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Acorn International Reports Preliminary Financial Results for the Fourth Quarter and Full Year 2018

Vlad Poptamas

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Acorn International, Inc. (NYSE: ATV) (“Acorn” or the “Company”), today announced its preliminary unaudited financial results for the fourth quarter and full year ended December 31, 2018.

Fourth Quarter 2018 Preliminary Financial Highlights

  • Net revenues increased 65.7% year-over-year in Q4 2018 to US$8.4 million
  • Gross profit rose 65.8% year-over-year in Q4 2018 to US$5.9 million
  • Gross margin remained stable year-over-year at 69.8% in Q4 2018
  • Income from continuing operations was US$1.7 million in Q4 2018, compared to a loss from continuing operations of US$1.0 million in Q4 2017
  • Net income was US$1.6 million in Q4 2018 as compared to net income of US$7.5 million in Q4 2017

Full Year 2018 Preliminary Financial Highlights

  • Full year net revenues rose 40.2% in 2018 to US$28.4 million
  • Gross profit increased 42.3% in 2018 to US$20.2 million
  • Gross margin increased to 71.1% in 2018 from 70.1% in 2017
  • Income from continuing operations was US$2.9 million in 2018, compared to a loss from continuing operations of US$4.2 million in 2017
  • Net income was US$29.1 million in 2018, as compared to net income of US$12.4 million in 2017

For the first time in recent history, Acorn achieved profitability at the operating level for the full year.  Revenue growth of 40.2% combined with strong gross margin and significant operating leverage led to income from continuing operations of US$2.9 million in 2018, up from a loss from continuing operations of US$4.2 million in 2017. Net income attributable to Acorn for 2018 was US$29.1 million, including a one-time gain of US$30.0 million from the sale of non-core assets in May 2018.

Throughout 2018, Acorn leveraged its 20-year history as a leading marketing and branding company in China to focus on new media in China, while simultaneously expanding its e-commerce B2C platforms and promoting its products through digital media in China.

The Company’s Babaka brand of posture correction products continued to perform well, and new product category Acorn Fresh saw monthly net revenue more than double from October to December.  The Company recently began promoting its popular line of collectibles, which were historically sold offline, on Acorn Streaming in an effort to further drive online sales.

In the year ahead, Acorn plans to build on its success in 2018 by focusing on growing e-commerce sales via streaming content as it taps into this large and growing market in China, and also seeks to drive further revenue from Acorn Entertainment, which is a social media business that helps western sports and entertainment talent and a diverse range of brands develop a deep and meaningful impact in the Chinese market and Acorn Streaming, which is primarily focused on live streaming and pre-recorded video content creation and distribution.

Preliminary Financial Results for the Fourth Quarter of 2018:

Total net revenues were US$8.4 million in the fourth quarter of 2018, up 65.7% from US$5.1 million in the fourth quarter of 2017, primarily due to an increase in e-commerce sales of Babaka branded products as well as other products.

Cost of sales in the fourth quarter of 2018 was US$2.5 million, up 65.6% from US$1.5 million in the fourth quarter of 2017. The increase was attributable to increased sales volume and net revenues.

Gross profit in the fourth quarter of 2018 was US$5.9 million, up 65.8% from US$3.5 million in the fourth quarter of 2017. Gross margin was 69.8% in the fourth quarter of 2018, unchanged from the fourth quarter of 2017.

Total operating expenses in the fourth quarter of 2018 were US$4.1 million, down 9.3% from US$4.6 million in the fourth quarter of 2017, due primarily to lower general and administrative expenses, which were partially offset by an increase in selling and marketing expenses to support e-commerce sales.

Income from continuing operations was US$1.7 million in the fourth quarter of 2018, as compared to a loss from continuing operations of US$1.0 million in the fourth quarter of 2017.

Income tax expense was US$0.3 million in the fourth quarter of 2018. This compares to an income tax benefit of US$9.6 million in the fourth quarter of 2017, which was due to the recording of a tax asset of US$8.0 million from deductible loss and a US$1.6 million write-down of previously accrued income tax expenses based on the full-year financial performance.

Net income from continuing operations was US$1.4 million in the fourth quarter of 2018. This compares to net income from continuing operations of US$8.7 million in the fourth quarter of 2017, which was primarily due to the previously mentioned income tax benefit realized in 2017.

