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Smart Share Global Limited Announces First Quarter 2024 Results

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Smart Share Global (Nasdaq: EM) announced its unaudited financial results for Q1 2024. The company, which provides mobile device charging solutions, reported a revenue of RMB397.2 million (US$55.0 million), a 51.7% drop from Q1 2023. The decrease mainly stems from changes in contractual arrangements with network partners. Mobile device charging revenues fell by 53.5% to RMB378.1 million, with direct model revenues at RMB155.2 million and network partner model revenues at RMB222.9 million. The company achieved a net loss of RMB0.3 million, compared to a net income of RMB10.8 million a year earlier. Despite a challenging market, Smart Share Global expanded its POI coverage to 1,245 thousand and increased cumulative registered users to 404.3 million. The company's shift to a network partner model is expected to yield long-term benefits but incurred one-off costs during the transition. Cash and cash equivalents stood at RMB3.3 billion (US$454.1 million) as of March 31, 2024.

Positive
  • POI coverage expanded to 1,245 thousand as of March 31, 2024.
  • Cumulative registered users reached 404.3 million, with 12.8 million new users added in Q1 2024.
  • Cash and cash equivalents totaled RMB3.3 billion (US$454.1 million) as of March 31, 2024.
  • Other revenues increased by 95.4% to RMB19.1 million (US$2.6 million), driven by new business initiatives and advertising efficiency.
Negative
  • Revenues decreased by 51.7% to RMB397.2 million (US$55.0 million) compared to Q1 2023.
  • Mobile device charging revenues dropped 53.5% to RMB378.1 million.
  • Net loss was RMB0.3 million, compared to a net income of RMB10.8 million in Q1 2023.
  • Cost of revenues increased by 31.7% to RMB167.7 million (US$23.2 million).
  • Research and development expenses decreased by 8.3% to RMB19.7 million (US$2.7 million).
  • Sales and marketing expenses dropped by 69.3% to RMB204.5 million (US$28.3 million).
  • Adjusted net income fell to RMB3.8 million (US$0.5 million) from RMB17.1 million.

Insights

The first quarter results for Smart Share Global Limited indicate significant operational and financial shifts primarily due to its strategic move towards a network partner model. The transition has led to a notable decrease in revenues, which fell by 51.7% compared to the same period last year. This is largely because revenues under the network partner model are now net of incentive fees paid to network partners, thus impacting the topline. However, the cost structure has seen some optimization, evident from the reduction in sales and marketing expenses by 69.3%, driven by lower incentive fees and a reduction in personnel expenses under the direct model. This strategic move aims to enhance long-term profitability despite incurring one-off transition costs. The company's balance sheet remains robust with cash and equivalents of RMB3.3 billion, providing ample liquidity to navigate the challenging environment and invest in future opportunities. The decrease in R&D expenses and stabilization of administrative costs also highlight effective cost management. However, the rise in cost of revenues by 31.7% due to increased sales of cabinets and power banks under the new contractual arrangement is a point of concern and needs to be monitored closely in future quarters to ensure it doesn't offset the intended benefits of the strategic shift. From a retail investor's perspective, while the short-term financial impact appears negative due to the revenue decline and increased operational loss, the strategic rebalancing towards a network partner model is likely to yield long-term benefits. The strong liquidity position is a positive indicator for sustaining operations and funding growth initiatives. Rating: 0

