“We executed and delivered a strong start to our new fiscal year driven by the successful transition of our business focus to services segment under the platform model, under which, we are well positioned to capture the increasing demand from third-party merchants and brands for our KOLs to provide sales and advertising services. Services segment demonstrated excellent profitability in the first fiscal quarter with related income from operations of
“We are building a leading technology-driven platform, including KOL Platform and key opinion consumer (“KOC”) Community, in order to intelligently connect and empower our KOLs, KOCs and third-party merchants and brands, further improving our operational efficiency and profitability,”
Mr.
First Fiscal Quarter Financial Highlights:
- Services revenue increased 74% year-over-year to
RMB113.7 million (US$16.1 million ). - Total net revenue decreased 10% year-over-year to
RMB280.4 million (US$39.7 million ). - Gross margin increased to 38% from 36% in the same quarter of last fiscal year.
- Net loss attributable to ruhnn was
RMB56.6 million (US$8.0 million ), inclusive of noncash impairment of exclusive cooperation rights ofRMB53.2 million , compared toRMB26.7 million in the same quarter of last fiscal year. - Adjusted net income attributable to ruhnn1 was
RMB10.7 million (US$1.5 million ) compared to a loss ofRMB21.6 million in the same quarter of last fiscal year. - Income from operations of services was
RMB22.2 million . Adjusted income from operations1 of services wasRMB25.1 million . - Net cash provided by operating activities increased 11 times year-over-year to
RMB11.6 million (US$1.6 million ).
First Fiscal Quarter Operational Highlights:
- Number of signed KOLs increased to 174 as of
June 30, 2020 from 133 as ofJune 30, 2019 . Number of fans increased to 263.1 million as ofJune 30, 2020 from 172.0 million as ofJune 30, 2019 . - Number of platform top-tier KOLs increased to 8 as of
June 30, 2020 from 2 as ofJune 30, 2019 . Number of platform established KOLs increased to 19 as ofJune 30, 2020 from 12 as ofJune 30, 2019 . - Accumulated number of brands served increased to 1,186 as of
June 30, 2020 from 701 as ofJune 30, 2019 .
___________________________________________
1 Adjusted net income (loss) attributable to ruhnn, and adjusted income from operations are non-GAAP measures, which exclude certain noncash or nonrecurring expenses. See “Unaudited Reconciliation of GAAP and Non-GAAP Financial Measures” at the end of this press release.
Summary Operation Data
Following the significant expansion of the Company’s business under the platform model and the transition of some online stores from the full-service model to the platform model, the Company has primarily switched its focus to services through the platform model and all of the Company’s signed KOLs were involved in the platform model as of
The following table presents the Company’s classification of its signed KOLs under the platform model:
As of and for the three months ended | |||||||||||
Number of KOLs | Services Revenue (RMB in millions) | Number of Fans(1) (In millions) | Number of KOLs | Services Revenue (RMB in millions) | Number of Fans(1) (In millions) | ||||||
Platform top-tier KOLs(2) | 2 | 6.1 | 10.6 | 8 | 40.3 | 73.0 | |||||
Platform established KOLs(3) | 12 | 29.9 | 33.7 | 19 | 31.1 | 44.8 | |||||
Platform emerging KOLs(4) | 14 | 10.6 | 25.2 | 18 | 15.5 | 40.0 | |||||
Platform micro KOLs(5) | 105 | 7.0 | 102.5 | 129 | 12.9 | 105.3 | |||||
Total signed KOLs | 133 | 53.6 | 172.0 | 174 | 99.8 | 263.1 | |||||
Others(6) | 11.9 | 13.9 | |||||||||
Total services revenue | 65.5 | 113.7 |
(1) The number of fans presented may include a single fan who was included multiple times if the fan follows more than one KOL, follows the same KOL across multiple platforms, or both.
