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TOKYO, Dec. 22, 2023 /PRNewswire/ -- Yoshitsu Co., Ltd ("Yoshitsu" or the "Company") (Nasdaq: TKLF), a retailer and wholesaler of Japanese beauty and health products, sundry products, luxury products, electronic products, as well as other products in Hong Kong, mainland China, Japan, North America, and the United Kingdom, today announced its unaudited financial results for the first six months of fiscal year 2024 ended September 30, 2023. Mr. Mei Kanayama, Principal Executive Officer of Yoshitsu, commented, "We believe it has been a dynamic first half of fiscal year 2024, marked by a significant growth in revenue from physical stores and our strategic focuses on the asset-light business model and franchise expansion in Japan. Our revenue from directly-operated physical stores increased by 99.0% during the first half of fiscal year 2024, compared to the same period in 2023, which we believe reflects the success of our new luxury product lines and our expansion in key markets, like Japan and Hong Kong, and underscores our commitment to enhancing our physical store presence and adapting to market demands. Looking forward, we are optimistic about our asset-light business model and franchise expansion in Japan. We believe this strategy not only streamlines our operational efficiency but also aligns with our vision to build a strong brand presence and optimize revenue streams. As we continue to expand our business globally, we are expecting this model to bring innovative products to the market more rapidly, respond effectively to customer needs, and improve our overall profitability. Our commitment to our shareholders remains steadfast as we look to the future with optimism and a clear strategy aiming for sustained growth and value creation." Mr. Youichiro Haga, Principal Accounting and Financial Officer of Yoshitsu, remarked, "The financial results for the first six months of fiscal year 2024 present a diverse set of financial outcomes for Yoshitsu. We expect the adoption of the asset-light business model to enhance our market agility, foster stronger customer relationship, and elevate our customers' shopping experiences. We are focused on continuing to strengthen our financial foundation and drive sustainable growth in the coming periods. We are committed to consistently evaluating and refining our financial strategies to align with our long-term goals and market dynamics, and to ensuring that Yoshitsu remains resilient and poised for continued success." First Six Months of Fiscal Year 2024 Financial Highlights Revenue was $74.2 million for the six months ended September 30, 2023, compared to $77.6 million for the same period of last year. Gross profit was $9.5 million for the six months ended September 30, 2023, compared to $14.6 million for the same period of last year. Net income was $2.0 million for the six months ended September 30, 2023, increased by 496.6% from $0.3 million for the same period of last year. Basic and diluted earnings per share was $0.05 for the six months ended September 30, 2023, compared to $0.01 for the same period of last year. First Six Months of Fiscal Year 2024 Financial Results Revenue Total revenue was $74.2 million for the six months ended September 30, 2023, decreased by 4.4% from $77.6 million for the same period of last year. For the Six Months Ended September 30, 2023 2022 ($ millions) Revenue Cost ofRevenue GrossMargin Revenue Cost ofRevenue GrossMargin Directly-operated physical stores 11.6 9.9 14.6 % 5.8 4.7 20.2 % Online stores and services 6.0 4.9 17.9 % 16.3 13.0 20.5 % Franchise stores and wholesale customers 56.5 49.9 11.8 % 55.5 45.4 18.1 % Total 74.2 64.7 12.8 % 77.6 63.1 18.8 % Revenue from directly-operated physical stores increased by 99.0%, to $11.6 million for the six months ended September 30, 2023, from $5.8 million for the six months ended September 30, 2022. The increase was mainly driven by the introduction of luxury products in directly-operated physical stores in Japan during the six months ended September 30, 2023. The increase in directly-operated physical stores sales was also due to revenue contributed from the Company's newly-opened physical stores in Hong Kong. Revenue from online stores and services decreased by 63.2%, to $6.0 million for the six months ended September 30, 2023, from $16.3 million for the six months ended September 30, 2022. The decrease was mainly due to a shift in the Company's business strategy since August 2022. Instead of operating the online stores by itself, the Company entrusted the entire operations of all its online stores in China to third-party companies to minimize the operating risk. After the change, these third-party companies purchased products from the Company like other wholesale customers, and hence this portion of revenue was recorded under franchise stores and wholesale customers. The decrease was partially offset by increased revenue generated by the Company's online stores in Japan and revenue from advertising services through key opinion leaders. Revenue from franchise stores and wholesale customers increased by 1.9%, to $56.5 million for the six months ended September 30, 2023, from $55.5 million for the six months ended September 30, 2022. During the six months ended September 30, 2023, the Company started to offer luxury products and electronic products, which led to an increase in revenue from franchise stores and wholesale customers due to their higher unit selling price. The increase was also due to increased revenue previously recognized under physical stores and online stores as mentioned above. However, the increase was partially offset by the temporary suspension of sale to certain customers. In order to mitigate the increased credit risk due to slow collection of the Company's overdue account receivable, the Company suspended its sales to certain customers during the period from May to June 2023. Sales to these customers have only gradually resumed since July 2023 after they accelerated their payments of the overdue accounts receivable to the Company. Cost of Revenue Cost of revenue increased by 2.6%, to $64.7 million for the six months ended September 30, 2023, from $63.1 million for the six months ended September 30, 2022. Gross Profit and Gross Margin Gross profit decreased by 35.1%, to $9.5 million for the six months ended September 30, 2023, from $14.6 million for the same period of last year. Gross margin decreased by 6 percentage points, to 12.8% for the six months ended September 30, 2023, from 18.8% for the same period of last year. Operating Expenses Operating expenses decreased by 32.5%, to $9.1 million for the six months ended September 30, 2023, from $13.5 million for the same period of last year. The decrease in operating expenses was primarily attributable to a decrease in shipping expenses, promotion and advertising expenses, transaction commission paid to third-party e-commerce marketplace operators, payroll, employee benefit expenses, and bonus expenses and allowance for credit losses. The decrease was partially offset by an increase in consulting and professional service fees. Interest Expenses, net Interest expenses, net included interest expenses calculated at interest rate per loan agreements and loan service costs, which were directly incremental to the loan agreements and amortized over the loan periods. Interest expenses, net decreased by 27.4%, to $1.0 million for the six months ended September 30, 2023, from $1.4 million for the same period of last year. The decrease mainly consisted of a decrease in interest expenses at interest rate by $0.4 million, which was mainly because the weighted average interest rate decreased to 0.98% for the six months ended September 30, 2023, from 1.83% for the same period of last year. The decrease was partially offset by the slight increase in amortized loan service costs in relation to the Company's syndicated loans by $63,497. Other Income (Expenses), net The Company's other income (expenses), net primarily includes tax refund, disposal gain or loss from property and equipment, government subsidies, and other immaterial income and expense items. Other income, net increased by 159.0%, to $66,947 for the six months ended September 30, 2023, from net other expenses of $113,409 for the same period of last year. The increase was mainly due to the decreased loss from disposal of property and equipment, which was partially offset by decreased government subsidies received during the six months ended September 30, 2023 as compared to the same period of last year. Gain from Foreign Currency Exchange Gain from foreign currency exchange was $2.4 million for the six months ended September 30, 2023, as compared to a gain from foreign currency exchange of $1.0 million for the same period of last year. The gain from foreign currency exchange was mainly due to the significant fluctuations of foreign exchange rate on the Company's accounts receivable denominated in foreign currencies, such as U.S. dollars and Chinese Yuan, during the six months ended September 30, 2023. The increase was also due to the increased gain from foreign currency exchange by the Company's Hong Kong subsidiaries, which was mainly due to the significant fluctuations of foreign exchange rate on its payables denominated in Japanese Yen during the six months ended September 30, 2023. Provision (Benefit) for Income Taxes Benefit for income taxes was $0.4 million for the six months ended September 30, 2023, as compared to provision for income taxes of $0.2 million for the same period of last year. The Company's benefit for income taxes increased by 268.1%. The increase in benefit for income taxes was mainly due to the increased deferred income tax benefit, which was partially offset by the increased current income tax expenses resulting from the increased taxable income for the six months ended September 30, 2023. Net Income Net income increased by 496.6%, to $2.0 million for the six months ended September 30, 2023, from $0.3 million for the same period of last year. Basic and Diluted Earnings per Share Basic and diluted earnings per share was $0.05 for the six months ended September 30, 2023, compared to $0.01 for the same period of last year. Financial Condition As of September 30, 2023, the Company had cash of $2.8 million, compared to $1.8 million as of March 31, 2023. As of September 30, 2023, the Company also had approximately $74.2 million of account receivable balance due from third parties. Approximately 38.05% of the September 30, 2023 balance has been subsequently collected, and the majority of the remaining balance is expected to be collected by March 31, 2024. The collection of such receivables made cash available for use in the Company's operations as working capital, if necessary. Net cash provided by operating activities was $3.7 million for the six months ended September 30, 2023, mainly derived from net income of $2.0 million for the period, and net changes in the Company's operating assets and liabilities, which mainly due to the decrease in accounts receivable due from third parties of $6.4 million as a result of the Company's great effort in collection of overdue accounts receivable and the decrease in compensation receivable for consumption tax of $6.1 million as the Company received payments from the debtors according to the collection plan. Net cash used in operating activities was $21.9 million for the six months ended September 30, 2022, mainly derived from net income of $0.3 million for the period, and net changes in the Company's operating assets and liabilities, which mainly included an increase in accounts receivable from third parties of $21.8 million, which was due to the delayed shipments and longer payment processing procedures as affected by the COVID-19 pandemic. Net cash provided by investing activities was $0.4 million for the six months ended September 30, 2023, mainly due to repayments from related parties of $0.4 million and proceeds from disposal of equity method investment of $0.3 million, partially offset by the purchases of property and equipment in the aggregate amount of $0.2 million and disposal of a subsidiary of $0.2 million. Net cash provided by investing activities was $0.1 million for the six months ended September 30, 2022, mainly due to repayments from related parties of $0.1 million. Net cash used in financing activities was $1.1 million for the six months ended September 30, 2023, which primarily consisted of repayments of long-term borrowings of $0.6 million, payments made to related parties of $0.2 million, and repayments of obligations under finance leases of $0.3 million. Net cash provided by financing activities was $16.4 million for the six months ended September 30, 2022, which primarily consisted of proceeds from short-term borrowings of $74.8 million and proceeds from long-term borrowings of $2.2 million, partially offset by repayments of short-term borrowings of $56.1 million, repayments of long-term borrowings of $1.5 million, and cash consideration paid for business combination under common control of $2.8 million. Conference Call Information The Company will host an earnings conference call at 8:30 am U.S. Eastern Time (10:30 pm Japan Standard Time) on December 22, 2023. Dial-in details for the conference call are as follows: Date: December 22, 2023 Time: 8:30 am U.S. Eastern Time International: 1-412-902-4272 United States Toll Free: 1-888-346-8982 Japan Toll Free: 0066-33-812830 Conference ID Yoshitsu Co., Ltd Please dial in at least 15 minutes before the commencement of the call to ensure timely participation. For those unable to participate, an audio replay of the conference call will be available from approximately one hour after the end of the live call until December 29, 2023. The dial-in for the replay is +1-877-344-7529 within the United States or +1-412-317-0088 internationally. The replay access code is No. 1325694. A live and archived webcast of the conference call will also be available at the Company's investor relations website at https://www.ystbek.co.jp/irlibrary/. About Yoshitsu Co., Ltd Headquartered in Tokyo, Japan, Yoshitsu Co., Ltd is a retailer and wholesaler of Japanese beauty and health products, sundry products, luxury products, electronic products, as well as other products in Hong Kong, mainland China, Japan, North America, and the United Kingdom. The Company offers various beauty products (including cosmetics, skincare, fragrance, and body care products), health products (including over-the-counter drugs, nutritional supplements, and medical supplies and devices), sundry products (including home goods), luxury products (including branded watches, perfume, handbags, clothes, and jewelry), electronic products (including entertainment gaming products), and other products (including food and alcoholic beverages). The Company currently sells its products through directly-operated physical stores, through online stores, and to franchise stores and wholesale customers. For more information, please visit the Company's website at https://www.ystbek.co.jp/irlibrary/. Forward-Looking Statements Certain statements in this press release are 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. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy, and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to," or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. In addition, there is uncertainty about the further spread of the COVID-19 virus or the occurrence of another wave of cases and the impact it may have on the Company's operations, the demand for the Company's products, global supply chains, and economic activity in general. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and in its other filings with the U.S. Securities and Exchange Commission. For more information, please contact: Yoshitsu Co., LtdInvestor Relations DepartmentEmail: ir@ystbek.co.jp Ascent Investor Relations LLCTina XiaoPresidentPhone: +1-646-932-7242Email: investors@ascent-ir.com YOSHITSU CO., LTD UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS September 30, March 31, 2023 2023 ASSETS CURRENT ASSETS: Cash $ 2,790,801 $ 1,766,441 Accounts receivable, net 74,181,423 89,447,155 Accounts receivable - related parties 44 327,807 Merchandise inventories, net 14,828,587 7,187,800 Due from related parties 9,035 444,567 Compensation receivable for consumption tax, current 9,229,456 3,912,719 Prepaid expenses and other current assets, net 3,453,592 3,542,864 TOTAL CURRENT ASSETS 104,492,938 106,629,353 Property and equipment, net 11,284,906 12,938,598 Operating lease right-of-use assets 3,113,422 2,709,954 Long-term investment - 169,148 Compensation receivable for consumption tax, non-current, net 6,106,954 19,230,370 Long-term prepaid expenses and other non-current assets, net 4,128,092 4,997,857 TOTAL ASSETS $ 129,126,312 $ 146,675,280 CURRENT LIABILITIES: Short-term borrowings $ 54,539,800 $ 60,636,412 Current portion of long-term borrowings 3,618,832 2,783,445 Accounts payable 13,344,531 12,719,160 Accounts payable - related parties 67,848 - Due to related parties 108,064 297,559 Deferred revenue 85,989 146,024 Taxes payable 12,283,353 18,219,803 Operating lease liabilities, current 1,348,045 1,323,900 Finance lease liabilities, current 231,406 369,786 Representative's warrants liability 20,222 24,663 Other payables and other current liabilities 1,284,569 1,520,756 TOTAL CURRENT LIABILITIES 86,932,659 98,041,508 Operating lease liabilities, non-current 1,833,622 1,416,508 Finance lease liabilities, non-current 340,899 622,922 Long-term borrowings 7,315,955 10,326,399 Other non-current liabilities 2,152,875 2,535,123 Deferred tax liabilities, net 2,583,854 4,451,077 TOTAL LIABILITIES $ 101,159,864 $ 117,393,537 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Ordinary shares, 100,000,000 shares authorized; 36,250,054 shares and 36,250,054 shares issued and outstanding as of September 30, 2023 and March 31, 2023, respectively 14,694,327 14,694,327 Capital reserve 9,078,915 9,078,915 Retained earnings 15,532,199 13,577,844 Accumulated other comprehensive loss (11,338,993) (8,069,343) TOTAL SHAREHOLDERS' EQUITY 27,966,448 29,281,743 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 129,126,312 $ 146,675,280 YOSHITSU CO., LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS AND COMPREHENSIVE LOSS For the Six Months Ended September 30, 2023 2022 REVENUE Revenue - third parties $ 74,049,115 $ 77,607,361 Revenue - related parties 115,034 8,188 Total revenue 74,164,149 77,615,549 COSTS AND OPERATING EXPENSES Merchandise costs 64,706,599 63,052,437 Selling, general and administrative expenses 9,124,805 13,518,943 Total operating expenses 73,831,404 76,571,380 INCOME FROM OPERATIONS 332,745 1,044,169 OTHER INCOME (EXPENSES) Interest expenses, net (995,997) (1,372,444) Additional and delinquent tax due to consumption tax correction (644,780) - Gain from disposal of equity method investment 195,391 - Gain from disposal of a subsidiary 341,755 - Other income (expenses), net 66,947 (113,409) Gain from foreign currency exchange 2,371,226 981,017 Change in fair value of representative's warrants liability 1,833 89,049 Loss from equity method investment (71,200) (88,737) Total other income (expenses), net 1,265,175 (504,524) INCOME BEFORE INCOME TAX PROVISION 1,597,920 539,645 PROVISION (BENEFIT) FOR INCOME TAXES (356,435) 212,052 NET INCOME 1,954,355 327,593 OTHER COMPREHENSIVE LOSS Foreign currency translation loss (3,269,650) (7,374,799) TOTAL COMPREHENSIVE LOSS $ (1,315,295) $ (7,047,206) Earnings per ordinary share - basic and diluted $ 0.05 $ 0.01 Weighted average shares - basic and diluted 36,250,054 36,250,054 YOSHITSU CO., LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 Ordinary Shares Capital Retained AccumulatedOtherComprehensive TotalShareholders' Shares Amount Reserve Earnings Income (Loss) Equity Balance, March 31, 2022 36,250,054 $ 14,694,327 11,921,065 21,465,317 $ (3,628,669) 44,452,040 Business combinations under common control - - (2,842,173) - - (2,842,173) Net income for the period - - - 327,593 - 327,593 Foreign currency translation loss - - - - (7,374,799) (7,374,799) Balance, September 30, 2022 36,250,054 $ 14,694,327 $ 9,078,892 $ 21,792,910 $ (11,003,468) $ 34,562,661 Balance, March 31, 2023 36,250,054 $ 14,694,327 $ 9,078,915 $ 13,577,844 $ (8,069,343) $ 29,281,743 Net income for the period - - - 1,954,355 - 1,954,355 Foreign currency translation loss - - - - (3,269,650) (3,269,650) Balance, September 30, 2023 36,250,054 $ 14,694,327 $ 9,078,915 $ 15,532,199 $ (11,338,993) $ 27,966,448 YOSHITSU CO., LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended September 30, 2023 2022 Cash flows from operating activities: Net Income $ 1,954,355 $ 327,593 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 526,994 514,000 Loss from disposal of property and equipment 13,704 304,133 Loss (gain) from unrealized foreign currency translation 139,012 (175,351) Allowance for (net recovery of) credit losses (148,556) 87,250 Reversal of merchandise inventories written down (10,713) - Amortization of operating lease right-of-use assets 876,122 1,086,370 Deferred tax benefit (1,460,623) (29,689) Change in fair value of representative's warrants liability (1,833) (89,049) Investment loss from equity method investment 71,200 88,737 Gain from disposal of equity method investment (195,391) - Changes in operating assets and liabilities: Accounts receivable 6,372,895 (21,785,420) Accounts receivable - related parties 309,809 - Merchandise inventories (8,645,561) 4,774,980 Compensation receivable for consumption tax 6,116,206 - Prepaid expenses and other current assets (2,342,968) (4,009,679) Long-term prepaid expenses and other non-current assets 2,767,762 1,681,064 Accounts payable 2,128,474 (1,509,149) Accounts payable - related parties 67,840 (211,615) Deferred revenue 68,324 84,979 Taxes payable (4,136,000) (106,681) Other payables and other current liabilities 103,774 (1,894,627) Operating lease liabilities (838,782) (1,102,199) Other non-current liabilities (38,735) 26,812 Net cash provided by (used in) operating activities 3,697,309 (21,937,541) Cash flows from investing activities: Purchase of property and equipment (197,825) (45,472) Proceeds from disposal of property and equipment 710 2,992 Proceeds from disposal of equity method investment 283,800 - Proceeds from disposal of a subsidiary 35,475 - Disposal of a subsidiary, net of cash (176,133) - Collection of amount due from related parties 410,181 145,017 Net cash provided by investing activities 356,208 102,537 Cash flows from financing activities: Cash consideration paid for business combination under common control - (2,840,957) Proceeds from short-term borrowings - 74,800,000 Repayments of short-term borrowings - (56,100,000) Proceeds from long-term borrowings - 2,190,669 Repayments of long-term borrowings (608,947) (1,450,671) Payments made to related parties (166,252) (48,632) Repayment of obligations under finance leases (297,843) (200,104) Net cash provided by (used in) financing activities (1,073,042) 16,350,305 Effect of exchange rate fluctuation on cash (1,956,115) (3,618,859) Net increase (decrease) in cash 1,024,360 (9,103,558) Cash at beginning of period 1,766,441 18,256,220 Cash at end of period $ 2,790,801 $ 9,152,662 Supplemental cash flow information Cash paid for income taxes $ 592,194 $ 334,323 Cash paid for interest $ 341,583 $ 644,244 Supplemental non-cash operating activities Purchase of property and equipment financed under finance leases $ - $ 30,892 Right-of-use assets obtained in exchange for operating lease liabilities $ 1,512,843 $ 464,940
BEIJING, Dec. 8, 2023 /PRNewswire/ -- Hello Group Inc. (NASDAQ: MOMO) ("Hello Group" or the "Company"), a leading mobile social and entertainment platform in China, today announced its unaudited financial results for the third quarter of 2023. Third Quarter of 2023 Highlights Net revenues decreased by 5.9% year over year to RMB3,042.8 million (US$417.1 million*) in the third quarter of 2023. Net income attributable to Hello Group Inc. increased to RMB546.4 million (US$74.9 million) in the third quarter of 2023, from RMB450.8 million in the same period of 2022. Non-GAAP net income attributable to Hello Group Inc. (note 1) increased to RMB605.9 million (US$83.0 million) in the third quarter of 2023, from RMB535.8 million in the same period of 2022. Diluted net income per American Depositary Share ("ADS") was RMB2.75 (US$0.38) in the third quarter of 2023, compared to RMB2.20 in the same period of 2022. Non-GAAP diluted net income per ADS (note 1) was RMB3.05 (US$0.42) in the third quarter of 2023, compared to RMB2.60 in the same period of 2022. Monthly Active Users ("MAU") on Tantan application were 15.7 million in September 2023, compared to 20.9 million in September 2022. For the Momo app total paying users was 7.8 million for the third quarter of 2023, compared to 8.4 million for the same period last year. Tantan had 1.4 million paying users for the third quarter of 2023 compared to 2.0 million from the year ago period. First Nine Months of 2023 Highlights Net revenues decreased by 5.2% year over year to RMB8,999.4 million (US$1,233.5 million) for the first nine months of 2023. Net income attributable to Hello Group Inc. was RMB1,505.1 million (US$206.3 million) for the first nine months of 2023, compared to RMB1,086.3 million during the same period of 2022. Non-GAAP net income attributable to Hello Group Inc. (note 1) was RMB1,710.0 million (US$234.4 million) for the first nine months of 2023, compared to RMB1,397.8 million during the same period of 2022. Diluted net income per ADS was RMB7.52 (US$1.03) for the first nine months of 2023, compared to RMB5.30 during the same period of 2022. Non-GAAP diluted net income per ADS (note 1) was RMB8.53 (US$1.17) for the first nine months of 2023, compared to RMB6.75 during the same period of 2022. "We are pleased to report strong financial results for the third quarter and steady progress on various strategic priorities across all business lines." commented Yan Tang, Chairman and CEO of Hello Group. "The group level profitability continued to grow from the prior year period, thanks to our effective cost optimization and efficiency improvement initiatives, which enabled us to maintain the stability of Momo cash cow business, turn Tantan profitable as well as support the development of new endeavors." * This press release contains translations of certain Renminbi amounts into U.S. dollars at specified rate solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars, in this press release, were made at a rate of RMB7.2960 to US$1.00, the effective noon buying rate for September 29, 2023 as set forth in the H.10 statistical release of the Federal Reserve Board. Third Quarter of 2023 Financial Results Net revenues Total net revenues were RMB3,042.8 million (US$417.1 million) in the third quarter of 2023, a decrease of 5.9% from RMB3,233.0 million in the third quarter of 2022. Live video service revenues were RMB1,530.8 million (US$209.8 million) in the third quarter of 2023, a decrease of 7.6% from RMB1,657.5 million during the same period of 2022. The decrease was primarily attributable to a soft consumer sentiment in the current macro environment, and to a lesser degree, Tantan pivoting away from the live video service which we deem not the priority for Tantan at this point for the dating service. Value-added service revenues mainly include virtual gift revenues and membership subscription revenues. Total value-added service revenues were RMB1,466.7 million (US$201.0 million) in the third quarter of 2023, a decrease of 4.6% from RMB1,537.7 million during the same period of 2022. The decrease was primarily due to the impact of the macro economy on consumer sentiment as well as our proactive product adjustments to improve Momo app's ecosystem, and to a lesser extent, the decline in Tantan's paying user as we reduced marketing spending. However, the decrease was partially offset by the rapid revenue growth from the new standalone apps. Mobile marketing revenues were RMB30.7 million (US$4.2 million) in the third quarter of 2023, an increase of 8.7% from RMB28.2 million during the same period of 2022. Mobile games revenues were RMB7.9 million (US$1.1 million) in the third quarter of 2023, an increase of 1.9% from RMB7.7 million in the third quarter of 2022. Net revenues from the Momo segment decreased from RMB2,891.0 million in the third quarter of 2022 to RMB2,743.1 million (US$376.0 million) in the third quarter of 2023, primarily due to the decrease in net revenues from value-added service and live video service on Momo application. The decrease was partially offset by the revenue growth of the new standalone apps. Net revenues from the Tantan segment decreased from RMB341.3 million in the third quarter of 2022 to RMB295.0 million (US$40.4 million) in the third quarter of 2023, mainly due to the decrease in net revenues from value-added service, and to a lesser extent, the decrease from live video service. Cost and expenses Cost and expenses were RMB2,461.1 million (US$337.3 million) in the third quarter of 2023, a decrease of 10.0% from RMB2,734.2 million in the third quarter of 2022. The decrease was primarily attributable to: (a) a decrease in revenue sharing with broadcasters related to live video service and with virtual gift recipients of virtual gift service on the Momo application. The decrease was partially offset by an increase in revenue sharing with virtual gift recipients for new standalone apps; (b) a decrease in salary expenses and share-based compensation expenses, due to our continuous optimization in personnel costs and the newly granted share options which had lower fair value; (c) a decrease in sales and marketing expenses due to our initiatives to control cost and optimize Tantan's channel marketing strategy and, to a lesser extent, Momo's strategy to trim inefficient channel marketing spend. Non-GAAP cost and expenses (note 1) were RMB2,401.6 million (US$329.2 million) in the third quarter of 2023, a decrease of 9.3% from RMB2,649.2 million during the same period of 2022. Income from operations Income from operations was RMB621.8 million (US$85.2 million) in the third quarter of 2023, compared to RMB520.1 million during the same period of 2022. Income from operations of the Momo segment was RMB618.6 million (US$84.8 million) in the third quarter of 2023, which increased from RMB569.4 million in the third quarter of 2022. Income from operations of the Tantan segment was RMB24.0 million (US$3.3 million) in the third quarter of 2023, compared to a loss from operations of RMB44.5 million in the third quarter of 2022. Non-GAAP income from operations (note 1) was RMB681.2 million (US$93.4 million) in the third quarter of 2023, compared to RMB605.1 million during the same period of 2022. Non-GAAP income from operations of the Momo segment was RMB674.5 million (US$92.4 million) in the third quarter of 2023, which increased from RMB648.2 million in the third quarter of 2022. Non-GAAP income from operations of the Tantan segment was RMB27.6 million (US$3.8 million) in the third quarter of 2023, compared to a non-GAAP loss from operations of RMB38.3 million in the third quarter of 2022. Income tax expenses Income tax expenses were RMB158.1 million (US$21.7 million) in the third quarter of 2023, compared to RMB156.0 million in the third quarter of 2022. The increase in income tax expenses was primarily due to the higher profit in the third quarter of 2023. Net income Net income was RMB542.2 million (US$74.3 million) in the third quarter of 2023, compared to RMB449.9 million during the same period of 2022. Net income from the Momo segment was RMB540.0 million (US$74.0 million) in the third quarter of 2023, compared to RMB499.6 million in the same period of 2022. Net income from the Tantan segment was RMB23.0 million (US$3.2 million) in the third quarter of 2023, compared to a net loss of RMB45.0 million in the third quarter of 2022. Non-GAAP net income (note 1) was RMB601.6 million (US$82.5 million) in the third quarter of 2023, compared to RMB534.8 million during the same period of 2022. Non-GAAP net income from the Momo segment was RMB595.9 million (US$81.7million) in the third quarter of 2023, which increased from RMB578.4 million in the third quarter of 2022. Non-GAAP net income of the Tantan segment was RMB26.6 million (US$3.6 million) in the third quarter of 2023, compared to a non-GAAP net loss of RMB38.8 million in the third quarter of 2022. Net income attributable to Hello Group Inc. Net income attributable to Hello Group Inc. was RMB546.4 million (US$74.9 million) in the third quarter of 2023, compared to RMB450.8 million during the same period of 2022. Non-GAAP net income (note 1) attributable to Hello Group Inc. was RMB605.9 million (US$83.0 million) in the third quarter of 2023, compared to RMB535.8 million during the same period of 2022. Net income per ADS Diluted net income per ADS was RMB2.75 (US$0.38) in the third quarter of 2023, compared to RMB2.20 in the third quarter of 2022. Non-GAAP diluted net income per ADS (note 1) was RMB3.05 (US$0.42) in the third quarter of 2023, compared to RMB2.60 in the third quarter of 2022. Cash and cash flow As of September 30, 2023, the Company's cash, cash equivalents, short-term deposits, long-term deposits, short-term investments, short-term restricted cash and long-term restricted cash totaled RMB13,644.6 million (US$1,870.1 million), compared to RMB13,398.8 million as of December 31, 2022. Net cash provided by operating activities in the third quarter of 2023 was RMB582.5 million (US$79.8 million), compared to RMB444.5 million in the third quarter of 2022. First Nine Months of 2023 Financial Results Net revenues for the first nine months of 2023 were RMB8,999.4 million (US$1,233.5 million), a decrease of 5.2% from RMB9,491.5 million in the same period of 2022. Net income attributable to Hello Group Inc. was RMB1,505.1 million (US$206.3 million) for the first nine months of 2023, compared to RMB1,086.3 million during the same period of 2022. Non-GAAP net income attributable to Hello Group Inc. (note 1) was RMB1,710.0 million (US$234.4 million) for the first nine months of 2023, compared to RMB1,397.8 million during the same period of 2022. Diluted net income per ADS was RMB7.52 (US$1.03) during the first nine months of 2023, compared to RMB5.30 in the same period of 2022. Non-GAAP diluted net income per ADS (note 1) was RMB8.53 (US$1.17) during the first nine months of 2023, compared to RMB6.75 in the same period of 2022. Net cash provided by operating activities was RMB1,861.3 million (US$255.1 million) during the first nine months of 2023, compared to RMB688.2 million in the same period of 2022. Recent Development Execution of share repurchase program On June 7, 2022, Hello Group's board of directors authorized a share repurchase program under which the Company may repurchase up to US$200 million of its shares over the next 24 months. As of December 8, 2023, the Company has repurchased 16.2 million ADSs for US$86.1 million on the open market under this program, at an average purchase price of US$5.31 per ADS. Business Outlook For the fourth quarter of 2023, the Company expects total net revenues to be between RMB2.9 billion to RMB3.0 billion, representing a decrease of 9.7% to 6.6% year over year. This forecast reflects the Company's current and preliminary views on the market and operational conditions, which are subject to change. Note 1: Non-GAAP measures To supplement our consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), we, Hello Group, use various non-GAAP financial measures that are adjusted from the most comparable GAAP results to exclude share-based compensation. Reconciliations of our non-GAAP financial measures to our U.S. GAAP financial measures are shown in tables at the end of this earnings release, which provide more details about the non-GAAP financial measures. Our non-GAAP financial information is provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors' overall understanding of the historical and current financial performance