Net income from discontinued operations, which reflects the sale of a majority stake in the Company’s HJX electronic learning products business to a third-party investor and operator in 2017 (Refer to “Discontinued Operations” discussion below), was US$0.2 million in the fourth quarter of 2018, compared to a net loss from discontinued operations of US$1.2 million in the fourth quarter of 2017.

Net income attributable to Acorn was US$1.6 million in the fourth quarter of 2018. This compares to net income attributable to Acorn of US$7.5 million in the fourth quarter of 2017, which was primarily due to the previously mentioned tax benefit realized in 2017.

During the fourth quarter of 2018, the Company repurchased 14,615 ADSs at an average price of US$20.56 per ADS under its share repurchase program, which was approved by the Board of Directors on December 8th, 2017.

Preliminary Full Year 2018 Financial Results

Total net revenues were US$28.4 million in 2018, up 40.2% from US$20.3 million in 2017, primarily due to an increase in e-commerce sales of Babaka branded products as well as other products.

Cost of sales in 2018 was US$8.2 million, up 35.2% from US$6.1 million in 2017. The increase was attributable to increased sales volume and net revenues.

Gross profit in 2018 was US$20.2 million, up 42.3% from US$14.2 million in 2017. Gross margin was 71.1% in 2018, up from 70.1% in 2017. The slight increase in gross margin was due to a larger proportion of higher margin products in the product mix.

Total operating expenses in 2018 were US$17.4 million, down 5.7% from operating expenses of US$18.4 million in 2017, due primarily to lower general and administrative expenses and an increase in other operating income from loan interest income and net revenue from Acorn Entertainment, which were partially offset by an increase in selling and marketing expenses to support e-commerce.

Income from continuing operations was US$2.9 million in 2018, as compared to a loss from continuing operations of US$4.2 million in 2017.

Other income was US$30.0 million in 2018, primarily due to a gain on the sale of non-core assets, as compared to other income of US$11.6 million in 2017, which was primarily due to dividends received and gains from sales of shares of E-Money Holding Co., Ltd. (formerly known as “Yimeng Software Technology Co., Ltd.”), a publicly traded company in China.

Income tax expense was $3.0 million in 2018. This compares to an income tax benefit of $7.9 million in 2017, which was primarily due to the recording of a one-time tax asset of US$8.0 million from a deductible loss in the fourth quarter of 2017.

Net income from continuing operations was US$30.3 million in 2018, compared to net income from continuing operations of US$15.9 million in 2017.

Net loss from discontinued operations, which reflects the sale of a majority stake in the Company’s HJX electronic learning products business to a third-party investor and operator in 2017 (Refer to “Discontinued Operations” discussion below), was US$1.2 million in 2018, compared to net loss from discontinued operations of US$3.5 million in 2017.

Net income attributable to Acorn was US$29.1 million in 2018 as compared to net income attributable to Acorn of US$12.4 million in 2017.  Net income for 2018 includes the one-time gain of US$30.0 million from the sale of non-core assets while net income for 2017 includes the one-time gain of US$11.8 million due to dividends received and gains from sales of E-Money/Yimeng shares, along with an income tax benefit of US$9.6 million in the fourth quarter of 2017.

As of December 31, 2018, Acorn’s cash and cash equivalents, with restricted cash, totaled US$20.1 million. The cash balance at the end of 2018 reflects the payment of a special cash dividend of approximately US$40 million in June 2018. Cash and equivalents, with restricted cash, totaled US$21.1 million as of December 31, 2017.

On December 10, 2018, we executed an agreement to sell Acorn’s former principal office in Shanghai to a third party for US$6.7 million and received the initial payment of US$5.1 million on December 24, 2018.

In addition to a tax asset of $8.2 million already netted against deferred tax liabilities in the balance sheet as of December 31, 2018Acorn also has an aggregate net deductible loss of approximately $33.4 million expiring within the next 5 years, which we will strive to utilize for our benefit going forward.

Discontinued Operations

In 2017, Acorn reached an agreement to sell a majority stake in its HJX electronic learning products business (“HJX Business”) to a third-party investor and operator, allowing the Company to focus on existing businesses and brands with higher profit margins, and on achieving profitable growth of new, potentially high margin businesses. Acorn maintains a 37.5% stake in a joint venture established with this third party. As a result of this transaction, the Company is required by applicable accounting rules to treat the historical operations of the wholly owned HJX Business as discontinued operations and the minority stake in the HJX Business as equity in losses of affiliates in the consolidated statements of operations for all periods presented, subject to the consolidation of the HJX Business into the joint venture entity.

