Saturday, September 19, 2020
Financial Results News

ECMOHO Announces First Quarter 2020 Unaudited Financial Results

ECMOHO Limited (Nasdaq: MOHO) (“ECMOHO” or the “Company”), a leading integrated solutions provider in the non-medical health and wellness market in China, today announced its unaudited financial results for the first quarter ended March 31, 2020.

First Quarter 2020 Financial Highlights

  • Total net revenues were US$61.2 million, compared with US$63.9 million in the same quarter last year.
  • Operating loss was US$5.6 million, compared with operating income of US$0.8 million in the same quarter last year.
  • Non-GAAP operating loss was US$5.3 million, compared with Non-GAAP operating income of US$1.1 million in the same quarter last year.
  • Net loss was US$4.6 million, compared with net income of US$0.3 million in the same quarter last year.
  • Non-GAAP net loss was US$4.3 million, compared with net income of US$0.6 million in the same quarter last year.
  • Basic and diluted net loss per American Depositary Share (“ADS1”) attributable to ECMOHO Limited’s ordinary shareholders were US$0.13 and US$0.13, respectively, compared with US$0.01 and US$0.01, respectively, for the same period of 2019.
  • Non-GAAP basic and diluted net loss per ADS attributable to ECMOHO Limited’s ordinary shareholders were US$0.12 and US$0.12, respectively, compared with net earnings per ADS of US$0.01 and US$0.01, respectively, for the same period of 2019.

First Quarter 2020 Operational Highlights

  • Number of brands offered by the Company increased to 76 as of March 31, 2020, from 70 as of December 31, 2019.
  • Number of cumulative paying consumers was 8.6 million as of March 31, 2020.
  • Repeat purchase rate2 reached 38% in the three months ended March 31, 2020, from 35% in the three months ended December 31, 2019.

First Quarter 2020 Financial Results

Total net revenues were US$61.2 million, a decrease of 4.2% from US$63.9 million in the same quarter in 2019 with increases in product sales offset by declines in other revenues.  Total net revenues calculated in Renminbi declined by 0.9% year-over-year and declined further in US dollar terms as a result of the Renminbi’s depreciation year-over-year. The decrease was mainly due to disruptions caused by the COVID-19 pandemic, as some of the Company’s employees were not able to return to work as scheduled after the Lunar New Year public holiday and the Company’s domestic logistics and transport service providers, who experienced temporary shutdowns or worker absenteeism, were unable to ship products for us. 

Among brand partners, the Company saw revenue growth from existing partners Gerber, Perrier, Wyeth Pharmaceutical, Harbin Pharmaceutical and new partners Jiangzhong Shiliao and Bayer.  The growth in these brands was offset by decreases in the sales of milk powder products, such as Abbott and Wyeth Nutrition.

Cost of revenues was US$50.5 million, an increase of 6.5% from US$47.4 million in the same quarter in 2019.  The increase in cost of revenue was mainly due to higher sales to online retailers which typically generate lower gross profit.

Operating expenses were US$16.3 million, compared with US$15.7 million in the same quarter in 2019.  Operating expenses represented 26.6% of total net revenue, compared with 24.6% of total net revenues in the same quarter in 2019.

  • Fulfilment expenses were US$3.8 million, a decrease of 2.6% from US$3.9 million in the same quarter in 2019.  Fulfilment expenses declined primarily due to higher sales recorded to online retailers, which generally have lower fulfilment expenses per unit.  The above mentioned decline of fulfilment expense was offset by the increase in air freight expense per unit due to the nonfunctional logistics system in the first quarter.  Fulfillment expenses represented 6.2% of total net revenues, up slightly from 6.1% in the same quarter in 2019.
  • Sales and marketing expenses were US$9.1 million, flat with the same quarter in 2019.  Within sales and marketing expenses, platform fees and labor expenses grew and these increases were offset by a reduction in promotional expenses, which was a result of the Company doing fewer promotional activities during the COVID-19 pandemic.  Sales and marketing expenses represented 14.9% of total net revenues, up from 14.2% in the same quarter in 2019.
  • General and administrative expenses were US$3.1 million, an increase of 40.9% from US$2.2 million in the same quarter in 2019.  The increase was primarily due to higher professional service fees, higher labor expenses, and insurance expense in the first quarter of 2020 and offset by (1) a reduction in value added tax paid on inter-subsidiary transactions, which resulted from the Company receiving approval for VAT tax exemption for export of services in the second quarter of 2019, and (2) reductions in entertainment and office expenses.  General and administrative expenses represented 5.1% of total net revenues, up from 3.4% in the same quarter in 2019.
  • Research and development expenses were US$0.3 million, representing a 40.0% decline from US$0.5 million in the same quarter in 2019.  The decline was primarily due to a reduced headcount in the R&D department in the period.

Operating loss was US$5.6 million, compared with operating income of US$0.8 million in the same quarter in 2019.

Non-GAAP operating loss was US$5.3 million, compared with Non-GAAP operating income of US$1.1 million in the same quarter in 2019. 

Net loss was US$4.6 million, compared with net income of US$0.3 million during the same quarter in 2019.

Non-GAAP net loss was US$4.3 million, compared with Non-GAAP net income of US$0.6 million during the same quarter in 2019.

Net loss attributable to ECMOHO Limited was US$4.4 million, compared with net income attributable to ECMOHO Limited of US$0.3 million during the same quarter in 2019.

Non-GAAP net loss attributable to ECMOHO Limited was US$4.1 million, compared with Non-GAAP net income attributable to ECMOHO Limited of US$0.6 million during the same quarter in 2019.

As of March 31, 2020, the Company had US$53.0 million in cash, cash equivalents and restricted cash, an increase from US$51.1 million as of December 31, 2019. 

Inventory days in the first quarter of 2020 increased to 89 days from 62 days in the fourth quarter of 2019.  The increase in inventory days were influenced by three factors:

  • At the end of the fourth quarter 2019, the Company had just completed its double-eleven and double-twelve shopping events and inventory days were therefore relatively low;
  • During the first quarter of the calendar year the Company generally experiences lower levels of sales activity due to the Lunar New Year holiday, during which the volumes of online purchases and logistical operations drop significantly due to vacations and business closures;
  • The Company pulled in some of its orders to its overseas suppliers for the 618 shopping event from April to March, as a precaution against potential disruptions in the supply chain. 

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