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August 22, 2016 at 6:05 AM EDT

Wowo Limited Reports Second Quarter 2016 Unaudited Financial Results

BEIJING, Aug. 22, 2016 (GLOBE NEWSWIRE) -- Wowo Limited (the “Company” or “JM Wowo”) (NASDAQ:JMU), a leading B2B online e-commerce platform that provides integrated services to suppliers and customers in the foodservice industry in China, today announced its unaudited financial results for the second quarter of 2016 ended June 30, 2016.

Second Quarter 2016 Highlights

  • Revenues in the second quarter of 2016 were $56.1 million, an increase of 26.8% from $44.3 million in the first quarter of 2016.
  • Gross loss was $45,000 in the second quarter 2016, improved from $156,000 in the first quarter of 2016.
  • B2B online platform recorded gross billing of RMB1,598 million (US$240 million) in the second quarter of 2016, measured in terms of gross merchandise value (“GMV”).
  • Active customer accounts reached 32,775 as of June 30, 2016.
  • Third-party sellers on the Company’s JMU online marketplace reached 14,085.

Ms. Xiaoxia Zhu, Co-chairperson and Chief Executive Officer commented, “We are pleased to achieve continuous topline growth in the second quarter of 2016. Our revenue growth was attributable to the increase in order volume from our growing online direct sales business.  We continue to expand the number of qualified international suppliers onto our online platform to better serve our customers. In the second quarter of 2016, we entered into partnership agreements with several outstanding food companies including Dalian Beston Global Food Company, Sino-Australia Top Beef (Tianjin) Co., Ltd. and Hebei Qianxihe Meat lndustry Co., Ltd. This highlights our successful efforts to seek partnerships with leading direct suppliers to strengthen China’s online platform catering supply chain system. As we aim to build one of China's largest internet foodservice platforms, we will continue to actively seek additional partnerships with both domestic and international suppliers and provide our customers with more high-quality products and services.”

“Also during the second quarter, we changed our ticker to ‘JMU’ to better reflect the direction of our company as a leading B2B online e-commerce platform operating in China’s foodservice industry and also relocated our headquarters to a larger facility located in Bay Valley, Shanghai to better prepare us for future growth and expansion.  Finally, in July, our consolidated affiliated entity, Zhongmin Supply Chain Management Co., Ltd., received the ‘Regional Headquarters Certificate’ from the Shanghai government, recognizing it as one of the key trading companies headquartered in Shanghai. We are very happy to achieve this recognition and will capitalize on our favorable reputation and strength of our foodservice B2B platform expertise to further expand our development activity,” concluded Ms. Zhu.

Recent Corporate Highlights

  • In July 2016, the Company relocated its corporate headquarters to Bay Valley, Shanghai.
  • In July, JM Wowo’s consolidated affiliated entity in China, Shanghai Zhongmin Supply Chain Management Co., Ltd., is among the first group of 94 Shanghai-based trading companies that received the ‘Regional Headquarters Certificate’ from the Shanghai government, recognizing it as one of the key trading companies headquartered in Shanghai.
  • In July, the Company entered into a strategic partnership with Chongqing Haier Home Appliance Sales Co., Ltd.Shanghai Branch. JM Wowo customers can purchase a full line of Haier products with supporting services on JM Wowo’s online marketplace.
  • On July 18th, the Company entered into a strategic cooperation agreement with Taetea Group, a leading tea company that produces, distributes and sells Pu’er tea with over 2,200 retail outlets in Asia.

Second Quarter 2016 Financial Performances

As previously announced, in September 2015, JM Wowo divested Wowo Group Limited, the Company’s group buying and other non-foodservice-related businesses in an effort to build one of China's largest internet foodservice platforms, improve its profitability and streamline its business operations.

Revenues were $56.1 million for the second quarter of 2016, an increase of 26.8% from $44.3 million in the first quarter of 2016. The growth of revenue in the second quarter 2016 was mainly due to the larger order volume from our growing online direct sales business.

Cost of revenues was $56.2 million in second quarter 2016, an increase of 26.5% from $44.4 million in the first quarter of 2016, which generally is in line with the growth of our revenues.