Smart Share Global's shift to the network partner model represents a significant pivot in its business strategy, aiming to leverage the strengths of partnerships to expand its reach and operational efficiency. The model shows potential for scalability and cost savings, as indicated by the optimization efforts in reducing under-performing POIs and focusing on acquiring new key accounts. Despite the short-term drop in mobile device charging revenues, the model's restructuring towards providing mobile charging solutions and hardware sales to network partners sets a foundation for a more sustainable revenue stream. The increase in cumulative registered users to 404.3 million and newly registered users by 12.8 million during the quarter signals a growing market penetration and user acquisition capability. However, the drop in mobile device charging orders from 153.2 million to 147.0 million year-over-year suggests a softer consumption environment, possibly due to macroeconomic factors impacting consumer behavior. Investors should consider these trends when evaluating the company's long-term growth potential. Additionally, the increase in other revenues by 95.4%, driven by new business initiatives and improved advertising efficiency, indicates diversification efforts that could mitigate risks associated with reliance on core charging services. Overall, while the financial results present a mixed short-term picture, the strategic initiatives and market positioning offer a cautiously optimistic outlook for long-term value creation. Rating: 0

POIsoperated through network partner model reached 79.7% as of the end of the first quarter of 2024
Cumulative registered usersreached 404.3 million as of the end of the first quarter of 2024

SHANGHAI, China, June 03, 2024 (GLOBE NEWSWIRE) -- Smart Share Global Limited (Nasdaq: EM) (“Energy Monster” or the “Company”), a consumer tech company providing mobile device charging service, today announced its unaudited financial results for the quarter ended March 31, 2024.

HIGHLIGHTS FOR THE FIRST QUARTER OF 2024

  • As of March 31, 2024, 79.7% of POIs were operated under our network partner model, compared with 72.8% as of December 31, 2023.
  • As of March 31, 2024, the Company’s services were available in 1,245 thousand POIs, compared with 1,234 thousand as of December 31, 2023.
  • As of March 31, 2024, the Company’s available-for-use power banks3 were 9.4 million, compared with 9.2 million as of December 31, 2023.
  • As of March 31, 2024, cumulative registered users reached 404.3 million, with 12.8 million newly registered users acquired during the quarter.
  • Mobile device charging orders4 for the first quarter of 2024 was 147.0 million, compared with 153.2 million for the first quarter of 2023.

“Despite a stable performance this quarter due to a softer consumption environment, we continue to achieve new operational milestones,” said Mars Guangyuan Cai, Chairman and Chief Executive Officer. “We have successfully expanded our POI coverage to a record-high scale and reached a remarkable milestone of over 400 million cumulative registered users. Additionally, we have strategically rebalanced our operational model towards the network partner model while maintaining our core direct model portfolios. This transition is anticipated to deliver substantial economic benefits for the Company in the long term. We remain steadfast in our commitment to delivering sustainable value to all our stakeholders and are optimistic about the future prospects of the mobile device charging service sector in China.”

“Our transition to the network partner model has been executed with precision, carefully balancing the rate of transition with quality,” said Peifeng Xu, President. “We are consistently reducing under-performing POIs and optimizing the operational efficiency of our direct model. Despite the challenging environment, we have maintained POI expansion momentum through the acquisition of new key accounts and by placing increased emphasis on the network partner model for core expansion. This strategy ensures that we leverage the strengths of both models to drive our coverage expansion and profitability.”

“The transition from the direct model to the network partner model in certain regions has incurred one-off costs, but it is a strategic move that will benefit the financial health of the Company in the long run,” said Maria Yi Xin, Chief Financial Officer. “We continue to maintain a strong balance sheet, providing us with the flexibility to navigate challenging environments and explore new opportunities that will drive future growth. Our focus remains on delivering long-term value for our shareholders, as exemplified by our previously announced share repurchase program and special dividend. We are confident that our initiatives will unlock our growth and value potential in the foreseeable future.”

PREVIOUS UPDATE ON CONTRACTUAL ARRANGEMENT
Starting in the second quarter of 2023, the Company has updated its contractual arrangement with its network partners under the network partner model, shifting the principal role of providing mobile device charging service from the Company to network partners. Under the new contractual arrangement, the Company generates revenue by providing mobile device charging solutions to network partners, including software and system service, billing and settlement service, customer call center service and other services. The ownership rights of cabinets and power banks under the network partner model, which were previously held by the Company, have also been transferred to the network partners under the new contractual arrangement.

