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Qutoutiao Inc. Reports Third Quarter 2019 Unaudited Financial Results

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SHANGHAI, China, Dec. 03, 2019 (GLOBE NEWSWIRE) — Qutoutiao Inc. (“Qutoutiao”, the “Company” or “We”) (NASDAQ: QTT), a leading operator of mobile content platforms in China, today announced its unaudited financial results in the third quarter ended September 30, 2019. 

Third Quarter 2019 Highlights

  • Combined average MAUs1 reached 133.9 million, representing an increase of 105.3% from 65.2 million in the third quarter of 2018, compared to 119.3 million in the previous quarter.
  • Combined average DAUs2 reached 42.1 million, representing an increase of 97.7% from 21.3 million in the third quarter of 2018, compared to 38.7 million in the previous quarter.
  • Average daily time spent per DAU was 61.3 minutes, compared to 55.9 minutes in the third quarter of 2018 and 60.0 minutes in the previous quarter.
  • Net revenues increased 44.0% year-over-year to RMB1,406.9 million (US$196.8 million), compared to RMB1,385.9 million in the previous quarter, and were above the Company’s guidance.
  • Net loss was RMB888.4 million (US$124.3 million), compared to net loss of RMB1,033.4 million in the third quarter of 2018 and net loss of RMB561.3 million in the second quarter of 2019. Net loss margin was 63.1%, compared to 105.7% in the third quarter of 2018 and 40.5% in the second quarter of 2019.
  • Non-GAAP net loss was RMB833.1 million (US$116.6 million), compared to non-GAAP net loss of RMB298.4 million in the third quarter of 2018 and non-GAAP net loss of RMB496.3 million in the second quarter of 2019. Non-GAAP net loss margin was 59.2%, compared to 30.5% in the third quarter of 2018 and 35.8% in the second quarter of 2019.

Mr. Eric Siliang Tan, Chairman and Chief Executive Officer of Qutoutiao, commented, “Despite the less than hospitable operating environment which has persisted for much of the year, we have pushed on with determination as well as agility. Our quarterly average MAUs has reached 133.9 million and DAUs has reached 42.1 million, both of which have doubled from the levels a year ago. During this quarter, we have also made meaningful progress on product suite expansion, most notably Midu Lite which commenced in May and has quickly gathered more than 3 million DAU.”

“We believe the lower tier cities remain the most attractive space today with unmatched structural potential for growth and monetization. During the Double 11 Shopping Festival, GMVs generated by Qutoutiao users on e-commerce platforms increased more than ten-fold in comparison to last year.”

“Our priority is not simply growth, but rather long-term profitable growth. We tend to respond to market fluctuations with reason and gain comfort in remaining focused on doing the right things that will ultimately matter. That means a balanced approach to growth and capital allocation, with an emphasis on sustainability. With better retention and ARPU3 on an improving path in this quarter, we shall see better ROI driving our business going forward.” Mr. Tan. Concluded.

_________________

1 “MAUs” refers to the number of unique mobile devices that accessed our relevant mobile application in a given month. “Combined average MAUs” for a particular period is the average of the MAUs for all of our mobile applications in each month during that period;
2 “DAUs” refers to the number of unique mobile devices that accessed our relevant mobile application on a given day. “Combined average DAUs” for a particular period is the average of the DAUs for all of our mobile applications on each day during that period;
3 “ARPU” refers to average net revenues per DAU per day.

Third Quarter 2019 Financial Results

Net revenues in the third quarter of 2019 were RMB1,406.9 million (US$196.8 million), an increase of 44.0% from RMB977.3 million in the third quarter of 2018.

Advertising and marketing revenues were RMB1,381.6 million (US$193.3 million) in the third quarter of 2019, an increase of 54.1% from RMB896.5 million in the third quarter of 2018, primarily due to increases in the Company’s user base, time spent and ability to monetize user traffic, and, to a lesser extent, the launch of our new integrated and customized marketing solution services to our customers.

Other revenues were RMB25.3 million (US$3.5 million) in the third quarter of 2019, compared to RMB80.9 million in the third quarter of 2018. Other revenues primarily represent revenues from providing agent and platform services between advertising customers and third-party advertising platforms and online marketing platform services. The decrease was primarily due to the decrease of agent and platform services.

Cost of revenues were RMB496.1 million (US$69.4 million) in the third quarter of 2019, an increase of 222.5% from RMB153.8 million in the third quarter of 2018, primarily attributable to the costs paid to suppliers for the new integrated and customized marketing solution services, and, to a lesser extent, increases in content procurement costs, bandwidth and IT infrastructure costs and increases in salaries and benefits associated with content management personnel.

Gross profit was RMB910.8 million (US$127.4 million) in the third quarter of 2019, an increase of 10.6% from RMB823.5 million in the third quarter of 2018. Gross margin was 64.7%, compared to 84.3% in the third quarter of 2018. The decrease of gross margin was mainly due to the growing revenue contribution from our new integrated and customized marketing solution services, which have a relatively low gross margin. The decrease of gross margin was also attributable to the growth of our content procurement costs as well as our bandwidth and IT infrastructure costs, as we are enriching our product offerings to include more engaging contents such as short videos, games and live-streaming.

Research and development expenses were RMB261.6 million (US$36.6 million) in the third quarter of 2019, an increase of 226.1% from RMB80.2 million in the third quarter of 2018, primarily due to an increase in R&D headcount as the Company continued to invest in enhancing technology capabilities, more specifically, the Company’s AI-based content recommendation technology.
                                                                        
Sales and marketing expenses were RMB1,503.2 million (US$210.3 million) in the third quarter of 2019, an increase of 43.9% from RMB1,045.0 million in the third quarter of 2018.

