Glory Star Reports Full Year 2021 Financial Results

Glory Star New Media Group Holdings Limited (NASDAQ: GSMG) (“Glory Star” or the “Company”), a leading digital media platform and content-driven e-commerce company in China, today announced its financial results for the full year ended December 31, 2021.

Full Year 2021 Operating Highlights

Downloads of the CHEERS App[1] was approximately 271 million as of December 31, 2021, compared to approximately 169 million as of December 31, 2020.
Monthly active users (“MAUs”)[2] of the CHEERS App increased to approximately 47.6 million from 37.7 million for the full year of 2020.
Gross Merchandise Value (GMV)[3] of the Company’s CHEERS App was approximately US$409 million, compared to US$132 million for the full year of 2020.
Full Year 2021 Financial Highlights

Total revenues increased by 23.6% to US$153.0 million for the full year of 2021 from US$123.8 million for the full year of 2020.
Income from operations increased by 18.3% to US$36.3 million for the full year of 2021 from US$30.7 million for the full year of 2020.
Net cash provided by operating activities increased by 431.5% to US$46.5 million for the full year of 2021 from US$8.7 million for the full year of 2020.
[1] Glory Star defines this metric as the total number of downloads of the CHEERS App (video+e-Mall) as of the end of the period.

[2] Glory Star defines monthly active users, or MAUs, as a user who has logged in or accessed the Company’s online video content and/or the Company’s e-commerce platform using the CHEERS App, whether on a mobile phone or tablet. The Company calculates MAUs using internal company data based on the activity of the user account and as adjusted to remove “duplicate” accounts.

[3] Glory Star defines gross merchandise value, or GMV, as the total value of all orders for products and services placed in the Company’s online direct sales business and on the Company’s online marketplaces, regardless of whether the goods are sold or delivered or whether the goods are returned.

Mr. Bing Zhang, Chairman and Chief Executive Officer of Glory Star, commented, “We are excited to close out a successful year with robust financial results that reflect the significant momentum in our business. Our total revenues increased by 23.6% to US$153.0 million for the full year of 2021, and the total downloads of our CHEERS App increased 60% to 271 million as of December 31, 2021. We have sustained our financial and operational performance and continued our growth as we continue to advance towards our business strategy through optimizing our content ecosystem, improving our users’ experiences, expanding our partnership base, and enhancing brand awareness. We made considerable progress in enriching the product offerings on our CHEERS e-Mall platform and growing customer base despite the challenging environment in 2021, which reflects our team’s effective execution of our business strategy. For 2022, we will continue expanding our CHEERS ecosystem, implementing our new metaverse retail strategy, and developing our CheerChat application, our overseas social audio application, which is anticipated to launch in 2022. We also plan to build and launch metaverse experience centers and are in the process of identifying locations in Beijing, China, for our first Metaverse Experience Center. Moving forward, we will continue focusing on long term growth opportunities and value generation, while investing in growth initiatives, optimizing our content offerings, deepening user engagement, and scaling up our business modules.”

Mr. Zhang continued, “Our innovative business in the live streaming segment of our operations continues to see further growth due to market demand and the evolution of technology in China. Live e-commerce continues to evolve and boom in China, and its growth has been intensified as a result of the COVID-19 pandemic. We are emerging from the sprint of past years even stronger and more ambitious, since being a pioneer of live e-commerce in China enables us to go farther faster for merchants and buyers alike. In 2022, we will be steadfast on making e-commerce easier for users by continuing to build high-performing infrastructure and innovative features on CHEERS App and increasing the number of SKUs carried on our CHEERS e-Mall platform, which combined will yield a powerful and trusted e-commerce chain that future-proofs our users in the years to come and benefits Glory Star over time. We are striving to become an e-commerce engine for brands who want to build a direct connection with customers and have a widespread market reach.”

Mr. Perry Lu, Chief Financial Officer of Glory Star, added, “The year of 2021 was a year of rapid growth for the Company, which is in-line with our expectations. The increase of our total revenue was due to enhanced brand recognition, improved user traffic generation, and growth of advertisements on the Company’s CHEERS platform. We upgraded our business ecosystem and refined our business strategy, which met our users’ demand and expectation. We believe that the efforts we put in place and the strategic development we are taking will bring us great improvements in profitability continuously and create long-term value for our shareholders.”