Gross loss for the second quarter of 2016 was $45,000, improved from gross loss of $160,000 in first quarter 2016. The improvement was mainly due to the increasing sales in the second quarter of 2016.

Selling and marketing expenses in the second quarter 2016 increased 29.4% to $2.1 million from $1.7 million in the first quarter of 2016. As a percentage of total revenue, selling and marketing expense was 3.8% and 3.7% in the second and first quarter of 2016, respectively. The increase in marketing expenses was primarily due to higher service charge arising from the intensive marketing activities in second quarter.

General and administrative expenses in second quarter 2016 were $3.5 million, up 14.1% compared to $3.0 million in the first quarter of 2016. The increase in general and administrative expenses was mainly due to the increase of R&D staff cost as the Company expanded its platform development team in the second quarter of 2016. As a percentage of total revenues, general and administrative expenses was 6.2% and 6.9% in the second and first quarter of 2016, respectively.

Loss from operations in the second quarter of 2016 was $5.7 million, an increase of 16.6% from $4.8 million in the first quarter of 2016.

Net loss attributable to the Company in the second quarter of 2016 was $5.1 million, an increase of 18.9% as compared to $4.3 million in the first quarter of 2016. Non-GAAP net loss attributable to the Company, which excludes amortization of acquired intangible assets, impairment of goodwill and related provision for income tax benefits, was $3.5 million compared to $2.7 million in the first quarter of 2016. For the quarter ended June 30, 2016 and March 31, 2016 the Company’s weighted average number of ordinary shares used in computing loss per ordinary share was 1,476,208,670 and 1,476,208,670, respectively.

As of June 30, 2016, the Company’s cash and cash equivalents was $3.6 million, a decrease of 68% as compared to $11.2 million as of December 31, 2015. The decrease in cash and cash equivalents was mainly due to the growth of our online direct sales which requires cash outflow for products procurement. Working capital was $7.9 million as compared to $16.1 million as of December 31, 2015. Total shareholders’ equity was $284.8 million and $304.7 million as of June 30, 2016 and December 31, 2015, respectively.

Note 1: Non-GAAP measures

To supplement our consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (“GAAP”), we use various non-GAAP financial measures that are adjusted from results based on U.S. GAAP to exclude amortization of acquired intangible assets, impairment of goodwill and related provision for income tax benefits.

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 U.S. GAAP, but should not be considered a substitute for or superior to U.S. GAAP financial results. In addition, our calculation of this non-GAAP financial information may be different from the calculation used by other companies, and therefore comparability may be limited.

Our non-GAAP information (including non-GAAP loss from operations and net loss attributable to the Company) which is adjusted from results based on U.S. GAAP to exclude amortization of acquired intangible assets, impairment of goodwill and related provision for income tax benefits. A limitation of using these non-GAAP financial measures is that amortization of acquired intangible assets, impairment of goodwill and related provision for income tax benefits have been and may continue to be for the foreseeable future significant recurring expenses in our results of operations. We compensate for these limitations by providing reconciliations of our non-GAAP financial measures to our U.S. GAAP financial measures. Please see the reconciliation tables at the end of this earnings release.

About JM Wowo

JM Wowo currently operates China’s leading B2B online e-commerce platform that provides integrated services to suppliers and customers in the catering industry. With the help of Internet and cloud technologies, JM Wowo has the vision to reshape the procurement and distribution pattern and build a fair business ecosystem in the catering industry in China. JM Wowo is further promoting the use of its platform for small- and medium-sized restaurants and restaurant chains in China.

Through cooperation with national and local industry associations and reputable restaurant groups across China, JM Wowo has formed a leading industrial alliance and has great resource leverage in China’s catering industry. JM Wowo works closely with suppliers and customers in the catering industry, providing one-stop procurement services, as well as other value-added services.

