BEIJING, Dec. 23, 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 third quarter ended September 30, 2019.
Highlights
- Net revenues decreased 25%, to RMB60.1
million (US$8.4 million),
from RMB80.5 million in the comparable period of
2018.
- Net loss attributable to Gridsum's ordinary shareholders
decreased 35%, to RMB126.7 million (US$17.7 million), from RMB193.9 million in
the comparable period of 2018.
Third Quarter 2019 Financial Results
REVENUES: Net revenues decreased 25%,
to RMB60.1 million (US$8.4
million), from RMB80.5 million in the comparable
period of 2018.
Enterprise revenues decreased 20%, to RMB54.5
million (US$7.6 million),
from RMB67.8 million in the comparable period of 2018,
primarily due to the Company's ongoing strategic restructuring to
target its Search Engine Marketing (SEM) business toward higher
return opportunities and to a slowdown in the Chinese economy.
E-Government and other revenues decreased 56%, to RMB6.0
million (US$0.8 million),
from RMB13.7 million in the comparable period of 2018,
primarily due to reduced budgeted spending by the Chinese
government as a result of government reorganization activities that
began in 2018.
COST OF REVENUES: Cost of revenues decreased
10%, to RMB21.3 million (US$3.0
million), compared with RMB23.6 million in the
comparable period of 2018.
GROSS PROFIT AND GROSS MARGIN: Gross profit
decreased 32%, to RMB38.8 million (US$5.4 million), from RMB56.8
million in the comparable period of 2018. Gross margin
decreased to 64.5% from 70.6%, reflecting the shift in revenue mix
and the timelag between the Company's revenue restructuring. The
Company believes its gross profit will begin to improve in 2020 as
its sales mix continues to evolve with its IIoT solutions
delivering a greater contribution.
OPERATING EXPENSES: Total operating expenses
declined 42%, to RMB148.4million (US$20.8 million), from RMB254.4 million in the comparable period of
2018.
- Sales and marketing expenses declined 27%, to RMB33.1 million (US$4.6
million), from RMB45.6 million
in the comparable period of 2018. The decrease reflected a
RMB6.6 million decrease in marketing
and promotion expenses and a RMB4.2
million decrease in staff costs.
- Research and development expenses declined 53%, to RMB74.5 million (US$10.4
million), from RMB158.3
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 declined 19%, to
RMB40.9 million (US$5.7 million), from RMB50.5 million in the comparable period of 2018.
The decrease was primarily due to a RMB8.3
million decrease in professional services fees.
LOSS FROM OPERATIONS: Loss from operations
was RMB109.6 million (US$15.3
million), compared with RMB197.5 million in the comparable period of
2018.
NET LOSS ATTRIBUTABLE TO GRIDSUM'S ORDINARY
SHAREHOLDERS: Net loss attributable
to Gridsum's ordinary shareholders was RMB126.7
million (US$17.7 million), compared
with RMB193.9 million in the comparable period of
2018.
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 RMB115.9
million (US$16.2million),
compared with RMB182.8 million in the comparable period
of 2018.
EBITDA: Loss before interest, income tax,
depreciation and amortization was RMB97.1
million (US$13.6 million),
compared with RMB199.6 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 RMB86.3
million (US$12.1 million),
compared with RMB188.5 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 RMB3.68
(US$0.51), compared
with RMB6.29 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 RMB3.36 (US$0.47), compared
with RMB5.93 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 third quarter of 2019 was
34,470,418. As of September 30, 2019, the total number of
ordinary shares outstanding was 34,540,511.
Balance Sheet
As of September 30, 2019, the Company had cash and cash
equivalents of RMB42.7 million (US$6.0 million), and restricted cash
of RMB0.06 million (US$0.008
million).
Third Quarter 2019 Review
The Company's performance in the third quarter of 2019 continued
to reflect the Company'sefforts and challenges around its strategic
restructuring to achieve a more optimal revenue and cost structure
under operating conditions also characterized by cashflow and
liquidity pressures. Momentum also continued to be impacted by the
slowdown in the Chinese economy.