Conference Call

The Company will host a conference call at 8:30 a.m. ET on March 7, 2019 to discuss financial results. Dial-in details for the earnings conference call are as follows:

US/Canada:

877-260-1479

International:

+1 334-323-0522

Please dial in 10 minutes before the call is scheduled to begin and provide the passcode 3807702 to join the call. A replay will be available approximately two hours following the conclusion of the conference call through March 14, 2019and can be accessed by dialing (888) 203-1112, or (719) 457-0820, passcode 3807702.  An archived audio file of the call will be available on the Company’s website http://www.acorninternationalgroup.com/news-and-events/webcasts-and-presentations/.

 

SOURCE Acorn International, Inc.

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Technology & Telecommunications Industry Ranked #3 in MBLM’s Brand Intimacy 2019 Study

Vlad Poptamas

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U.S. Top 10 Most Intimate Technology & Telecom Brands 2019
Reading Time: 3 minutes

 

The technology & telecommunications industry ranked third in MBLM’s Brand Intimacy 2019 Study, which is the largest study of brands based on emotions, climbing up one spot from the 2018 study. Apple ranked #1 in the industry for the fourth year, followed by Samsung and Google. The remaining brands in the Top 10 for the technology & telecommunications industry were: Sony, Microsoft, AT&T, HP, Verizon, Dell and LG.

Brand Intimacy is defined as the emotional science that measures the bonds we form with the brands we use and love. Top intimate brands in the U.S. continued to significantly outperform the top brands in the Fortune 500 and S&P indices in both revenue and profit over the past 10 years, according to the Brand Intimacy 2019 Study.

“With its presence and dominance in our modern day living, technology & telecommunications continues to build emotional bonds with consumers,” stated Mario Natarelli, managing partner, MBLM. “Brands that are part of the smartphone ecosystem – device manufacturers, content providers, access brands and apps – have higher rates of Brand Intimacy than those that do not. Device manufacturers performed particularly well, which suggests hardware brands are benefitting the most from the increasingly important role that smartphones play in our lives.”

Additional notable findings in the technology & telecommunications industry include:

  • Apple was the #1 brand for both women and men
  • Apple was also #1 for millennials, users over 35 and users with incomes of $50,000 or more
  • Google was the #1 brand for users with incomes under $50,000

MBLM explored the tech giant Google in a piece released in conjunction with the findings, “What’s Going on with Google?” The article delves into the Brand Intimacy profile of Google and its recent advances and setbacks. It discusses its Brand Intimacy performance, notably, its strong linkage to the archetype of   enhancement and its success at connecting with millennials.

In addition to the release of the findings and article, MBLM also hosted a webinar on the technology & telecommunications industry. A recording of the webinar can be found here.

The Brand Intimacy 2019 Study contains the most comprehensive rankings of brands based on emotion, analyzing the responses of 6,200 consumers and 56,000 brand evaluations across 15 industries in the U.S., Mexico and UAE. MBLM’s reports and interactive Data Dashboard, which features a brand ranking tool, showcase the performance of almost 400 brands, revealing the characteristics and intensity of the consumer bonds.

To view technology & telecommunications industry findings, please click here. To download the full Brand Intimacy 2019 Study or explore the Data Dashboard click here.

Methodology
During 2018, MBLM with Praxis Research Partners conducted an online quantitative survey among 6,200 consumers in the U.S. (3,000), Mexico (2,000), and the United Arab Emirates (1,200). Participants were respondents who were screened for age (18 to 64 years of age) and annual household income ($35,000 or more) in the U.S. and socioeconomic levels in Mexico and the UAE (A, B and C socioeconomic levels). Quotas were established to ensure that the sample mirrored census data for age, gender, income/socioeconomic level, and region. The survey was designed primarily to understand the extent to which consumers have relationships with brands and the strength of those relationships from fairly detached to highly intimate. It is important to note that this research provides more than a mere ranking of brand performance and was specifically designed to provide prescriptive guidance to marketers. We modeled data from over 6,200 interviews and approximately 56,000 brand evaluations to quantify the mechanisms that drive intimacy. Through factor analysis, structural equation modeling, and other sophisticated analytic techniques, the research allows marketers to better understand which levers need to be pulled to build intimacy between their brand and consumers. Thus, marketers will understand not only where their brand falls in the hierarchy of performance but also how to strengthen performance in the future.
To read a more detailed description of MBLM’s approach, visit its Methodology page.