Full Year 2021 Selected Financial Results

Revenues increased by 23.6% to US$153.0 million for the full year of 2021, from US$123.8 million for the full year of 2020, which was mainly due to (1) the Company’s effort to enhance brand recognition and user traffic generation, the Company succeeded to increase its user base and, in turn, expanding its attractiveness to CHEERS e-Mall customers, consequently, leading to the high volume of business orders; and (2) advertisements on the Company’s CHEERS platform achieved much more exposure because of the numerously increasing active users, which led to an increased price of each piece of advertising. In addition, the Company has seen a rapid growth in advertising demand and advertising volume for advertisements on its CHEERS platform, online short videos and live streaming shows, which led to the increase in advertising service orders. Advertising revenues increased by 27.0% to US$132.9 million for the full year of 2021, from $104.7 million for the full year of 2020. CHEERS e-Mall marketplace service revenues increased by 348.7% to US$6.8 million for the full year of 2021, from $1.5 million for the full year of 2020.

Total operating expenses increased by 25.4% to US$116.7 million for the full year of 2021, from US$93.1 million for the full year of 2020.

Cost of revenues decreased by 9.2% to US$34.9 million for the full year of 2021, from US$38.5 million for the full year of 2020, mainly due to the decrease of content production costs and channel cost of the Company’s traditional media business. The decrease was partially offset by the increase of production cost of advertisements on the Company’s CHEERS platform, online short videos and live streaming shows in line with its increased advertising revenue on them.
Selling and marketing expenses increased by 76.9% to US$77.5 million for the full year of 2021, from US$43.8 million for the full year of 2020. As a percentage of revenues, selling and marketing expenses for the full year of 2021 were 50.7% as compared to 35.4% for the full year of 2020. The increase was mainly due to an increase in marketing and advertising fees to enhance the Company’s brand recognition and user traffic generation.
General and administrative expenses decreased by 66.9% to US$3.3 million for the full year of 2021, from US$10.1 million for the full year of 2020. As a percentage of revenues, general and administrative expenses for the full year of 2021 were 2.2% compared to 8.2% for the full year of 2020. In 2020, the Company issued stock options to certain employees for their contribution to the business as well as to professional service providers for their efforts related to the SPAC business combination. The Company did not issue any options for the year ended 2021.
Income from operations increased by 18.3% to US$36.3 million for the full year of 2021, from US$30.7 million for the full year of 2020. Operating margin was 23.7% for the full year of 2021, compared to 24.8% for full year of 2020.

As of December 31, 2021, the Company had cash and cash equivalents of US$77.3 million, compared to US$17.7 million as of December 31, 2020.

GLORY STAR NEW MEDIA GROUP HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS

(In U.S. dollars in thousands, except share and per share data)

December 31,

2020

December 31,

2021

(Restated)

Assets

Current assets:

Cash and cash equivalents

$

17,731

$

77,302

Short-term investments

1,732

–

Accounts receivable, net

81,110

63,135

Prepayment and other current assets

2,544

13,103

Total current assets

103,117

153,540

Property, plant and equipment, net

251

242

Intangible assets, net

15,632

16,718

Deferred tax assets

760

56

Unamortized produced content, net

1,300

1,874

Right-of-use assets

1,689

1,298

Prepayment and other non-current assets, net

20,647

21,445

Total non-current assets

40,279

41,633

TOTAL ASSETS

$

143,396

$

195,173

Liabilities and Equity

Current liabilities:

Short-term bank loans

$

5,160

$

4,998

Accounts payable

7,887

12,878

Advances from customers

609

536

Accrued liabilities and other payables

11,291

2,251

Other taxes payable

7,894

13,104

Lease liabilities current

385

291

Due to related parties

730

500

Convertible promissory note – related party

1,400

–

Total current liabilities

35,356

34,558

Long-term bank loan

1,374

–

Lease liabilities non-current

1,386

1,127

Warrant liability

833

24

Total non-current liabilities

3,593

1,151

TOTAL LIABILITIES

$

38,949

$

35,709

Equity

Preferred shares (par value of $0.0001 per share; 2,000,000 authorized; none
issued and outstanding)

$

–

$

–

Ordinary shares (par value of $0.0001 per share; 200,000,000 shares authorized
as of December 31, 2020 and December 31,2021; 57,886,352 and 68,122,402
shares issued and outstanding as of December 31, 2020 and December 31,
2021, respectively)

$

6

$

7

Additional paid-in capital

9,159

25,629

Statutory reserve

648

1,224

Retained earnings

89,271

123,982

Accumulated other comprehensive income

4,892

8,069

TOTAL GLORY STAR NEW MEDIA GROUP HOLDINGS LIMITED
SHAREHOLDERS’ EQUITY

103,976

158,911

Non-controlling interest

471

553

TOTAL EQUITY

104,447

159,464

TOTAL LIABILITIES AND EQUITY

$

143,396

$

195,173

GLORY STAR NEW MEDIA GROUP HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