of our continuing operations and our prospects for the future. Our non-GAAP financial information should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to the GAAP results. In addition, our calculation of the non-GAAP financial measures may be different from the calculation used by other companies, and therefore comparability may be limited. Our non-GAAP information (including non-GAAP cost and operating expenses, income (loss) from operations, net income (loss), net income attributable to Hello Group Inc., and diluted net income per ADS) is adjusted from the most comparable GAAP results to exclude share-based compensation. A limitation of using these non-GAAP financial measures is that share-based compensation has been and will continue to be for the foreseeable future significant recurring expenses in our results of operations. We compensate for such limitation by providing reconciliations of our non-GAAP measures to our U.S. GAAP measures. Please see the reconciliation tables at the end of this earnings release. Conference Call Hello Group's management will host an earnings conference call on Friday, December 8, 2023, at 7:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing / Hong Kong Time on December 8, 2023). Participants can register for the conference call by navigating to: https://s1.c-conf.com/diamondpass/10035226-k7h0xo.html. Upon registration, each participant will receive details for the conference call, including dial-in numbers, conference call passcode and a unique access PIN. Please dial in 10 minutes before the call is scheduled to begin. A telephone replay of the call will be available after the conclusion of the conference call through December 15, 2023. The dial-in details for the replay are as follows: U.S. / Canada: 1-855-883-1031 Hong Kong: 800-930-639Passcode: 10035226 Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of Hello Group's website at https://ir.hellogroup.com. About Hello Group Inc. We are a leading player in China's online social and entertainment space. Through Momo, Tantan and other properties within our product portfolio, we enable users to discover new relationships, expand their social connections and build meaningful interactions. Momo is a mobile application that connects people and facilitates social interactions based on location, interests and a variety of online recreational activities. Tantan, which was added into our family of applications through acquisition in May 2018, is a leading social and dating application. Tantan is designed to help its users find and establish romantic connections as well as meet interesting people. We also operate a number of other applications to serve different social and entertainment demands from our users. For investor and media inquiries, please contact: Hello Group Inc. Investor RelationsPhone: +86-10-5731-0538Email: ir@hellogroup.com Christensen In ChinaMs. Xiaoyan SuPhone: +86-10-5900-1548E-mail: Xiaoyan.Su@christensencomms.com In U.S. Ms. Linda BergkampPhone: +1-480-614-3004Email: linda.bergkamp@christensencomms.com Safe Harbor Statement This news release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include but are not limited to our management quotes, our financial outlook for the fourth quarter of 2023, as well as the amount of, timing, methods and funding sources for repurchases of our shares under the share repurchase program. Our forward-looking statements are not historical facts but instead represent only our belief regarding expected results and events, many of which, by their nature, are inherently uncertain and outside of our control. Our actual results and other circumstances may differ, possibly materially, from the anticipated results and events indicated in these forward-looking statements. Announced results for the third quarter of 2023 are preliminary, unaudited and subject to audit adjustment. In addition, we may not meet our financial outlook for the fourth quarter of 2023 and may be unable to grow our business in the manner planned. We may also modify our strategy for growth. Moreover, there are other risks and uncertainties that could cause our actual results to differ from what we currently anticipate, including those relating to our ability to retain and grow our user base, our ability to attract and retain sufficiently trained professionals to support our operations, our ability to anticipate and develop new services and enhance existing services to meet the demand of our users or customers, the impact of the COVID-19 pandemic on the Company's business operations and the economy in China, the market price of the Company's stock prevailing from time to time, the nature of other investment opportunities presented to the Company from time to time, the Company's cash flows from operations, general economic conditions, and other factors. For additional information on these and other important factors that could adversely affect our business, financial condition, results of operations, and prospects, please see our filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, after the date of this release, except as required by law. Such information speaks only as of the date of this release. Hello Group Inc. Unaudited Condensed Consolidated Statement of Operations (All amounts in thousands, except share and per share data) Three months First nine months Ended September 30 Ended September 30 2022 2023 2023 2022 2023 2023 RMB RMB US$ RMB RMB US$ Net revenues: Live video service 1,657,531 1,530,797 209,813 4,786,232 4,548,986 623,490 Value-added service 1,537,666 1,466,727 201,031 4,557,481 4,327,678 593,158 Mobile marketing 28,243 30,705 4,208 92,029 88,762 12,166 Mobile games 7,719 7,864 1,078 50,416 14,169 1,942 Other services 1,862 6,754 927 5,356 19,796 2,713 Total net revenues 3,233,021 3,042,847 417,057 9,491,514 8,999,391 1,233,469 Cost and expenses: Cost of revenues (1,886,135) (1,771,530) (242,808) (5,505,369) (5,255,277) (720,296) Research and development (245,105) (201,693) (27,644) (733,562) (653,145) (89,521) Sales and marketing (467,012) (373,942) (51,253) (1,666,542) (1,110,253) (152,173) General and administrative (135,933) (113,896) (15,611) (453,514) (376,981) (51,670) Total cost and expenses (2,734,185) (2,461,061) (337,316) (8,358,987) (7,395,656) (1,013,660) Other operating income, net 21,289 39,971 5,478 85,790 99,284 13,608 Income from operations 520,125 621,757 85,219 1,218,317 1,703,019 233,417 Interest income 89,274 96,791 13,266 280,761 311,899 42,749 Interest expense (25,010) (19,293) (2,644) (72,575) (41,671) (5,711) Other gain or loss, net 40,403 - - 118,325 4,565 626 Income before income tax and share of income on equity method investments 624,792 699,255 95,841 1,544,828 1,977,812 271,081 Income tax expenses (156,041) (158,064) (21,664) (452,860) (446,646) (61,218) Income before share of income on equity method investments 468,751 541,191 74,177 1,091,968 1,531,166 209,863 Share of (loss) income on equity method investments (18,880) 974 133 (8,967) (31,940) (4,378) Net income 449,871 542,165 74,310 1,083,001 1,499,226 205,485 Less: net loss attributable to non-controlling interest (964) (4,263) (584) (3,288) (5,886) (807) Net income attributable to the shareholders of Hello Group Inc. 450,835 546,428 74,894 1,086,289 1,505,112 206,292 Net income per shareattributable to ordinary shareholders Basic 1.15 1.44 0.20 2.75 3.98 0.55 Diluted 1.10 1.37 0.19 2.65 3.76 0.52 Weighted average shares usedin calculating net income perordinary share Basic 391,027,485 379,292,110 379,292,110 394,333,009 378,085,030 378,085,030 Diluted 423,608,050 398,296,690 398,296,690 429,765,849 405,490,366 405,490,366 Hello Group Inc. Unaudited Condensed Consolidated Statement of Comprehensive Income (All amounts in thousands, except share and per share data) Three months First nine months Ended September 30 Ended September 30 2022 2023 2023 2022 2023 2023 RMB RMB US$ RMB RMB US$ Net income 449,871 542,165 74,310 1,083,001 1,499,226 205,485 Other comprehensive (loss) income, net of tax: Foreign currency translation adjustment (188,343) 6,032 827 (328,832) 116,188 15,925 Comprehensive income 261,528 548,197 75,137 754,169 1,615,414 221,410 Less: comprehensive income (loss) attributed to the non-controlling interest 10,831 (3,141) (431) 17,710 5,377 737 Comprehensive income attributable to Hello Group Inc. 250,697 551,338 75,568 736,459 1,610,037 220,673 Hello Group Inc. Unaudited Condensed Consolidated Balance Sheets (All amounts in thousands, except share and per share data) December 31 September 30 September 30 2022 2023 2023 RMB RMB US$ Assets Current assets Cash and cash equivalents 5,018,129 4,994,558 684,561 Short-term deposits 5,300,000 1,885,005 258,361 Restricted cash 97,706 9,245 1,267 Short-term investments 300,240 308,550 42,290 Accounts receivable, net of allowance for doubtful accounts of RMB5,870 and RMB13,365 as of December 31, 2022 and September 30, 2023, respectively 188,711 192,849 26,432 Amounts due from related parties 55 7,114 975 Prepaid expenses and other current assets 819,706 712,236 97,620 Total current assets 11,724,547 8,109,557 1,111,506 Long-term deposits 2,600,000 3,809,200 522,094 Long-term restricted cash 82,766 2,638,015 361,570 Right-of-use assets, net 115,520 127,804 17,517 Property and equipment, net 172,984 358,361 49,117 Intangible assets, net 22,203 18,365 2,517 Rental deposits 20,737 18,486 2,534 Long-term investments 893,988 860,306 117,915 Amounts due from RPT-non current - 20,000 2,741 Other non-current assets 162,499 177,853 24,377 Deferred tax assets 34,343 33,470 4,587 Total assets 15,829,587 16,171,417 2,216,475 Liabilities and equity Current liabilities Accounts payable 617,022 642,886 88,113 Deferred revenue 484,775 474,647 65,056 Accrued expenses and other current liabilities 797,504 648,156 88,837 Amounts due to related parties 9,178 3,675 504 Lease liabilities due within one year 88,352 56,681 7,769 Income tax payable 68,765 89,263 12,235 Dividends payable - 21,012 2,879 Deferred consideration in connection with business acquisitions 26,483 28,014 3,840 Long-term borrowings, current portion - 215,615 29,552 Convertible senior notes-current 2,646,168 - - Total current liabilities 4,738,247 2,179,949 298,785 Deferred tax liabilities 22,011 151,578 20,775 Convertible Senior Notes - 20,094 2,754 Long-term borrowings - 1,938,385 265,678 Lease liabilities 33,281 66,285 9,085 Other non-current liabilities 105,410 95,958 13,152 Total liabilities 4,898,949 4,452,249 610,229 Shareholder's equity (i) 10,930,638 11,719,168 1,606,246 Total liabilities and shareholder's equity 15,829,587 16,171,417 2,216,475 (i): As of September 30, 2023, the number of ordinary shares outstanding was 379,881,912. Hello Group Inc. Unaudited Condensed Consolidated Statement of Cash Flows (All amounts in thousands, except share and per share data) Three months First nine months Ended September 30 Ended September 30 2022 2023 2023 2022 2023 2023 RMB RMB US$ RMB RMB US$ Cash flows from operating activities: Net income 449,871 542,165 74,310 1,083,001 1,499,226 205,485 Adjustments to reconcile net income to net cashprovided by operating activities: Depreciation of property and equipment 27,047 17,467 2,394 83,107 59,098 8,100 Amortization of intangible assets 1,279 1,279 175 3,837 3,837 526 Share-based compensation 84,976 59,472 8,151 311,540 204,877 28,081 Share of loss (income) on equity method investments 18,880 (974) (133) 8,967 31,940 4,378 Gain on repurchase of convertible senior notes (51,653) - - (129,575) (4,565) (626) Loss on long-term investments 11,250 - - 11,250 - - Cash received on distributions from equity method investments - 718 98 1,708 2,067 283 Gain or loss on disposal of property and equipment (923) (60) (8) (783) (520) (71) Provision of (income) loss on receivable and other assets (820) (133) (18) (453) 10,071 1,380 Changes in operating assets and liabilities: Accounts receivable 22,973 10,749 1,473 15,695 (9,916) (1,359) Prepaid expenses and other current assets 41,418 (96,572) (13,236) (16,144) 98,294 13,472 Amounts due from related parties - (27,114) (3,716) - (27,059) (3,709) Rental deposits 716 1,301 178 1,399 2,252 309 Deferred tax assets 590 415 57 (986) 872 120 Other non-current assets 16,130 (50,578) (6,932) 76,820 (27,639) (3,788) Accounts payable (438) 6,987 958 (106,392) 38,825 5,321 Income tax payable (15,635) 24,215 3,319 (50,923) 20,496 2,809 Deferred revenue (19,356) 11,736 1,609 (73,891) (11,137) (1,526) Accrued expenses and other current liabilities (108,513) 15,374 2,107 (304,346) (172,186) (23,600) Amount due to related parties 7,824 (8,401) (1,151) 4,427 (5,504) (754) Deferred tax liabilities (14,425) 47,681 6,535 (171,752) 130,198 17,845 Other non-current liabilities (26,655) 26,741 3,665 (58,311) 17,757 2,434 Net cash provided by operating activities 444,536 582,468 79,835 688,195 1,861,284 255,110 Cash flows from investing activities: Purchase of property and equipment (27,051) (238,219) (32,651) (70,392) (259,463) (35,562) Payment for long-term investments - - - (55,343) (9,000) (1,234) Purchase of short-term deposits (1,700,000) (531,214) (72,809) (1,700,000) (1,028,556) (140,975) Cash received on maturity of short-term deposits 2,700,000 1,900,000 260,417 3,710,000 5,409,820 741,478 Cash received on investment income distribution - - - 3,523 1,517 208 Purchase of long-term deposits (1,000,000) (2,498,860) (342,497) (2,550,000) (3,848,860) (527,530) Cash received on maturity of long-term deposits - 1,700,000 233,004 1,200,000 1,700,000 233,004 Cash received from sales of long-term investment - 15,000 2,056 - 15,000 2,056 Other investing activities 2,781 137 19 3,103 1,822 250 Net cash (used in) provided by investing activities (24,270) 346,844 47,539 540,891 1,982,280 271,695 Cash flows from financing activities: Deferred payment for business acquisition (15,858) - - (21,421) - - Proceeds from exercise of share options 18 551 76 51 570 78 Repurchase of ordinary shares (285,355) (58,767) (8,055) (287,690) (62,004) (8,498) Repurchase of subsidiary's share options (14,330) (223) (31) (39,867) (4,319) (592) Dividends payment - - - (840,997) (937,249) (128,461) Proceeds from long-term borrowings - 2,154,000 295,230 - 2,154,000 295,230 Payment for redemption of convertible bonds (1,024,443) (86,932) (11,915) (2,136,987) (2,679,942) (367,317) Net cash (used in) provided by financing activities (1,339,968) 2,008,629 275,305 (3,326,911) (1,528,944) (209,560) Effect of exchange rate changes (6,190) (7,837) (1,075) 72,096 128,597 17,625 Net (decrease) increase in cash and cash equivalents (925,892) 2,930,104 401,604 (2,025,729) 2,443,217 334,870 Cash, cash equivalents and restricted cash at the beginning of period 4,547,197 4,711,714 645,794 5,647,034 5,198,601 712,528 Cash, cash equivalents and restricted cash at the end of period 3,621,305 7,641,818 1,047,398 3,621,305 7,641,818 1,047,398 Hello Group Inc. Reconciliation of Non-GAAP financial measures to comparable GAAP measures (All amounts in thousands, except per share data) 1. Reconciliation of Non-GAAP cost and operating expenses, income from operations, and net income to comparable GAAP measures. Three months Three months Three months Ended September 30, 2022 Ended September 30, 2023 Ended September 30, 2023 GAAP RMB Share-based compensation RMB Non-GAAP RMB GAAP RMB Share-basedcompensation RMB Non-GAAP RMB GAAP US$ Share-basedcompensation US$ Non-GAAP US$ Cost of revenues (1,886,135) 1,496 (1,884,639) (1,771,530) 1,211 (1,770,319) (242,808) 166 (242,642) Research and development (245,105) 21,713 (223,392) (201,693) 14,993 (186,700) (27,644) 2,055 (25,589) Sales and marketing (467,012) 8,453 (458,559) (373,942) 5,854 (368,088) (51,253) 802 (50,451) General and administrative (135,933) 53,314 (82,619) (113,896) 37,414 (76,482) (15,611) 5,128 (10,483) Cost and operating expenses (2,734,185) 84,976 (2,649,209) (2,461,061) 59,472 (2,401,589) (337,316) 8,151 (329,165) Income from operations 520,125 84,976 605,101 621,757 59,472 681,229 85,219 8,151 93,370 Net income attributable to Hello Group Inc. 450,835 84,976 535,811 546,428 59,472 605,900 74,894 8,151 83,045 Hello Group Inc. Reconciliation of Non-GAAP financial measures to comparable GAAP measures (All amounts in thousands, except per share data) 1. Reconciliation of Non-GAAP cost and operating expenses, income from operations, and net income to comparable GAAP measures-continued. First nine months First nine months First nine months Ended September 30, 2022 Ended September 30, 2023 Ended September 30, 2023 GAAP RMB Share-basedcompensation RMB Non-GAAP RMB GAAP RMB Share-based compensation RMB Non-GAAP RMB GAAP US$ Share-based compensation US$ Non-GAAP US$ Cost of revenues (5,505,369) 12,488 (5,492,881) (5,255,277) 4,398 (5,250,879) (720,296) 603 (719,693) Research and development (733,562) 66,652 (666,910) (653,145) 51,186 (601,959) (89,521) 7,016 (82,505) Sales and marketing (1,666,542) 29,952 (1,636,590) (1,110,253) 20,413 (1,089,840) (152,173) 2,798 (149,375) General and administrative (453,514) 202,448 (251,066) (376,981) 128,880 (248,101) (51,670) 17,664 (34,006) Cost and operating expenses (8,358,987) 311,540 (8,047,447) (7,395,656) 204,877 (7,190,779) (1,013,660) 28,081 (985,579) Income from operations 1,218,317 311,540 1,529,857 1,703,019 204,877 1,907,896 233,417 28,081 261,498 Net income attributable to Hello Group Inc. 1,086,289 311,540 1,397,829 1,505,112 204,877 1,709,989 206,292 28,081 234,373 Hello Group Inc. Unaudited Condensed Segment Report (All amounts in thousands, except share and per share data) Three months Ended September 30, 2023 Momo Tantan QOOL Total Total RMB RMB RMB RMB US$ Net revenues: Live video service 1,410,844 119,953 - 1,530,797 209,813 Value-added service 1,298,329 168,398 - 1,466,727 201,031 Mobile marketing 24,039 6,666 - 30,705 4,208 Mobile games 7,864 - - 7,864 1,078 Other services 1,981 - 4,773 6,754 927 Total net revenues 2,743,057 295,017 4,773 3,042,847 417,057 Cost and expenses (ii): Cost of revenues (1,606,261) (145,346) (19,923) (1,771,530) (242,808) Research and development (151,649) (50,044) - (201,693) (27,644) Sales and marketing (298,919) (71,978) (3,045) (373,942) (51,253) General and administrative (105,339) (5,656) (2,901) (113,896) (15,611) Total cost and expenses (2,162,168) (273,024) (25,869) (2,461,061) (337,316) Other operating income, net 37,750 1,985 236 39,971 5,478 Income (loss) from operations 618,639 23,978 (20,860) 621,757 85,219 Interest income 96,680 94 17 96,791 13,266 Interest expense (19,293) - - (19,293) (2,644) Income (loss) before income tax and share of income on equity method investments 696,026 24,072 (20,843) 699,255 95,841 Income tax expenses (156,992) (1,072) - (158,064) (21,664) Income (loss) before share of income on equity method investments 539,034 23,000 (20,843) 541,191 74,177 Share of loss on equity method investments 974 - - 974 133 Net income (loss) 540,008 23,000 (20,843) 542,165 74,310 (ii) Share-based compensation was allocated in cost of revenues and operating expenses as follows: Three months Ended September 30, 2023 Momo Tantan QOOL Total Total RMB RMB RMB RMB US$ Cost of revenues 1,207 4 - 1,211 166 Research and development 11,401 3,592 - 14,993 2,055 Sales and marketing 5,854 - - 5,854 802 General and administrative 37,406 8 - 37,414 5,128 Total cost and expenses 55,868 3,604 - 59,472 8,151 Hello Group Inc. Reconciliation of GAAP and NON-GAAP Results of Unaudited Segment Report (All amounts in thousands, except share and per share data) Three months Ended September 30, 2023 Momo Tantan QOOL Total Total RMB RMB RMB RMB US$ Income (loss) from operations 618,639 23,978 (20,860) 621,757 85,219 Share-based compensation 55,868 3,604 - 59,472 8,151 Non-GAAP income (loss) from operations 674,507 27,582 (20,860) 681,229 93,370 Net income (loss) 540,008 23,000 (20,843) 542,165 74,310 Share-based compensation 55,868 3,604 - 59,472 8,151 Non-GAAP net income (loss) 595,876 26,604 (20,843) 601,637 82,461 Hello Group Inc. Unaudited Condensed Segment Report (All amounts in thousands, except share and per share data) Three months Ended September 30, 2022 Momo Tantan QOOL Total Total RMB RMB RMB RMB US$[1] Net revenues: Live video service 1,517,872 139,659 - 1,657,531 233,012 Value-added service 1,336,050 201,616 - 1,537,666 216,162 Mobile marketing 28,243 - - 28,243 3,970 Mobile games 7,719 - - 7,719 1,085 Other services 1,126 - 736 1,862 262 Total net revenues 2,891,010 341,275 736 3,233,021 454,491 Cost and expenses (iii): Cost of revenues (1,704,934) (180,277) (924) (1,886,135) (265,149) Research and development (176,727) (68,378) - (245,105) (34,456) Sales and marketing (335,350) (130,222) (1,440) (467,012) (65,652) General and administrative (124,184) (8,574) (3,175) (135,933) (19,109) Total cost and expenses (2,341,195) (387,451) (5,539) (2,734,185) (384,366) Other operating income 19,563 1,722 4 21,289 2,993 Income (loss) from operations 569,378 (44,454) (4,799) 520,125 73,118 Interest income 89,003 187 84 89,274 12,550 Interest expense (25,010) - - (25,010) (3,516) Other gain or loss, net 40,403 - - 40,403 5,680 Income (loss) before income tax and share of income on equity method investments 673,774 (44,267) (4,715) 624,792 87,832 Income tax expenses (155,328) (713) - (156,041) (21,936) Income (loss) before share of income on equity method investments 518,446 (44,980) (4,715) 468,751 65,896 Share of loss on equity method investments (18,880) - - (18,880) (2,654) Net income (loss) 499,566 (44,980) (4,715) 449,871 63,242 (iii) Share-based compensation was allocated in cost of revenues and operating expenses as follows: Three months Ended September 30, 2022 Momo Tantan QOOL Total Total RMB RMB RMB RMB US$ Cost of revenues 1,478 18 - 1,496 210 Research and development 15,640 6,073 - 21,713 3,052 Sales and marketing 8,446 7 - 8,453 1,188 General and administrative 53,272 42 - 53,314 7,495 Total cost and expenses 78,836 6,140 - 84,976 11,945 [1] All translations from RMB to U.S. dollars are made at a rate of RMB7.1135 to US$1.00, the effective noon buying rate for September 30, 2022 as set forth in the H.10 statistical release of the Federal Reserve Board. Hello Group Inc. Reconciliation of GAAP and NON-GAAP Results of Unaudited Segment Report (All amounts in thousands, except share and per share data) Three months Ended September 30, 2022 Momo Tantan QOOL Total Total RMB RMB RMB RMB US$ Income (loss) from operations 569,378 (44,454) (4,799) 520,125 73,118 Share-based compensation 78,836 6,140 - 84,976 11,945 Non-GAAP income (loss) from operations 648,214 (38,314) (4,799) 605,101 85,063 Net income (loss) 499,566 (44,980) (4,715) 449,871 63,242 Share-based compensation 78,836 6,140 - 84,976 11,945 Non-GAAP net income (loss) 578,402 (38,840) (4,715) 534,847 75,187 Hello Group Inc. Unaudited Condensed Segment Report (All amounts in thousands, except share and per share data) First nine months Ended September 30, 2023 Momo Tantan QOOL Total Total RMB RMB RMB RMB US$ Net revenues: Live video service 4,144,164 404,822 - 4,548,986 623,490 Value-added service 3,821,183 506,495 - 4,327,678 593,158 Mobile marketing 75,730 13,032 - 88,762 12,166 Mobile games 14,169 - - 14,169 1,942 Other services 14,577 - 5,219 19,796 2,713 Total net revenues 8,069,823 924,349 5,219 8,999,391 1,233,469 Cost and expenses (iv): Cost of revenues (4,765,127) (469,111) (21,039) (5,255,277) (720,296) Research and development (483,997) (169,148) - (653,145) (89,521) Sales and marketing (894,462) (210,208) (5,583) (1,110,253) (152,173) General and administrative (349,614) (19,600) (7,767) (376,981) (51,670) Total cost and expenses (6,493,200) (868,067) (34,389) (7,395,656) (1,013,660) Other operating income 95,876 3,110 298 99,284 13,608 Income (loss) from operations 1,672,499 59,392 (28,872) 1,703,019 233,417 Interest income 311,157 656 86 311,899 42,749 Interest expense (41,671) - - (41,671) (5,711) Other gain or loss, net 4,565 - - 4,565 626 Income (loss) before income tax and share of income on equity method investments 1,946,550 60,048 (28,786) 1,977,812 271,081 Income tax expenses (443,175) (3,471) - (446,646) (61,218) Income (loss) before share of income on equity method investments 1,503,375 56,577 (28,786) 1,531,166 209,863 Share of income on equity method investments (31,940) - - (31,940) (4,378) Net income (loss) 1,471,435 56,577 (28,786) 1,499,226 205,485 (iv) Share-based compensation was allocated in cost of revenues and operating expenses as follows: First nine months Ended September 30, 2023 Momo Tantan QOOL Total Total RMB RMB RMB RMB US$ Cost of revenues 4,262 136 - 4,398 603 Research and development 36,793 14,393 - 51,186 7,016 Sales and marketing 20,408 5 - 20,413 2,798 General and administrative 128,856 24 - 128,880 17,664 Total cost and expenses 190,319 14,558 - 204,877 28,081 Hello Group Inc. Reconciliation of GAAP and NON-GAAP Results of Unaudited Segment Report (All amounts in thousands, except share and per share data) First nine months ended September 30, 2023 Momo Tantan QOOL Total Total RMB RMB RMB RMB US$ Operating income (loss) 1,672,498 59,392 (28,871) 1,703,019 233,417 Share-based compensation 190,319 14,558 - 204,877 28,081 Non-GAAP operating income (loss) 1,862,817 73,950 (28,871) 1,907,896 261,498 Net income (loss) 1,471,435 56,577 (28,786) 1,499,226 205,485 Share-based compensation 190,319 14,558 - 204,877 28,081 Non-GAAP net income (loss) 1,661,754 71,135 (28,786) 1,704,103 233,566 Hello Group Inc. Unaudited Condensed Segment Report (All amounts in thousands, except share and per share data) First nine months Ended September 30, 2022 Momo Tantan QOOL Total Total RMB RMB RMB RMB US$ Net revenues: Live video service 4,404,991 381,241 - 4,786,232 672,838 Value-added service 3,917,609 639,872 - 4,557,481 640,681 Mobile marketing 92,029 - - 92,029 12,937 Mobile games 50,416 - - 50,416 7,087 Other services 4,298 - 1,058 5,356 753 Total net revenues 8,469,343 1,021,113 1,058 9,491,514 1,334,296 Cost and expenses (v): Cost of revenues (4,981,345) (522,188) (1,836) (5,505,369) (773,933) Research and development (536,640) (196,922) - (733,562) (103,123) Sales and marketing (1,039,526) (623,680) (3,336) (1,666,542) (234,279) General and administrative (415,954) (25,335) (12,225) (453,514) (63,754) Total cost and expenses (6,973,465) (1,368,125) (17,397) (8,358,987) (1,175,089) Other operating income 76,253 9,491 46 85,790 12,060 Income (loss) from operations 1,572,131 (337,521) (16,293) 1,218,317 171,267 Interest income 280,252 291 218 280,761 39,469 Interest expense (72,575) - - (72,575) (10,202) Other gain or loss, net 118,325 - - 118,325 16,634 Income (loss) before income tax and share of income on equity method investments 1,898,133 (337,230) (16,075) 1,544,828 217,168 Income tax expenses (451,061) (1,799) - (452,860) (63,662) Income (loss) before share of income on equity method investments 1,447,072 (339,029) (16,075) 1,091,968 153,506 Share of loss on equity method investments (8,967) - - (8,967) (1,261) Net income (loss) 1,438,105 (339,029) (16,075) 1,083,001 152,245 (v) Share-based compensation was allocated in cost of revenues and operating expenses as follows: First nine months Ended September 30, 2022 Momo Tantan QOOL Total Total RMB RMB RMB RMB US$ Cost of revenues 5,477 7,011 - 12,488 1,756 Research and development 51,752 14,900 - 66,652 9,370 Sales and marketing 29,729 223 - 29,952 4,211 General and administrative 202,319 129 - 202,448 28,460 Total cost and expenses 289,277 22,263 - 311,540 43,797 Hello Group Inc. Reconciliation of GAAP and NON-GAAP Results of Unaudited Segment Report (All amounts in thousands, except share and per share data) First nine months ended September 30, 2022 Momo Tantan QOOL Total Total RMB RMB RMB RMB US$ Operating income (loss) 1,572,131 (337,521) (16,293) 1,218,317 171,267 Share-based compensation 289,277 22,263 - 311,540 43,797 Non-GAAP operating income (loss) 1,861,408 (315,258) (16,293) 1,529,857 215,064 Net income (loss) 1,438,105 (339,029) (16,075) 1,083,001 152,245 Share-based compensation 289,277 22,263 - 311,540 43,797 Non-GAAP net income (loss) 1,727,382 (316,766) (16,075) 1,394,541 196,042
WUHAN, China, Dec. 7, 2023 /PRNewswire/ -- DouYu International Holdings Limited ("DouYu" or the "Company") (Nasdaq: DOYU), a leading game-centric live streaming platform in China and a pioneer in the eSports value chain, today announced its unaudited financial results for the third quarter ended September 30, 2023. Third Quarter 2023 Financial and Operational Highlights Total net revenues in the third quarter of 2023 were RMB1,359.2 million (US$186.3 million), compared with RMB1,798.3 million in the same period of 2022. Gross profit in the third quarter of 2023 was RMB192.4 million (US$26.4 million), compared with RMB251.2 million in the same period of 2022. Net income in the third quarter of 2023 was RMB76.4 million (US$10.5 million), compared with a net loss of RMB6.6 million in the same period of 2022. Adjusted net income[1] in the third quarter of 2023 was RMB71.9 million (US$9.9 million), compared with RMB25.7 million in the same period of 2022. Average mobile MAUs[2] in the third quarter of 2023 were 51.7 million, compared with 57.1 million in the same period of 2022. The number of quarterly average paying users[3] in the third quarter of 2023 was 3.9 million, compared with 5.6 million in the same period of 2022. The interim management committee of DouYu commented, "In the third quarter of 2023, we diligently executed and optimized our corporate growth strategy, making steady advancements in our business that progress our goal of fostering a healthy, sustainable game-centric community ecosystem. During the quarter, we continued to progress our prudent marketing strategies and strengthened our partnerships with game developers to promote new games and enhance game operations during new game launches. Our premium content offerings and ongoing efficient operations continue to improve user experience. This has helped us maintain a stable core user base and consistently attract new users, resulting in third-quarter mobile MAUs growing slightly quarter-over-quarter to 51.7 million. Going forward, our unwavering commitment to achieving long-term, sustainable growth will remain at the forefront of our mission. To further foster our vibrant game-centric content ecosystem based on continued compliance efforts, we will enhance our content and service offerings through innovation and product upgrades. We will also explore new growth avenues to ensure the steady development of our business and financial performance, further cementing DouYu's competitive edge and market leadership in the domestic gaming content industry." Mr. Hao Cao, Vice President of DouYu, commented, "Amid a complex macroeconomic environment, we proactively refined our monetization and marketing strategies, effectively stabilizing our financials in the third quarter. We adapted to the market dynamics with agile pricing, and forged ahead with our business innovation, reporting total net revenues of RMB1.36 billion in the third quarter. We also continued to improve our operating efficiency under effective cost-control measures that markedly reduced content costs. As a result, our gross profit for the third quarter was RMB192.4 million, representing gross margin of 14.2%. Our net income was RMB76.4 million in the quarter compared with the net loss of RMB6.6 million in the same period last year. Our adjusted net profit grew by 179.9% year-over-year to RMB71.9 million. Both our gross margin and adjusted net margin have now improved for three consecutive quarters. Moving forward, we will persist in executing our long-term, sustainable growth strategy, maintaining financial stability while advancing our core business operations. We will actively explore new business models and monetization channels, laying a solid foundation for business development and striving to create long-term value for shareholders." Third Quarter 2023 Financial Results Total net revenues in the third quarter of 2023 decreased by 24.4% to RMB1,359.2 million (US$186.3 million), compared with RMB1,798.3 million in the same period of 2022. Livestreaming revenues in the third quarter of 2023 decreased by 32.5% to RMB1,151.0 million (US$157.8 million) from RMB1,705.0 million in the same period of 2022. The decrease was primarily attributable to the soft macroeconomic environment, leading to a decrease in the number of quarterly average paying users. Advertising and other revenues in the third quarter of 2023 increased by 123.2% to RMB208.2 million (US$28.5 million) from RMB93.3 million in the same period of 2022. The increase was primarily driven by the increase in other revenues generated through other innovative business. Cost of revenues in the third quarter of 2023 was RMB1,166.8 million (US$159.9 million), a decrease of 24.6% compared with RMB1,547.1 million in the same period of 2022. Revenue sharing fees and content costs in the third quarter of 2023 decreased by 29.7% to RMB927.4 million (US$127.1 million) from RMB1,319.6 million in the same period of 2022. The decrease was primarily due to a decrease in sharing fees aligned with decreased livestreaming revenues, as well as a decline in content costs resulting from improved cost management in self-produced content and streamer payments. The decrease was partially offset by an increase in copyright costs due to the acquisition of LPL tournament copyright. Bandwidth costs in the third quarter of 2023 decreased by 21.4% to RMB106.1 million (US$14.5 million) from RMB135.0 million in the same period of 2022. The decline was primarily due to our effective bandwidth cost control measures. Gross profit in the third quarter of 2023 was RMB192.4 million (US$26.4 million), compared with RMB251.2 million in the same period of 2022. The decrease in gross profit was mainly due to a decrease in livestreaming revenues and an increase in other costs related to the development of innovative business. Gross margin in the third quarter of 2023 was 14.2%, relatively stable compared with 14.0% in the same period of 2022. Sales and marketing expenses in the third quarter of 2023 decreased by 44.5% to RMB90.0 million (US$12.3 million) from RMB162.1 million in the same period of 2022. This was mainly attributable to a decrease in user acquisition marketing expenses. Research and development expenses in the third quarter of 2023 decreased by 11.7% to RMB74.5 million (US$10.2 million) from RMB84.4 million in the same period of 2022. This decrease was primarily due to a decrease in personnel-related expenses. General and administrative expenses in the third quarter of 2023 decreased by 2.5% to RMB51.0 million (US$7.0 million) from RMB52.3 million in the same period of 2022. Other operating income, net in the third quarter of 2023 was RMB14.3 million (US$2.0 million), compared with RMB36.5 million in the same period of 2022. Loss from operations in the third quarter of 2023 was RMB8.8 million (US$1.2 million), compared with RMB11.1 million in the same period of 2022. Net income in the third quarter of 2023 was RMB76.4 million (US$10.5 million), compared with a net loss of RMB6.6 million in the same period of 2022. Adjusted net income, which excludes share-based compensation expenses, the share of income (loss) in equity method investments, gain on disposal of investment and impairment loss of investments, was RMB71.9 million (US$9.9 million) in the third quarter of 2023, compared with RMB25.7 million in the same period of 2022. Basic and diluted net income per ADS[4] in the third quarter of 2023 were both RMB0.24 (US$0.03). Adjusted basic and diluted net income per ADS in the third quarter of 2023 were both RMB0.22 (US$0.03). Cash and cash equivalents, restricted cash and bank deposits As of September 30, 2023, the Company had cash and cash equivalents, restricted cash, and short-term and long-term bank deposits of RMB7,139.4 million (US$978.5 million), compared with RMB6,808.8 million as of December 31, 2022. Conference Call Information The Company will hold a conference call on December 7, 2023, at 7:00 a.m. Eastern Time (or 8:00 p.m. Beijing Time on the same day) to discuss the financial results. Listeners may access the call by dialing the following numbers: International: +1-412-317-6061 