China Finance Online Reports Third Quarter and First Nine Months of 2020 Unaudited Financial Results
Rhea-AI Summary
China Finance Online reported third-quarter 2020 results with a net revenue of $10.7 million, up 32.9% year-over-year. The net loss narrowed to $1.5 million, improving from $2.1 million in Q3 2019. Financial information and advisory services surged 108.0% year-over-year, constituting 46.5% of total revenue. Gross margin increased to 64.4%. For the first nine months, revenues reached $30.3 million, compared to $26.8 million in the same period last year, with a net loss of $4.9 million versus $7.9 million.
Positive
- Net revenues rose 32.9% year-over-year to $10.7 million in Q3 2020.
- Financial information and advisory revenues grew 108.0% year-over-year to $5.0 million.
- Gross margin improved to 64.4% from 62.3% in Q3 2019.
- Net loss narrowed to $1.5 million, compared to $2.1 million in Q3 2019.
- First nine months revenues were $30.3 million, a 12.6% increase year-over-year.
Negative
- Net loss of $4.9 million for the first nine months, though improved from $7.9 million in 2019.
- Revenue from financial services decreased to $3.1 million in Q3 2020 from $3.6 million in Q3 2019.
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BEIJING, Dec. 29, 2020 /PRNewswire/ -- China Finance Online Co. Limited ("China Finance Online", or the "Company", "we", "us" or "our") (NASDAQ GS: JRJC), a leading web-based financial services company that provides Chinese individual investors with fintech-powered online access to securities trading services, wealth management products, securities investment advisory services, as well as financial database and analytics services to institutional customers, today announced its unaudited financial results for the third quarter and first nine months ended September 30, 2020.
Third Quarter 2020 Financial Highlights and Recent Development
- The bottom line losses continued to narrow year-over-year.
- Net loss attributable to China Finance Online was
$1.5 million , compared with a net loss of$2.1 million in the third quarter of 2019. - Net revenues grew
32.9% year-over-year and9.8% quarter-over-quarter to$10.7 million . - Revenues from the financial information and advisory business, accounted for
46.5% total revenue in the third quarter of 2020, were up108.0% year-over-year to$5.0 million , powered by139.6% growth in individual investor subscription and176.3% growth in investment advisory services. - Due to the growth of financial information and advisory business, gross margin increased to
64.4% from62.3% in the third quarter of 2019 and63.3% in the second quarter of 2020. - In the 2020 China Robo-Advisor Industry report recently published by Tsinghua University, Lingxi Robo-Advisor ("Lingxi") won the Top 10 Best Robo-Advisors.
First Nine Months of 2020 Highlights
- Net revenues were
$30.3 million compared with$26.8 million in the first nine months of 2019. - Revenues from the financial information and advisory business grew
54.1% year-over-year and accounted for43.2% of total revenues in the first nine months of 2020. - Net loss attributable to China Finance Online was
$4.9 million , compared with a net loss of$7.9 million in the first nine months of 2019.
Mr. Zhiwei Zhao, Chairman and CEO of China Finance Online, commented that "During the third quarter, we continued to expand our top line as our financial information and advisory business experienced robust growth in a market that participation keeps reaching new highs among retail investors. We are pleased that our years of accumulated experience in fintech and wealth management are gaining popularity and showing results. Through our product mix change and vigorous cost controls, we further reduced our bottom-line loss in the third quarter as well."
"As a professional financial media, we continued to retain our leadership and market influence. On October 16th, the prestigious Hurun Institute published its 2020 Hurun China's Most Influential Financial Media report and awarded China Finance Online as a Top 8 Most Influential Financial Media. We continue to promote innovations and the rise of short-form videos demonstrates how new media is becoming the new entry point for online traffic. As a professional financial media provider, we have strengthened our new media operation to deliver our enriched content to audiences through different channels. With our original content and proprietary programs, we made substantial strides in the popular short-form video social media, DouYin. In recent years, we also have been providing value-added services to public companies listed on domestic and international exchanges which helped grow our revenue in the third quarter."
"In addition, our fintech offerings to empower wealth management buy-side services began to bear fruit. Our one-stop wealth management service platform, i-TAMP, not only empowers investment advisors and wealth managers, but helps elevate their service efficiency and professionalism. Our i-TAMP has supported more than 100 third-party platforms and reached nearly 40 million individual investors. With the growing scale of the platform, our revenue from services for individual investors increased significantly during the third quarter."
