Weyland Tech Reports Q3 2019 Results; Revenue at Record $9.0 Million
NEW YORK, Nov. 15, 2019 (GLOBE NEWSWIRE) — Weyland Tech, Inc. (OTCQX: WEYL), a growing global provider of m-Commerce and fintech business enablement solutions with its CreateApp™ Platform-as-a-Service (PaaS), reported results for the third quarter ended September 30, 2019. All quarterly comparisons are to the same period in 2018 unless otherwise noted.
Q3 2019 Highlights
- Revenue, comprised of recurring subscription fees, totaled a record $9.0 million, up 26% from the previous quarter and up 7% from the year-ago quarter.
- Net loss improved 35% from the previous quarter and 46% from the year-ago quarter to a loss of $1.1 million or $(0.01) per share.
- Turned adjusted EBITDA positive during the final month of the quarter (see definition of this non-GAAP term, below.)
- Increased adoption of the company’s CreateApp mobile app solution for SMBs, which included new customers as well as existing customers subscribing to additional features and modules.
- Partnered in the launch of AtozGo™, a short distance food delivery service in Jakarta, Indonesia, followed by joining forces with Grab, the leading online-to-offline mobile platform in Southeast Asia, to market the service. AtozGo addresses the need for a hyper-local, pedestrian-powered food delivery service that can make food delivery from local establishments quick and easy for office workers and urbanites. In three months since launch, lunchtime deliveries have scaled to more than 10,000 per day for 35,000 customers.
- Appointed Sim Farar and Andre Peschong to the company’s advisory board. Farar’s 30 years of experience in both public and private sectors, along with Peschong’s more than 25 years of senior management and capital markets experience, will provide the board with important insights and guidance as it pursues its plans for organic and acquisitive growth.
- Raised gross proceeds of approximately $6.4 million In a private placement offering.
- Cash and cash equivalents totaled $5.8 million at September 30, 2019.
- Subsequent to the end of the third quarter, Weyland acquired 31% beneficial ownership in the owner and operator of AtozGo as well as the AtozPay™ mobile payment platform that powers AtozGo transactions.
“In Q3, our topline performance was driven by growth in CreateApp subscription fees, which was due to greater adoption of our CreateApp Platform-as-a-Service by SMBs in our existing markets,” said Brent Suen, president and CEO of Weyland Tech.
“Driven primarily by our highly-productive channel partners, the increased adoption included new customers as well as existing customers subscribing to additional features and modules. These results helped us turn positive in terms of adjusted EBITDA in the last month of the quarter. This momentum has continued into the fourth quarter, keeping us on track for another year of record growth and shareholder value creation.
“We recently exercised our option to acquire 31% beneficial ownership of PT Weyland Indonesia Perkasa (WIP), owner and operator of the fast-growing AtozPay and AtozGo platforms. AtozGo’s unique runner-based approach to urban food delivery is quickly capturing a huge untapped market.
“Jakarta’s population of 30 million, with another 3.5 million commuting daily, made the city an ideal location to launch the AtozGo delivery service. Within three months from launch, AtozGo has attracted more than 35,000 customers and continues to grow at a parabolic rate. We expect this rapid ramp up to pave the way for greater visibility with potential acquirers, like other major food delivery service providers who traditionally operate in areas that require motorized delivery. Valuations of app-based food delivery services average $330 per user, implying a current stand-alone valuation of AtozGo of more than $10 million.
“AtozPay’s consumer-facing fintech solution supports users on our CreateApp PaaS platform by providing e-payment capabilities. Given the strong growth in AtozPay and AtozGo, along with the participation with major partners like Grab, we believe our new ownership position substantially enhances Weyland Tech’s shareholder value.
“For Weyland, we’re seeing more than $32 million in recurring revenue on a trailing 12-month basis. The market valuation for a company like ours with a 100% subscription-based recurring revenue stream should garner a several times multiple in its price-to-revenue ratio, rather than merely a fraction as it does today.
“In fact, publicly traded SaaS and PaaS companies typically trade on average at around 10x revenue, with other microcap comparables trading around 4x revenue on average. Companies with software subscription-based models attract higher multiples due to their ‘stickier,’ higher-margin customer engagements that provide greater transparency into revenue and profitability.
“Given these factors, it appears that the market price of our stock does not reflect our financial performance, the quality of our revenue, and the strong prospects for our growth to accelerate over the coming quarters. However, we believe as we continue to execute on our growth plans and raise our profile in U.S. investment community, our valuation will eventually follow suit. This conclusion supported my decision in October to personally acquire nearly 100,000 shares of WEYL off the open market, with an eye to making additional purchases in the future.
“In terms of business growth and expansion, we will continue to focus on supporting our channel partners in enhancing platform offerings. We expect margins to improve as we introduce more value-added services and increase our revenue base. We are also continuing to evaluate a number of attractive merger and acquisition opportunities, including potential strategic entry points for bringing our award winning CreateApp platform to the U.S. market which is becoming increasingly mobile-centric.
“Given our momentum and proven differentiated products and strategies addressing large and growing global markets, we remain on track for another year of double-digit growth and a strong start to the new year.”