User engagement expenses were RMB536.1 million (US$75.0 million) in the third quarter of 2019, an increase of 11.5% year-over-year, primarily due to our enlarged user base. User engagement expenses per DAU per day were RMB0.14 in the third quarter of 2019, a decrease of 43.6% year-over-year and stable quarter-over-quarter. The decrease of user engagement expenses per DAU per day was primarily due to the Company’s ongoing efforts in optimizing user engagement expenses for Qutoutiao and the absence of such expenses for other products such as Midu Novels.

User acquisition expenses were RMB788.3 million (US$110.3 million) in the third quarter of 2019, an increase of 48.1% year-over-year. User acquisition expenses consist of the costs of both word-of-mouth referrals and third-party marketing, and the increase was primarily driven by the Company’s continued strategic investments into building user base. User acquisition expenses per new installed user4 in the third quarter of 2019 were RMB6.58, compared to RMB6.93 in the second quarter of 2019 and RMB6.01 in the third quarter of 2018.

Other sales and marketing expenses were RMB178.8 million (US$25.0 million) in the third quarter of 2019, an increase of 462.5% year-over-year, mainly due to an increase in brand campaigns and sponsorship to TV shows as we continue to strengthen our brand recognition.

General and administrative expenses were RMB57.1 million (US$8.0 million) in the third quarter of 2019, a decrease of 92.3% from RMB741.6 million in the third quarter of 2018. The decrease was mainly due to the decrease in share-based compensation expenses. Share-based compensation expenses in the third quarter of 2018 were RMB717.7 million, the majority of the expenses were one-off charges in relation to the share restriction deeds entered into by certain of our co-founders in January 2018, pursuant to which certain ordinary shares beneficially owned by such co-founders became restricted shares and were to be vested. Upon completion of the Company’s initial public offering in September 2018, all the remaining restricted shares were immediately vested and the associated and unrecognized share-based compensation expenses of RMB649.7 million were recorded.

Loss from operations was RMB899.4 million (US$125.8 million) in the third quarter of 2019, compared to RMB1,043.3 million in the third quarter of 2018. Operating loss margin was 63.9%, compared to 106.8% in the third quarter of 2018.

Non-GAAP loss from operations was RMB844.2 million (US$118.1 million) in the third quarter of 2019, compared to RMB308.3 million in the third quarter of 2018. Non-GAAP operating loss margin was 60.0%, compared to non-GAAP operating loss margin of 31.6% in the third quarter of 2018.

Net loss was RMB888.4 million (US$124.3 million), compared to net loss of RMB1,033.4 million in the third quarter of 2018 and net loss of RMB561.3 million in the second quarter of 2019. Net loss margin was 63.1%, compared to 105.7% in the third quarter of 2018 and 40.5% in the second quarter of 2019.

Non-GAAP net loss was RMB833.1 million (US$116.6 million), compared to non-GAAP net loss of RMB298.4 million in the third quarter of 2018 and non-GAAP net loss of RMB496.3 million in the second quarter of 2019. Non-GAAP net loss margin was 59.2%, compared to 30.5% in the third quarter of 2018 and 35.8% in the second quarter of 2019.

Net loss attributable to Qutoutiao Inc.’s ordinary shareholders was RMB891.8 million (US$124.8 million) in the third quarter of 2019, compared to RMB1,055.1 million in the third quarter of 2018. Non-GAAP net loss attributable to Qutoutiao Inc.’s ordinary shareholders was RMB836.6 million (US$117.0 million) in the third quarter of 2019, compared to RMB320.1 million in the third quarter of 2018.

Basic and diluted net loss per American Depositary Share (“ADS”) were RMB3.54 (US$0.49) in the third quarter of 2019. Non-GAAP basic and diluted net loss per ADS were RMB3.32 (US$0.46) in the third quarter of 2019. Each four ADSs represent one Class A ordinary share of the Company.

__________________
4 “New installed users” refers to the aggregate number of unique mobile devices that have downloaded and launched our relevant mobile applications at least once.

Balance Sheet

As of September 30, 2019, the Company had cash, cash equivalents and short-term investments of RMB 2,120.1 million (US$296.6 million), compared to RMB2,287.6 million as of June 30, 2019.

Recent Developments

On October 16, 2019, Qutoutiao announced that its subsidiary holding the operations of Midu Novels and Midu Lite had completed Series B financing in the amount of USD100 million. The financing round was led by CMC Capital and followed by Qutoutiao.

Effective May 28, 2019, the Board of Directors approved a share repurchase program to repurchase in the open market up to US$50 million worth of outstanding ADSs of the Company, every four of which represents one class A ordinary share, from time to time over the next 12 months, depending on market conditions, share price and other factors, as well as subject to the memorandum and articles of association, the relevant rules under United States securities laws and regulations, and the relevant stock exchange rules. As of September 30, 2019, 4,665,700 ADSs, representing 1,166,425 ordinary shares, were repurchased with a total consideration of US$20.7 million.

Business Outlook

Based on the current market conditions, the Company provides the following outlook reflecting the Company’s preliminary estimates of market and operating conditions, and customer demand:

For the fourth quarter of 2019, the Company expects net revenues to be between RMB 1,600 million and RMB 1,620 million.

Conference Call

The Company’s management will host an earnings conference call at 8:00 a.m. U.S. Eastern Time on December 3, 2019 (9:00 p.m. Beijing/Hong Kong time on the same day, 2019).