United States Toll Free: +1-888-317-6003 Mainland China Toll Free: 4001-206115 Hong Kong Toll Free: 800-963976 Singapore Toll Free: 800-120-5863 Conference ID: 0554126 The replay will be accessible through December 14, 2023, by dialing the following numbers: International: +1-412-317-0088 United States Toll Free: +1-877-344-7529 Conference ID: 2412484 A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.douyu.com. [1] "Adjusted net income" is defined as net income excluding share-based compensation expenses, and share of income (loss) in equity method investments, gain on disposal of investment and impairment loss of investments. For more information, please refer to "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and Non-GAAP Results" at the end of this press release. [2] Refers to the number of mobile devices that launched our mobile apps in a given period. Average mobile MAUs for a given period is calculated by dividing (i) the sum of active mobile users for each month of such period, by (ii) the number of months in such period. [3] "Quarterly average paying users" refers to the average paying users for each quarter during a given period of time calculated by dividing (i) the sum of paying users for each quarter of such period, by (ii) the number of quarters in such period. "Paying user" refers to a registered user that has purchased virtual gifts on our platform at least once during the relevant period. [4] Every ten ADSs represent one ordinary share. About DouYu International Holdings Limited Headquartered in Wuhan, China, DouYu International Holdings Limited (Nasdaq: DOYU) is a leading game-centric live streaming platform in China and a pioneer in the eSports value chain. DouYu operates its platform on both PC and mobile apps to bring users access to immersive and interactive games and entertainment livestreaming, a wide array of video and graphic contents, as well as opportunities to participate in community events and discussions. By nurturing a sustainable technology-based talent development system and relentlessly producing high-quality content, DouYu consistently delivers premium content through integration of livestreaming, video, graphics, and virtual communities with a primary focus on games, especially on eSports. This enables DouYu to continuously enhance its user experience and pursue long-term healthy development. For more information, please see http://ir.douyu.com. Use of Non-GAAP Financial Measures Adjusted operating income (loss) is calculated as operating income (loss) adjusted for share-based compensation expenses. Adjusted net income (loss) is calculated as net income (loss) adjusted for share-based compensation expenses, share of income (loss) in equity method investments, gain on disposal of investment and impairment loss of investments. Adjusted net income (loss) attributable to DouYu is calculated as net income (loss) attributable to DouYu adjusted for share-based compensation expenses, share of income (loss) in equity method investments, gain on disposal of investment and impairment loss of investments. Adjusted basic and diluted net income per ordinary share is non-GAAP net income attributable to ordinary shareholders divided by weighted average number of ordinary shares used in the calculation of non-GAAP basic and diluted net income per ordinary share. The Company adjusted the impact of (i) share-based compensation expenses, (ii) share of income (loss) in equity method investments, (iii) gain on disposal of investment, (iv) impairment loss of investments to understand and evaluate the Company's core operating performance. The non-GAAP financial measures are presented to enhance investors' overall understanding of the Company's financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measures to its most directly comparable GAAP financial measures. As non-GAAP financial measures have material limitations as analytical metrics and may not be calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measures as a substitute for, or superior to, such metrics in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of Non-GAAP Results" near the end of this 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 RMB7.2960 to US$1.00, the noon buying rate in effect on September 29, 2023, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB amounts could have been, or could be, converted, realized or settled in U.S. dollars, at that rate on September 29, 2023, or at any other rate. Safe Harbor Statement This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward- looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company's results of operations and financial condition; the Company's business strategies; general market conditions, in particular the game live streaming market; the ability of the Company to retain and grow active and paying users; changes in general economic and business conditions in China; the impact of the COVID-19 to the Company's business operations and the economy in China and globally; any adverse changes in laws, regulations, rules, policies or guidelines applicable to the Company; and assumptions underlying or related to any of the foregoing. In some cases, forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the Securities Exchange Commission. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law. Investor Relations Contact In China: Lingling Kong DouYu International Holdings Limited Email: ir@douyu.tv Tel: +86 (10) 6508-0677 Andrea Guo Piacente Financial Communications Email: douyu@tpg-ir.com Tel: +86 (10) 6508-0677 In the United States: Brandi Piacente Piacente Financial Communications Email: douyu@tpg-ir.com Tel: +1-212-481-2050 Media Relations Contact In China: Lingling Kong DouYu International Holdings Limited Email: pr_douyu@douyu.tv Tel: +86 (10) 6508-0677 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (All amounts in thousands, except share, ADS, per share and per ADS data) As of December 31 As of September 30 2022 2023 2023 ASSETS RMB RMB US$ (1) Current assets: Cash and cash equivalents 4,041,603 4,209,335 576,937 Restricted cash 6,057 25,163 3,449 Short-term bank deposits 2,511,150 2,334,950 320,032 Accounts receivable, net 109,180 75,962 10,411 Prepayments 26,064 38,495 5,276 Amounts due from related parties 46,126 55,412 7,595 Other current assets 337,004 354,180 48,544 Total current assets 7,077,184 7,093,497 972,244 Property and equipment, net 16,988 13,746 1,884 Intangible assets, net 106,723 120,424 16,505 Long-term bank deposits 250,000 570,000 78,125 Investments 531,911 462,183 63,347 Goodwill 13,804 14,231 1,951 Right-of-use assets, net 49,911 28,724 3,937 Other non-current assets, net 98,845 93,638 12,834 Total non-current assets 1,068,182 1,302,946 178,583 TOTAL ASSETS 8,145,366 8,396,443 1,150,827 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Current liabilities: Accounts payable 666,985 568,988 77,986 Advances from customers 6,459 11,976 1,641 Deferred revenue 288,152 352,093 48,258 Accrued expenses and other current liabilities 302,801 213,571 29,272 Amounts due to related parties 266,788 391,213 53,620 Lease liabilities due within one year 27,479 17,285 2,369 Total current liabilities 1,558,664 1,555,126 213,146 Lease liabilities 19,572 9,275 1,271 Deferred revenue 6,570 - - Total non-current liabilities 26,142 9,275 1,271 TOTAL LIABILITIES 1,584,806 1,564,401 214,417 (1) Translations of certain RMB amounts into U.S. dollars at a specified rate are solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB7.2960 to US$1.00, the noon buying rate in effect on September 29, 2023, in the H.10 statistical release of the Federal Reserve Board. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) (All amounts in thousands, except share, ADS, per share and per ADS data) As of December 31 As of September 30 2022 2023 2023 RMB RMB US$ (1) SHAREHOLDERS' EQUITY Ordinary shares 23 23 3 Treasury shares (911,217) (911,217) (124,893) Additional paid-in capital 10,670,287 10,670,287 1,462,485 Accumulated deficit (3,520,525) (3,422,782) (469,131) Accumulated other comprehensive income 321,991 495,731 67,946 Total DouYu Shareholders' Equity 6,560,559 6,832,042 936,410 Noncontrolling interests 1 - - Total Shareholders' Equity 6,560,560 6,832,042 936,410 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 8,145,366 8,396,443 1,150,827 (1) Translations of certain RMB amounts into U.S. dollars at a specified rate are solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB7.2960 to US$1.00, the noon buying rate in effect on September 29, 2023, in the H.10 statistical release of the Federal Reserve Board. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (All amounts in thousands, except share, ADS, per share and per ADS data) Three Months Ended Nine Months Ended Sep 30, 2022 Jun 30, 2023 Sep 30, 2023 Sep 30, 2023 Sep 30, 2022 Sep 30, 2023 Sep 30, 2023 RMB RMB RMB US$ (1) RMB RMB US$ (1) Net revenues 1,798,333 1,392,193 1,359,189 186,292 5,427,184 4,234,443 580,379 Cost of revenues (1,547,091) (1,203,294) (1,166,771) (159,919) (4,623,131) (3,676,660) (503,928) Gross profit 251,242 188,899 192,418 26,373 804,053 557,783 76,451 Operating (expenses) income (2) Sales and marketing expenses (162,137) (87,047) (89,996) (12,335) (515,959) (267,729) (36,695) General and administrative expenses (52,308) (46,938) (50,994) (6,989) (233,066) (157,725) (21,618) Research and development expenses (84,371) (71,043) (74,510) (10,212) (302,525) (217,863) (29,861) Other operating income, net 36,459 8,615 14,272 1,956 104,633 41,933 5,747 Total operating expenses (262,357) (196,413) (201,228) (27,580) (946,917) (601,384) (82,427) Loss from operations (11,115) (7,514) (8,810) (1,207) (142,864) (43,601) (5,976) Other expenses, net (32,577) (53,554) 1,401 192 (62,609) (60,153) (8,245) Interest income, net 34,402 67,252 80,747 11,067 74,602 202,426 27,745 Foreign exchange loss - 1,641 4 1 - 248 34 (Loss) Income before income taxes and share of Income (loss) in equity method investments (9,290) 7,825 73,342 10,053 (130,871) 98,920 13,558 Income tax expense - - - - - - - Share of income (loss) in equity method investments 2,647 (977) 3,035 416 (1,386) (1,177) (161) Net (loss) Income (6,643) 6,848 76,377 10,469 (132,257) 97,743 13,397 Less: Net loss attributable to noncontrolling interest (3,672) - - - (11,513) - - Net (loss) income attributable to ordinary shareholders of the Company (2,971) 6,848 76,377 10,469 (120,744) 97,743 13,397 Net (loss) income per ordinary share Basic (0.09) 0.21 2.39 0.33 (3.78) 3.06 0.42 Diluted (0.09) 0.21 2.39 0.33 (3.78) 3.06 0.42 Net (loss) income per ADS(3) Basic (0.01) 0.02 0.24 0.03 (0.38) 0.31 0.04 Diluted (0.01) 0.02 0.24 0.03 (0.38) 0.31 0.04 Weighted average number of ordinary shares used in calculating net (loss) income per ordinary share Basic 31,966,417 31,977,664 31,977,664 31,977,664 31,953,780 31,977,664 31,977,664 Diluted 31,966,417 31,977,664 31,977,664 31,977,664 31,953,780 31,977,664 31,977,664 Weighted average number of ADS used in calculating net (loss) income per ADS(3) Basic 319,664,172 319,776,640 319,776,640 319,776,640 319,537,795 319,776,640 319,776,640 Diluted 319,664,172 319,776,640 319,776,640 319,776,640 319,537,795 319,776,640 319,776,640 (1) Translations of certain RMB amounts into U.S. dollars at a specified rate are solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB7.2960 to US$1.00, the noon buying rate in effect on September 29, 2023, in the H.10 statistical release of the Federal Reserve Board. (2) Share-based compensation expenses were allocated in cost of revenues and operating expenses as follows: Three Months Ended Nine Months Ended Sep 30, 2022 Jun 30, 2023 Sep 30, 2023 Sep 30, 2023 Sep 30, 2022 Sep 30, 2023 Sep 30, 2023 RMB RMB RMB US$ (1) RMB RMB US$ (1) Research and development expenses 605 - - - 11,476 - - Sales and marketing expenses 135 - - - 2,560 - - General and administrative expenses 1,958 - - - 52,705 - - (3) Every ten ADSs represent one ordinary share. RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS (All amounts in thousands, except share, ADS, per share and per ADS data) Three Months Ended Nine Months Ended Sep 30, 2022 Jun 30, 2023 Sep 30, 2023 Sep 30, 2023 Sep 30, 2022 Sep 30, 2023 Sep 30, 2023 RMB RMB RMB US$ (1) RMB RMB US$ (1) Loss from operations (11,115) (7,514) (8,810) (1,207) (142,864) (43,601) (5,976) Add: Share-based compensation expenses 2,698 - - - 66,741 - - Adjusted Operating loss (8,417) (7,514) (8,810) (1,207) (76,123) (43,601) (5,976) Net (loss) income (6,643) 6,848 76,377 10,469 (132,257) 97,743 13,397 Add: Share-based compensation expenses 2,698 - - - 66,741 - - Share of income (loss) in equity method investments (2,647) 977 (3,035) (416) 1,386 1,177 161 Gain on disposal of investment - - (5,132) (703) - (5,132) (703) Impairment loss of investments 32,298 53,554 3,731 511 32,298 57,285 7,852 Adjusted net (loss) income 25,706 61,379 71,941 9,861 (31,832) 151,073 20,707 Net (loss) income attributable to DouYu (2,971) 6,848 76,377 10,469 (120,744) 97,743 13,397 Add: Share-based compensation expenses 2,698 - - - 66,741 - - Share of income (loss) in equity method investments (2,647) 977 (3,035) (416) 1,386 1,177 161 Gain on disposal of investment - - (5,132) (703) - (5,132) (703) Impairment loss of investments 32,298 53,554 3,731 511 32,298 57,285 7,852 Adjusted net (loss) income attributable to DouYu 29,378 61,379 71,941 9,861 (20,319) 151,073 20,707 Adjusted net (loss) income per ordinary share Basic 0.92 1.92 2.25 0.31 (0.64) 4.72 0.65 Diluted 0.92 1.92 2.25 0.31 (0.64) 4.72 0.65 Adjusted net (loss) income per ADS(2) Basic 0.09 0.19 0.22 0.03 (0.06) 0.47 0.06 Diluted 0.09 0.19 0.22 0.03 (0.06) 0.47 0.06 Weighted average number of ordinary shares used in calculating Adjusted net (loss) income per ordinary share Basic 31,966,417 31,977,664 31,977,664 31,977,664 31,953,780 31,977,664 31,977,664 Diluted 31,966,417 31,977,664 31,977,664 31,977,664 31,953,780 31,977,664 31,977,664 Weighted average number of ADS used in calculating net (loss) income per ADS(2) Basic 319,664,172 319,776,640 319,776,640 319,776,640 319,537,795 319,776,640 319,776,640 Diluted 319,664,172 319,776,640 319,776,640 319,776,640 319,537,795 319,776,640 319,776,640 (1) Translations of certain RMB amounts into U.S. dollars at a specified rate are solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB7.2960 to US$1.00, the noon buying rate in effect on September 29, 2023, in the H.10 statistical release of the Federal Reserve Board. (2) Every ten ADSs represent one ordinary share.
WUHAN, China, Dec. 1, 2023 /PRNewswire/ -- DouYu International Holdings Limited ("DouYu" or the "Company") (Nasdaq: DOYU), a leading game-centric live streaming platform in China and a pioneer in the eSports value chain, today announced that it plans to release its unaudited financial results for the third quarter 2023 before the U.S. market opens on Thursday, December 7, 2023. The earnings release will be available on the Company's investor relations website at http://ir.douyu.com/. DouYu's management will hold a conference call on Thursday, December 7, 2023, at 7:00 a.m. Eastern Time or 8:00 p.m. Beijing Time to discuss the financial results. Listeners may access the call by dialing the following numbers: International: +1-412-317-6061 United States Toll Free: +1-888-317-6003 Mainland China Toll Free: 4001-206115 Hong Kong Toll Free: 800-963976 Singapore Toll Free: 800-120-5863 Conference ID: 0554126 The replay will be accessible through December 14, 2023, by dialing the following numbers: International: +1-412-317-0088 United States Toll Free: +1-877-344-7529 Access Code: 2412484 A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.douyu.com/. About DouYu International Holdings Limited Headquartered in Wuhan, China, DouYu International Holdings Limited (Nasdaq: DOYU) is a leading game-centric live streaming platform in China and a pioneer in the eSports value chain. DouYu operates its platform on both PC and mobile apps to bring users access to immersive and interactive games and entertainment livestreaming, a wide array of video and graphic contents, as well as opportunities to participate in community events and discussions. By nurturing a sustainable technology-based talent development system and relentlessly producing high-quality content, DouYu consistently delivers premium content through integration of livestreaming, video, graphics, and virtual communities with a primary focus on games, especially on eSports. This enables DouYu to continuously expand its user base and enhance its user experience. For more information, please see http://ir.douyu.com/. Investor Relations Contact In China: Lingling KongDouYu International Holdings LimitedEmail: ir@douyu.tvTel: +86 (10) 6508-0677 Andrea GuoPiacente Financial CommunicationsEmail: douyu@tpg-ir.comTel: +86 (10) 6508-0677 In the United States: Brandi PiacentePiacente Financial CommunicationsEmail: douyu@tpg-ir.comTel: +1-212-481-2050 Media Relations Contact Lingling KongDouYu International Holdings LimitedEmail: pr_douyu@douyu.tvTel: +86 (10) 6508-0677