SOURCE MBLM

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Escalated Launches Real-Time Fraud Prevention and Monitoring SAAS Platform

Vlad Poptamas

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CEO Kyle Smith
Reading Time: 2 minutes

 

Escalated (www.escalated.io) recently announced the launch of their proprietary SAAS-platform designed to screen and stop malicious bot activity online. The service is available as either a monthly or annual subscription, both offering instant accessibility and easy implementation. Escalated has multiple tiered plans to suit a variety of individual, organization or company needs, regardless of size. And each plan offers a full-access free trial period.

With a focus on both security and affordability, Escalated is specifically designed to help monitor and safeguard websites, ad campaigns and other online activity from invalid traffic. Malicious bots create fraudulent ad impressions that routinely eat holes in advertising budgets. These attacks can also cause a wide variety of anomalies that skew data collection and analysis, harm business relationships, steal content, waste bandwidth and otherwise degrade valuable server resources.

“With margins in ad-tech being squeezed constantly, and the cost of ad-fraud on the rise, companies are dealing with the financial pain in the middle. We hope to solve that problem,” said Escalated CEO Kyle Smith.

The Escalated Solution

Escalated’s real-time pre-bid API eliminates bots on the fly, minimizing risk, and can be used to make bidding or rendering decisions. The post-bid fraud monitoring tags allow the collection of insights into overall traffic activity, making it easy to spot invalid traffic received by domain, referrer or partner sources.

Other Escalated features include:

  • General Web Security: Stops bots from stealing assets, or clicking on ads that follow links to clients’ landing pages. Prevents bots from scraping and copying content or scanning sites for future exploitable vulnerabilities.
  • Campaign Optimization: Bots can cause confusing analytics, offset KPIs and decimate marketing budgets. Escalated can track invalid traffic by domain, partner, source or geo. Clients can also send in costing data to track IVT by overall cost, enabling the creation of whitelists and blacklists.
  • Audience Management: Eliminates bots that pretend to be human audience members, allowing for pure and accurate data collection.
  • Content Locking: Keeps digital content safe from theft.
  • Resource Protection: Save server resources by denying fraudulent activity.
  • Threat Detection: Detect hard-to-find, incoming, or outright hidden fraudulent activity.
  • Ad Verification: Campaigns can be audited to ensure ads are running exactly where they are supposed to, for maximum effectiveness and use of advertising spend.

Malicious and fraudulent bot-activity is on the rise. Recent statistics place projected estimates for loss of ad-revenue due to ad-fraud in the tens-of-billions of dollars. This type of activity has long become a viable business model for career criminals, and many small business owners are either under-protected or not protected at all. Ad fraud continues to pose threats to both business relations and the industry in general. It can no longer be ignored.

SOURCE Escalated

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Aimia Announces Results of Conversion Privilege of Series 3 Cumulative Rate Reset Preferred Shares

Vlad Poptamas

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Reading Time: 1 minute

 

Data-driven marketing and loyalty analytics company Aimia Inc. (TSX: AIM) today announced that none of its 6,000,000 Cumulative Rate Reset Preferred Shares, Series 3 (the “Series 3 Shares”) will be converted into Cumulative Floating Rate Preferred Shares, Series 4 (the “Series 4 Shares”) on April 1, 2019. During the conversion notice period, which commenced on March 4, 2019 and ended at 5:00 p.m. (Montreal time) on March 18, 2019, 65,624 Series 3 Shares were tendered for conversion into Series 4 Shares. In accordance with the rights, privileges, restrictions and conditions attaching to the Series 3 Shares and the Series 4 Shares, since there would be less than 1,000,000 Series 4 Shares outstanding on April 1, 2019, after having taken into account all Series 3 Shares tendered for conversion into Series 4 Shares, holders of Series 3 Shares who elected to tender their shares for conversion will not have their Series 3 Shares converted into Series 4 Shares on April 1, 2019. As a result, no Series 4 Shares will be issued on April 1, 2019.

 

SOURCE Aimia Inc.

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