Recent Developments
On October 9, 2019, the Company
announced that the special committee (the "Special Committee") of
the Company's board of directors (the "Board") retained
Houlihan Lokey (China) Limited as its financial advisor in
connection with its review and evaluation of the preliminary
non-binding proposal received by the Board on July 15, 2019 (the "Proposal") from Guosheng Qi,
Guofa Yu, their respective
affiliated entities, and Beta Dynamic Limited, an affiliate of
Hammer Capital Private Investments Limited.
At this time, no decisions have been made by the Special Committee
with respect to the Company's response to the Proposal or any other
alternative transaction. The Special Committee has not set a
definitive timetable for the completion of its evaluation of the
Proposal or any other alternative transaction, and does not
currently intend to announce developments unless and in the event a
definitive agreement has been reached. There can be no assurance
that any definitive offer will be made, that any agreement will be
executed or that the transactions contemplated by the Proposal or
any other alternative transaction will be approved or
consummated.
On May 5, 2018, the Company issued
to FutureX Innovation SPC ("FutureX") a convertible note in the
principal amount of US$40,000,000 due
November 5, 2019 (the "Note").The
Company has not yet repaid the Note.On December 9, 2019, FutureXserved a statutory
demand on the Company, under which FutureX (i) claims that the
Company owes, as of December 9, 2019,
a total amount of US$41,913,498 under
the Note (the "Debt"), (ii) demands that the Company pay the Debt
or secure or compound for it to FutureX's satisfaction, and (iii)
states that if payment of the Debt is not made within 21 days of
the date when the statutory demand was served on the Company, the
Company will be deemed to be insolvent and a winding up petition
may be presented against the Company in accordance with applicable
Cayman laws.The Company is engaged in discussions to resolve its
obligations under the Note but there can be no assurance that any
such resolution can be reached on a timely basis, or at all. In the
event the Company is deemed insolvent there can be no assurance
that the Company's ADRs will remain listed for trading on The
Nasdaq Stock Market.
Exchange Rate
This announcement contains translations of certain RMB amounts
into U.S. Dollars ("US$") 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 RMB7.1477 to US$1.00, the
noon buying rate in effect on September 30, 2019 in the
H.10 statistical release of the Federal Reserve Board. The Company
makes no representation that the RMB or US$ 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 general economic conditions
in China, unexpected difficulties
in pursuit of our business strategy, unpredictable demand for
solutions we have developed, difficulties keeping and strengthening
relationships with existing customers or expanding our customer
base, availability of additional capital when needed, uncertainties
associated with our repayiment of indebtedness and our ability to
maintain listing for trading on The Nasdaq Stock Market, and
uncertainty about the Proposal. Further information regarding these
and other risks is included in Gridsum'sannual 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,
|
September 30,
|
September 30,
|
|
|
|
2018
|
2019
|
2019
|
|
|
Assets
|
RMB
|
RMB
|
USD
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
92,684
|
42,717
|
5,976
|
|
|
Restricted
cash
|
1,334
|
55
|
8
|
|
|
Accounts receivable,
net
|
397,969
|
370,159
|
51,787
|
|
|
Prepayments and other
current assets
|
294,904
|
283,093
|
39,606
|
|
|
Total current
assets
|
786,891
|
696,024
|
97,377
|
|
|