Dial-in details for the live conference call are as follows:

United States: +1-845-675-0437
United States (toll free): +1-866-519-4004
Hong Kong: +852-3018-6771
Hong Kong (toll free): 800-906-601
China: 400-620-8038
International: +65-6713-5090
Conference ID: 8036388

Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at https://ir.qutoutiao.net.

A replay of the conference call will be accessible approximately two hours after the conclusion of the live call until December 9, 2019, by dialing the following telephone numbers:

United States: +1-646-254-3697
Hong Kong : +852-3051-2780
China: 400-632-2162
International: +61-2-8199-0299
Replay Access Code: 8036388

About Qutoutiao Inc.

Qutoutiao Inc. operates innovative and fast-growing mobile content platforms in China with a mission to bring fun and value to its users. The eponymous flagship mobile application, Qutoutiao, meaning “fun headlines” in Chinese, applies artificial intelligence-based algorithms to deliver customized feeds of articles and short videos to users based on their unique profiles, interests and behaviors. Qutoutiao has attracted a large group of loyal users, many of whom are from lower-tier cities in China. They enjoy Qutoutiao’s fun and entertainment-oriented content as well as its social-based user loyalty program. Launched in May 2018, Midu Novels is a pioneer in offering free literature supported by advertising and has grown rapidly to become a leading player in the online literature industry. The Company will continue to bring more exciting products to users through innovation, and strive towards creating a leading global online content ecosystem.

For more information, please visit: https://ir.qutoutiao.net.

Use of Non-GAAP Financial Measures

We use non-GAAP loss from operations, non-GAAP operating loss margin, non-GAAP net loss, non-GAAP net loss margin, non-GAAP net loss attributable to Qutoutiao Inc.’s ordinary shareholders and non-GAAP basic and diluted net loss per ADS, which are non-GAAP financial measures, in evaluating our operating results and for financial and operational decision-making purposes. Each of these non-GAAP financial measures represents the corresponding GAAP financial measure before share-based compensation expenses. We believe that such non-GAAP financial measures help identify underlying trends in our business that could otherwise be distorted by the effect of such share-based compensation expenses that we include in cost of revenues, total operating expenses and net loss. We believe that all such non-GAAP financial measures also provide useful information about our operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. They should not be considered in isolation or construed as alternatives to net loss or any other measure of performance prepared in accordance with U.S. GAAP or as an indicator of our operating performance. We mitigate these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating our performance. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of GAAP and Non-GAAP Results” set forth at the end of this press release.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB7.1477 to US$1.00, the rate in effect as of September 30, 2019 as set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Statements that are not historical facts, including statements about Qutoutiao’s beliefs, plans and expectations, are forward-looking statements. Among other things, the “Business Outlook” section and quotations from management in this announcement, contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. 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: Qutoutiao’s strategies; Qutoutiao’s future business development, financial condition and results of operations; Qutoutiao’s ability to retain and increase the number of users and provide quality content; competition in the mobile content platform industry; Qutoutiao’s ability to manage its costs and expenses; 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 is included in Qutoutiao’s filings with the SEC. All information provided in this press release is as of the date of this press release, and Qutoutiao does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

In China:

Qutoutiao Inc.
Investor Relations
Tel: +86-21-6858-3790
E-mail: ir@qutoutiao.net

The Piacente Group, Inc.
Jenny Cai
Tel: +86-10-6508-0677
E-mail: qutoutiao@tpg-ir.com

In the United States:

Qutoutiao Inc.
Oliver Yucheng Chen
E-mail: oliver@qutoutiao.net

The Piacente Group, Inc.
Brandi Piacente
Tel: +1-212-481-2050
E-mail: qutoutiao@tpg-ir.com

 
QUTOUTIAO INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in RMB, or otherwise noted)
 
  As of December 31, As of September 30,
  2018  2019 
  RMB RMB
ASSETS    
Current assets:    
Cash and cash equivalents 2,186,288,246   525,393,392  
Short-term investments 115,436,080   1,594,659,465  
Accounts receivable, net 203,984,074   314,081,563  
Amount due from related parties   179,059,305  
Prepayments and other current assets 120,365,506   239,377,396  
Total current assets 2,626,073,906   2,852,571,121  
     
Non-current assets:    
Long-term Investments   35,589,200  
Property and equipment, net 13,929,542   25,459,493  
Intangible assets 94,527,598   89,719,263  
Goodwill 7,268,330   7,268,330  
Right-of-use assets, net   80,551,884  
Other non-current assets 10,672,141   29,655,220  
Total non-current assets 126,397,611   268,243,390  
Total assets 2,752,471,517   3,120,814,511  
     
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY    
Current liabilities:    
Accounts payable 131,249,219   285,735,152  
Registered users’ loyalty payable 256,661,934   166,817,570  
Advance from advertising customers 155,099,317   218,142,036  
Salary and welfare payable 43,422,202   89,990,002  
Tax payable 101,286,721   112,620,573  
Lease liabilities, current   38,755,108  
Accrued liabilities related to users’ loyalty programs 44,133,812   71,206,052  
Accrued liabilities and other current liabilities 379,130,559   583,834,630  
Total current liabilities 1,110,983,764   1,567,101,123  
     
Lease liabilities, non-current   34,373,153  
Convertible loan   1,226,492,365  
Deferred tax liabilities 23,631,899   21,829,466  
Other non-current liabilities 9,686,219   7,987,207  
Non-current liabilities 33,318,118   1,290,682,191  
Total liabilities 1,144,301,882   2,857,783,314  
     