"Our two-year-old robo-advisor, Lingxi, remains committed to providing personalized services for global asset allocation to the vast investor population. Lingxi's outstanding performance didn't go unnoticed by the financial industry and academia. In the 2020 China Robo-Advisor Industry report recently published by Tsinghua University, Lingxi won as the Top 10 Best Robo-Advisors."
"On the institutional wealth management service front, we are forming partnerships with more and more financial institutions. With the growing popularity of our content, our services in investor education drew increasingly more attention and won projects from leading financial institutions. We strongly believe that China presents a massive market opportunity in wealth management. We will continue to develop and upgrade our technologies, products and services to empower the wealth management sector in China," Mr. Zhao concluded.
Third Quarter 2020 Financial Results
Net revenues were
Revenues from financial services were
Revenues from the financial information and advisory business were
Revenues from the advertising business were
Revenues from enterprise value-added services were
Gross profit was
General and administrative expenses were
Sales and marketing expenses were
Research and development expenses were
Total operating expenses were
Loss from operations was
Net loss attributable to China Finance Online was
Fully diluted loss per American Depository Shares ("ADS") attributable to China Finance Online was
First Nine Months of 2020 Financial Results
Net revenues for the first nine months of 2020 were
Gross profit for the first nine months of 2020 was
Loss from operations for the first nine months of 2020 was
Net loss attributable to China Finance Online for the first nine months of 2020 was
Fully diluted losses per ADS attributable to China Finance Online was
Recent Developments
- Lingxi Robo-Advisor recorded strong performance in the third quarter of 2020 and won Top 10 Best Robo-Advisors
According to our proprietary asset allocation system, our Robo-Advisor product, Lingxi, provides Chinese retail investors with a wide array of investment combinations and personalized global asset allocations through Chinese domestic mutual funds. Since its inception, Lingxi established a solid track record of balancing performance and risk management. During the first nine months of 2020, the Chinese stock market experienced unprecedented volatility. Lingxi once again outclassed most of the peer Robo-Advisor products in the marketplace and outperformed the Shanghai Composite Index. The best strategy of Lingxi posted a return of
- 2020 Leading China Annual Forum
In December 2020, the Company hosted the "2020 Leading China Annual Awards" in Beijing. The key discussions were digital transformation of the financial industry, applications of fintech in wealth management, mutual funds, and pension finance. The conference is committed to promoting the long-term development of the financial industry in China and has received high recognition from financial regulators and institutions. There were senior government officials and over 1100 professionals from nearly 300 financial institutions in attendance at the event.
- Hurun Report Ranks China Finance Online among the Top 8 Most Influential Financial Media in China
In October 2020, the prestigious Hurun Institute awarded China Finance Online as a Top 8 Most Influential Financial Media in China. This new ranking is based on Hurun Institute's research of leading Chinese financial media outlets' public data, website unique visitors, social media followers and article readership. The Chairman of Hurun Institute and researcher-in-chief of the Hurun Report, Rupert Hoogewerf, commented: "In this fast-moving information age, credibility of information source is especially crucial. High-quality original content is the most important determining factor of a media's competitiveness. This ranking list enables corporates to identify the most influential financial media in China."
Conference Call Information
The management will host a conference call on December 29, 2020 at 8:00 p.m. U.S. Eastern Time (9:00 a.m. Beijing/Hong Kong time December 30, 2020). Dial-in details for the earnings conference call are as follows:
US: 1-855-823-0291
Hong Kong: 800-963-435
Singapore: 800-616-2312
Mainland China: 800-870-0211 or 400-120-3169
Conference ID: 1688879
Please dial in 10 minutes before the call is scheduled to begin and provide the conference ID to join the call.
A recording of the call will be available on China Finance Online's website under the investor relations section.
In addition, a live and archived webcast of the conference call will be available at https://edge.media-server.com/mmc/p/yenpozzx.