Non-current
assets:
|
|
|
|
|
|
Investment in
associates
|
5,000
|
5,000
|
700
|
|
|
Property, equipment
and software, net
|
62,328
|
50,978
|
7,132
|
|
|
Intangible assets,
net
|
13,840
|
21,373
|
2,990
|
|
|
Goodwill
|
537
|
537
|
75
|
|
|
Deferred tax
assets
|
46,359
|
47,712
|
6,675
|
|
|
Other non-current
assets
|
435
|
337
|
47
|
|
|
Operating lease
right-of-use assets
|
-
|
122,224
|
17,100
|
|
|
Total non-current
assets
|
128,499
|
248,161
|
34,719
|
|
|
Total
assets
|
915,390
|
944,185
|
132,096
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Short-term bank
loan
|
5,000
|
40,000
|
5,596
|
|
|
Accounts
payable
|
97,293
|
50,581
|
7,076
|
|
|
Salary and welfare
payables
|
65,451
|
62,101
|
8,688
|
|
|
Taxes
payable
|
110,529
|
113,749
|
15,914
|
|
|
Deferred
revenues
|
36,126
|
52,769
|
7,383
|
|
|
Advances from
customers
|
154,731
|
187,088
|
26,175
|
|
|
Accrued expenses and
other current liabilities
|
147,940
|
156,891
|
21,950
|
|
|
Derivative
liabilities
|
596
|
5,649
|
790
|
|
|
Operating lease
liabilities current
|
-
|
31,104
|
4,352
|
|
|
Convertible
note
|
242,702
|
282,548
|
39,530
|
|
|
Total current
liabilities
|
860,368
|
982,480
|
137,454
|
|
|
Non-current
liabilities:
|
|
|
|
|
|
Long-term
borrowing
|
-
|
91,627
|
12,819
|
|
|
Corporate
bond
|
-
|
18,289
|
2,559
|
|
|
Deferred tax
liabilities
|
212
|
184
|
26
|
|
|
Other non-current
liabilities
|
-
|
1,248
|
175
|
|
|
Operating lease
liabilities non-current
|
-
|
101,586
|
14,212
|
|
|
Total non-current
liabilities
|
212
|
212,934
|
29,791
|
|
|
Total
liabilities
|
860,580
|
1,195,414
|
167,245
|
|
|
|
|
|
|
|
|
Shareholders'
(deficit)/equity:
|
|
|
|
|
|
Ordinary shares
—Class A
|
31
|
31
|
4
|
|
|
Ordinary shares
—Class B
|
177
|
200
|
28
|
|
|
Additional paid-in
capital
|
1,146,253
|
1,262,751
|
176,665
|
|
|
Statutory
reserve
|
12,903
|
12,903
|
1,805
|
|
|
Accumulated other
comprehensive loss
|
(35,496)
|
(47,464)
|
(6,640)
|
|
|
Accumulated
deficit
|
(1,077,409)
|
(1,489,041)
|
(208,324)
|
|
|
Total Gridsum
shareholders' (deficit)/equity
|
46,459
|
(260,620)
|
(36,462)
|
|
|
Non-controlling
interest
|
8,351
|
9,391
|
1,314
|
|
|
Total shareholders'
(deficit)equity
|
54,810
|
(251,229)
|
(35,148)
|
|
|
Total liabilities and
shareholders' equity
|
915,390
|
944,185
|
132,096
|
|
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-Sep-18
|
30-Sep-19
|
30-Sep-19
|
|
|
|
RMB
|
RMB
|
USD
|
|
|
Revenues:
|
|
|
|
|
|
Enterprise
|
67,815
|
54,464
|
7,620
|
|
|
e-Government and
other
|
13,701
|
6,049
|
846
|
|
|
Less: Business tax
and surcharges
|
(1,062)
|
(379)
|
(53)
|
|
|
Net
revenues
|
80,454
|
60,134
|
8,413
|
|
|
Cost of
revenues
|
(23,630)
|
(21,326)
|
(2,984)
|
|
|
Gross
profit
|
56,824
|
38,808
|
5,429
|
|
|
Operating
expenses:
|
|
|
|
|
|
Sales and marketing
expenses
|
(45,565)
|
(33,064)
|
(4,626)
|
|
|
Research and
development expenses
|
(158,348)
|
(74,490)
|
(10,422)
|
|
|
General and
administrative expenses
|
(50,454)
|
(40,889)
|
(5,720)
|
|
|
Total operating
expenses
|
(254,367)
|
(148,443)
|
(20,768)
|
|
|
Losses from
operations
|
(197,543)
|
(109,635)
|
(15,339)
|
|
|
Foreign exchange
loss
|
(3,644)
|
37
|
5
|
|
|
Interest expense,
net
|
(2,795)
|
(4,126)
|
(577)
|
|
|
Other
(expense)/income, net
|
3,297
|
589
|
82
|
|
|
Amortization of debt
discount
|
(9,593)
|
(10,711)
|
(1,498)
|
|
|
Gain on change in
fair value of derivative liabilities
|
-
|
13,932
|
1,949
|
|
|
Loss before income
tax
|
(210,278)
|
(109,914)
|
(15,378)
|
|
|
Income tax benefit
(expenses)
|
15,783
|
(15,151)
|
(2,119)
|
|
|
Net
loss
|
(194,495)
|
(125,065)
|
(17,497)
|
|
|
Less: Net loss
attributable to non-controlling interests
|
(597)
|
1,649
|
231
|
|
|
Net loss
attributable to Gridsum Holding Inc.