Starting in the second quarter of 2023, mobile device charging revenue generated under the network partner model has therefore been recorded under mobile device charging solution, which is now net of incentive fees paid to network partners. Relatedly, all incentive fees paid to network partners have been excluded from the Company’s sales and marketing expenses under the new contractual arrangement. Due to the new contractual arrangement, the Company now also generates revenue from cabinet and power bank sales to its network partners as a result of the shift in ownership rights of the cabinets and power banks under the network partner model from the Company to the network partners, and cost of cabinets and power banks sold to the network partners will be recognized accordingly.

Starting in the second quarter of 2023, the classification of revenue has been updated accordingly to more clearly reflect the results of the two mobile device charging models. The Company’s mobile device charging operation now consists of the direct model and the network partner model. Under the direct model, the Company generates revenue by offering mobile device charging service and sales of power banks to users. Under the network partner model, the Company generates revenue by offering mobile device charging solutions and sales of power banks and cabinets to network partners.

The table below sets forth the breakdown of mobile device charging revenue components based on the latest classification for the periods indicated:

 2023Q1 2023Q4 2024Q1
 thousands RMB thousands RMB thousands RMB
      
Mobile device charging:     
Direct Model282,625 215,741 155,224
Mobile device charging service275,716 210,899 152,108
Power bank sales6,909 4,842 3,116
Network Partner Model530,420 249,958 222,852
Mobile device charging service518,743 - -
Mobile device charging solution- 60,600 59,016
Power bank and cabinet sales11,677 189,358 163,836
Total mobile device charging813,045 465,699 378,076
      

FINANCIAL RESULTS FOR THE FIRST QUARTER OF 2024
Revenues were RMB397.2 million (US$55.0 million5) for the first quarter of 2024, representing a 51.7% decrease from the same period in 2023. The decrease was primarily due to the decrease in mobile device charging revenues as a result of the change in the contractual arrangement with network partners.

  • Mobile device charging revenues, which consist of revenues generated under both the direct and network partner models, decreased by 53.5% to RMB378.1 million (US$52.4 million) for the first quarter of 2024, from RMB813.0 million in the same period of 2023.
    • Revenues generated under the direct model, which comprise of mobile device charging service fees of RMB152.1 million and power bank sales of RMB3.1 million, decreased by 45.1% to RMB155.2 million for the first quarter of 2024, from RMB282.6 million in the same period of 2023. The decrease was primarily due to the decrease in number of POIs operated under the direct model.
    • Revenues generated under the network partner model, which comprise of mobile device charging solution fees of RMB59.0 million and sales of cabinets and power banks of RMB163.8 million, decreased by 58.0% to RMB222.9 million for the first quarter of 2024, from RMB530.4 million in the same period of 2023. The decrease was primarily due to the change in the contractual arrangement with network partners. Under the new contractual arrangement, mobile device charging revenues generated under the network partner model are net of incentive fees paid to network partners. The decrease was partially offset by the increase in the sales of cabinet and power bank to network partners.
       
  • Other revenues, which primarily comprise of revenues from advertising services and new business initiatives, increased by 95.4% to RMB19.1 million (US$2.6 million) for the first quarter of 2024, from RMB9.8 million in the same period of 2023. The increase was primarily attributable to new business initiatives as well as increases in users and advertisement efficiency.

Cost of revenues increased by 31.7% to RMB167.7 million (US$23.2 million) for the first quarter of 2024, from RMB127.4 million in the same period last year. The increase was primarily due to the increase in sales of cabinets and power banks under the new contractual arrangement with network partners, partially offset by the decrease in depreciation cost.

Research and development expenses decreased by 8.3% to RMB19.7 million (US$2.7 million) for the first quarter of 2024, from RMB21.4 million in the same period last year. The decrease was primarily due to the decrease in personnel related expenses.