SHANGHAI, Nov. 30, 2023 /PRNewswire/ -- 111, Inc. ("111" or the "Company") (NASDAQ: YI), a leading tech-enabled healthcare platform company committed to digitally connecting patients with medicine and healthcare services in China, today announced its unaudited financial results for the third quarter ended September 30, 2023. Third Quarter 2023 Highlights Net revenues were RMB3.7 billion (US$502.4 million), representing an increase of 9.5% year-over-year. Gross segment profit (1) was RMB 190.6 million (US$ 26.1 million), decreased by 5.6% year-over-year. Total operating expenses were RMB271.0 million (US$37.2 million), compared to RMB282.7 million in the same quarter of last year. As a percentage of net revenues, total operating expenses decreased to 7.4% from 8.4% in the same quarter of last year. Loss from operations was RMB80.4 million (US$11.0 million), compared to RMB80.7 million in the same quarter of last year. As a percentage of net revenues, loss from operations decreased to 2.2% from 2.4% in the same quarter of last year. Non-GAAP loss from operations (2) was RMB54.0 million (US$7.4 million), compared to RMB48.7 million in the same quarter of last year. As a percentage of net revenues, non-GAAP loss from operations accounted for 1.5% in the quarter, which was same as last year. (1) Gross segment profit represents net revenues less cost of goods sold. (2) Non-GAAP loss from operations represents loss from operations excluding share-based compensation expenses. Mr. Junling Liu, Co-Founder, Chairman, and Chief Executive Officer of 111, commented, "Despite the challenges in the macro-economy as well as retail pharmacy business, we have managed to deliver net revenue growth of 9.5% year-over-year, reaching RMB3.7 billion. This represents the 21st consecutive quarter of year-over-year progression for 111 since our NASDAQ IPO. Our gross segment profit was negatively impacted as we made efforts to digest the inventory of Anti-Covid related medicines, which decreased by 5.6% compared to the same period last year. Our operational loss, as a percentage of net revenues, reduced to 2.2%, compared to 2.4% in the corresponding quarter of the prior year, while Non-GAAP operational loss remained at 1.5% of net revenues which was same as third quarter of last year." Mr. Liu added, "Furthermore, we've made strides in improving our operational efficiency, with total operating expenses as a percentage of net revenues falling to 7.4% this quarter, down from 8.4% in the corresponding quarter of the previous year. We anticipate maintaining this positive trajectory as we expand. Concurrently, our dedication remains steadfast in providing top-tier services to our customers and patients." "Our recent progresses are a direct outcome of our unwavering strategic focus, particularly on digitalization. In this quarter, the 111 technology team achieved a significant milestone by securing three patents, showcasing our dedication to innovation in the healthcare sector. On August 11th, we were honored to have our case on "Leveraging Digitalization for Pharmaceutical Full-Channel Commercialization" selected for the 2023 "Supply Chain Management Services and Manufacturing Integration" category within the "4th China (Shanghai) Industrial Product Online Trading Festival.". Additionally, 111 was recognized as one of the "Top Ten Pharmaceutical Retail E-commerce Platforms in 2023" and received the prestigious "CPEO Gold Award" at the 16th China Pharmaceutical Ecology Conference - CPEO Conference. In October, we were privileged to receive the "2023 (16th) China Digital Breakthrough Practice Award" from the China Management Model 50+ Forum (C50+). With our strengthened digital capabilities and robust relationships with over 500 pharmaceutical partners, as well as operational optimization for 450,000 retail pharmacies, we remain committed to our digitization strategy. We will continue to leverage innovative tools like "Telescope" and harness the latest technological advancements to ensure ongoing growth and efficiency. "We have a strong belief that our efforts directed towards improving margins, optimizing costs, and aligning our organization have produced concrete results. Our primary objective continues to be refining our product offerings to align with customer preferences, reducing costs through direct sourcing, and strengthening our competitive advantage through intelligent pricing strategies. Our dedication to enhancing supply chain efficiency and continuous digitization drives process improvement and fosters innovation. Leveraging our robust technological capabilities, especially with recent advancements in AI, positions us to expand further, ensure profitability, and continually increase value for our shareholders." Third Quarter 2023 Financial Results Net revenues were RMB3.7 billion (US$502.4 million), representing an increase of 9.5% from RMB3.3 billion in the same quarter of last year. (In thousands RMB) For the three months ended September 30, 2022 2023 YoY B2B Net Revenue Product 3,225,201 3,556,749 10.3 % Service 23,716 20,671 -12.8 % Sub-Total 3,248,917 3,577,420 10.1 % Cost of Products Sold(3) 3,069,316 3,406,320 11.0 % Segment Profit 179,601 171,100 -4.7 % Segment Profit % 5.5 % 4.8 % (In thousands RMB) For the three months ended September 30, 2022 2023 YoY B2C Net Revenue Product 90,941 82,538 -9.2 % Service 8,857 5,287 -40.3 % Sub-Total 99,798 87,825 -12.0 % Cost of Products Sold 77,417 68,301 -11.8 % Segment Profit 22,381 19,524 -12.8 % Segment Profit % 22.4 % 22.2 % (3) For segment reporting purposes, purchase rebates are allocated to the B2B segment and B2C segments primarily based on the amount of cost of products sold for each segment. Cost of products sold does not include other direct costs related to cost of product sales such as shipping and handling expense, payroll and benefits of logistic staff, logistic centers rental expenses and depreciation expenses, which are recorded in the fulfillment expenses. Cost of service revenue is recorded in the operating expense. Operating costs and expenses were RMB3.7 billion (US$513.4 million), representing an increase of 9.2% from RMB3.4 billion in the same quarter of last year. Cost of products sold was RMB3.5 billion (US$476.2 million), representing an increase of 10.4% from RMB3.1 billion in the same quarter of last year. The increase was primarily due to the revenue growth in B2B business, which increased by 10.3% from the same quarter last year. Fulfillment expenses were RMB101.6 million (US$13.9 million), representing an increase of 1.4% from RMB100.2 million in the same quarter of last year. Fulfillment expenses accounted for 2.8% of net revenues this quarter as compared to 3.0% in the same quarter of last year. Selling and marketing expenses were RMB95.5 million (US$13.1 million), representing a decrease of 11.4% from RMB107.8 million in the same quarter of last year. Excluding the share-based compensation expenses of RMB5.1 million for the quarter and RMB10.5 million for the same quarter last year, respectively, selling and marketing expenses as a percentage of net revenues, accounted for 2.5% in the quarter as compared to 2.9% in the same quarter of last year. General and administrative expenses were RMB45.8 million (US$6.3 million), representing a decrease of 0.6% from RMB46.1 million in the same quarter of last year. Excluding the share-based compensation expenses of RMB16.8 million for the quarter and RMB17.0 million for the same quarter last year, respectively, general and administrative expenses as a percentage of net revenues, accounted for 0.8% in the quarter as compared to 0.9% in the same quarter of last year. Technology expenses were RMB25.4 million (US$3.5 million), representing a decrease of 14.1% from RMB29.5 million in the same quarter of last year. Excluding the share-based compensation expenses of RMB4.5 million for the quarter and RMB4.4 million for the same quarter last year, respectively, technology expenses as a percentage of net revenues, accounted for 0.6% in the quarter as compared to 0.8% in the same quarter of last year. Loss from operations was RMB80.4 million (US$11.0 million), compared to RMB80.7 million in the same quarter of last year. As a percentage of net revenues, loss from operations decreased to 2.2% in the quarter from 2.4 % in the same quarter of last year. Non-GAAP loss from operations was RMB54.0 million (US$7.4 million), compared to RMB48.7 million in the same quarter of last year. As a percentage of net revenues, non-GAAP loss from operations accounted for 1.5% in the quarter, which was same as last year. Net loss was RMB83.5 million (US$11.4 million), compared to RMB86.2 million in the same quarter of last year. As a percentage of net revenues, net loss decreased to 2.3% in the quarter from 2.6% in same quarter of last year. Non-GAAP net loss (4) was RMB57.1 million (US$7.8 million), compared to RMB54.3 million in the same quarter of last year. As a percentage of net revenues, non-GAAP net loss decreased to 1.56% in the quarter from 1.62% in same quarter of last year Net loss attributable to ordinary shareholders was RMB93.3 million (US$12.8 million), compared to RMB96.8 million in the same quarter of last year. As a percentage of net revenues, net loss attributable to ordinary shareholders decreased to 2.5% in the quarter from 2.9% in same quarter of last year. Non-GAAP net loss attributable to ordinary shareholders (5) was RMB66.9 million (US$9.2 million), compared to RMB64.9 million in the same quarter of last year. As a percentage of net revenues, non-GAAP net loss attributable to ordinary shareholders decreased to 1.8% in the quarter from 1.9% in same quarter of last year. (4) Non-GAAP net loss represents net loss excluding share-based compensation expenses, net of tax. Considering the impact of accretion of redeemable non-controlling interest for the third quarter 2023, non-GAAP net loss is used as a more meaningful measurement of the operation performance of the Company. (5) Non-GAAP net loss attributable to ordinary shareholders represents net loss attributable to ordinary shareholders excluding share-based compensation expenses, net of tax. As of September 30, 2023, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB876.6 million (US$120.1 million), compared to RMB922.7 million as of December 31, 2022. As of the date of this earning release, we had a total outstanding amount of RMB1.1 billion, which has been included in the balances of redeemable non-controlling interests and accrued expenses and other current liabilities, owed to a group of investors of 1 Pharmacy Technology pursuant to their equity investments made in 2020 as previously disclosed. As of the date of this earning release, we have received redemption requests from certain of such investors for a total redemption amount of RMB0.2 billion in accordance with the terms of their initial investments in 1 Pharmacy Technology. We are currently in the process of negotiating with these investors and other relevant stakeholders regarding the repayment and/or restructuring of such redemption obligations. Conference Call 111's management team will host an earnings conference call at 7:30 AM U.S. Eastern Time on Thursday, November 30, 2023 (8:30 PM Beijing Time on the same day). Details for the conference call are as follows: Event Title: 111, Inc. Third Quarter 2023 Unaudited Financial ResultsRegistration Link: https://s1.c-conf.com/diamondpass/10034943-yewgs3.html All participants must use the link provided above to complete the online registration process in advance of the conference call. Upon registering, each participant will receive a set of participant dial-in numbers, the Direct Event passcode, and a unique Registration ID, which can be used to join the conference call. Please dial in 15 minutes before the call is scheduled to begin and provide the Direct Event passcode and unique Registration ID you have received upon registering to join the call. A telephone replay of the call will be available after the conclusion of the conference call until December 7, 2023 on: China: 4001 209 216United States: +1 855 883 1031International: +61 7 3107 6325Conference ID: 10034943 A live and archived webcast of the conference call will be available on the website at https://edge.media-server.com/mmc/p/jzjigam6. Use of Non-GAAP Financial Measures In evaluating the business, the Company considers and uses non-GAAP loss from operations, non-GAAP net loss, non-GAAP net loss attributable to ordinary shareholders, and non-GAAP loss per ADS, as supplemental measures to review and assess its operating performance. The Company defines non-GAAP loss from operations as loss from operations excluding share-based compensation expenses. The Company defines non-GAAP net loss as net loss excluding share-based compensation expenses, net of tax. The Company defines non-GAAP net loss attributable to ordinary shareholders as net loss attributable to ordinary shareholders excluding share-based compensation expenses, net of tax. The Company defines non-GAAP loss per ADS as net loss attributable to ordinary shareholders per ADS excluding share-based compensation expenses, net of tax per ADS. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company believes that non-GAAP loss from operations, non-GAAP net loss, non-GAAP net loss attributable to ordinary shareholders, and non-GAAP loss per ADS help identify underlying trends in its business that could otherwise be distorted by the effect of certain expenses that it includes in loss from operations and net loss. Share-based compensation expenses is a non-cash expense that varies from period to period. As a result, management excludes the items from its internal operating forecasts and models. Management believes that the adjustments for share-based compensation expenses provide investors with a reasonable basis to measure the company's core operating performance, in a more meaningful comparison with the performance of other companies. The Company believes that non-GAAP loss from operations, non-GAAP net loss, non-GAAP net loss attributable to ordinary shareholders, and non-GAAP loss per ADS provide useful information about its operating results, enhances the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by the management in their 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. The non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP loss from operations, non-GAAP net loss, non-GAAP net loss attributable to ordinary shareholders, or non-GAAP loss per ADS is that it does not reflect all items of income and expense that affect the Company's operations. Further, the non-GAAP financial measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP measures, all of which should be considered when evaluating the Company's performance. The Company encourages you to review its financial information in its entirety and not rely on a single financial measure. Reconciliation of the non-GAAP financial measures to the most comparable U.S. GAAP measures is included at the end of this press release. Exchange Rate Information Statement This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB7.2960 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of September 30, 2023. Forward-Looking Statements This press release contains forward-looking statements. These statements 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. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "confident" and similar statements. Among other things, the Business Outlook and quotations from management in this announcement, as well as 111's strategic and operational plans, contain forward-looking statements. 111 may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control. Forward-looking statements involve inherent risks, uncertainties and other factors that could cause actual results to differ materially from those contained in any such statements. Potential risks and uncertainties include, but are not limited to, uncertainties as to the Company's ability comply with extensive and evolving regulatory requirements, its ability to compete effectively in the evolving PRC general health and wellness market, its ability to manage the growth of its business and expansion plans, its ability to achieve or maintain profitability in the future, its ability to control the risks associated with its pharmaceutical retail and wholesale businesses, and the Company's ability to meet the standards necessary to maintain listing of its ADSs on the Nasdaq Global Market, including its ability to cure any non-compliance with Nasdaq's continued listing criteria. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and 111 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. About 111, Inc. 111, Inc. (NASDAQ: YI) ("111" or the "Company") is a leading tech-enabled healthcare platform company committed to digitally connecting patients with medicine and healthcare services in China. The Company provides consumers with better access to pharmaceutical products and healthcare services directly through its online retail pharmacy, 1 Pharmacy, and indirectly through its offline virtual pharmacy network. The Company also offers online healthcare services through its internet hospital, 1 Clinic, which provides consumers with cost-effective and convenient online consultation, electronic prescription service, and patient management service. In addition, the Company's online platform, 1 Medicine, serves as a one-stop shop for pharmacies to source a vast selection of pharmaceutical products. With the largest virtual pharmacy network in China, 111 enables offline pharmacies to better serve their customers with cloud-based services. 111 also provides an omni-channel drug commercialization platform to its strategic partners, which includes services such as digital marketing, patient education, data analytics, and pricing monitoring. For more information on 111, please visit: http://ir.111.com.cn/. 111, Inc. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except for share and per share data) As of As of December 31, 2022 September 30, 2023 RMB RMB US$ ASSETS Current Assets: Cash and cash equivalents 673,669 730,876 100,175 Restricted cash 43,122 35,342 4,844 Short-term investments 205,861 110,343 15,124 Accounts receivable, net 488,875 585,571 80,259 Notes Receivable 43,332 70,919 9,720 Inventories 1,498,900 1,481,308 203,030 Prepayments and other current assets 282,066 180,205 24,700 Total current assets 3,235,825 3,194,564 437,852 Property and equipment, net 48,497 37,916 5,197 Intangible assets, net 3,267 2,461 337 Long-term investments 2,000 2,000 274 Other non-current assets 20,348 14,434 1,978 Operating lease right-of-use asset 163,877 109,574 15,018 Total Assets 3,473,814 3,360,949 460,656 LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS'DEFICIT Current Liabilities: Short-term borrowings 178,990 349,345 47,882 Accounts payable 1,764,849 1,814,722 248,728 Accrued expense and other current liabilities 781,271 816,822 111,955 Total Current liabilities 2,725,110 2,980,889 408,565 Long-term operating lease liabilities 100,469 64,816 8,884 Total Liabilities 2,825,579 3,045,705 417,449 MEZZANINE EQUITY Redeemable non-controlling interests 1,056,939 830,784 113,867 SHAREHOLDERS' DEFICIT Ordinary shares Class A 31 32 5 Ordinary shares Class B 25 25 3 Treasury shares (40,859) (40,859) (5,600) Additional paid-in capital 2,977,174 3,056,226 418,891 Accumulated deficit (3,426,556) (3,608,883) (494,639) Accumulated other comprehensive income 75,586 80,197 10,992 Total shareholders' deficit (414,599) (513,262) (70,348) Non-controlling interest 5,895 (2,278) (312) Total Deficit (408,704) (515,540) (70,660) Total liabilities, mezzanine equity and deficit 3,473,814 3,360,949 460,656 111, Inc. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands, except for share and per share data) For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 RMB RMB US$ RMB RMB US$ Net Revenues 3,348,715 3,665,245 502,364 9,368,451 10,839,503 1,485,677 Operating Costs and expenses: Cost of products sold (3,146,733) (3,474,621) (476,236) (8,781,967) (10,204,779) (1,398,681) Fulfillment expenses (100,167) (101,602) (13,925) (282,608) (299,202) (41,009) Selling and marketing expenses (107,799) (95,523) (13,093) (323,827) (274,880) (37,675) General and administrative expenses (46,121) (45,839) (6,283) (132,609) (126,235) (17,302) Technology expenses (29,540) (25,386) (3,479) (102,272) (75,243) (10,313) Other operating income, net 976 (2,696) (370) (7,742) (2,723) (373) Total Operating costs and expenses (3,429,384) (3,745,667) (513,386) (9,631,025) (10,983,062) (1,505,353) Loss from operations (80,669) (80,422) (11,022) (262,574) (143,559) (19,676) Interest income 2,558 2,362 324 6,022 6,517 893 Interest expense (4,297) (5,433) (745) (10,666) (14,525) (1,991) Foreign exchange gain (loss) (5,102) 79 11 (9,645) (1,095) (150) Other Income, net 1,270 38 5 4,870 4,552 624 Loss before income taxes (86,240) (83,376) (11,427) (271,993) (148,110) (20,300) Income tax expense - (102) (14) - (102) (14) Net Loss (86,240) (83,478) (11,441) (271,993) (148,212) (20,314) Net Loss attributable to non-controlling interest 3,532 4,315 591 11,498 7,837 1,074 Net Loss attributable to redeemable non-controlling interest 7,052 7,253 994 23,308 12,529 1,717 Adjustment attributable to redeemable non-controlling interest (21,190) (21,391) (2,932) (65,260) (54,481) (7,467) Net Loss attributable to ordinary shareholders (96,846) (93,301) (12,788) (302,447) (182,327) (24,990) Other comprehensive loss Unrealized gains of available-for-sale securities, 1,034 1,013 139 3,810 3,936 539 Realized gains of available-for-sale debt securities (721) (841) (115) (3,184) (3,558) (488) Foreign currency translation adjustments 9,385 (1,690) (232) 18,570 4,234 580 Comprehensive loss (87,148) (94,819) (12,996) (283,251) (177,715) (24,359) Loss per ADS: Basic and diluted (1.16) (1.10) (0.16) (3.64) (2.16) (0.30) Weighted average number of shares used in computation of loss per share Basic and diluted 166,710,907 169,088,015 169,088,015 166,547,681 168,179,779 168,179,779 111, Inc. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 RMB RMB US$ RMB RMB US$ Net cash provided by (used in) operating activities 11,815 35,208 4,825 (86,361) (250,230) (34,297) Net cash provided by investing activities 100,460 5,163 708 71,025 91,913 12,598 Net cash (used in) provided by financing activities (40,755) 110,452 15,139 917 204,230 27,992 Effect of exchange rate changes on cash and cash equivalents, and restricted cash 7,019 2,621 359 12,983 3,514 482 Net Increase (decrease) in cash and cash equivalents, and restricted cash 78,539 153,444 21,031 (1,436) 49,427 6,775 Cash and cash equivalents, and restricted cash at the beginning of the period 680,697 612,774 83,988 760,672 716,791 98,244 Cash and cash equivalents, and restricted cash at the end of the period 759,236 766,218 105,019 759,236 766,218 105,019 111, Inc. Unaudited Reconciliation of GAAP and Non-GAAP Results (In thousands, except for share and per share data) For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 RMB RMB US$ RMB RMB US$ Loss from operations (80,669) (80,422) (11,022) (262,574) (143,559) (19,676) Add: Share-based compensation expenses 31,938 26,402 3,619 88,692 74,818 10,255 Non-GAAP loss from operations (48,731) (54,020) (7,403) (173,882) (68,741) (9,421) Net Loss (86,240) (83,478) (11,441) (271,993) (148,212) (20,314) Add: Share-based compensation expenses, net of tax 31,938 26,402 3,619 88,692 74,818 10,255 Non-GAAP net Loss (54,302) (57,076) (7,822) (183,301) (73,394) (10,059) Net Loss attributable to ordinary shareholders (96,846) (93,301) (12,788) (302,447) (182,327) (24,990) Add: Share-based compensation expenses, net of tax 31,938 26,402 3,619 88,692 74,818 10,255 Non-GAAP net Loss attributable to ordinary shareholders (64,908) (66,899) (9,169) (213,755) (107,509) (14,735) Loss per ADS(6): Basic and diluted (1.16) (1.10) (0.16) (3.64) (2.16) (0.30) Add: Share-based compensation expenses per ADS(6), net of tax 0.38 0.32 0.04 1.06 0.88 0.12 Non-GAAP Loss per ADS(6) (0.78) (0.78) (0.12) (2.58) (1.28) (0.18) (6) Every one ADSs represent two Class A ordinary shares
SHANGHAI, Nov. 30, 2023 /PRNewswire/ -- Noah Holdings Limited ("Noah" or the "Company") (NYSE: NOAH and HKEX: 6686), a leading wealth management service provider in China offering comprehensive global investment and asset allocation advisory services primarily for high net worth investors, today announced its unaudited financial results for the third quarter of 2023. THIRD QUARTER 2023 FINANCIAL HIGHLIGHTS Net revenues for the third quarter of 2023 were RMB750.0 million (US$102.8 million), a 9.6% increase from the corresponding period in 2022, mainly due to increases in one-time commissions. Net revenues decreased by 20.4% compared with the second quarter of 2023, mainly due to a decrease in distribution of insurance products. (RMB millions, except percentages) Q3 2022 Q3 2023 YoY Change Wealth management 466.0 548.8 17.8 % Asset management 200.3 191.4 (4.4 %) Other businesses 18.2 9.8 (46.2 %) Total net revenues 684.5 750.0 9.6 % Income from operations for the third quarter of 2023 was RMB248.9 million (US$34.1 million), a 7.4% increase from the corresponding period in 2022, due to a 9.6% increase in net revenues; income from operations decreased by 28.8% compared with the second quarter of 2023, due to a 50.8% decrease in one-time commissions. (RMB millions, except percentages) Q3 2022 Q3 2023 YoY Change Wealth management 133.2 154.5 16.0 % Asset management 117.7 106.5 (9.6 %) Other businesses (19.1) (12.1) (36.6 %) Total income from operations 231.8 248.9 7.4 % Net income attributable to Noah shareholders for the third quarter of 2023 was RMB233.3 million (US$32.0 million), a 27.9% increase from the corresponding period in 2022, mainly due to a 158.0% increase in interest income as a result of higher interest rate for our US dollar cash deposits. Net income attributable to Noah shareholders decreased by 26.0% compared with the second quarter of 2023, mainly due to a 20.4% decrease in net revenues. Non-GAAP[1] net income attributable to Noah shareholders for the third quarter of 2023 was RMB232.4 million (US$31.9 million), a 21.8% increase from the corresponding period in 2022, and a 25.8% decrease from the second quarter of 2023. THIRD QUARTER 2023 OPERATIONAL UPDATES Wealth Management Business We offer investment products and provide value-added services to high net worth investors in China and overseas for our wealth management business. Noah primarily distributes private equity, private secondary, mutual funds and other products denominated in RMB and other currencies. Total number of registered clients as of September 30, 2023 was 452,222, a 4.4% increase from September 30, 2022, and a 1.3% increase from June 30, 2023. Total number of active clients[2] who transacted with us during the third quarter of 2023 was 9,489, a 58.1% decrease from the third quarter of 2022, and a 17.8% decrease from the second quarter of 2023. Aggregate value of investment products distributed during the third quarter of 2023 was RMB22.3 billion (US$3.1 billion), a 24.2% increase from the third quarter of 2022, and a 21.2% increase from the second quarter of 2023, mainly due to an increase in the distribution of mutual fund products. Three months ended September 30, 2022 2023 Product type (RMB in billions, except percentages) Mutual fund products 11.7 64.8 % 14.9 66.9 % Private secondary products 3.3 18.5 % 5.7 25.4 % Private equity products 2.5 13.9 % 0.7 3.1 % Other products[3] 0.5 2.8 % 1.0 4.6 % All products 18.0 100.0 % 22.3 100.0 % Coverage network in mainland China covered 59 cities as of September 30, 2023, compared with 76 cities as of September 30, 2022 and 63 cities as of June 30, 2023, as we continue to streamline our domestic coverages and focus on strengthening our operations in central hub cities. Number of relationship managers was 1,408 as of September 30, 2023, a 12.0% increase from September 30, 2022, and a 2.4% increase from June 30, 2023. Among which, we had 77 overseas relationship managers as of September 30, 2023, a 37.5% increase from June 30, 2023. Asset Management Business Our asset management business is conducted through Gopher Asset Management Co., Ltd. ("Gopher Asset Management"), a leading multi-asset manager in China with overseas offices in Hong Kong and the United States. Gopher Asset Management develops and manages assets ranging from private equity, real estate, public securities to multi-strategies investments denominated in RMB and other currencies. Total assets under management as of September 30, 2023 were RMB154.9 billion (US$21.2 billion), a 1.3% decrease from June 30, 2023 and a 0.9% decrease from September 30, 2022, mainly due to exits in private equity investment products. Investment type As of June 30, 2023 Growth Distribution/ Redemption As ofSeptember 30, 2023 (RMB billions, except percentages) Private equity 132.9 84.7 % 0.2 1.4 131.7 85.0 % Public securities[4] 11.6 7.4 % 4.2 3.6 12.2 7.9 % Real estate 6.6 4.2 % 0.3 0.6 6.3 4.0 % Multi-strategies 4.4 2.8 % - 0.2 4.2 2.8 % Others 1.4 0.9 % - 0.9 0.5 0.3 % All Investments 156.9 100.0 % 4.7 6.7 154.9 100.0 % [1] Noah's Non-GAAP financial measures are its corresponding GAAP financial measures excluding the effects of all forms of share-based compensation and net of relevant tax impact, if any. See "Reconciliation of GAAP to Non-GAAP Results" at the end of this press release. [2] "Active clients" for a given period refers to registered high net worth investors who purchase investment products distributed or receive services provided by us during that given period. [3] "Other products" refers to other investment products, which includes insurance products, multi-strategies products and others. [4] The asset distribution/redemption of public securities also includes market appreciation or depreciation. Other Businesses Our other businesses segment mainly provides more comprehensive services and investment products to our clients. Ms. Jingbo Wang, co-founder, Chairwoman and CEO of Noah, said, "I'm pleased to report a strong quarter with net revenues increasing 9.6% year-over-year to RMB750.0 million, primarily driven by one-time commissions from the distribution of insurance products. With a robust balance sheet and nearly RMB5 billion in cash and cash equivalents, ample liquidity, and a standardized product offering, we are well-positioned to fuel future growth and execute on our strategic plans. Our clean Assets Under Advisory (AUA) with no legacy private credit or residential real estate exposure has built us a solid reputation as a trusted advisor to mandarin-speaking HNW clients, which we are leveraging to drive our global expansion, as demand for global asset allocation grows. We continue to recruit Relationship Managers in Hong Kong and Singapore; meanwhile, our client service centre in Los Angeles is up and running, and we are preparing to commence operations in Dubai. We are also offering clients sophisticated market intelligence and asset allocation strategies through our innovative 'CCI' model (composed of the Chief Investment Office, Client Strategy Office, and Investment Product & Solution department) and its solutions-driven wealth management approach. As we rapidly approach the end of the year, we are increasingly confident in our abilities to carefully navigate an increasingly complex macroeconomic environment and create value for our shareholders." THIRD QUARTER 2023 FINANCIAL RESULTS Net Revenues Net revenues for the third quarter of 2023 were RMB750.0 million (US$102.8 million), a 9.6% increase from the corresponding period in 2022, mainly due to increases in one-time commissions. Wealth Management Business Net revenues from one-time commissions for the third quarter of 2023 were RMB198.5 million (US$27.2 million), a 115.5% increase from the corresponding period in 2022, primarily due to an increase in distribution of insurance products. Net revenues from recurring service fees for the third quarter of 2023 were RMB279.7 million (US$38.3 million), an 8.8% decrease from the corresponding period in 2022, due to a shift in product mix and clients' investment preferences, as well as less recurring service fees generated from private secondary and private equity products. Net revenues from performance-based income for the third quarter of 2023 were RMB8.8 million (US$1.2 million), a 51.3% decrease from the corresponding period of 2022, primarily due to less performance-based income from private secondary products. Net revenues from other service fees for the third quarter of 2023 were RMB61.7 million (US$8.5 million), a 25.5% increase from the corresponding period in 2022, primarily due to more value-added services Noah offered to its high net worth clients. Asset Management Business Net revenues from recurring service fees for the third quarter of 2023 were RMB186.3 million (US$25.5million), a 1.8% increase from the corresponding period in 2022, due to an increase in the amount of real estate investments managed by our Gopher New York team. Net revenues from performance-based income for the third quarter of 2023 were RMB5.1 million (US$0.7 million), a 46.3% decrease from the corresponding period in 2022, primarily due to a decrease in performance-based income from private equity investments managed by Gopher compared with the third quarter of 2022. Other Businesses Net revenues for the third quarter of 2023 were RMB9.8 million (US$1.3 million), compared with RMB18.2 million for the corresponding period in 2022, as we continued to wind down our loan portfolio. Operating Costs and Expenses Operating costs and expenses for the third quarter of 2023 were RMB501.1 million (US$68.7 million), a 10.7% increase from the corresponding period in 2022. Operating costs and expenses primarily consisted of compensation and benefits of RMB400.8 million (US$54.9 million), selling expenses of RMB119.7 million (US$16.4 million), general and administrative expenses of RMB67.4 million (US$9.2 million), provision for credit losses of RMB0.5 million (US$0.1 million) and other operating expenses of RMB19.0 million (US$2.6 million). Operating costs and expenses for the wealth management business for the third quarter of 2023 were RMB394.2 million (US$54.0 million), a 18.5% increase from the corresponding period in 2022, primarily due to an increase in compensation and benefits, selling expenses and general and administrative expenses, as less expenses incurred during the corresponding quarter of the preceding year due to various pandemic restrictions. Operating costs and expenses for the asset management business for the third quarter of 2023 were RMB84.9 million (US$11.6 million), a 2.9% increase from the corresponding period in 2022, primarily due to increased selling expenses. Operating costs and expenses for other businesses for the third quarter of 2023 were RMB21.9 million (US$3.0 million), compared with RMB37.4 million from the corresponding period in 2022, due to decreased other operating expenses. Operating Margin Operating margin for the third quarter of 2023 was 33.2%, compared with 33.9% for the corresponding period in 2022. Operating margin for the wealth management business for the third quarter of 2023 was 28.2%, compared with 28.6% for the corresponding period in 2022. Operating margin for the asset management business for the third quarter of 2023 was 55.6%, compared with 58.8% for the corresponding period in 2022. Loss from operation for other businesses for the third quarter of 2023 was RMB12.1 million (US$1.7 million), compared with an operating loss of RMB19.1 million for the corresponding period in 2022. Investment Income/loss Investment income for the third quarter of 2023 was RMB9.6 million (US$1.3 million), compared with investment loss of RMB7.2 million for the corresponding period in 2022. Income Tax Expenses Income tax expenses for the third quarter of 2023 were RMB68.5 million (US$9.4 million), a 34.1% increase from the corresponding period in 2022, primarily due to more taxable income compared with the third quarter of 2022. Loss from Equity in Affiliates Loss from equity in affiliates for the third quarter of 2023 was RMB3.9 million (US$0.5 million), compared with loss from equity in affiliates of RMB22.4 million for the corresponding period in 2022, as we recorded such loss from decrease in net income of the funds of funds that we manage and invest in as the general partner or fund manager in 2022. Net Income Net Income Net income for the third quarter of 2023 was RMB232.0 million (US$31.8 million), a 30.4% increase from the corresponding period in 2022. Net margin for the third quarter of 2023 was 30.9%, up from 26.0% for the corresponding period in 2022. Net income attributable to Noah shareholders for the third quarter of 2023 was RMB233.3 million (US$32.0 million), a 27.9% increase from the corresponding period in 2022. Net margin attributable to Noah shareholders for the third quarter of 2023 was 31.1%, up from 26.7% for the corresponding period in 2022. Net income attributable to Noah shareholders per basic and diluted ADS for the third quarter of 2023 was RMB3.36 (US$0.46) and RMB3.36 (US$0.46), respectively, up