Total redeemable non-controlling interests 96,936,855   491,500,654  
     
Shareholders’ (deficit)/equity    
  Ordinary shares 41,547   44,404  
  Treasury stock   (142,228,779 )
  Additional paid-in capital 3,684,130,058   4,239,953,167  
  Accumulated other comprehensive imcome (16,428,875 ) (22,902,117 )
  Accumulated deficit (2,153,235,425 ) (4,299,623,655 )
Total Qutoutiao Inc. shareholders’ (deficit)/equity 1,514,507,305   (224,756,980 )
  Non-controlling interests (3,274,525 ) (3,712,477 )
Total (deficit)/equity 1,511,232,780   (228,469,457 )
     
Total liabilities, redeemable non-controlling interests and shareholders’ (deficit)/equity 2,752,471,517   3,120,814,511  
 
 
QUTOUTIAO INC. 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (All amounts in RMB, except ADS data, or otherwise noted)
 
  For the three months ended   For the nine months ended
  September 30 June 30 September 30   September 30 September 30
  2018  2019  2019    2018  2019 
  RMB RMB RMB   RMB RMB
             
Advertising and marketing revenues 896,464,500   1,358,002,272   1,381,619,079     1,597,315,666   3,826,799,574  
Other revenues 80,853,332   27,944,539   25,290,100     97,836,898   84,906,269  
             
Net revenues 977,317,832   1,385,946,811   1,406,909,179     1,695,152,564   3,911,705,843  
             
Cost of revenues (153,821,888 ) (361,446,349 ) (496,081,867 )   (299,815,099 ) (1,136,721,190 )
             
Gross profit 823,495,944   1,024,500,462   910,827,312     1,395,337,465   2,774,984,653  
             
Operating expenses:            
Research and development expenses (80,230,784 ) (221,318,168 ) (261,599,590 )   (143,143,162 ) (638,301,750 )
Sales and marketing expenses (1,044,965,206 ) (1,321,768,628 ) (1,503,239,735 )   (1,881,905,048 ) (4,121,959,554 )
General and administrative expenses (741,648,292 ) (63,509,965 ) (57,101,646 )   (935,534,269 ) (204,650,200 )
Total operating expenses (1,866,844,282 ) (1,606,596,761 ) (1,821,940,971 )   (2,960,582,479 ) (4,964,911,504 )
             
Other operating income   10,789,713   11,682,263       22,471,976  
             
Loss from Operations (1,043,348,338 ) (571,306,586 ) (899,431,396 )   (1,565,245,014 ) (2,167,454,875 )
             
Interest income (expense), net 8,986,275   8,955,594   (999,076 )   14,374,974   20,870,058  
Foreign exchange related gains, net 1,237,458   390,043   6,124,404     3,335,520   3,589,367  
Other gains/(loss), net (320,283 ) 48,952   5,296,371     (345,881 ) 3,288,020  
             
Loss before provision for income taxes (1,033,444,888 ) (561,911,997 ) (889,009,697 )   (1,547,880,401 ) (2,139,707,430 )
Income tax benefits   600,811   600,811       1,802,433  
             
Net loss (1,033,444,888 ) (561,311,186 ) (888,408,886 )   (1,547,880,401 ) (2,137,904,997 )
             
Net loss attributable to non-controlling interests 2,842,305   56,711   227,415     2,842,305   437,952  
Net loss attributable to Qutoutiao Inc. (1,030,602,583 ) (561,254,475 ) (888,181,471 )   (1,545,038,096 ) (2,137,467,045 )
             
Accretion to convertible redeemable preferred shares redemption value  (42,843,201 ) (3,020,121 ) (3,627,599 )   (101,806,744 ) (8,921,185 )
Gains on repurchase of preferred shares 18,332,152         18,332,152    
Deemed dividend to preferred shareholders         (1,916,871 )  
             
Net loss attributable to Qutoutiao Inc.s ordinary shareholders (1,055,113,632 ) (564,274,596 ) (891,809,070 )   (1,630,429,559 ) (2,146,388,230 )
             
Net loss (1,033,444,888 ) (561,311,186 ) (888,408,886 )   (1,547,880,401 ) (2,137,904,997 )
Other comprehensive loss/(income):            
Foreign currency translation adjustment, net of nil tax 544,476   21,815,137   8,734,926     (12,017,654 ) (6,473,241 )
Total comprehensive loss (1,032,900,412 ) (539,496,049 ) (879,673,960 )   (1,559,898,055 ) (2,144,378,238 )
Comprehensive loss attributable to non-controlling interests 2,842,305   56,711   227,415     2,842,305   437,952  
Comprehensive loss attributable to Qutoutiao Inc. (1,030,058,107 ) (539,439,338 ) (879,446,545 )   (1,557,055,750 ) (2,143,940,286 )
             
Net loss per ADS (1 Class A ordinary share equals 4 ADSs):            
 — Basic and diluted (8.97 ) (2.21 ) (3.54 )   (15.69 ) (8.54 )
             
Weighted average number of ADS used in computing basic and diluted earnings per ADS:            
 — Basic 117,604,564   255,563,250   252,278,760     103,915,274   251,189,900  
 — Diluted 117,604,564   255,563,250   252,278,760     103,915,274   251,189,900  
 
 
QUTOUTIAO INC.
Reconciliation of GAAP And Non-GAAP Results
(All amounts in RMB, except ADS data, or otherwise noted)
 
  For the three months ended   For the nine months ended
  September 30 June 30 September 30   September 30 September 30
  2018   2019   2019     2018   2019  
  RMB RMB RMB   RMB RMB
  (Unaudited) (Unaudited) (Unaudited)   (Unaudited) (Unaudited)
             