(In U.S. dollars in thousands, except share and per share data)

For the Years Ended

December 31,

2019

2020

2021

(Restated)

Revenues

$

65,777

$

123,763

$

153,012

Operating expenses:

Cost of revenues

(31,901)

(38,481)

(34,944)

Selling and marketing

(3,154)

(43,827)

(77,520)

General and administrative

(3,134)

(10,095)

(3,341)

Research and development

(749)

(691)

(920)

Total operating expenses

(38,938)

(93,094)

(116,725)

Income from operations

26,839

30,669

36,287

Other (expenses) income:

Interest expense, net

(295)

(282)

(513)

Change in fair value of warrant liability

–

19,714

809

Other income(expense), net

50

531

(255)

Total other (expenses) income

(245)

19,963

41

Income before income tax

26,594

50,632

36,328

Income tax expense

(191)

(1,673)

(976)

Net income

26,403

48,959

35,352

Less: net gain (loss) attributable to non-controlling interest

80

(31)

65

Net income attributable to Glory Star New Media Group Holdings
Limited’s shareholders

$

26,323

$

48,990

$

35,287

Other comprehensive (loss) income

Unrealized foreign currency translation (loss) gain

(974)

6,495

2,945

Comprehensive income

25,429

55,454

38,297

Less: comprehensive gain (loss) attributable to non-controlling interests

74

(4)

119

Comprehensive income attributable to Glory Star New Media Group
Holdings Limited’s shareholders

$

25,355

$

55,458

$

38,178

Earnings per ordinary share

Basic

$

0.64

$

0.91

$

0.54

Weighted average shares used in calculating earnings per ordinary share

Basic

41,204,025

53,844,237

65,381,186

Earnings per ordinary share

Dilutive

$

0.57

$

0.83

$

0.54

Weighted average shares used in calculating earnings per ordinary share

Dilutive

46,484,025

59,126,237

65,381,186

GLORY STAR NEW MEDIA GROUP HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In U.S. dollars in thousands)

For the Years Ended

December 31,

2019

2020

2021

(Restated)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

26,403

$

48,959

$

35,352

Adjustments to reconcile net income to net cash provided by operating
activities:

Allowance (Reversal of allowance) for doubtful accounts

188

(1,136)

(268)

Depreciation and amortization

739

2,910

2,090

Amortization of right-of-use assets

314

447

426

Deferred income tax (benefit) expense

190

(181)

713

Share based compensation for employees

–

5,381

4

Share based compensation for non-employees

–

1,779

181

Gains on disposal of a subsidiary

–

–

(26)

Amortization of loan origination fees

–

93

104

Change in fair value of warrant liability

–

(19,714)

(809)

Changes in assets and liabilities

Accounts receivable

(12,705)

(24,043)

19,904

Prepayment and other assets

4,549

(19,340)

(10,681)

Unamortized produced content

1,261

442

(537)

Accounts payable

3,925

2,827

4,750

Advances from customers

372

(39)

(87)

Accrued liabilities and other payables

449

5,177

(9,236)

Other taxes payable

717

5,555

4,964

Lease liabilities

(310)

(376)

(389)

Net cash provided by operating activities

26,092

8,741

46,455

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property, plant and equipment

(7)

(59)

(72)

Prepayments for acquisition of intangible assets

(15,311)

(2,722)

(2,718)

Cash disposed for sales of subsidiaries

–

–

(12)

(Payments) Return for short term investment

–

(1,637)

1,751

Net cash used in investing activities

(15,318)

(4,418)

(1,051)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from bank loans

(9,409)

6,228

5,114

Repayments of bank loans

–

(724)

(6,818)

Payment of loan origination fees

–

(146)

(68)

Contribution from shareholders

3,185

–

–

Repayments to related Parties

–

–

(232)

Cash acquired from the acquisition of TKK

–

23

–

Proceeds from equity finance

–

–

15,290

Net cash (used in) provided by financing activities

(6,224)

5,381

13,286

Effect of exchange rate changes

(68)

1,108

881

Net increase in cash and cash equivalents

4,482

10,812

59,571

Cash and cash equivalents, at beginning of year

2,437

6,919

17,731

Cash and cash equivalents, at end of year

$

6,919

$

17,731

$

77,302

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Interests paid

$

287

$

239

$

336

Right of use assets obtained in exchange for operating lease obligations

$

2,339

–

–

Source: Glory Star New Media Group Holdings Limited