(2) Platform top-tier KOLs generated services revenue of
(3) Platform established KOLs generated services revenue of
(4) Platform emerging KOLs generated services revenue of
(5) Platform micro KOLs generated services revenue of less than
(6) Others represent primarily services revenue that was generated through cooperation with third-party KOLs.
The following table presents operation data by platform model and full-service model:
As of and for the three months ended | |||
2019 | 2020 | ||
Platform Model(1) | |||
Number of signed KOLs serving such business model(3) | 133 | 174 | |
Accumulated number of brands served(4) | 701 | 1,186 | |
Number of brands served during the period(4) | 278 | 431 | |
Services revenue under the platform model (RMB in million) | 65.5 | 113.7 | |
Full-Service Model(2) | |||
Number of signed KOLs serving such business model(3) | 11 | 3 | |
Number of the Company’s online stores | 40 | 19 | |
Product sales revenue under the full-service model (RMB in million) | 247.3 | 166.8 |
(1) Under the platform model, the Company connects KOLs with third-party online stores and merchants to promote products sold in third-party online stores or provides advertising services on KOLs’ social media spaces to third-party merchants.
(2) Under the full-service model, the Company owns and operates online stores on third-party e-commerce platforms, and generate revenue through online sales of the Company’s self-designed products to consumers, especially the fans of the Company’s KOLs’ social media accounts that the Company manages.
(3) Certain KOLs under the Company’s full-service model overlap with those under the platform model. As of
(4) Number of brands served here represents the number of brands to which the Company provided advertising services.
Information by Segments
As discussed above, following the significant expansion of the Company’s business under the platform model and the transition of some online stores from the full-service model to platform model, the Company started to review its results of operations according to two operating segments when making decisions about allocating resources and assessing performance in the first quarter of fiscal year 2021. The two segments are (i) services through platform model, and (ii) product sales under full-service model. The table below sets forth the selected segment financial information of the two segments for the three months ended
Three months ended June 30, 2020 | |||||||||||||
Services | Product sales | Unallocated(1) | Consolidated | ||||||||||
RMB | RMB | RMB | RMB | US$ | |||||||||
(Amounts in thousands) | |||||||||||||
Net revenue | 113,668 | 166,752 | - | 280,420 | 39,691 | ||||||||
Less: | |||||||||||||
Cost of revenue | 54,420 | 118,606 | - | 173,026 | 24,491 | ||||||||
Fulfillment | 1,015 | 17,813 | - | 18,828 | 2,665 | ||||||||
Sales and marketing | 29,013 | 40,443 | - | 69,456 | 9,831 | ||||||||
General and administrative | 7,054 | 4,111 | 14,041 | 25,206 | 3,568 | ||||||||
Amortization of exclusive cooperation rights | - | 5,150 | - | 5,150 | 729 | ||||||||
Impairment of exclusive cooperation rights | - | 53,230 | - | 53,230 | 7,534 | ||||||||
Income (loss) from operations | 22,166 | (72,601 | ) | (14,041 | ) | (64,476 | ) | (9,127 | ) | ||||
Add back: | |||||||||||||
Amortization of exclusive cooperation rights | - | 5,150 | - | 5,150 | 729 | ||||||||
Impairment of exclusive cooperation rights | - | 53,230 | - | 53,230 | 7,534 | ||||||||
Share-based compensation expense | 2,967 | 2,602 | 1,905 | 7,474 | 1,058 | ||||||||
Litigation costs | - | - | 1,461 | 1,461 | 207 | ||||||||
Adjusted income (loss) from operations | 25,133 | (11,619 | ) | (10,675 | ) | 2,839 | 401 |
(1) Unallocated items include expenses incurred by the headquarters that are not allocated to services and product sales.