Loss from Operations (1,043,348,338 ) (571,306,586 ) (899,431,396 )   (1,565,245,014 ) (2,167,454,875 )
Add: Share-based compensation expenses            
  Cost of revenue 2,111,603   1,629,139   1,113,137     3,541,184   4,399,261  
  General and administrative 717,726,321   14,208,730   6,607,320     891,567,244   66,245,970  
  Sales and marketing 3,198,778   11,776,526   11,597,854     6,591,956   30,465,141  
  Research and development 11,967,731   37,446,655   35,940,659     18,687,524   89,720,428  
             
Non-GAAP Loss from Operations (308,343,905 ) (506,245,536 ) (844,172,426 )   (644,857,106 ) (1,976,624,075 )
             
Net loss (1,033,444,888 ) (561,311,186 ) (888,408,886 )   (1,547,880,401 ) (2,137,904,997 )
Add: Share-based compensation expenses            
  Cost of revenue 2,111,603   1,629,139   1,113,137     3,541,184   4,399,261  
  General and administrative 717,726,321   14,208,730   6,607,320     891,567,244   66,245,970  
  Sales and marketing 3,198,778   11,776,526   11,597,854     6,591,956   30,465,141  
  Research and development 11,967,731   37,446,655   35,940,659     18,687,524   89,720,428  
             
Non-GAAP net loss (298,440,455 ) (496,250,136 ) (833,149,916 )   (627,492,493 ) (1,947,074,197 )
             
Net loss attributable to Qutoutiao Inc. (1,030,602,583 ) (561,254,475 ) (888,181,471 )   (1,545,038,096 ) (2,137,467,045 )
Add: Share-based compensation expenses            
  Cost of revenue 2,111,603   1,629,139   1,113,137     3,541,184   4,399,261  
  General and administrative 717,726,321   14,208,730   6,607,320     891,567,244   66,245,970  
  Sales and marketing 3,198,778   11,776,526   11,597,854     6,591,956   30,465,141  
  Research and development 11,967,731   37,446,655   35,940,659     18,687,524   89,720,428  
             
Non-GAAP net loss attributable to Qutoutiao Inc. (295,598,150 ) (496,193,425 ) (832,922,501 )   (624,650,188 ) (1,946,636,245 )
             
Net loss attributable to Qutoutiao Inc.’s ordinary shareholders (1,055,113,632 ) (564,274,596 ) (891,809,070 )   (1,630,429,559 ) (2,146,388,230 )
Add: Share-based compensation expenses            
  Cost of revenue 2,111,603   1,629,139   1,113,137     3,541,184   4,399,261  
  General and administrative 717,726,321   14,208,730   6,607,320     891,567,244   66,245,970  
  Sales and marketing 3,198,778   11,776,526   11,597,854     6,591,956   30,465,141  
  Research and development 11,967,731   37,446,655   35,940,659     18,687,524   89,720,428  
             
Non-GAAP Net loss attributable to Qutoutiao Inc.’s ordinary shareholders (320,109,199 ) (499,213,546 ) (836,550,100 )   (710,041,651 ) (1,955,557,430 )
             
Non-GAAP net loss per ADS (1 Class A ordinary share equals 4 ADSs):            
  Basic and diluted (2.72 ) (1.95 ) (3.32 )   (6.83 ) (7.79 )
             
Weighted average number of ADS used in computing basic and diluted earnings per ADS            
Basic 117,604,564   255,563,250   252,278,760     103,915,274   251,189,900  
Diluted 117,604,564   255,563,250   252,278,760     103,915,274   251,189,900  
 
 
QUTOUTIAO INC.
APPENDIX I  Supplementary Operating Information
(RMB in millions, or otherwise noted)
 
  For the three months ended
  September 30 December 31 March 31 June 30 September 30
  2018 2018 2019 2019 2019
Net revenues 977.3 1,327.0 1,118.8 1,385.9 1,406.9
           
User engagement expenses5 481.0 563.3 580.8 449.5 536.1
User acquisition expenses6 532.2 746.9 675.3 787.9 788.3
Other sales and marketing expenses 31.8 57.9 40.9 84.3 178.8
           
Total sales and marketing expenses 1,045.0 1,368.1 1,297.0 1,321.8 1,503.2
           
Combined Average MAUs (in millions) 65.2 93.8 111.4 119.3 133.9
Combined Average DAUs (in millions) 21.3 30.9 37.5 38.7 42.1
New installed users (in millions) 88.6 113.6 108.7 113.7 119.9
           
Average net revenues per DAU per day(RMB) 0.50 0.47 0.33 0.39 0.36
User engagement expenses per DAU per day (RMB) 0.25 0.20 0.17 0.13 0.14
User acquisition expenses per new installed user(RMB) 6.01 6.57 6.21 6.93 6.58

_____________________

5 We offer loyalty program for registered users of our mobile applications to enhance user engagement and loyalty and incentivize word-of-mouth referrals. “User engagement expenses” refer to the cost of loyalty points associated with taking specific actions, such as viewing and sharing of content, that encourage engagement and retention on our mobile applications. Such expenses are recognized as part of sales and marketing expenses in the consolidated statements of operations. “User engagement expenses per average DAUs per day” refer to such expenses incurred on an average DAU per day during a particular period.
6 “User acquisition expenses” refer to the sum of the cost of loyalty points associated with referring new users to register on our mobile applications and the cost of third-party advertising and marketing of our mobile applications. Such expenses are recognized as part of sales and marketing expenses in the consolidated statements of operations. “User acquisition expenses per new registered user” refer to the average cost of acquiring a new installed user from both word-of-mouth referrals and third-party channels.