About China Finance Online
China Finance Online Co. Limited is a leading web-based financial services company that provides Chinese individual investors with fintech-powered online access to securities trading services, wealth management products, securities investment advisory services, as well as financial database and analytics services to institutional customers. The Company's prominent flagship portal site, www.jrj.com, is ranked among the top financial websites in China. In addition to the web-based securities trading platform, the Company offers basic financial software, information services and securities investment advisory services to retail investors in China. Through its subsidiary, Shenzhen Genius Information Technology Co. Ltd., the Company provides financial database and analytics to institutional customers including domestic financial, research, academic and regulatory institutions. China Finance Online also provides brokerage services in Hong Kong.
Safe Harbor Statement
This press release contains forward-looking statements which constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. The statements contained herein reflect management's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially from those in the forward-looking statements, all of which are difficult to predict and many of which are beyond the control of the Company. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, this release contains the following forward-looking statements regarding:
- Liquidity and sources of funding, including our ability to continue operating as a going concern;
- our prospect and our ability to attract new users;
- our prospect on building a comprehensive wealth management ecosystem through providing a fully-integrated online communication and securities-trading platform;
- our prospect on stabilization in cash attrition and improvement of our financial position;
- our initiatives to address customers' demand for intuitive online investment platforms and alternative investment opportunities; and
- the market prospect of the business of securities-trading, securities investment advisory and wealth management.
Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which risk factors and uncertainties include, amongst others, substantial doubt about ability to continue as a going concern, the outbreak of COVID-19 or other health epidemics in China or globally, changing customer needs, regulatory environment and market conditions that we are subject to; the uneven condition of the world and Chinese economies that could lead to volatility in the equity markets and affect our operating results in the coming quarters; the impact of the changing conditions of the mainland Chinese stock market, Hong Kong stock market and global financial markets on our future performance; the unpredictability of our strategic transformation and growth of new businesses; the prospect of our margin-related business and the degree to which our implementation of margin account screening and ongoing monitoring will yield successful outcomes; the degree to which our strategic collaborations with partners will yield successful outcomes; the prospects for China's high-net-worth and middle-class households; the prospects of equipping our customer specialists with new technology, tools and financial knowledge; wavering investor confidence that could impact our business; and possible non-cash goodwill, intangible assets and investment impairments may adversely affect our net income. Furthermore, we have recurring losses from operation and inability to generate sufficient cash flow to meet our obligation and sustain our operations and face uncertainty as to the operation impact of the COVID-19 outbreak, that raise substantial doubt about our ability to continue as a going concern. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F under "Forward-Looking Information" and "Risk Factors". The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
For more information, please contact:
China Finance Online
+86-10-8336-3100
ir@jrj.com
Kevin Theiss
Awaken Advisors
(212) 521-4050
kevin@awakenlab.com
-- Tables Follow --
China Finance Online Co. Limited | |||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(In thousands of U.S. dollars) | |||||
Sep. 30, 2020 | Dec. 31, 2019 | ||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | 7,093 | 9,600 | |||
Prepaid expenses and other current assets | 2,851 | 2,413 | |||
Trust bank balances held on behalf of customers | 30,889 | 36,987 | |||
Accounts receivable - margin clients | 12,824 | 13,452 | |||
Accounts receivable - others | 13,113 | 12,382 | |||
Short-term investments | — | 1,147 | |||
Total current assets | 66,770 | 75,981 | |||
Property and equipment, net | 3,446 | 4,272 | |||
Acquired intangible assets, net | 75 | 75 | |||