First Quarter of Fiscal Year 2021 Financial Results
Net revenue. Total net revenue was
- Services revenue through the platform model was
RMB113.7 million (US$16.1 million ), an increase ofRMB48.2 million or 74% fromRMB65.5 million for the same quarter of last fiscal year. The increase was mainly attributable to (i) the increase in the number of KOLs serving the Company’s platform model, which increased to 174 as ofJune 30, 2020 from 133 as ofJune 30, 2019 ; (ii) the improved performance of such KOLs as evidenced by the increase in the aggregate number of the platform top-tier, established and emerging KOLs to 45 as ofJune 30, 2020 from 28 as ofJune 30, 2019 ; and (iii) an increase in the number of brands that the Company cooperated with in its advertising business to 431 in the first quarter of fiscal year 2021 from 278 for the same quarter of last fiscal year.
- Product sales revenue through the full-service model was
RMB166.8 million (US$23.6 million ), a decrease ofRMB80.5 million or 33% fromRMB247.3 million for the same quarter of last fiscal year. The decrease was primarily attributable to (i) the transition of the business model of some online stores from the full-service model to the platform model, as a result of which, the number of the Company’s online stores decreased to 19 as ofJune 30, 2020 from 40 as ofJune 30, 2019 , while the number of the Company’s KOLs serving the full-service model decreased to 3 as ofJune 30, 2020 from 11 as ofJune 30, 2019 . This factor accounted for the majority of the decrease; (ii) the Company experienced a significant decrease in product sales generated from the online stores under the name of a top KOL who suffered from negative publicity sinceApril 2020 ; and (iii) the ongoing impact of the Covid-19 pandemic inChina during the first fiscal quarter, although to a lesser extent as compared to the previous quarter.
Cost of revenue. Cost of revenue was
Gross profit. Gross profit was
Total operating expenses. Total operating expenses were
- Fulfillment expenses were
RMB18.8 million (US$2.7 million ), a decrease ofRMB16.2 million or 46% fromRMB35.0 million for the same quarter of last fiscal year. The decrease was largely in line with the decrease in product sales. Fulfillment expenses accounted for 11% and 14% of product sales revenue for the first quarter of fiscal year 2021 and 2020, respectively.
- Sales and marketing expenses were
RMB69.5 million (US$9.8 million ), an increase ofRMB0.5 million or 1% fromRMB69.0 million for the same quarter of last fiscal year. Sales and marketing expenses consist primarily of expenses for KOL incubation, cultivation and training for the Company’s platform KOLs, as well as expenses incurred for the Company’s advertising, marketing and brand promotion activities under the full-service model. Following the expansion of KOL pool from 133 signed KOLs as ofJune 30, 2019 to 174 as ofJune 30, 2020 , related expenses incurred for KOL incubation, cultivation and training in order to support increased activities for the Company’s KOL sales and advertising business increased accordingly. Sales and marketing expenses accounted for 25% and 22% (or 23% and 22%, exclusive of noncash share-based compensation expense) of total net revenue for the first quarter of fiscal year 2021 and 2020, respectively.
- General and administrative expenses were
RMB25.2 million (US$3.6 million ), a decrease ofRMB5.3 million or 17% fromRMB30.5 million for the same quarter of last fiscal year. General and administrative expenses accounted for 9% and 10% (or 7% and 10%, exclusive of noncash share-based compensation expense and litigation costs) of total net revenue for the first quarter of fiscal year 2021 and 2020, respectively.
- Amortization of exclusive cooperation rights was
RMB5.2 million (US$0.7 million ) compared toRMB5.2 million for the same quarter of last fiscal year, which represented the amortization of intangible assets in relation to exclusive cooperation rights granted by a top KOL.
- Impairment of exclusive cooperation rights was
RMB53.2 million (US$7.5 million ) in the first quarter of fiscal year 2021 compared to nil in the same quarter of last fiscal year. The Company experienced a significant decrease in the product sales revenue generated from the online stores served by a top KOL who suffered from negative publicity sinceApril 2020 . The Company assessed the continuing impacts to its operations and recognized an impairment on the intangible assets relating to the exclusive cooperation rights granted by this KOL as ofJune 30, 2020 .
