MOGU Announces First Quarter Fiscal Year 2021 Unaudited Financial Results
MOGU Inc. (NYSE: MOGU) ("MOGU" or the "Company"), a leading KOL-driven online fashion and lifestyle destination in China, today announced its unaudited financial results for the first quarter of fiscal year 2021 ended June 30, 2020.
Mr. Qi Chen, Chairman and Chief Executive Officer of MOGU, commented, "In the past quarter, we have witnessed steady recovery from COVID-19. Our hosts and supply chain partners have gradually resumed their normal operation. Our live video broadcasting business has regained growth momentum and it grew 72.4% year over year benefiting from our business restructuring towards the LVB-focused model. We are highly dedicated to LVB-first strategy and our LVB associated business is now accounted for 72.6% of our total GMV this quarter. Our long term partnership with our KOLs has also become MOGU's most valuable asset."
"Our KOL-driven strategy has delivered a very unique user experience." commented Mr. Raymond Huang, Chief Strategy Officer of MOGU. "Our active LVB buyers grew by 37.0% this quarter year over year. On average, they spent 71 minutes everyday watching MOGU live and visited our platform 21 days a month. They like to interact with our LVB hosts, share LVB hosts with their friends and keep purchasing on our platform. Looking forward, it is our critical mission to focus on improving user experience, diversifying KOL base, and providing more value-for-money fashion products."
First Quarter Fiscal Year 2021 Highlights
First Quarter Fiscal Year 2021 Financial Results
Total revenues decreased by 46.8% to RMB132.5 million (US$18.8 million) from RMB248.9 million during the same quarter of fiscal year 2020.
Cost of revenues decreased by 19.5% to RMB48.8 million (US$6.9 million) from RMB60.6 million in the same period of fiscal year 2020, which was primarily due to a decrease in the costs associated with decreased online direct sales.
Sales and marketing expenses decreased by 57.3% to RMB61.9 million (US$8.8 million) from RMB145.0 million in the same period of fiscal year 2020, primarily due to optimized spending on user acquisition activities and user incentive programs.
Research and development expenses decreased by 48.4% to RMB29.0 million (US$4.1 million) from RMB56.2 million in the same period of fiscal year 2020, primarily as a result of headcount optimization we conducted to counter the adverse impact of COVID-19.
General and administrative expenses decreased by 31.2% to RMB23.5 million (US$3.3 million) from RMB34.2 million in the same period of fiscal year 2020, primarily due to a decrease of share-based compensation expenses.
Amortization of intangible assets increased by 9.3% to RMB70.5 million (US$10.0 million) from RMB64.5 million in the same period of fiscal year 2020, primarily due to the amortization of the broadcasting license acquired in September 2019.
Loss from operations was RMB94.9 million (US$13.4 million), compared to loss from operations of RMB105.3 million in the same period of fiscal year 2020.
Net loss attributable to MOGU Inc.'s ordinary shareholders was RMB88.9 million (US$12.6 million), compared to a net loss attributable to MOGU Inc's ordinary shareholders of RMB120.5 million in the same period of fiscal year 2020.
Adjusted EBITDA3 was negative RMB17.4 million (US$2.5 million), compared to negative RMB25.3 million in the same period of fiscal year 2020.
Adjusted net loss4 was RMB14.4 million (US$2.0 million), compared to adjusted net loss of RMB42.3 million in the same period of fiscal year 2020.
Basic and diluted loss per ADS were RMB0.81 (US$0.12) and RMB0.81 (US$0.12), respectively, compared with RMB1.12 and RMB1.12, respectively, in the same period of fiscal year 2020. One ADS represents 25 Class A ordinary shares.
Cash and cash equivalents, Restricted cash and Short-term investments were RMB1,048.8 million (US$148.4 million) as of June 30, 2020, compared with RMB1,095.4 million as of March 31, 2020.
Purchase of Office Building
On August 8, 2020, MOGU signed an agreement to purchase an office building located at the Hangzhou Zijingang Technology Zone for a total consideration of RMB209.0 million (US$29.6 million). The office building is now under construction and expected to be completed within the next 2 years. The Company has made the first installment payment of RMB104.5 million (US$14.8 million), and expects to pay off the remaining installments within the next 2 years. MOGU expects to begin business operations in this office building in 2023.
MOGU's management will host an earnings conference call at 7:30 AM U.S. Eastern Time on Monday, August 24, 2020 (7:30 PM Beijing/Hong Kong Time on the same day).
Dial-in numbers for the live conference call are as follows:
A telephone replay of the call will be available after the conclusion of the conference call until 11:59 PM ET on August 31, 2020.