Q3 Financial Summary
Revenue increased 7% to a record $9.0 million in the third quarter of 2019, as compared to $8.4 million in the same period last year. The increase was due to service revenue from customers in targeted emerging markets at lower price points.
Gross profit was $1.6 million or 17.7% of revenues as compared to $7.4 million or 87.7% of revenue in the year-ago quarter. The decrease was primarily due to a reclassification of certain R&D and sales and marketing expenses to be included in cost of services, which was enacted in the first quarter of 2019. Weyland believes the reclassification represents a more conservative approach given that its PaaS business model uses distribution partners to sell its services.
Total operating expenses decreased to $2.7 million from $9.4 million in the same year-ago period. The decrease was primarily due the reclassification of certain expenses to cost of services.
General and administrative (G&A) expenses increased 52% to $1.6 million in the third quarter 2019 from $1.0 million in the same year-ago quarter. G&A expenses in the third quarter of 2019 included $286,000 in stock-based compensation as compared to $257,000 in the same year-ago quarter.
Research and development expense decreased 75% to $1.1 million in the third quarter of 2019, as compared to $4.5 million in the same year-ago period. Sales and marketing expenses in the third quarter of 2019 decreased to zero as compared to $3.8 million in the year-ago quarter. The decreases were primarily due to the reclassification of certain expenses to be included in cost of services.
Net loss improved to $1.1 million or $(0.01) per basic and diluted share from a net loss of $2.0 million or $(0.05) per basic and diluted share in the same year-ago period.
At September 30, 2019, cash, cash equivalents and marketable equity securities totaled $5.8 million, compared to $5.3 million on June 30, 2019. The increase was primarily the result of proceeds from an equity offering.
Nine Month Financial Summary
Revenue increased 43% to a record $24.6 million in the first nine months of 2019, as compared to $17.3 million in the same period last year. The increase was due to service revenue from customers in targeted emerging markets at lower price points.
Gross profit decreased 71% to $4.4 million or 17.7% of revenue compared to $15.2 million or 87.7% of revenue in the year-ago quarter. The decrease was primarily due to a reclassification of certain research & development and sales & marketing expenses.
Total operating expenses decreased 62% to $7.2 million from $18.7 million in the same year-ago period. The decrease was primarily due to the aforementioned reclassification of certain expenses.
General and administrative expenses increased 35% to $3.5 million in the third quarter 2019 from $2.6 million in the same year-ago quarter. G&A expenses in the first nine months of 2019 included $1.5 million in stock-based compensation as compared to $1.2 million in the first nine months of 2018.
Research and development expense decreased 60% to $3.2 million in the third quarter of 2019, as compared to $8.1 million in the same year-ago period. Sales and marketing expenses for the nine months of 2019 were $390,000, as compared to $7.8 million in the same year-ago period. The decreases were primarily due to a reclassification of certain R&D and sales and marketing expenses.
Net loss was $2.8 million or $(0.06) per basic and fully diluted share, compared to net loss of $3.6 million or $(0.13) per basic and fully diluted share in the same year-ago period.
Weyland management will host a conference call to discuss its third quarter 2019 results tomorrow morning, followed by a question and answer period.
Date: Friday, November 15, 2019
Time: 10:00 a.m. Eastern time (7:00 a.m. Pacific time)
Toll-free dial-in number: 1-888-394-8218
International dial-in number: 1-323-701-0225
Conference ID: 7147694
Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact CMA at 1-949-432-7566.
A replay of the call will be available after 7:30 p.m. Eastern time on the same day through November 29, 2019, as well as available for replay via the Investors section of the Weyland website at www.weyland-tech.com/ir.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 7147694
About Weyland Tech
Weyland Tech, Inc. operates as a Fintech focused company and is a developer and global provider of mobile business software applications. The company operates its CreateApp™ platform-as-a-service (PaaS) across three continents and 10 countries, including some of the fastest-growing emerging markets in Southeast Asia. The platform provides a mobile presence for small-and-medium sized businesses (SMBs) that is supported locally by distributor partnerships.
Offered in 14 languages with more than 70 integrated modules, Weyland enables SMBs to create and deploy native mobile applications for Apple iOS and Google Android without technical knowledge or background. The technology empowers SMBs to increase sales, reach more customers, manage logistics, and promote their products and services in an easy, affordable and highly efficient way.
The company’s subsidiary, Weyland Indonesia Perkasa (WIP), operates AtozPay and AtozGo. The AtozPay mobile payments platform serves the burgeoning m-Commerce and e-Payment markets in Indonesia, the world’s fourth most populous country. AtozGo is a fast-growing short-distance food delivery service in Jakarta, Indonesia.
For more information, visit www.weyland-tech.com.
About the Use of Non-GAAP Financial Measures
Weyland management believes the use of adjusted EBITDA is helpful to assessing the company’s financial performance. The company defines adjusted EBITDA as income before interest and financing expense, provision for income taxes, depreciation and amortization, stock-based compensation and acquisition expense.
