
(17,993)
|
|
|
|
|
Net loss
|
(132,328)
|
(123,857)
|
(18,041)
|
Foreign currency
translation adjustment,
net of tax
|
4,853
|
4,371
|
637
|
Comprehensive
loss
|
(127,475)
|
(119,486)
|
(17,404)
|
Less: Comprehensive
loss attributable to
non-controlling interests
|
(142)
|
(331)
|
(48)
|
Comprehensive loss
attributable to
Gridsum Holding Inc.
|
(127,333)
|
(119,155)
|
(17,356)
|
|
|
|
|
Weighted average
number of ordinary
shares used in per share calculations:
|
|
|
|
Basic and
diluted
|
30,825,645
|
34,315,488
|
34,315,488
|
Net loss per
ordinary share attributable
to Gridsum's ordinary shareholders:
|
|
|
|
Basic and
diluted
|
(4.29)
|
(3.60)
|
(0.52)
|
Net loss per ADS
attributable to
Gridsum's ordinary shareholders:
|
|
|
|
Basic and
diluted
|
(4.29)
|
(3.60)
|
(0.52)
|
GRIDSUM HOLDING
INC.
|
RECONCILIATION OF
GAAP AND NON-GAAP RESULTS
|
(All amounts in
thousands, except for share, per share and per ADS data,
unaudited)
|
|
|
|
|
|
For the Three
Months Ended
|
|
30-Jun-18
|
30-Jun-19
|
30-Jun-19
|
|
RMB
|
RMB
|
USD
|
Reconciliation of
net loss attributable to Gridsum's ordinary shareholders
to non-GAAP net loss attributable to
Gridsum's ordinary shareholders
|
Net loss attributable
to Gridsum's ordinary shareholders
|
(132,186)
|
(123,526)
|
(17,993)
|
Share-based
compensation
|
9,091
|
20,332
|
2,962
|
Non-GAAP net
loss attributable to Gridsum's ordinary shareholders
|
(123,095)
|
(103,194)
|
(15,031)
|
Weighted average
number of ordinary shares used in net loss per share
attributable to Gridsum's ordinary shareholders
and non-GAAP net loss
per share attributable to Gridsum's ordinary shareholders
calculations:
|
|
|
|
Basic and
diluted
|
30,825,645
|
34,315,488
|
34,315,488
|
Net loss per ordinary
share attributable to Gridsum's ordinary shareholders:
|
|
|
|
Basic and
diluted
|
(4.29)
|
(3.60)
|
(0.52)
|
Net loss per ADS
attributable to Gridsum's ordinary shareholders:
|
|
|
|
Basic and
diluted
|
(4.29)
|
(3.60)
|
(0.52)
|
Non-GAAP net loss per
ordinary share attributable to Gridsum's
ordinary shareholders:
|
|
|
|
Basic and
diluted
|
(3.99)
|
(3.01)
|
(0.44)
|
Non-GAAP net loss per
ADS attributable to Gridsum's ordinary
shareholders:
|
|
|
|
Basic and
diluted
|
(3.99)
|
(3.01)
|
(0.44)
|
|
|
|
|
Reconciliation of
net loss to EBITDA and adjusted EBITDA
|
|
|
Net loss
|
(132,328)
|
(123,857)
|
(18,041)
|
Interest expense,
net
|
2,332
|
4,783
|
697
|
Income tax
expenses
|
8,873
|
(9,745)
|
(1,420)
|
Depreciation and
amortization expenses
|
8,032
|
9,204
|
1,341
|
EBITDA
|
(113,091)
|
(119,615)
|
(17,423)
|
Share-based
compensation
|
9,091
|
20,332
|
2,962
|
Adjusted
EBITDA
|
(104,000)
|
(99,283)
|
(14,461)
|
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SOURCE Gridsum Holding Inc.