Dial-in numbers for the replay are as follows:
A live and archived webcast of the conference call will be available on the Investor Relations section of MOGU's website at http://ir.mogu-inc.com.
Use of Non-GAAP Financial Measures
In evaluating the business, the Company considers and uses nonGAAP measures, such as Adjusted EBITDA and Adjusted net profit/(loss) as supplemental measures to review and assess operating performance. The presentation of these nonGAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The Company defines Adjusted EBITDA as net loss before interest income, loss from investments, net, income tax benefits, share of results of equity investee, goodwill impairment, share-based compensation expenses, amortization of intangible assets, and depreciation of property and equipment. The Company defines Adjusted net profit/(loss) as net loss excluding loss from investments, net, share-based compensation expenses, goodwill impairment, amortization of intangible assets, and adjustments for tax effects. Beginning from the second quarter of fiscal year 2020, we combined each of (i) investment gain/(loss), (ii) gain on deconsolidation of a subsidiary and (iii) gain from investment disposals, into loss from investments. The related financial statements prior to July 1, 2019 have been recast to reflect this change. See "Unaudited Reconciliations of GAAP and NonGAAP Results" at the end of this press release.
The Company presents these nonGAAP financial measures because they are used by management to evaluate operating performance and formulate business plans. The Company believes that the nonGAAP financial measures help identify underlying trends in its business by excluding certain expenses, gain/loss and other items that are not expected to result in future cash payments or that are nonrecurring in nature or may not be indicative of the Company's core operating results and business outlook. The Company also believes that the nonGAAP financial measures could provide further information about the Company's results of operations, enhance the overall understanding of the Company's past performance and future prospects.
The nonGAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The nonGAAP financial measures have limitations as analytical tools. The Company's nonGAAP financial measures do not reflect all items of income and expense that affect the Company's operations and do not represent the residual cash flow available for discretionary expenditures. Further, these nonGAAP measures may differ from the nonGAAP information used by other companies, including peer companies, and therefore their comparability may be limited. The Company compensates for these limitations by reconciling the nonGAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating performance. The Company encourages you to review the Company's financial information in its entirety and not rely on a single financial measure.
For more information on the nonGAAP financial measures, please see the table captioned "Unaudited Reconciliations of GAAP and NonGAAP Results" set forth at the end of this press release.
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 "will," "expects," "anticipates," "aims," "future," "intends," "plans," "believes," "estimates," "confident," "potential," "continue" or other similar expressions. Among other things, the business outlook and quotations from management in this announcement, as well as MOGU's strategic and operational plans, contain forward-looking statements. MOGU may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about MOGU's beliefs and expectations, are 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: MOGU's growth strategies; the risk that COVID-19 or other health risks in China or globally could adversely affect its operations or financial results; its future business development, results of operations and financial condition; its ability to understand buyer needs and provide products and services to attract and retain buyers; its ability to maintain and enhance the recognition and reputation of its brand; its ability to rely on merchants and third-party logistics service providers to provide delivery services to buyers; its ability to maintain and improve quality control policies and measures; its ability to establish and maintain relationships with merchants; trends and competition in China's ecommerce market; changes in its revenues and certain cost or expense items; the expected growth of China's ecommerce market; PRC governmental policies and regulations relating to MOGU's industry, and general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in MOGU's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and MOGU undertakes no obligation to update any forward-looking statement, except as required under applicable law.
About MOGU Inc.
MOGU Inc. (NYSE: MOGU) is a leading KOL-driven online fashion and lifestyle destination in China. MOGU provides people with a more accessible and enjoyable shopping experience for everyday fashion, particularly as they increasingly live their lives online. By connecting merchants, KOLs and users together, MOGU's platform serves as a valuable marketing channel for merchants, a powerful incubator for KOLs, and a vibrant and dynamic community for people to discover and share the latest fashion trends with others, where users can enjoy a truly comprehensive online shopping experience.
1 GMV refers to the total value of orders placed on the MOGU platform regardless of whether the products are sold, delivered or returned, calculated based on the listed prices of the ordered products without taking into consideration any discounts on the listed prices. Buyers on the MOGU platform are not charged for separate shipping fees over the listed price of a product. If merchants include certain shipping fees in the listed price of a product, such shipping fees will be included in GMV. As a prudent matter aiming at eliminating any influence on MOGU's GMV of irregular transactions, the Company excludes from its calculation of GMV transactions over a certain amount (RMB100,000) and transactions by users over a certain amount (RMB1,000,000) per day.
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