Adjusted EBITDA is not a measurement of financial performance under generally accepted accounting principles in the United States or GAAP. Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash operating expenses, management believes that providing a non-GAAP financial measure that excludes non-cash and non-recurring expenses allows for meaningful comparisons between the company’s core business operating results and those of other companies, as well as providing an important tool for financial and operational decision making and for evaluating the company’s own core business operating results over different periods of time.
The company’s adjusted EBITDA measure may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in the industry may calculate non-GAAP financial results differently, particularly related to non-recurring, or unusual items. The company’s EBITDA measurement of financial performance under GAAP and should not be considered as an alternative to operating income or as an indication of operating performance or any other measure of performance derived in accordance with GAAP. The company does not consider adjusted EBITDA to be a substitute for, or superior to, the information provided by GAAP financial results.
The company expects to include adjusted EBITDA in its future financial reporting, which will include a reconciliation to the nearest GAAP measure. For the third quarter 2019, the company has reported that it believes it turned positive during the last month of the quarter, but it is not providing a reconciliation to nearest GAAP measure in this press release since it would require unreasonable efforts to report a reconciliation of the entirely of this information for the singular month and for the anticipated reporting of adjusted EBITDA in future periods.
Important Cautions Regarding Forward Looking Statements
This release contains certain “forward-looking statements” relating to the business of the Company. All statements, other than statements of historical fact included herein are “forward-looking statements” including statements regarding: the continued growth of the e-commerce segment and the ability of the Company to continue its expansion into that segment; the ability of the Company to attract customers and partners and generate revenues; the ability of the Company to successfully execute its business plan; the business strategy, plans, and objectives of the Company; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,” “expects” or similar expressions and involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks, and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available on its website (www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume any duty to update these forward-looking statements.
Brent Suen, CEO
Weyland Tech Inc.
Media & Investor Contact
Ronald Both or Grant Stude
Tel (949) 432-7566
|WEYLAND TECH INC.|
|Consolidated Balance Sheets|
|September 30||December 31|
|Intangible assets, net||$||637,081||$||713,531|
|Investment in Associate||-||-|
|Total non-current assets||637,081||713,531|
|Amount due from Associate||2,025,250||862,000|
|Prepayment, deposit and other receivables||3,216,151||3,181,651|
|Cash and cash equivalents||5,820,629||731,355|
|Total current assets||11,062,030||4,775,006|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Accruals and other payables||149,029||283,795|
|Deposits received for share to be issued||1,898,726||-|
|Loan from director||19,000||-|
|Amount due to director||77,500||77,500|
|Total current liabilities||2,217,605||379,295|
|Common stock, $0.0001 par value,|
|250,000,000 shares authorized, 96,821,494 and|
|36,915,343 shares issued and outstanding as of|
|September 30, 2019 and December 31, 2018, respectively||9,682||3,692|
|Additional paid-in capital||53,322,418||46,177,521|
|Accumulated deficit brought forward||(43,850,594||)||(41,071,971||)|
|Total stockholder’s equity||9,481,506||5,109,242|
|Total liabilities and stockholders’ equity||$||11,699,111||$||5,488,537|
|WEYLAND TECH INC.|
|Condensed Consolidated Statements of Operations|
Ended September 30,
Ended September 30,
|Cost of Service||7,399,583||1,033,470||20,258,258||2,116,229|
|General and administrative||1,557,960||1,026,039||3,479,752||2,569,828|
|Research and development||1,126,165||4,511,103||3,236,713||8,124,074|
|Sales and marketing||–||3,796,385||389,610||7,773,794|
|Total Operating Expenses||2,709,609||9,400,677||7,182,524||18,710,812|
|(Loss) from Operations||(1,080,657||)||(1,997,735||)||(2,778,623||)||(3,551,943||)|
|Provision for income taxes||–||–||–||–|
|Net (Loss) per common share – basic and fully diluted:||(0.0130||)||(0.0542||)||(0.0627||)||(0.1336||)|
|Weighted average number of basic and fully diluted common shares outstanding||82,907,450||36,829,834||44,308,447||26,577,942|
|WEYLAND TECH INC.|
|Consolidated Statements of Cash Flows|
|Nine Months Ended September 30|
|Cash flows from operations:|
|(Loss) from continuing operations||$||(2,778,623||)||$||(3,551,943||)|
|Adjustment to reconcile net profit to net cash used in operating activities:|
|Amortization of intangible assets||76,450||243,116|
|Changes in operating assets and liabilities:|
|Amount due from Associates||(1,163,250||)||(2,409,638||)|
|Deposits and other receivables||(34,500||)||1,754,333|
|Accounts payable, accruals and other payables||(79,417||)||33,920|
|Stock subscription payables||1,898,726||(1,771,028||)|
|Loan from director||19,000||-|
|Net cash (used) in operations||(2,061,614||)||(5,797,905||)|
|Cash flows from financing activities:|
|Proceeds from stock issuance||7,150,888||5,681,414|
|Net increase/(decrease) in cash and cash equivalents||5,089,274||(116,491||)|
|Cash and cash equivalents, beginning of year||731,355||1,056,399|
|Cash and cash equivalents, end of year||$||5,820,629||$||939,908|
|Issuance of shares for services received||$||1,533,404||$||1,212,210|