Sales and marketing expenses decreased by 69.3% to RMB204.5 million (US$28.3 million) for the first quarter of 2024 from RMB665.3 million in the same period last year. The decrease was primarily due to the decrease in incentive fees paid to network partners as a result of the change in the contractual arrangement with network partners, the decrease in incentive fees paid to location partners and the reduction in personnel related expenses under the direct model.

General and administrative expenses remained relatively stable at RMB26.6 million (US$3.7 million) for the first quarter of 2024, compared to RMB26.8 million in the same period last year.

Loss from operations for the first quarter of 2024 was RMB22.8 million (US$3.2 million), compared to a loss from operations of RMB15.8 million in the same period last year.

Net loss for the first quarter of 2024 was RMB0.3 million, compared to a net income of RMB10.8 million in the same period last year.

Adjusted net income for the first quarter of 2024 was RMB3.8 million (US$0.5 million), compared to an adjusted net income of RMB17.1 million in the same period last year.

Net loss attributable to ordinary shareholders for the first quarter of 2024 was RMB0.3 million, compared to a net income attributable to ordinary shareholders of RMB10.8 million in the same period last year.

As of March 31, 2024, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB3.3 billion (US$454.1 million). 

CONFERENCE CALL INFORMATION
The company will hold a conference call at 8:00 A.M. Eastern Time on Monday, June 3, 2024 (8:00 P.M. Beijing Time on Monday, June 3, 2024) to discuss the financial results. Upon registration, each participant will receive dial-in details to join the conference call.

Event Title: Energy Monster’s First Quarter 2024 Earnings Conference Call
Pre-registration link: https://s1.c-conf.com/diamondpass/10039333-8hdt5e.html

Participants may also access the call via webcast: https://edge.media-server.com/mmc/p/msw8figv

A telephone replay will be available through June 10, 2024. The dial-in details are as follows:

International:+61-7-3107-6325
United States:+1-855-883-1031
Mainland China:+86-400-120-9216
China Hong Kong:+852-800-930-639
  
Access Code:10039333
  

A live and archived webcast of the conference call will also be available at the Company’s investor relations website at https://ir.enmonster.com/.

ABOUT SMART SHARE GLOBAL LIMITED
Smart Share Global Limited (Nasdaq: EM), or Energy Monster, is a consumer tech company with the mission to energize everyday life. The Company is the largest provider of mobile device charging service in China with the number one market share. The Company provides mobile device charging service through its power banks, which are placed in POIs such as entertainment venues, restaurants, shopping centers, hotels, transportation hubs and public spaces. Users may access the service by scanning the QR codes on Energy Monster’s cabinets to release the power banks. As of March 31, 2024, the Company had 9.4 million power banks in 1,245,000 POIs across more than 2,000 counties and county-level districts in China.

CONTACT US
Investor Relations
Hansen Shi
ir@enmonster.com

SAFE HARBOR STATEMENT
This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to,” or other similar expressions. Among other things, the business outlook and quotations from management in this announcement, as well as the Company’s strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission (“SEC”), in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Energy Monster’s strategies; its future business development, financial condition and results of operations; the impact of technological advancements on the pricing of and demand for its services; competition in the mobile device charging service industry; Chinese governmental policies and regulations affecting the mobile device charging service industry; changes in its revenues, costs or expenditures; general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.

NON-GAAP FINANCIAL MEASURE
In evaluating its business, the Company considers and uses non-GAAP adjusted net income in reviewing and assessing its operating performance. The presentation of this non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company presents this non-GAAP financial measure because it is used by management to evaluate operating performance and formulate business plans. The Company believes that this non-GAAP financial measure helps identify underlying trends in its business, provide further information about its results of operations, and enhance the overall understanding of its past performance and future prospects.

Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP, and have limitations as analytical tools. The Company’s non-GAAP financial measure does not reflect all items of expenses that affect its operations and does not represent the residual cash flow available for discretionary expenditures. Further, the Company’s non-GAAP measure may differ from the non-GAAP information used by other companies, including peer companies, and therefore its comparability may be limited. The Company compensates for these limitations by reconciling its non-GAAP financial measure to the nearest U.S. GAAP performance measure, which should be considered when evaluating performance. Investors and others are encouraged to review the Company’s financial information in its entirety and not rely on a single financial measure.

The Company defines non-GAAP adjusted net income as net income excluding share-based compensation expenses. For more information on the non-GAAP financial measure, please see the table captioned “Unaudited Reconciliation of GAAP and Non-GAAP Results” set forth at the end of this press release.


Smart Share Global Limited
Unaudited Consolidated Balance Sheets
(In thousands, except share and per share data, unless otherwise noted)
         
  December 31, 2023  March 31, 2024  March 31, 2024
RMBRMBUS$
   
ASSETS        
Current assets:        
Cash and cash equivalents 588,644   644,367   89,244 
Restricted cash 173,246   143,433   19,865 
Short-term investments 2,541,889   2,470,678   342,185 
Accounts receivable, net 269,736   278,690   38,598 
Inventory 106,530   129,661   17,958 
Prepayments and other current assets 345,744   380,314   52,673 
         
Total current assets 4,025,789   4,047,143   560,523 
         
Non-current assets:        
Long-term restricted cash 20,000   20,000   2,770 
Property, equipment and software, net 322,806   282,660   39,148 
Right-of-use assets, net 16,353   13,225   1,832 
Other non-current assets 21,621   20,081   2,781 
Deferred tax assets, net 18,804   18,804   2,604 
         
Total non-current assets 399,584   354,770   49,135 
         
Total assets 4,425,373   4,401,913   609,658 
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
Current liabilities:        
Accounts and notes payable 764,741   726,011   100,551 
Salary and welfare payable 143,653   136,805   18,947 
Taxes payable 214,738   213,999   29,639 
Current portion of lease liabilities 7,399   5,849   810 
Accruals and other current liabilities 336,959   411,791   57,032 
         
Total current liabilities 1,467,490   1,494,455   206,979 
         
Non-current liabilities:        
Non-current lease liabilities 7,641   6,497   900 
Amounts due to related parties-non-current 1,000   1,000   138 
Other non-current liabilities 195,585   201,019   27,841 
         
Total non-current liabilities 204,226   208,516   28,879 
         
Total liabilities 1,671,716   1,702,971   235,858 
         
SHAREHOLDERS' EQUITY        
Ordinary shares 347   347   48 
Treasury stock (5,549)  (11,756)  (1,628)
Additional paid-in capital 11,791,570   11,741,049   1,626,117 
Statutory reserves 16,593   16,593   2,298 
Accumulated other comprehensive income 182,824   185,186   25,648 
Accumulated deficit (9,232,128)  (9,232,477)  (1,278,683)
         
Total shareholders' equity 2,753,657   2,698,942   373,800 
         
Total liabilities and shareholders' equity 4,425,373   4,401,913   609,658 
         


Smart Share Global Limited
Unaudited Consolidated Statements of Comprehensive (Loss)/Income
(In thousands, except share and per share data, unless otherwise noted)
       
  Three months ended March 31,
  2023 2024
  RMB RMB US$
       
Revenues:      
Mobile device charging 813,045  378,076  52,363 
Others 9,790  19,130  2,649 
       
Total revenues 822,835  397,206  55,012 
       
Cost of revenues (127,389) (167,737) (23,231)
Research and development expenses (21,444) (19,674) (2,725)
Sales and marketing expenses (665,274) (204,494) (28,322)
General and administrative expenses (26,771) (26,584) (3,682)
Other operating income/(loss) 2,268  (1,474) (204)
       
Loss from operations (15,775) (22,757) (3,152)
       
Interest and investment income 26,236  30,589  4,237 
Interest expense to third parties (4,228) -  - 
Foreign exchange gain/(loss), net 4,760  (566) (78)
Other (loss)/income, net (183) 73  10 
       