Interest income, net. Interest income, net was
Other income, net. Other income, net was
Loss before income taxes. Loss before income taxes was
Income taxes. Income tax expense was
Net loss attributable to ruhnn. Net loss attributable to ruhnn was
Adjusted net income (loss) attributable to ruhnn. Adjusted net income attributable to ruhnn was
Balance Sheet and Cash Flow
As of
Net cash provided by operating activities was
Outlook
The Company reiterates that, for the full fiscal year 2021, it currently expects its net revenue from services through the platform model to be between
This forecast reflects the Company’s current and preliminary view on the current business situation and market conditions, which are all subject to change.
The Company does not provide outlook for its product sales revenue for the full fiscal year 2021, primarily because of the uncertainty of the continuing impacts of the following factor: The Company has experienced a significant decrease in the product sales revenue generated from the online stores served by a top KOL who suffered from negative publicity since
Share Repurchase Program
On
Conference Call
The Company’s management will host an earnings conference call at
Event Title: | Ruhnn Holding Limited First Quarter of Fiscal Year 2021 Earnings Conference Call |
Conference ID: | 1279756 |
Registration Link: | http://apac.directeventreg.com/registration/event/1279756 |
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 access PIN, which can be used to join the conference call.
Participants should dial-in at least 10 minutes before the scheduled start time to be connected to the call.
Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at http://ir.ruhnn.com.
About
For more information, please visit http://ir.ruhnn.com.
Use of Non-GAAP Financial Measures
The Company uses non-GAAP measures, such as adjusted net (loss) income attributable to ruhnn, adjusted basic and diluted net (loss) income per ADS and adjusted (loss) income from operations in evaluating its operating results and for financial and operational decision-making purposes. The Company believes that the non-GAAP financial measures help identify underlying trends in its business by excluding the impact of noncash charges of impairment and amortization of intangible assets in relation to exclusive cooperation rights and share-based compensation expense, and litigation costs incurred in relation to the class action. The Company believes that the non-GAAP financial measures provide useful information about the Company’s results of operations, enhance the overall understanding of the Company’s past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company’s management in its financial and operational decision-making.
The non-GAAP financial measures are not defined under
The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable
For more information on the non-GAAP financial measures, please see the table captioned “Unaudited Reconciliations of GAAP and Non-GAAP Financial Measures” set forth at the end of this press release.
Exchange Rate Information
This announcement contains translations of certain Renminbi (“RMB”) amounts into
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the
For investor and media inquiries, please contact:
In
Senior Director of Investor Relations
Tel: +86-571-2825-6700
E-mail: ir@ruhnn.com
Tel: +86-21-6039-8363
E-mail: ruhnn@thepiacentegroup.com
In
The Piacente Group, Inc.
Tel: +1-212-481-2050
E-mail: ruhnn@thepiacentegroup.com
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Amounts in thousands, except for share and per share data) | ||||||||
RMB | RMB | US$ | ||||||
