China Finance Online Co. Limited (“China Finance Online”, or the “Company”, “we”, “us” or “our”) (NASDAQ GS: JRJC), a leading web-based financial services company that provides Chinese retail investors with online access to securities trading services, wealth management products, securities investment advisory services, as well as financial database and analytics services to institutional customers, today announced its unaudited financial results for the first quarter ended March 31, 2018.
First Quarter 2018 Financial Highlights
- Net revenues grew 53.1% year-over-year to $13.3 million from $8.7 million in the first quarter of 2017
- Revenues from the financial information and advisory business grew 72.7% year-over-year
- Revenues from financial services grew 24.3% year-over-year
- Gross margin increased to 61.9%, up from 46.4% in the first quarter of 2017
- Net loss attributable to China Finance Online was $5.2 million, compared with a net loss of $11.6 million in the first quarter of 2017
- Lingxi Robo-Advisor outperformed most of its peer products in the Chinese market with an average return of 2.4% and average drawdown rate of 4.0% in the first quarter of 2018. In the first quarter of 2018, the aggressive portfolio of Lingxi has beat 92% of equity funds and hybrid funds in terms of return
Mr. Zhiwei Zhao, Chairman and CEO of China Finance Online, commented, “As we continued to ramp up our cloud-based software sales, our bottom line losses narrowed. After four quarters of streamlining our business units, our efficiency reached a new recent high. With the bulk of our investment in our cloud system and user interface completed, we will continue to improve operational efficiency and leverage our intelligent-finance driven fintech business to drive better economy of scale.”
“We will continue to focus on fundamental operational measures to further strength our professional journalism and content quality. We strongly believe that our continued improvement on content will be recognized by more and more readers of financial market news,”
“During the development and extension of our new product for the enterprise market, Genius Zhisheng, a cloud-based one-stop investment research platform for institutional investors, we continued to find new services scenarios. Our products and services draw interest from brokerage firms and wealth management advisors. As more potential users are partaking beta testing, we have started monetizing our products and services for enterprise market gradually,” Mr. Zhao concluded.
First Quarter 2018 Financial Results
Net revenues were $13.3 million, compared with $8.7 million during the first quarter of 2017 and $13.6 million during the fourth quarter of 2017. During the first quarter of 2018, revenues from financial services, the financial information and advisory business, and advertising services contributed 50%, 37% and 13% of the net revenues, respectively, compared with 62%, 33% and 5%, respectively, for the corresponding period in 2017.
Revenues from financial services were $6.7 million, compared with $5.4 million during the first quarter of 2017 and $8.9 million during the fourth quarter of 2017. Revenues from financial services mainly represent equity brokerage services. The equity brokerage business grew 47.1% year-over-year and decreased 27.2% quarter-over-quarter.
Revenues from the financial information and advisory business were $4.9 million, an increase of 72.7% from $2.8 million during the first quarter of 2017 and 69.2% from $2.9 million in the fourth quarter of 2017. Revenues from the financial information and advisory business were comprised of subscription services from individual and institutional customers. During the first quarter, subscription revenue from individual investors grew by 1314.3% year-over-year, mainly due to the increased subscription of the Company’s cloud-based analytical tools among retail investors. The year-over-year and quarter-over-quarter increases of revenues from the financial information and advisory business were mainly due to the increase of subscription revenue from individual investors.
Revenues from advertising were $1.7 million, compared with $0.4 million in the first quarter of 2017 and $1.6 million in the fourth quarter of 2017. The increased traffic to our site and readership recognition of our premium content also helped to elevate our advertising revenues.
Gross profit was $8.2 million, compared with $4.0 million in the first quarter of 2017 and $6.8 million in the fourth quarter of 2017. Gross margin in the first quarter of 2018 was 61.9%, compared with 46.4% in the first quarter of 2017 and 49.7% in the fourth quarter of 2017. The year-over-year and quarter-over-quarter increases in gross margin were mainly due to revenue mix changes associated with the growth of the financial information and advisory business, which carries a higher margin.
General and administrative expenses were $3.3 million, a decrease of 20.9% from $4.1 million in the first quarter of 2017, and a decrease of 19.8% from $4.1 million in the fourth quarter of 2017. The year-over-year and quarter-over-quarter decreases were mainly attributable to more stringent expense control measures and streamlining operations.
Sales and marketing expenses were $6.2 million, a decrease of 25.2% from $8.3 million in the first quarter of 2017, and a decrease of 8.8% from $6.8 million in the fourth quarter of 2017. The year-over-year and quarter-over-quarter decreases were mainly attributable to the reduction in headcount and rental expenses associated with the terminated commodity brokerage operation.