Income before income tax expense 10,810  7,339  1,017 
       
Income tax expense -  (7,688) (1,065)
       
Net income/(loss) 10,810  (349) (48)
       
Net income/(loss) attributable to ordinary shareholders of Smart Share Global Limited 10,810  (349) (48)
       
Other comprehensive (loss)/income      
Foreign currency translation adjustments, net of nil tax (18,067) 2,362  327 
       
Total comprehensive (loss)/income (7,257) 2,013  279 
       
Comprehensive (loss)/income attributable to ordinary shareholders of Smart Share Global Limited (7,257) 2,013  279 
       
Weighted average number of ordinary shares used in computing net income/(loss) per share      
- basic 519,242,751  518,487,159  518,487,159 
- diluted 519,353,842  518,487,159  518,487,159 
       
Net income/(loss) per share attributable to ordinary shareholders      
- basic 0.02  0.00  0.00 
- diluted 0.02  0.00  0.00 
       
Net income/(loss) per ADS attributable to ordinary shareholders      
- basic 0.04  0.00  0.00 
- diluted 0.04  0.00  0.00 
       

 

Smart Share Global Limited
Unaudited Reconciliation of GAAP and Non-GAAP Results
(In thousands, except share and per share data, unless otherwise noted)
      
 Three months ended March 31,
 2023 2024
 RMB RMB US$
      
Net income/(loss)10,810 (349) (48)
Add:     
Share-based compensation6,285 4,183  579 
Less:     
Adjusted for tax effects- -  - 
      
Adjusted net income (non-GAAP)17,095 3,834  531 
      

_________________________

1 The Company defines number of points of interests, or POIs, as of a certain day as the total number of unique locations whose proprietors (location partners) have entered into contracts with the Company or its network partners on that day and have at least one cabinet assigned to the location.
2 The Company defines cumulative registered users as the total number of users who have agreed to register their mobile phone numbers with the Company via its mini programs since inception, and the number of cumulative registered users of the Company on a certain date is the number of unique mobile phone numbers that have been registered with the Company since inception on that date.
3 The Company defines available-for-use power banks as of a certain date as the number of power banks in circulation on that day.
4 The Company defines mobile device charging orders for a given period as the total number of completed orders placed by registered users of the mobile device charging business under both the direct and network partner models in that given period, without any adjustment for orders that may qualify for discounts or incentives.
5 The U.S. dollar (US$) amounts disclosed in this press release, except for those transaction amounts that were actually settled in U.S. dollars, are presented solely for the convenience of the readers. The conversion of Renminbi (RMB) into US$ in this press release is based on the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of March 29, 2024, which was RMB7.2203 to US$1.0000. The percentages stated in this press release are calculated based on the RMB amounts.


FAQ

What are Smart Share Global's Q1 2024 revenues?

Smart Share Global's revenues for Q1 2024 were RMB397.2 million (US$55.0 million), a 51.7% decline from Q1 2023.

How many registered users does Smart Share Global have as of Q1 2024?

As of Q1 2024, Smart Share Global has 404.3 million registered users.

What is the net income/loss for Smart Share Global for Q1 2024?

Smart Share Global reported a net loss of RMB0.3 million for Q1 2024.

How much did Smart Share Global's mobile device charging revenues decrease in Q1 2024?

Smart Share Global's mobile device charging revenues decreased by 53.5% to RMB378.1 million in Q1 2024.

What is Smart Share Global's cash and cash equivalents as of March 31, 2024?

As of March 31, 2024, Smart Share Global had cash and cash equivalents of RMB3.3 billion (US$454.1 million).

What are the key financial challenges faced by Smart Share Global in Q1 2024?

Key challenges include a 51.7% revenue decline, increased cost of revenues by 31.7%, and a shift to a net loss of RMB0.3 million.

Smart Share Global Limited American Depositary Shares

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