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IT

Networld to Distribute Cloudian Object Storage Solutions in Japan

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TOKYO, Dec. 15, 2019 (GLOBE NEWSWIRE) — Networld Corp. and Cloudian® today announced that Networld will begin selling Cloudian’s HyperStore® object storage solution in Japan this month under a recently completed distribution agreement. The new partnership will provide customers with a limitlessly scalable, fully S3-compatible and highly cost-effective platform for managing, protecting and maximizing the value of growing datasets in hybrid cloud and on-premises environments. It builds on Cloudian’s position as the most widely deployed independent provider of object storage systems and its expanding presence in the Asia Pacific region over the last year. As the largest VMware distributor in Japan, Networld will also be able to capitalize on a solution Cloudian recently introduced specifically for VMware Cloud Providers.

Cloudian serves the needs of data-intensive industries such as scientific research, financial services, telecommunications, healthcare, government, and media and entertainment in a broad range of use cases, including:

  • Data protection
  • Active archive
  • Storage services
  • NAS offload
  • Big data
  • Artificial intelligence/machine learning

HyperStore offers the industry’s most advanced S3 compatibility, enabling seamless data management across public cloud and on-premises private cloud environments. In addition to hybrid and multi-cloud data management, other HyperStore benefits include:

  • Modular and limitless scalability: Unlike many other object storage providers that require users to over-provision, Cloudian enables customers to start small and then grow without limit. As more capacity is needed, they can non-disruptively add an additional node or even new locations to the cluster and that capacity becomes part of the available storage pool.
  • Geo-distribution: HyperStore’s global data fabric means storage can be deployed anywhere but still be managed centrally from a single pane of glass.
  • Multi-tenancy: HyperStore provides isolated storage environments within a shared system to ensure data privacy. In addition, it incorporates billing and quality-of-service (QoS) features to help meet performance SLAs.
  • Up to 70 percent cost savings: By reducing CAPEX and eliminating expensive and time-consuming data migrations, Cloudian can cut data protection costs by up to 70 percent compared to purpose-built disk-based offerings and tape-based systems.
  • Choice of configurations: HyperStore is available as software-defined storage or pre-configured appliances.

“We’re seeing increasing adoption of object storage and expect this trend to accelerate moving forward,” said Shoichi Morita, president, at Networld. “The partnership with Cloudian reflects our continued commitment to providing customers with best-of-breed solutions that enable them to drive greater business or organizational success.”

“Over the past year, Cloudian has solidified its position as the leading object storage specialist, enabling customers to overcome the inability of traditional file and block storage systems to meet their evolving data management and protection needs,” said Brian Burns, vice president, Asia Pacific, at Cloudian. “Our sales partners play a vital role in helping us bring the benefits of our solutions to users, so we’re thrilled to be working with Networld, an undisputed leader in the Japanese market.”

For more information about Cloudian and the HyperStore solution, visit cloudian.com.

About Networld
As a solution distributor for IT infrastructure, Networld Inc. provides technology products and related services that transform the IT infrastructure of enterprises in the age of cloud computing. The company has been working since its early days on servers, storage and networking, and application and desktop virtualization, to lead the way to what the next generation IT infrastructure should be. https://www.networld.co.jp/

About Cloudian
Cloudian is the most widely deployed independent provider of object storage systems, with the industry’s most advanced S3 compatibility and an extensive partnership ecosystem. Its award-winning flagship solution, HyperStore, provides limitless scalability and cloud-like technology, flexibility and economics in the data center. Cloudian’s global data fabric architecture enables enterprises to store, find and protect object and file data seamlessly across sites, both on-premises and in public clouds, within a single, unified platform. Learn more at cloudian.com.

Networld Media Contact
Tsutaya
pr@networld.co.jp
+ 81-5210-3911

Cloudian Media Contact
Jordan Tewell
10Fold Communications
cloudian@10fold.com
+1 415-666-6066

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IT

Traffic4cast competition reveals novel way to predict traffic flow using AI

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NeurIPS, Vancouver – The Institute for Advanced Research in Artificial Intelligence (IARAI), an independent global machine-learning research institute established by HERE Technologies, today announced the results and winners of its traffic prediction competition, which aimed to solve mobility challenges using artificial intelligence (AI). Traffic4cast, a unique competition merging movie-prediction machine learning with traffic research, challenged competitors to understand complex traffic systems and make predictions about how they would flow in the future.

The results show how AI can effectively uncover insights to solve traffic gridlock through trial and error of industrial geospatial data from HERE, a leader in mapping and location-based services. Traffic comes about when drivers make simple decisions that lead to complex behavior patterns. These patterns depend on various factors, such as time of day, the road network, congestion situations, holidays, weather conditions and day of the week. Effectively identifying and analyzing traffic patterns lead to more accurate predictions of how traffic would move on given roads at given times of day.

AI, and more specifically neural networks—computer systems modeled on the human brain and nervous system—can help to solve this problem because they are very good at spotting patterns. Neural networks “learn” to do tasks by considering examples, such as datasets, usually without being programmed with task-specific rules. This ability to learn without being programmed means that although neural networks are good at identifying patterns, why they are good at it is unclear. Their inner workings are one of the mysteries of machine learning, the so-called “black box” AI, meaning that the processes cannot be easily understood or tested by programmers.

The Traffic4cast results show that neural networks were the most effective method used at predicting traffic and came closest to simulating the exact traffic flow. All the top entrants used neural networks instead of “non-black box” solutions, such as support vector machines, Bayesian networks and other fixed algorithms. Winners from South Korea, Oxford/Zurich and Toronto were among more than 40 teams from around the world who submitted over 4,000 entries. 