ASSETS: | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | 718,478 | 784,093 | 110,981 | |||||
Restricted cash | 5,673 | 5,799 | 821 | |||||
Short-term investment | 76,450 | 5,550 | 786 | |||||
Accounts receivable, net | 60,370 | 83,553 | 11,826 | |||||
Inventories | 145,553 | 121,104 | 17,141 | |||||
Advances to suppliers | 32,628 | 36,071 | 5,106 | |||||
Prepaid expenses and other current assets | 37,312 | 33,467 | 4,737 | |||||
Total current assets | 1,076,464 | 1,069,637 | 151,398 | |||||
Property and equipment, net | 183,404 | 171,225 | 24,235 | |||||
Intangible assets, net | 82,567 | 38,001 | 5,379 | |||||
1,002 | 1,002 | 142 | ||||||
Long-term investments | 87,636 | 88,473 | 12,523 | |||||
Operating lease right-of-use assets | - | 47,748 | 6,758 | |||||
Other non-current assets | 2,978 | 2,394 | 339 | |||||
TOTAL ASSETS | 1,434,051 | 1,418,480 | 200,774 | |||||
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY: | ||||||||
Current liabilities: | ||||||||
Accounts payable | 104,822 | 124,765 | 17,659 | |||||
Notes payable | 10,698 | 8,594 | 1,216 | |||||
Accrued salary and benefits | 68,601 | 59,831 | 8,469 | |||||
Accrued expenses and other current liabilities | 30,042 | 32,561 | 4,609 | |||||
Amounts due to related parties | - | 17,131 | 2,425 | |||||
Dividends payable | 18,097 | - | - | |||||
Current operating lease liabilities | - | 11,904 | 1,685 | |||||
Income tax payable | 1,662 | 3,340 | 473 | |||||
Total current liabilities | 233,922 | 258,126 | 36,536 | |||||
Deferred income | 10,033 | 9,398 | 1,330 | |||||
Non-current operating lease liabilities | - | 31,968 | 4,525 | |||||
Other non-current liabilities | 12,334 | 1,950 | 276 | |||||
Total liabilities | 256,289 | 301,442 | 42,667 | |||||
Shareholders' (deficit) equity: | ||||||||
Class A ordinary shares ( shares authorized, 246,122,394 and 243,823,804 shares issued and outstanding as of | - | - | - | |||||
Class B ordinary shares ( shares authorized, 174,834,250 shares issued and outstanding as of | - | - | - | |||||
- | (10,603 | ) | (1,501 | ) | ||||
Additional paid in capital | 1,504,848 | 1,512,321 | 214,057 | |||||
Accumulated deficit | (325,126 | ) | (381,710 | ) | (54,028 | ) | ||
Other comprehensive income | 4,598 | 4,678 | 662 | |||||
Total ruhnn shareholders' (deficit) equity | 1,184,320 | 1,124,686 | 159,190 | |||||
Non-controlling interest | (6,558 | ) | (7,648 | ) | (1,083 | ) | ||
Total shareholders' (deficit) equity | 1,177,762 | 1,117,038 | 158,107 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 1,434,051 | 1,418,480 | 200,774 | |||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||||||
(Amounts in thousands, except for share and per share data) | ||||||||
Three Months Ended | ||||||||
2019 | 2020 | |||||||
RMB | RMB | US$ | ||||||
Net revenue: | ||||||||
Services | 65,481 | 113,668 | 16,089 | |||||
Product sales | 247,295 | 166,752 | 23,602 | |||||
Total net revenue | 312,776 | 280,420 | 39,691 | |||||
Cost of revenue: | ||||||||
Cost of services | 27,360 | 54,420 | 7,703 | |||||
Cost of product sales | 173,896 | 118,606 | 16,788 | |||||
Total cost of revenue | 201,256 | 173,026 | 24,491 | |||||
Gross profit | 111,520 | 107,394 | 15,200 | |||||
Operating expenses(1): | ||||||||
Fulfillment | 34,975 | 18,828 | 2,665 | |||||
Sales and marketing | 68,990 | 69,456 | 9,831 | |||||
General and administrative | 30,510 | 25,206 | 3,568 | |||||
Amortization of exclusive cooperation rights | 5,150 | 5,150 | 729 | |||||
Impairment of exclusive cooperation rights | - | 53,230 | 7,534 | |||||
Other operating income, net | (785 | ) | - | - | ||||
Total operating expenses | 138,840 | 171,870 | 24,327 | |||||