Research and development expenses were $3.8 million, a decrease of 12.4% from $4.3 million in the first quarter of 2017 and with no significant difference from $3.8 million in the fourth quarter of 2017. The year-over-year decrease was mainly attributable to improved efficiency after the consolidation of the R&D team. The Company continues to maintain a team of senior software engineers, data scientists and capital market professionals to support further development in its fintech capabilities.
Total operating expenses were $13.3 million, a decrease of 20.8% from $16.8 million in the first quarter of 2017, and a decrease of 9.9% from $14.7 million in the fourth quarter of 2017. The year-over-year and quarter-over-quarter decreases were mainly due to improved operational efficiency and effective cost controls.
Loss from operations was $5.0 million, compared with a loss from operations of $12.5 million in the first quarter of 2017 and a loss from operations of $8.0 million in the fourth quarter of 2017.
Net loss attributable to China Finance Online was $5.2 million, compared with a net loss of $11.6 million in the first quarter of 2017 and a net loss of $8.4 million in the fourth quarter of 2017.
Fully diluted loss per American Depository Shares (“ADS”) attributable to China Finance Online was $0.23 for the first quarter of 2018, compared with fully diluted loss per ADS of $0.51 for the first quarter of 2017 and fully diluted loss per ADS of $0.37 for the fourth quarter of 2017. Basic and diluted weighted average numbers of ADSs for the first quarter of 2018 were 22.8 million, compared with basic and diluted weighted average number of ADSs of 22.7 million for the first quarter of 2017. Each ADS represents five ordinary shares of the Company.
As of March 31, 2018, total cash and cash equivalents, restricted cash and short-term investments were $24.7 million.
- Lingxi Robo-Advisor recorded strong performance in first quarter of 2018
In the first quarter of 2018, the Company’s Robo-Advisor product, Lingxi, posted an average return of 2.4% (an annualized return of 10.0%) with an average drawdown rate of 4.0% which significantly outperformed the Shanghai Composite Index in return with a significantly lower drawdown. According to China Finance Online’s internal research, Lingxi’s performance in the first quarter of 2018 also exceeded most of its peer products in the market for its better return with a lower drawdown. Even though experiencing several market fluctuations in the first quarter of 2018, one of the best-performing strategies by Lingxi produced an annualized return of 15.81%. Moreover, in the first quarter of 2018, the aggressive portfolio of Lingxi beats 92% of equity funds and hybrid funds in terms of return. Since its inception in late 2016, Lingxi provides Chinese middle-class retail investors with a wide array of investment combinations and personalized global asset allocations through Chinese domestic mutual funds.
Lingxi Platinum Product, which targets mass affluent investors in China, outperformed the average level of public Fund of Funds in return with a significantly lower drawdown in the first quarter of 2018.
- 2018 China Finance Online Value Discovery Forum for Public Companies on Chinese Stock Markets
In order to leverage China Finance Online’s market influence as the leading financial media in China and share its robust machine learning and research capability on public companies’ value creation, in May 2018, the Company hosted the “2018 Value Discovery Forum for Public Companies on Chinese Stock Markets” in Chengdu. Over 80 prestigious public companies listed on the Shenzhen and Shanghai stock markets and influential investors attended the forum.
During the forum, China Finance Online also announced the 2018 Top 30 Growth Non-State-Owned-Companies, 2018 Top 30 Socially Responsible Non-State-Owned-Companies and 2018 Top 30 Investor Confidence Non-State-Owned-Companies. These rankings are based on China Finance Online’s proprietary algorithms dynamically tracking a series of datapoints including financials, valuation, growth trends, ESG (environment, social and governance) and other metrics, which enable investors to identify investment opportunities and discover value stocks.
Safe Harbor Statement
This press release contains forward-looking statements which constitute “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. The statements contained herein reflect management’s current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially from those in the forward-looking statements, all of which are difficult to predict and many of which are beyond the control of the Company. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, this release contains the following forward-looking statements regarding:
- our prospect and our ability to attract new users;
- our prospect on building a comprehensive wealth management ecosystem through providing a fully-integrated online communication and securities-trading platform;
- our prospect on stabilization in cash attrition and improvement of our financial position;
- our initiatives to address customers’ demand for intuitive online investment platforms and alternative investment opportunities; and
- the market prospect of the business of securities-trading, securities investment advisory and wealth management.
Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which risk factors and uncertainties include, amongst others, changing customer needs, regulatory environment and market conditions that we are subject to; the uneven condition of the world and Chinese economies that could lead to volatility in the equity markets and affect our operating results in the coming quarters; the impact of the changing conditions of the mainland Chinese stock market, mainland Chinese precious metals exchanges, Hong Kong stock market and global financial markets on our future performance; the unpredictability of our strategic transformation and growth of new businesses; the prospect of our margin-related business and the degree to which our implementation of margin account screening and ongoing monitoring will yield successful outcomes; the degree to which our strategic collaborations with partners will yield successful outcomes; the prospects for China’s high-net-worth and middle-class households; the prospects of equipping our customer specialists with new technology, tools and financial knowledge; wavering investor confidence that could impact our business; and possible non-cash goodwill, intangible assets and investment impairments may adversely affect our net income. Further information regarding these and other risks is included in the Company’s filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F under “Forward-Looking Information” and “Risk Factors”. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
U.S. inauguration turns poet Amanda Gorman into best seller
WASHINGTON (Thomson Reuters Foundation) – The president’s poet woke up a superstar on Thursday, after a powerful reading at the U.S. inauguration catapulted 22-year-old Amanda Gorman to the top of Amazon’s best-seller list.
Hours after Gorman’s electric performance at the swearing-in of President Joe Biden and Vice President Kamala Harris, her two books – neither out yet – topped Amazon.com’s sales list.
“I AM ON THE FLOOR MY BOOKS ARE #1 & #2 ON AMAZON AFTER 1 DAY!” Gorman, a Los Angeles resident, wrote on Twitter.
Gorman’s debut poetry collection ‘The Hill We Climb’ won top spot in the online retail giant’s sale charts, closely followed by her upcoming ‘Change Sings: A Children’s Anthem’.
While poetry’s popularity is on the up, it remains a niche market and the overnight adulation clearly caught Gorman short.
“Thank you so much to everyone for supporting me and my words. As Yeats put it: ‘For words alone are certain good: Sing, then’.”
Gorman, the youngest poet in U.S. history to mark the transition of presidential power, offered a hopeful vision for a deeply divided country in Wednesday’s rendition.
“Being American is more than a pride we inherit. It’s the past we step into and how we repair it,” Gorman said on the steps of the U.S. Capitol two weeks after a mob laid siege and following a year of global protests for racial justice.
“We will not march back to what was. We move to what shall be, a country that is bruised, but whole. Benevolent, but bold. Fierce and free.”
The performance stirred instant acclaim, with praise from across the country and political spectrum, from the Republican-backing Lincoln Project to former President Barack Obama.
“Wasn’t @TheAmandaGorman’s poem just stunning? She’s promised to run for president in 2036 and I for one can’t wait,” tweeted former presidential candidate Hillary Clinton.
A graduate of Harvard University, Gorman says she overcame a speech impediment in her youth and became the first U.S. National Youth Poet Laureate in 2017.
She has now joined the ranks of august inaugural poets such as Robert Frost and Maya Angelou.
Her social media reach boomed, with her tens of thousands of followers ballooning into a Twitter fan base of a million-plus.
“I have never been prouder to see another young woman rise! Brava Brava, @TheAmandaGorman! Maya Angelou is cheering—and so am I,” tweeted TV host Oprah Winfrey.
Gorman’s books are both due out in September.
Third on Amazon’s best selling list was another picture book linked to politics and projecting hope: ‘Ambitious Girl’ by Vice-President Kamala Harris’ niece, Meena Harris.
(Reporting by Umberto Bacchi @UmbertoBacchi, Editing by Lyndsay Griffiths. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)
Why brands harnessing the power of digital are winning in this evolving business landscape
By Justin Pike, Founder and Chairman, MYPINPAD
Delivery of intuitive, secure, personalised, and frictionless user experiences has long been table stakes in digital commerce, well before the era of COVID-19. As businesses harness the revolutionary power of digital technologies, they have pursued large-scale change to adapt to evolving consumer preferences (some more successfully than others, but that’s a blog for another day). Digital transformation is a term we hear repeatedly, and it looks different for each organisation, but essentially, it’s about utilising technology and data to digitise, automate, innovate and improve processes and the customer experience across the entire business.
As I said, this was already well underway but then came 2020 and no industry escaped the disruption of the coronavirus outbreak, which has had an indelible impact on businesses performance, operations, and revenue. Regardless of whether the impact of COVID has been very positive or very challenging, it has forced organisations globally to re-evaluate and re-orient strategies to adapt.
As lockdowns and pandemic-related restrictions continue to change daily life, this raises the question of how we can balance a dramatic shift to digital and the benefits it brings, while ensuring business continuity and innovation both during and post-COVID, and protecting everyone against fraud?