Working with HERE, IARAI provided participants with traffic movie clips based on a year’s worth of industrial-scale, real-world data for three diverse cities: Berlin, Istanbul and Moscow. The clips were created using data based on an unprecedented number of over 100 billion probe points from positions reported by a large fleet of probe vehicles. They captured morning, evening and rush-hour traffic. Each movie frame summarized GPS trajectories mapped to spatio-temporal cells. The movies showed multiple color channels characterizing traffic volume, speed and direction.

“This competition is special alone because of the sheer scope and size of the data,” said Sepp Hochreiter, a founding co-director of IARAI and an artificial intelligence pioneer (he invented the long short-term memory (LSTM) neural network framework).

Entrants had to forecast the traffic by completing the next part of each movie clip for all three cities. Contestants were given 285 full training days (full movie for the entire day) and 72 testing days (containing five blocks of 12 consecutive images with at least 30 frames between each such block); the rest were marked out validation sets. Each contestant then had to produce the three consecutive images following each given block of 12 images in each movie file for each day in the test set for each city.

“This competition brought together diverse groups to tackle a fundamental problem—predicting geospatial processes—that lies at the heart of sustainable mass mobility,” said Michael Kopp, head of research at HERE and founding co-director of IARAI. “Guiding the AI revolution to this problem using an interdisciplinary approach via billions of real-life data points is both novel and a paradigm shift that will be reflected in many applied scientific disciplines. The results seem to prove that ‘black box’ machine learning is most effective at solving predictive problems. This gives us a jumping-off point for further research into how AI learns.”

Media Contacts  
Jordan Stark
+1 312 316 4537
jordan.stark@here.com

Amy Stupavsky
+49 175 419 1678
amy.stupavsky@here.com


About HERE Technologies

HERE, a location data and technology platform, moves people, businesses and cities forward by harnessing the power of location. By leveraging our open platform, we empower our customers to achieve better outcomes – from helping a city manage its infrastructure or a business optimize its assets to guiding drivers to their destination safely. To learn more about HERE, please visit www.here.com and http://360.here.com.

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ShiftPixy, Inc. Reports Fiscal 2019 Results

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IRVINE, Calif., Dec. 13, 2019 (GLOBE NEWSWIRE) — ShiftPixy, Inc. (NASDAQ: PIXY), a California-based staffing enterprise that designs, manages, and sells access to a disruptive, revolutionary platform that facilitates employment in the rapidly growing Gig Economy, today announced operating results for the year ended August 31, 2019 (“2019”).

2019 Financial Highlights

  • Earnings per share improved to $0.57 in 2019 compared to $0.58 for 2018.
  • Gross billings grew 59% to $353 million, compared to $222 million for 2018.  Q4 billings exceeded $100 million for the first quarter in our history at $105 million for an exit annualized billings rate of over $420 million.  
  • Revenues increased 53% to $53 million, compared to $35 million for 2018.
  • Gross profit was $12.4 million, increasing 125% over 2018 gross profit of $5.5 million due to improving margins and workers compensation cost savings.  Gross profit per worksite employee improved to $1,200 for 2019 from $800 for 2018.
  • Loss from Operations improved to $9.7 million from $11.6 million in 2018. 
  • EBITDAS Loss (Operating Loss excluding depreciation and share-based compensation) improved to $8.3 million for 2019 from $11.0 million for 2018 due to improved margins and reduced spending on our mobile application, offset by increased operations costs.
  • Investment in our mobile application and technology solution deployment decreased to $4.9 million in 2019 from $7.5 million in 2018 due to reduced costs relating to movement to our new in-sourced development team.  Total Human Resource Information System (HRIS) and mobile application investment is $15.5 million to date.

2019 Operational highlights

  • The number of employees billed during the year and retained in our employee HRIS exceeded 25,000.
  • The active number of worksite employees billed increased to 13,100 at August 31, 2019, a 54% increase, from 8,500 at August 31, 2018.
  • Average gross billings per worksite employee increased by 4.3% to $33,600 in 2019 from $32,200 in 2018
  • Average operating support costs per billed worksite employee improved in 2019.  We have staffed to manage up to 50,000 active worksite employees with our current corporate overhead.
  • Our dispute with our outsourced software development partner delayed our HRIS and mobile application launch in 2019 and necessitated our move towards in-house development. 

“We continue to see strong growth in our legacy business which has driven top line expansion and improvement in our operating metrics, including gross billings and gross profits for 2019,” stated Chief Executive Officer, Scott Absher.  ”Delays in the launch of our mobile application solution are now behind us and the project is now back on track and well received by our initial launch customers.  We believe it will support revenue growth in 2020 from both significantly higher worksite employee counts and added technology features.  The reception from our target customers has been phenomenal and we expect to see a significant increase in our business activity levels as we move into calendar 2020 and continue our focus on creating long-term shareholder value.”

About ShiftPixy
ShiftPixy is a disruptive human capital services enterprise, revolutionizing employment in the Gig Economy by delivering a next-gen platform for workforce management that helps businesses with shift-based employees navigate regulatory mandates, minimize administrative burdens and better connect with a ready-for-hire workforce.  With expertise rooted in management’s nearly 25 years of workers’ compensation and compliance programs experience, ShiftPixy adds a needed layer for addressing compliance and continued demands for equitable employment practices in the growing Gig Economy. ShiftPixy’s complete HCM ecosystem is designed to manage regulatory requirements and compliance in such required areas as paid time off (PTO) laws, insurance and workers’ compensation, minimum wage increases, and the Affordable Care Act (ACA) compliance.