Loss from operations | (27,320 | ) | (64,476 | ) | (9,127 | ) | ||
Other income (loss): | ||||||||
Interest income | 1,408 | 6,259 | 886 | |||||
Other income, net | 598 | 4,015 | 568 | |||||
Foreign exchange gain (loss) | 397 | (91 | ) | (13 | ) | |||
Loss before income taxes | (24,917 | ) | (54,293 | ) | (7,686 | ) | ||
Income taxes | 3,420 | 3,381 | 479 | |||||
Net loss | (28,337 | ) | (57,674 | ) | (8,165 | ) | ||
Less: Net loss attributable to non-controlling interest | (1,624 | ) | (1,090 | ) | (154 | ) | ||
Net loss attributable to ruhnn | (26,713 | ) | (56,584 | ) | (8,011 | ) | ||
Net loss per ordinary share: | ||||||||
Basic and diluted | (0.06 | ) | (0.14 | ) | (0.02 | ) | ||
Net loss per ADS (each ADS represents five ordinary shares): | ||||||||
Basic and diluted | (0.32 | ) | (0.68 | ) | (0.10 | ) | ||
Weighted average shares used in calculating net loss per ordinary share: | ||||||||
Basic and diluted | 412,473,758 | 415,377,951 | 415,377,951 | |||||
Net loss | (28,337 | ) | (57,674 | ) | (8,165 | ) | ||
Other comprehensive loss: | ||||||||
Foreign currency translation adjustments | 4,697 | 80 | 11 | |||||
Comprehensive loss | (23,640 | ) | (57,594 | ) | (8,154 | ) | ||
(1) Share-based compensation expense in each category: | ||||||||
Fulfillment | - | 142 | 20 | |||||
Sales and marketing | - | 3,737 | 529 | |||||
General and administrative | - | 3,595 | 509 | |||||
Total | - | 7,474 | 1,058 | |||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Amounts in thousands) | ||||||||
Three Months Ended | ||||||||
2019 | 2020 | |||||||
RMB | RMB | US$ | ||||||
Net cash provided by operating activities | 965 | 11,649 | 1,649 | |||||
Net cash (used in) provided by investing activities | (105,187 | ) | 65,375 | 9,253 | ||||
Net cash provided by (used in) financing activities | 718,498 | (11,035 | ) | (1,562 | ) | |||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 776 | (248 | ) | (35 | ) | |||
Increase in cash, cash equivalents and restricted cash | 615,052 | 65,741 | 9,305 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 103,821 | 724,151 | 102,497 | |||||
Cash, cash equivalents and restricted cash at end of period | 718,873 | 789,892 | 111,802 | |||||
UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES | ||||||||
(Amounts in thousands, except for share and per share data) | ||||||||
Three Months Ended | ||||||||
2019 | 2020 | |||||||
RMB | RMB | US$ | ||||||
Net loss attributable to ruhnn | (26,713 | ) | (56,584 | ) | (8,009 | ) | ||
Amortization of exclusive cooperation rights | 5,150 | 5,150 | 729 | |||||
Impairment of exclusive cooperation rights | - | 53,230 | 7,534 | |||||
Share-based compensation expense | - | 7,474 | 1,058 | |||||
Litigation costs | - | 1,461 | 207 | |||||
Adjusted net (loss) income attributable to ruhnn | (21,563 | ) | 10,731 | 1,519 | ||||
Adjusted net (loss) income per ADS (each ADS represents five ordinary shares): | ||||||||
Basic | (0.26 | ) | 0.13 | 0.02 | ||||
Diluted | (0.26 | ) | 0.13 | 0.02 | ||||
Weighted average shares used in calculating adjusted net (loss) income per ordinary share: | ||||||||
Basic | 412,473,758 | 415,377,951 | 415,377,951 | |||||
Diluted | 412,473,758 | 428,519,977 | 428,519,977 |
Three Months Ended June 30, 2020 | |||||
RMB | US$ | ||||
Loss from operations | (64,476 | ) | (9,127 | ) | |
Amortization of exclusive cooperation rights | 5,150 | 729 | |||
Impairment of exclusive cooperation rights | 53,230 | 7,534 | |||
Share-based compensation expense | 7,474 | 1,058 | |||
Litigation costs | 1,461 | 207 | |||
Adjusted income from operations | 2,839 | 401 |
Source:
2020 GlobeNewswire, Inc., source