Equity investments without readily determinable fair value | 1,645 | 1,605 | |||
Equity method investment, net | 783 | 767 | |||
Right-of-use assets | 2,491 | 3,988 | |||
Rental deposits | 775 | 770 | |||
Goodwill | 109 | 108 | |||
Guarantee fund deposits | 219 | 218 | |||
Deferred tax assets | 1,277 | 1,381 | |||
Total assets | 77,590 | 89,165 | |||
Liabilities and equity | |||||
Current liabilities: | |||||
Deferred revenue, current (including deferred revenue, current of the consolidated variable | 9,916 | 8,855 | |||
Accrued expenses and other current liabilities (including accrued expenses and other current | 18,533 | 17,420 | |||
Amount due to customers for trust bank balances held on behalf of customers (including | 30,889 | 36,987 | |||
Accounts payable (including accounts payable of the consolidated variable interest entities | 5,251 | 6,741 | |||
Lease liabilities, current (including lease liabilities, current of the consolidated variable | 2,002 | 2,243 | |||
Income taxes payable (including income taxes payable of the consolidated variable interest | (35) | 177 | |||
Total current liabilities | 66,556 | 72,423 | |||
Deferred revenue, non-current (including deferred revenue, non-current of the consolidated | 80 | 151 | |||
Deferred tax liabilities (including deferred tax liabilities of the consolidated variable interest | 14 | 15 | |||
Lease liabilities, non-current (including lease liabilities, non-current of the consolidated | 225 | 1,448 | |||
Total liabilities | 66,875 | 74,037 | |||
Total China Finance Online Co. Limited Shareholders' equity | 21,033 | 25,156 | |||
Noncontrolling interests | (10,318) | (10,028) | |||
Total liabilities and equity | 77,590 | 89,165 | |||
China Finance Online Co. Limited | |||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||||
(in thousands of U.S. dollars, except share and ADS related data) | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |||||||||||||
Net revenues | 10,701 | 8,051 | 9,745 | 30,281 | 26,833 | ||||||||||||
Cost of revenues | (3,812) | (3,036) | (3,577) | (11,312) | (9,826) | ||||||||||||
Gross profit | 6,889 | 5,015 | 6,168 | 18,969 | 17,007 | ||||||||||||
Operating expenses | |||||||||||||||||
General and administrative (including share-based | (2,223) | (2,290) | (2,254) | (6,703) | (7,488) | ||||||||||||
Product development (including share-based compensation | (2,023) | (2,195) | (1,990) | (5,998) | (7,323) | ||||||||||||
Sales and marketing (includes share-based compensation | (4,509) | (2,816) | (4,120) | (11,965) | (10,245) | ||||||||||||
Total operating expenses | (8,755) | (7,301) | (8,364) | (24,666) | (25,056) | ||||||||||||
Loss from operations | (1,866) | (2,286) | (2,196) | (5,697) | (8,049) | ||||||||||||
Interest income | 4 | 5 | 8 | 17 | 25 | ||||||||||||
Exchange gain (loss), net | (78) | 76 | 6 | (104) | 10 | ||||||||||||
Loss on the interest sold and retained noncontrolling | — | — | — | — | (298) | ||||||||||||
Income (loss) from equity method investment | — | (1) | (1) | (2) | (4) | ||||||||||||
Other income (expense), net | 350 | 79 | 242 | 658 | 36 | ||||||||||||
Loss before income tax expenses | (1,590) | (2,127) | (1,941) | (5,128) | (8,280) | ||||||||||||
Income tax expenses | (5) | (108) | 243 | (181) | (574) | ||||||||||||
Net loss | (1,595) | (2,235) | (1,698) | (5,309) | (8,854) | ||||||||||||
Less: Net loss attributable to the noncontrolling interest | (74) | (131) | (209) | (379) | (1,001) | ||||||||||||
Net loss attributable to China Finance Online Co. Limited | (1,521) | (2,104) | (1,489) | (4,930) | (7,853) | ||||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||
Changes in foreign currency translation adjustment | (76) | (189) | 15 | 105 | (124) | ||||||||||||
Other comprehensive income (loss), net of tax | (76) | (189) | 15 | 105 | (124) | ||||||||||||
Comprehensive loss | (1,671) | (2,424) | (1,683) | (5,204) | (8,978) | ||||||||||||
Less: comprehensive loss attributable to noncontrolling | (74) | (131) | (209) | (379) | (1,001) | ||||||||||||
Comprehensive income (loss) attributable to China Finance | (1,597) | (2,293) | (1,474) | (4,825) | (7,977) | ||||||||||||
Net income (loss) per share attributable to China Finance | |||||||||||||||||
Basic and Diluted | (0.01) | (0.02) | (0.01) | (0.04) | (0.07) | ||||||||||||
Net income (loss) per ADS attributable to China Finance | |||||||||||||||||
Basic and Diluted | (0.66) | (0.91) | (0.65) | (2.14) | (3.43) | ||||||||||||
Weighted average ordinary shares | |||||||||||||||||
Basic and Diluted | 115,060,781 | 115,060,781 | 115,060,781 | 115,060,781 | 114,561,418 | ||||||||||||
Weighted average ADSs | |||||||||||||||||
Basic and Diluted | 2,301,216 | 2,301,216 | 2,301,216 | 2,301,216 | 2,291,228 | ||||||||||||
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SOURCE China Finance Online Co., Ltd.