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 “aim”, “anticipate”, “believe”, “estimate”, “expect”, “going forward”, “intend”, “ought to”, “plan”, “project”, “potential”, “seek”, “may”, “might”, “can”, “could”, “will”, “would”, “shall”, “should”, “is likely to” and the negative form of these words and other similar expressions. Among other things, statements that are not historical facts, including statements about JM Wowo’s beliefs and expectations, the business outlook and quotations from management in this announcement, as well as JM Wowo’s strategic and operational plans, are or contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. 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 general economic and business conditions in China may deteriorate. The growth of Internet and mobile user population in China might not be as strong as expected. JM Wowo’s plan to enhance customer experience, upgrade infrastructure and increase service offerings might not be well received. JM Wowo might not be able to implement all of its strategic plans as expected. Competition in China may intensify further. All information provided in this press release is as of the date of this press release and are based on assumptions that we believe to be reasonable as of this date, and JM Wowo does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

 Wowo Limited
Unaudited Condensed Consolidated Statements of Operations
(US dollars in thousands, except share number and per share data)
 
     Three months ended
    March 31, 2016   June 30, 2016
Revenues       44,263         56,134  
Cost of revenues       44,419         56,179  
Gross loss       (156 )       (45 )
Operating expenses:            
Selling and marketing       1,650         2,135  
General and administrative       3,041         3,469  
Total operating expenses       4,691         5,604  
Loss from operations       (4,847 )       (5,649 )
Interest income       13         5  
Other expenses, net       0         0  
Loss before provision for income taxes       (4,834 )       (5,644 )
Provision for income tax benefits       540         540  
Net loss attributable to Wowo Limited       (4,294 )       (5,104 )
Net loss attributable to holders of ordinary shares of Wowo Limited       (4,294 )       (5,104 )
             
Net loss per ordinary shares            
Basic       (0.0029 )       (0.0035 )
Diluted       (0.0029 )       (0.0035 )
Weighted average shares used in calculating net loss per ordinary shares            
Basic       1,476,208,670         1,476,208,670  
Diluted       1,476,208,670         1,476,208,670  


Wowo Limited
Unaudited Condensed Consolidated Balance Sheets
(US dollars in thousands) 
 
  December 31,   June 30,
  2015   2016
Assets      
Current assets:          
Cash and cash equivalents     11,152         3,633  
Accounts receivable, net     3,748         2,689  
Inventories, net     94         1,461  
Prepaid expenses and other current assets     25,282         25,318  
Amounts due from related parties     807         568  
           
Total current assets     41,083         33,669  
Long-term investment     -         752  
Property and equipment, net     478         1,684  
Acquired intangible assets, net     50,563         42,144  
Goodwill     250,650         243,366  
Other non-current assets     -         -  
Total assets     342,774         321,615  
Current liabilities:          
Accounts payable     3,831         4,374  
Accrued expenses and other current liabilities     19,971         18,100  
Advance from customers     828         1,817  
Amounts due to related parties     320         1,477  
           
Total current liabilities     24,950         25,768  
Non-current liabilities:          
Other non-current liabilities     502         502  
Deferred tax liabilities-non-current     12,641         10,536  
Total liabilities     38,093         36,806  
Shareholders' equity:          
Ordinary shares     14         14  
Additional paid-in capital     630,470         630,470  
Accumulated deficit     (326,711 )       (336,109 )
Accumulated other comprehensive (loss)/income     908         (9,566 )
Total Wowo Limited shareholders' equity     304,681         284,809  
Total liabilities and equity     342,774         321,615  


Wowo Limited
Reconciliation of Non-GAAP financial measures to comparable GAAP measures
(US Dollars in thousands)
  Three Months Ended
  March 31, 2016   June 30, 2016
       
Loss from operations   4,847       5,649  
Net loss attributable to Wowo Ltd.   4,294       5,104  
Amortization of acquired intangible assets   2,159       2,161  
Impairment of goodwill   -       -  
Provision for income tax benefits   (540 )     (540 )
       
Non-GAAP loss from operation (a)   2,688       3,488  
Non-GAAP net loss attributable to Wowo Ltd.(a)(b)   2,675       3,483  
       
(a) Adjustment to exclude amortization of acquired intangible assets
(b) Adjustment to exclude provision for income tax benefits


Contact:

Lichao Zhao, IR Director
Wowo Limitedzhaolichao@ccjmu.com
Tel: +86-183 2119 5582

Bill ZimaICR Inc.bill.zima@icrinc.com
Tel: +1(203)-682-8200

Wowo Limited
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