from RMB2.64 and RMB2.63 respectively, for the corresponding period in 2022. Non-GAAP Net Income Attributable to Noah Shareholders Non-GAAP net income attributable to Noah shareholders for the third quarter of 2023 was RMB232.4 million (US$31.9 million), a 21.8% increase from the corresponding period in 2022. Non-GAAP net margin attributable to Noah shareholders for the third quarter of 2023 was 31.0%, compared with 27.9% for the corresponding period in 2022. Non-GAAP net income attributable to Noah shareholders per diluted ADS for the third quarter of 2023 was RMB3.35 (US$0.46), up from RMB2.76 for the corresponding period in 2022. Balance Sheet and Cash Flow As of September 30, 2023, the Company had RMB4,959.6 million (US$679.8 million) in cash and cash equivalents, compared with RMB4,740.4 million as of June 30, 2023 and RMB4,312.8 million as of September 30, 2022. Net cash inflow from the Company's operating activities during the third quarter of 2023 was RMB404.4 million (US$55.4 million), primarily due to operating cash inflow generated by net income and collection of accounts receivables. Net cash inflow from the Company's investing activities during the third quarter of 2023 was RMB4.0 million (US$0.5 million), primarily due to collection of loan receivables. Net cash outflow from the Company's financing activities was RMB196.3 million (US$26.9 million) in the third quarter of 2023, primarily due to payment of the final dividend. CONFERENCE CALL The Company's senior management will host an earnings conference call to discuss its Q3 Results and recent business activities. Details of the conference call are as follows: Conference title: Noah Holdings 3Q23 Earnings Conference Call Date/Time: Wednesday, November 29, 2023 at 8:00 p.m., U.S. Eastern Time Thursday, November 30, 2023 at 9:00 a.m., Hong Kong Time Dial in: – Hong Kong Toll Free: 800-963976 – United States Toll Free: 1-888-317-6003 – Mainland China Toll Free: 4001-206115 – International Toll: 1-412-317-6061 Participant Password: 7559504 A telephone replay will be available starting approximately one hour after the end of the conference until December 6, 2023 at 1-877-344-7529 (US Toll Free) and 1-412-317-0088 (International Toll) with the access code 1973272. A live and archived webcast of the conference call will be available at the Company's investor relations website under the "Financial Reports" section at http://ir.noahgroup.com. DISCUSSION OF NON-GAAP MEASURES In addition to disclosing financial results prepared in accordance with U.S. GAAP, the Company's earnings release contains non-GAAP financial measures excluding the effects of all forms of share-based compensation and net of tax impact, if any. See "Reconciliation of GAAP to Non-GAAP Results" at the end of this press release. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for financial measures prepared in accordance with U.S. GAAP. The financial results reported in accordance with U.S. GAAP and reconciliation of GAAP to non-GAAP results should be carefully evaluated. The non-GAAP financial measures used by the Company may be prepared differently from and, therefore, may not be comparable to similarly titled measures used by other companies. When evaluating the Company's operating performance in the periods presented, management reviewed the foregoing non-GAAP net income attributable to Noah shareholders and per diluted ADS and non-GAAP net margin attributable to Noah shareholders to supplement U.S. GAAP financial data. As such, the Company's management believes that the presentation of the non-GAAP financial measures provides important supplemental information to investors regarding financial and business trends relating to its results of operations in a manner consistent with that used by management. ABOUT NOAH HOLDINGS LIMITED Noah Holdings Limited (NYSE: NOAH and HKEX:6686) is a leading and pioneer wealth management service provider in China offering comprehensive one-stop advisory services on global investment and asset allocation primarily for high net worth investors. Noah is a Cayman Islands holding company and carries on business in Hong Kong as Noah Holdings Private Wealth and Asset Management Limited. In the first nine months of 2023, Noah distributed RMB57.5 billion (US$7.9 billion) of investment products. Through Gopher Asset Management, Noah had assets under management of RMB154.9 billion (US$21.2 billion) as of September 30, 2023. Noah's wealth management business primarily distributes private equity, private secondary, mutual fund and other products denominated in RMB and other currencies. Noah's network covers major cities in mainland China, as well as offices in Hong Kong (China), Taiwan (China), New York, Silicon Valley and Singapore. A total of 1,408 relationship managers across 59 cities provide customized financial solutions for clients through this network, and meet their international investment needs. The Company's wealth management business had 452,222 registered clients as of September 30, 2023. Through Gopher Asset Management, Noah manages private equity, public securities, real estate, multi-strategy and other investments denominated in RMB and other currencies. The Company also provides other services. For more information, please visit Noah at ir.noahgroup.com. FOREIGN CURRENCY TRANSLATION In this announcement, the unaudited financial results for the third quarter of 2023 ended September 29, 2023 are stated in RMB. This announcement contains currency conversions of certain RMB amounts into US$ at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB7.296 to US$1.00, the effective noon buying rate for September 29, 2023 as set forth in the H.10 statistical release of the Federal Reserve Board. SAFE HARBOR STATEMENT This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. 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," "confident" and similar statements. Noah may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in announcements, circulars or other publications made on the website of The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange"), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Noah's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. These statements include, but are not limited to, estimates regarding the sufficiency of Noah's cash and cash equivalents and liquidity risk. A number of factors could cause Noah's actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: its goals and strategies; its future business development, financial condition and results of operations; the expected growth of the wealth management and asset management market in China and internationally; its expectations regarding demand for and market acceptance of the products it distributes; investment risks associated with investment products distributed to Noah's investors, including the risk of default by counterparties or loss of value due to market or business conditions or misconduct by counterparties; its expectations regarding keeping and strengthening its relationships with key clients; relevant government policies and regulations relating to its industries; its ability to attract and retain qualified employees; its ability to stay abreast of market trends and technological advances; its plans to invest in research and development to enhance its product choices and service offerings; competition in its industries in China and internationally; general economic and business conditions in China; and its ability to effectively protect its intellectual property rights and not to infringe on the intellectual property rights of others. Further information regarding these and other risks is included in Noah's filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. All information provided in this press release and in the attachments is as of the date of this press release, and Noah does not undertake any obligation to update any such information, including forward-looking statements, as a result of new information, future events or otherwise, except as required under the applicable law. Contacts: Noah Holdings LimitedMelo XiTel: +86-21-8035-8292ir@noahgroup.com -- FINANCIAL AND OPERATIONAL TABLES FOLLOW -- Noah Holdings Limited Condensed Consolidated Balance Sheets (unaudited) As of June 30, September 30, September 30, 2023 2023 2023 RMB'000 RMB'000 USD'000 Assets Current assets: Cash and cash equivalents 4,740,434 4,959,550 679,763 Restricted cash 143,255 153,908 21,095 Short-term investments 445,485 407,872 55,904 Accounts receivable, net 534,885 445,386 61,045 Loans receivable, net 341,083 315,785 43,282 Amounts due from related parties 429,202 406,764 55,752 Other current assets 200,588 189,473 25,969 Total current assets 6,834,932 6,878,738 942,810 Long-term investments, net 980,257 995,746 136,478 Investment in affiliates 1,464,702 1,491,173 204,382 Property and equipment, net 2,525,732 2,510,839 344,139 Operating lease right-of-use assets, net 152,040 145,410 19,930 Deferred tax assets 436,240 435,632 59,708 Other non-current assets 169,454 171,083 23,449 Total Assets 12,563,357 12,628,621 1,730,896 Liabilities and Equity Current liabilities: Accrued payroll and welfare expenses 562,029 545,240 74,731 Income tax payable 141,693 166,959 22,884 Deferred revenues 71,440 88,377 12,113 Dividend payable 177,502 49 7 Other current liabilities 584,384 578,296 79,262 Contingent liabilities 592,097 595,137 81,570 Total current liabilities 2,129,145 1,974,058 270,567 Operating lease liabilities, non-current 79,267 77,418 10,611 Deferred tax liabilities 230,797 229,003 31,387 Other non-current liabilities 54,495 45,058 6,176 Total Liabilities 2,493,704 2,325,537 318,741 Equity 10,069,653 10,303,084 1,412,155 Total Liabilities and Equity 12,563,357 12,628,621 1,730,896 Noah Holdings Limited Condensed Consolidated Income Statements (In RMB'000, except for ADS data, per ADS data and percentages) (unaudited) Three months ended September 30, September 30, September 30, Change 2022 2023 2023 Revenues: RMB'000 RMB'000 USD'000 Revenues from others: One-time commissions 92,551 199,286 27,314 115.3 % Recurring service fees 195,429 171,408 23,493 (12.3 %) Performance-based income 17,658 8,440 1,157 (52.2 %) Other service fees 71,290 74,355 10,191 4.3 % Total revenues from others 376,928 453,489 62,155 20.3 % Revenues from funds Gopher manages: One-time commissions 7,846 32 4 (99.6 %) Recurring service fees 296,648 295,982 40,568 (0.2 %) Performance-based income 10,109 5,543 760 (45.2 %) Total revenues from funds Gopher manages 314,603 301,557 41,332 (4.1 %) Total revenues 691,531 755,046 103,487 9.2 % Less: VAT related surcharges (7,063) (5,088) (697) (28.0 %) Net revenues 684,468 749,958 102,790 9.6 % Operating costs and expenses: Compensation and benefits Relationship managers (108,971) (185,748) (25,459) 70.5 % Others (234,055) (215,047) (29,475) (8.1 %) Total compensation and benefits (343,026) (400,795) (54,934) 16.8 % Selling expenses (75,995) (119,707) (16,407) 57.5 % General and administrative expenses (57,511) (67,407) (9,239) 17.2 % Reversal of credit losses 5,274 525 72 (90.0 %) Other operating expenses (25,084) (18,982) (2,602) (24.3 %) Government subsidies 43,645 105,297 14,432 141.3 % Total operating costs and expenses (452,697) (501,069) (68,678) 10.7 % Income from operations 231,771 248,889 34,112 7.4 % Other income: Interest income 16,847 43,465 5,957 158.0 % Investment (loss) income (7,233) 9,640 1,321 N.A. Other income 10,066 2,446 335 (75.7 %) Total other income 19,680 55,551 7,613 182.3 % Income before taxes and income from equity in affiliates 251,451 304,440 41,725 21.1 % Income tax expense (51,078) (68,499) (9,389) 34.1 % Loss from equity in affiliates (22,406) (3,897) (534) (82.6 %) Net income 177,967 232,044 31,802 30.4 % Less: net loss attributable to non-controlling interests (4,448) (1,282) (176) (71.2 %) Net income attributable to Noah shareholders 182,415 233,326 31,978 27.9 % Income per ADS, basic 2.64 3.36 0.46 27.3 % Income per ADS, diluted 2.63 3.36 0.46 27.8 % Margin analysis: Operating margin 33.9 % 33.2 % 33.2 % Net margin 26.0 % 30.9 % 30.9 % Weighted average ADS equivalent[1]: Basic 69,212,818 69,472,282 69,472,282 Diluted 69,255,667 69,485,287 69,485,287 ADS equivalent outstanding at end of period 62,558,122 63,154,215 63,154,215 [1] Assumes all outstanding ordinary shares are represented by ADSs. Each ordinary share represents two ADSs. Noah Holdings Limited Condensed Comprehensive Income Statements (unaudited) Three months ended September 30, September 30, September 30, Change 2022 2023 2023 RMB'000 RMB'000 USD'000 Net income 177,967 232,044 31,802 30.4 % Other comprehensive income, net of tax: Foreign currency translation adjustments 107,640 21,405 2,934 (80.1 %) Comprehensive income 285,607 253,449 34,736 (11.3 %) Less: Comprehensive loss attributable to non-controlling interests (4,428) (1,169) (160) 73.6 % Comprehensive income attributable to Noah shareholders 290,035 254,618 34,896 (12.2 %) Noah Holdings Limited Supplemental Information (unaudited) As of September 30, 2022 September 30, 2023 Change Number of registered clients 433,250 452,222 4.4 % Number of relationship managers 1,257 1,408 12.0 % Number of cities in mainland China under coverage 76 59 (22.4 %) Three months ended September 30, 2022 September 30, 2023 Change (in millions of RMB, except number of active clients and percentages) Number of active clients 22,641 9,489 (58.1 %) Transaction value: Private equity products 2,487 693 (72.1 %) Private secondary products 3,326 5,670 70.5 % Mutual fund products 11,650 14,929 28.1 % Other products 507 1,024 102.1 % Total transaction value 17,970 22,316 24.2 % Noah Holdings Limited Segment Condensed Income Statements (unaudited) Three months ended September 30, 2023 Wealth ManagementBusiness Asset ManagementBusiness Other Businesses Total RMB'000 RMB'000 RMB'000 RMB'000 Revenues: Revenues from others One-time commissions 199,286 - - 199,286 Recurring service fees 171,408 - - 171,408 Performance-based income 8,440 - - 8,440 Other service fees 61,915 - 12,440 74,355 Total revenues from others 441,049 - 12,440 453,489 Revenues from funds Gopher manages One-time commissions - 32 - 32 Recurring service fees 109,368 186,614 - 295,982 Performance-based income 405 5,138 - 5,543 Total revenues from funds Gopher manages 109,773 191,784 - 301,557 Total revenues 550,822 191,784 12,440 755,046 Less: VAT related surcharges (2,074) (389) (2,625) (5,088) Net revenues 548,748 191,395 9,815 749,958 Operating costs and expenses: Compensation and benefits Relationship managers (179,854) (5,894) - (185,748) Others (144,256) (64,041) (6,750) (215,047) Total compensation and benefits (324,110) (69,935) (6,750) (400,795) Selling expenses (94,088) (18,723) (6,896) (119,707) General and administrative expenses (53,401) (9,217) (4,789) (67,407) (Provision for) reversal of credit losses (894) (400) 1,819 525 Other operating expenses (11,677) (298) (7,007) (18,982) Government subsidies 89,925 13,656 1,716 105,297 Total operating costs and expenses (394,245) (84,917) (21,907) (501,069) Income (loss) from operations 154,503 106,478 (12,092) 248,889 Noah Holdings Limited Segment Condensed Income Statements (unaudited) Three months ended September 30, 2022 Wealth ManagementBusiness Asset ManagementBusiness Other Businesses Total RMB'000 RMB'000 RMB'000 RMB'000 Revenues: Revenues from others One-time commissions 92,551 - - 92,551 Recurring service fees 195,429 - - 195,429 Performance-based income 17,658 - - 17,658 Other service fees 49,368 - 21,922 71,290 Total revenues from others 355,006 - 21,922 376,928 Revenues from funds Gopher manages One-time commissions - 7,846 - 7,846 Recurring service fees 112,636 184,012 - 296,648 Performance-based income 515 9,594 - 10,109 Total revenues from funds Gopher manages 113,151 201,452 - 314,603 Total revenues 468,157 201,452 21,922 691,531 Less: VAT related surcharges (2,212) (1,139) (3,712) (7,063) Net revenues 465,945 200,313 18,210 684,468 Operating costs and expenses: Compensation and benefits Relationship managers (103,275) (5,696) - (108,971) Others (165,245) (58,758) (10,052) (234,055) Total compensation and benefits (268,520) (64,454) (10,052) (343,026) Selling expenses (65,988) (8,796) (1,211) (75,995) General and administrative expenses (39,345) (10,947) (7,219) (57,511) Reversal of (provision for) credit losses 931 (14) 4,357 5,274 Other operating expenses (1467) (357) (23,260) (25,084) Government subsidies 41,610 2,005 30 43,645 Total operating costs and expenses (332,779) (82,563) (37,355) (452,697) Income (loss) from operations 133,166 117,750 (19,145) 231,771 Noah Holdings Limited Supplement Revenue Information by Geography (unaudited) Three months ended September 30, 2023 Wealth ManagementBusiness Asset ManagementBusiness Other Businesses Total RMB'000 RMB'000 RMB'000 RMB'000 Revenues: Mainland China 333,911 116,355 12,440 462,706 Hong Kong 165,361 42,668 - 208,029 Others 51,550 32,761 - 84,311 Total revenues 550,822 191,784 12,440 755,046 Three months ended September 30, 2022 Wealth ManagementBusiness Asset ManagementBusiness Other Businesses Total RMB'000 RMB'000 RMB'000 RMB'000 Revenues: Mainland China 302,088 173,771 21,922 497,781 Hong Kong 125,240 6,945 - 132,185 Others 40,829 20,736 - 61,565 Total revenues 468,157 201,452 21,922 691,531 Noah Holdings Limited Reconciliation of GAAP to Non-GAAP Results (In RMB, except for per ADS data and percentages) (unaudited) Three months ended September 30, September 30, Change 2022 2023 RMB'000 RMB'000 Net income attributable to Noah shareholders 182,415 233,326 27.9 % Adjustment for share-based compensation 11,148 (1,161) N.A. Less: tax effect of adjustments 2,684 (281) N.A. Adjusted net income attributable to Noah shareholders (non-GAAP) 190,879 232,446 21.8 % Net margin attributable to Noah shareholders 26.7 % 31.1 % Non-GAAP net margin attributable to Noah shareholders 27.9 % 31.0 % Net income attributable to Noah shareholders per ADS, diluted 2.63 3.36 27.8 % Non-GAAP net income attributable to Noah shareholders per ADS, diluted 2.76 3.35 21.4 %
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