Gridsum Reports Unaudited 2nd Quarter 2019 Financial Results.

BEIJING: Gridsum Holding Inc. ("Gridsum" or the "Company") (NASDAQ:GSUM), a leading provider of cloud-based big-data analytics and artificial intelligence ("AI") solutions in China, today reported its unaudited financial results for the second quarter ended June 30, 2019.

Highlights

Net revenues decreased by 38% to RMB69.7 million (US$10.2 million) from RMB112.4 million in the comparable period of 2018.

Net loss attributable to Gridsum's ordinary shareholders decreased to RMB123.5 million (US$18.0 million) from RMB132.2 million in the comparable period of 2018.

Second Quarter 2019 Financial Results

REVENUES: Net revenues decreased by 38% to RMB69.7 million (US$10.2 million) from RMB112.4 million in the comparable period of 2018.

Enterprise revenues decreased by 40% to RMB60.4 million (US$8.8 million) from RMB100.7 million in the comparable period of 2018, primarily due to the Company's ongoing strategic evolution to achieve a more optimal revenue mix by proactively optimizing its Search Engine Marketing (SEM) business toward higher return opportunities and a slowdown in the Chinese economy.

E-Government and other revenues decreased by 25% to RMB9.9 million (US$1.4 million) from RMB13.2 million in the comparable period of 2018, mainly due to the lengthening sales cycles and lower budgeted spending by the Chinese government for legal services solutions as a result of government reorganization efforts which began in 2018.

COST OF REVENUES: Cost of revenues was RMB19.9 million (US$2.9 million), compared with RMB22.8 million in the comparable period of 2018.

GROSS PROFIT AND GROSS MARGIN: Gross profit decreased by 44% to RMB49.7 million (US$7.2 million) from RMB89.6 million in the comparable period of 2018, while gross margin decreased to 71.4% from 79.7%. This was mainly due to a change in revenue mix as well as a time-lag between the Company's restructuring/optimization of its revenue mix and its cost structure.

OPERATING EXPENSES: Total operating expenses were RMB181.7 million (US$26.5 million), compared with RMB203.3 million in the comparable period of 2018.

Sales and marketing expenses were RMB38.1 million (US$5.6 million), compared with RMB40.1 million in the comparable period of 2018. The decrease was primarily due to a RMB4.0 million decrease in staff and other costs, which was partially offset by a RMB1.0 million increase in share-based compensation expenses.

Research and development expenses were RMB87.9 million (US$12.8 million)...

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