Digital is an essential survival tool, and even more so in a COVID world
No one could have predicted the dramatic digital pivot that has taken place over this year. Indeed, within weeks of the COVID outbreak cash usage in the UK dropped by around 50%. Digital solutions including delivery applications, contactless payments, mobile commerce, online and mobile banking have become essential components of a touchless customer experience in the era of social distancing. It’s no longer just about an enhanced and superior customer experience, it’s also about health, safety and survival.
In store, businesses have benefited from contactless payments enabling faster throughput and reduced need for consumers to touch payment terminals (therefore requiring greater cleaning, which degrades the hardware much faster). Mastercard reported a 40% increase in contactless payments – including tap-to-pay and mobile pay – during the first quarter of the year as the global pandemic worsened. Digital has also become an essential sales channel for many B2C brands. Where brick and mortar stores have been required to close, digital commerce enables continuity of customer relationships and revenue. This channel also provides brands with rich customer data, which can be used to enhance and personalise the customer experience and typically results in greater levels of engagement and uplifts in revenue.
Industry forecasts estimate that worldwide spending on the technologies and services enabling digital transformation will reach GBP 1.8 trillion in 2023 – a clear indication that the process represents a long-term investment and a global commitment to digital-first strategy. The key point here is that digital brings significant benefits, and regardless of COVID, is here to stay.
The challenges that rapid digital transformation brings to businesses
Regardless of whether businesses are operating in developed or less-developed economies, these times of crisis have levelled the playing field in the sense that all businesses are facing similar issues. Access to products and supplies, maintaining customer relationships, accelerating sales for some and declining sales for others, health and hygiene are just a few of the unique challenges brought about by COVID.
Many businesses in physical environments have had to swiftly implement changes to significantly reduce safety risks for staff and customers, such as contactless payments, mobile ordering and delivery options. But with these changes come a host of other benefits of digitisation, such as faster transactions, and reduced human error at the point-of-sale.
The reliance on technology, however, can also expose organisations and consumers to certain vulnerabilities. In particular, the risks of fraud and cybercrime have dramatically increased since the onset of the pandemic as scammers have taken advantage of digital technologies to target both businesses and individuals.
As a McKinsey report illustrates, new levels of sophistication in the activities of fraudsters have placed more pressure on companies that have been previously slow to go digital, bringing “into sharp relief how vulnerable companies really are”, and damaging the financial health of small and large businesses. In fact, the Bottomline 2020 Business Payments Barometer reveals that only one in 10 small businesses across the UK report recovering more than 50% of losses due to fraud.
But take these stats with a grain of salt. While it is important to be aware of the risks and challenges this new business landscape brings, it’s equally as important to have a lens firmly across your own business, industry and audience, and to identify the changes you can make internally to mitigate risk as well as improve your customer experience. Where can you make some quick wins? Do you have the right skillsets internally to achieve what you need to achieve? What technology is out there that will enable your business goals? There are tech companies like MYPINPAD that are making huge strides in software development, which will transform businesses globally.
A digital world post-COVID
Almost a year in, the line between business success and failure remains fragile. However, an ongoing transition towards greater digitisation will be the difference between survival and the alternative.
There is a wide range of initiatives businesses can implement to weather this storm. If we look at the space MYPINPAD operates within, secure digital consumer authentication is crucial to the ongoing success and security of not only financial products but also identification and verification across a range of different industry verticals. Shifting the authentication of consumers securely onto mobile devices enables businesses to completely reshape their customer experiences. By bringing together a more seamless, frictionless customer experience, accessibility, privacy, security and access to consumer data, businesses are able to drive digital transformation across day-to-day activities.
Against this backdrop, software with stronger security standards continue to play an ever more vital role in supporting society, protecting consumers and businesses from the increase in risks that rapid digitisation brings. Already, merchants can deploy PIN on Mobile technology from companies like MYPINPAD, onto their smart devices to speed up the digitisation process many are now tackling.
Essentially, opening up universal payments and authentication methods that feel familiar, for both online and face-to-face transactions, will be key to opening up a world of possibilities when it comes to redefining how businesses engage with consumers.
Brexit responsible for food supply problems in Northern Ireland, Ireland says
LONDON (Reuters) – Food supply problems in Northern Ireland are due to Brexit because there are now a certain amount of checks on goods going between Britain and Northern Ireland, Irish Foreign Minister Simon Coveney said.
British ministers have sought to play down the disruption of Brexit in recent days.
“The supermarket shelves were full before Christmas and there are some issues now in terms of supply chains and so that’s clearly a Brexit issue,” Coveney told ITV.
The Northern Irish protocol means there are “a certain amount of checks on goods coming from GB into Northern Ireland and that involves some disruption,” he said.
(Reporting by Guy Faulconbridge; Editing by Tom Hogue)
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