|
(193,898)
|
(126,714)
|
(17,728)
|
|
|
Net loss
attributable to Gridsum's ordinary
shareholders
|
(193,898)
|
(126,714)
|
(17,728)
|
|
|
|
|
|
|
|
|
Net loss
|
(194,495)
|
(125,065)
|
(17,497)
|
|
|
Foreign currency
translation adjustment, net of tax
|
(2,567)
|
(22,000)
|
(3,078)
|
|
|
Comprehensive
loss
|
(197,062)
|
(147,065)
|
(20,575)
|
|
|
Less: Comprehensive
loss attributable to non-
controlling interests
|
(598)
|
1,649
|
231
|
|
|
Comprehensive loss
attributable to Gridsum
Holding Inc.
|
(196,464)
|
(148,714)
|
(20,806)
|
|
|
|
|
|
|
|
|
Weighted average
number of ordinary shares
used in per share calculations:
|
|
|
|
|
|
Basic and
diluted
|
30,827,609
|
34,470,418
|
34,470,418
|
|
|
Net loss per
ordinary share attributable to
Gridsum's ordinary shareholders:
|
|
|
|
|
|
Basic and
diluted
|
(6.29)
|
(3.68)
|
(0.51)
|
|
|
Net loss per ADS
attributable to Gridsum's
ordinary shareholders:
|
|
|
|
|
|
Basic and
diluted
|
(6.29)
|
(3.68)
|
(0.51)
|
|
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-Sep-18
|
30-Sep-19
|
30-Sep-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
|
(193,898)
|
(126,714)
|
(17,728)
|
|
|
Share-based
compensation
|
11,081
|
10,859
|
1,519
|
|
|
Non-GAAP net
loss attributable to Gridsum's ordinary
shareholders
|
(182,817)
|
(115,855)
|
(16,209)
|
|
|
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
|
30,827,609
|
34,470,418
|
34,470,418
|
|
|
Net loss per ordinary
share attributable to Gridsum's ordinary
shareholders:
|
|
|
|
|
|
Basic and
diluted
|
(6.29)
|
(3.68)
|
(0.51)
|
|
|
Net loss per ADS
attributable to Gridsum's ordinary
shareholders:
|
|
|
|
|
|
Basic and
diluted
|
(6.29)
|
(3.68)
|
(0.51)
|
|
|
Non-GAAP net loss per
ordinary share attributable to
Gridsum's ordinary shareholders:
|
|
|
|
|
|
Basic and
diluted
|
(5.93)
|
(3.36)
|
(0.47)
|
|
|
Non-GAAP net loss per
ADS attributable to Gridsum's
ordinary shareholders:
|
|
|
|
|
|
Basic and
diluted
|
(5.93)
|
(3.36)
|
(0.47)
|
|
|
|
|
|
|
|
|
Reconciliation of
net loss to EBITDA and adjusted EBITDA
|
|
|
|
|
Net loss
|
(194,495)
|
(125,065)
|
(17,497)
|
|
|
Interest expense,
net
|
2,795
|
4,126
|
577
|
|
|
Income tax
expenses
|
(15,783)
|
15,151
|
2,120
|
|
|
Depreciation and
amortization expenses
|
7,922
|
8,659
|
1,211
|
|
|
EBITDA
|
(199,561)
|
(97,129)
|
(13,589)
|
|
|
Share-based
compensation
|
11,081
|
10,859
|
1,519
|
|
|
Adjusted
EBITDA
|
(188,480)
|
(86,270)
|
(12,070)
|
|
View original
content:http://www.prnewswire.com/news-releases/gridsum-reports-unaudited-third-quarter-2019-financial-results-300978803.html
SOURCE Gridsum Holding Inc.