ShiftPixy Cautionary Statement
The information provided in this release includes forward-looking statements, the achievement or success of which involves risks, uncertainties, and assumptions. Although such forward-looking statements are based upon what management of the Company believes are reasonable assumptions, there can be no assurance that forward-looking statements will prove to be accurate. If any of the risks or uncertainties, including those set forth below, materialize or if any of the assumptions proves incorrect, the results of ShiftPixy, Inc., could differ materially from the results expressed or implied by the forward-looking statements we make.  The risks and uncertainties include, but are not limited to, risks associated with the nature of our business model; our ability to execute the Company’s vision and growth strategy; our ability to attract and retain clients; our ability to assess and manage risks; changes in the law that affect our business and our ability to respond to such changes and incorporate them into our business model, as necessary; our ability to insure against and otherwise effectively manage risks that affect our business; competition; reliance on third-party systems and software; our ability to protect and maintain our intellectual property; and general developments in the economy and financial markets.  Statements made in connection with any guidance may refer to financial statements that have not been reviewed or audited.  The Company undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change, except as required by applicable securities laws.  The information in this press release shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and will not be deemed an admission as to the materiality of any information that is required to be disclosed solely by Regulation FD.  Further information on these and other factors that could affect the financial results of ShiftPixy, Inc., is included in the filings on Forms 1-A and 10-Q and in other filings we make with the Securities and Exchange Commission from time to time. These documents are available on the “SEC Filings” subsection of the “Investor Information” section of our website at https://ir.shiftpixy.com/financial-information/sec-filings.

Consistent with the SEC’s April 2013 guidance on using social media outlets like Facebook and Twitter to make corporate disclosures and announce key information in compliance with Regulation FD, ShiftPixy is alerting investors and other members of the general public that ShiftPixy will provide updates on operations and progress required to be disclosed under Regulation FD through its social media on Facebook, Twitter, LinkedIn and YouTube. Investors, potential investors, shareholders and individuals interested in our Company are encouraged to keep informed by following us on Facebook, Twitter, LinkedIn and YouTube.

INVESTOR CONTACT:

InvestorRelations@shiftpixy.com
800.475.3655

ShiftPixy Inc.
Consolidated Balance Sheets

    August 31,
2019
    August 31,
2018
 
ASSETS  
Current assets            
Cash   $ 1,561,000     $ 1,650,000  
Accounts receivable     272,000       111,000  
Unbilled accounts receivable     9,478,000       6,193,000  
Deposits-workers’ compensation     1,957,000       1,672,000  
Prepaid expenses     519,000       563,000  
Other current assets     244,000       259,000  
Total current assets     14,031,000       10,447,000  
                 
Fixed assets, net     3,360,000       3,032,000  
Deposits- workers’ compensation     6,281,000       2,202,000  
Deposits and other assets     124,000       121,000  
Total assets   $ 23,796,000     $ 15,802,000  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities                
Accounts payable   $ 3,061,000     $ 1,246,000  
Accrued payroll and related liabilities     16,412,000       9,477,000  
Convertible Notes, Net     3,351,000       6,171,000  
Derivative liability     3,756,000        
Accrued workers’ compensation costs     1,957,000       305,000  
Default penalties accrual     1,800,000       3,500,000  
Other current liabilities     1,850,000       1,956,000  
Total current liabilities     32,187,000       22,656,000  
Noncurrent liabilities                
Accrued workers’ compensation costs     4,379,000       901,000  
Total liabilities     36,566,000       23,557,000  
Commitments and contingencies                
Stockholders’ deficit                
Preferred stock, 50,000,000 authorized shares; $0.0001 par value; no shares issued and outstanding            
Common stock, 750,000,000 authorized shares; $0.0001 par value; 36,281,894 and 28,851,787 shares issued as of August 31, 2019 and 2018, respectively     4,000       3,000  
Additional paid-in capital     32,501,000       18,465,000  
Treasury stock, at cost – 558,132 shares and no shares as of August 31, 2019 and 2018, respectively     (325,000 )      
Accumulated deficit     (44,950,000 )     (26,223,000 )
Total stockholders’ deficit     (12,770,000 )     (7,755,000 )
Total liabilities and stockholders’ deficit   $ 23,796,000     $ 15,802,000  

ShiftPixy Inc.
Consolidated Statements of Operations

    For the Years Ended  
    August 31,
2019
    August 31,
2018
 
             
Revenues (gross billings of $352.6 million and $222.4 million (unaudited)  less worksite employee payroll cost of $299.2 million and $187.5 million, (unaudited) respectively)   $ 53,436,000     $ 34,959,000  
                 
Cost of revenue     41,046,000       29,458,000  
Gross profit     12,390,000       5,500,000  
Operating expenses:                
Salaries, wages and payroll taxes     7,702,000       5,383,000  
Share-based compensation – general and administrative     632,000       363,000  
Commissions     2,732,000       1,594,000  
Professional fees     3,918,000       2,078,000  
Software development     1,209,000       3,828,000  
Marketing and advertising     1,208,000       547,000  
General and administrative     3,823,000       3,005,000  
Depreciation and amortization     839,000       274,000  
Total operating expenses     22,063,000       17,072,000  
Operating Loss     (9,673,000 )     (11,572,000 )
Other income (expense)                
Interest expense     (8,507,000 )     (1,751,000 )
Loss on debt extinguishment     (3,927,000 )      
Change in fair value of derivative     2,569,000        
Gain (Loss) associated with note defaults, net     811,000       (3,500,000 )
Total Other income (expense)     (9,054,000 )     (5,251,000 )
                 
Net Loss   $ (18,727,000 )   $ (16,823,000 )
                 
Net loss per common share                
Basic and diluted   $ (0.57 )   $ (0.58 )
                 
Weighted average number of common shares                
Basic and diluted     32,708,800       28,810,103  

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