Cheer Holding Reports Full Year 2023 Financial Results

BEIJING, March 14, 2024 (GLOBE NEWSWIRE) — Cheer Holding, Inc. (NASDAQ: CHR) (“Cheer Holding,” or the “Company”), a leading provider of advanced mobile internet infrastructure and platform services, today announced its financial results for the full year ended December 31, 2023.

Full Year 2023 Operating Highlights

Total Downloads of CHEERS Apps was approximately 474 million as of December 31, 2023, compared to approximately 377 million as of December 31, 2022. Specifically:

CHEERS Video

  • Monthly Active Users of CHEERS Video increased by 5% to approximately 50.1 million.
  • Daily Time Spent on CHEERS Video was 59 minutes during the commercial year of 2023.

CHEERS e-Mall

  • Monthly Active Users of CHEERS e-Mall increased by 71% to approximately 6.5 million.
  • Repurchase Rate on CHEERS e-Mall was 39.6% during the commercial year of 2023.

CheerReal

  • Monthly Active Users of CheerReal platform was approximately 1.3 million.
  • Number of Digital Art Collections listed on CheerReal platform was 767 units.

CHEERS Telepathy

  • Monthly Active Users of CHEERS Telepathy platform was approximately 300 thousand.

CHEERS Open Data

  • Total Number of User Engagement was 27 million.
  • Platform Daily Usage was more than 150 thousand.

Full Year 2023 Financial Highlights

  • Revenues reached $152.3 million.
  • Net Income reached $30.5 million.
  • Net Cash Provided by Operating Activities was approximately $42.2 million.

Full Year 2023 Selected Financial Results

Revenues

Our revenues for the year ended December 31, 2023 were approximately $152.3 million, representing a decrease of approximately $4.8 million, or 3.03% from approximately $157.1 million for the year ended December 31, 2022. The change in revenues was mainly affected by depreciation of RMB during the year ended December 31, 2023, leading to a lower USD amount in translation of revenues from RMB into USD.

Without the impact of fluctuation of foreign exchange rates, our revenues for the year ended December 31, 2023 increased by approximately RMB22.1 million (approximately $3.1 million), or 2.09% as compared with the revenues for the same period of 2022. The increase in the revenues was primarily attributable to increase in advertising revenues of approximately RMB32.4 million as a result of continuous efforts to expand our customer base through improving our content production quality.

For the years ended December 31, 2023 and 2022, 97.9% and 96.8% of our revenues derived from advertising services.

Operating expenses

Operating expenses consists of cost of revenues, selling and marketing, general and administrative and research and development expense.

  • Cost of revenues decreased by approximately $1.0 million, or 2.54%, from approximately $40.6 million for the year ended December 31, 2022 to approximately $39.5 million for the year ended December 31, 2023. Similar to the changes in revenues, the decrease in cost of revenues was primarily caused by depreciation of RMB during the year ended December 31, 2023.
  • Sales and marketing expenses decreased by approximately $6.3 million, to approximately $76.2 million for the year ended December 31, 2023 from approximately $82.5 million for the year ended December 31, 2022. The decrease was mainly due to a decrease in promotion service charge of approximately $5.9 million because the Company reduced cost in marketing and promotion.
  • General and administrative expenses was stable at approximately $5.7 million and $5.9 million, respectively, for the year ended December 31, 2023 and 2022.
  • Research and development expenses for the years ended December 31, 2023 and 2022 were approximately $1.6 million and approximately $1.3 million, respectively. Such increase was primarily due to the continued investment in the IT infrastructure, user-friendliness upgrades, and continual implementation on content driven strategies.

Net income

We had a net income of approximately $30.5 million in the year ended December 31, 2023, as compared to a net income of approximately $26.4 million in the year ended December 31, 2022.

Cash, cash equivalents and working capital

As of December 31, 2023 and 2022, the Company’s principal sources of liquidity were cash and cash equivalents of approximately $194.2 million and $70.5 million, respectively. Working capital at December 31, 2023 was approximately $260.7 million.

About Cheer Holding, Inc.

As a preeminent provider of next-generation mobile internet infrastructure and platform services in China, Cheer Holding is dedicated to building a digital ecosystem that integrates “platforms, applications, technology, and industry” into a cohesive system, thereby creating a new, open business environment for web3.0 that leverages AI technology. The Company is developing a 5G+VR+AR+AI shared universe space that builds on cutting-edge technologies including blockchain, cloud computing, extended reality, and digital twin.

Cheer Holding’s portfolio includes a wide range of products and services, such as Polaris Intelligent Cloud, CHEERS Telepathy, CHEERS Open Data Platform, CHEERS Video, CHEERS e-Mall, CheerReal, CheerCar, CheerChat, CHEERS Fresh Group-Buying E-commerce Platform, Digital Innovation Research Institute, CHEERS Livestreaming, variety show series, IP short video matrix, and more. These offerings provide diverse application scenarios that seamlessly blend “online/offline” and “virtual/reality” elements.

With “CHEERS+” at the core of Cheer Holding’s ecosystem, the Company is committed to consolidating and strengthening its core competitiveness, and achieving long-term sustainable and scalable growth.

For more information, please visit http://ir.gsmg.co/.

Safe Harbor Statement

Certain statements made in this release are “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, are: the ability to manage growth; ability to identify and integrate other future acquisitions; ability to obtain additional financing in the future to fund capital expenditures; fluctuations in general economic and business conditions; costs or other factors adversely affecting our profitability; litigation involving patents, intellectual property, and other matters; potential changes in the legislative and regulatory environment; a pandemic or epidemic; the occurrence of any event, change or other circumstances that could affect the Company’s ability to continue successful development and launch of its metaverse experience centers; the possibility that the Company may not succeed in developing its new lines of businesses due to, among other things, changes in the business environment and technological developments, competition, changes in regulation, or other economic and policy factors; disruptions or other business interruptions that may affect the operations of our products and services, the possibility that the Company’s new lines of business may be adversely affected by other economic, business, and/or competitive factors; other factors, risks and uncertainties set forth in documents filed by the Company with the Securities and Exchange Commission from time to time, including the Company’s latest Annual Report on Form 20-F filed with the SEC on March 22, 2023, as amended. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Such information speaks only as of the date of this release.

For investor and media inquiries, please contact:

Wealth Financial Services LLC

Connie Kang, Partner

Email: ckang@wealthfsllc.com

Tel: +86 1381 185 7742 (CN)


CHEER HOLDING, INC.

(Formerly known as “Glory Star New Media Group Holdings Limited”)
CONSOLIDATED BALANCE SHEETS
(In U.S. dollars in thousands, except share and per share data)

           
  December 31,
2023
    December 31,
2022
 
Assets          
Current assets:          
Cash and cash equivalents $ 194,227     $ 70,482  
Restricted cash   298        
Accounts receivable, net   81,170       98,034  
Prepayment and other current assets   31,179       15,329  
Total current assets   306,874       183,845  
Property, plant and equipment, net   85       160  
Intangible assets, net   20,255       20,297  
Deferred tax assets   41       103  
Unamortized produced content, net         807  
Right-of-use assets   377       750  
Prepayment and other non-current assets, net         1  
Total non-current assets   20,758       22,118  
TOTAL ASSETS $ 327,632     $ 205,963  
               
Liabilities and Equity              
Current liabilities:              
Short-term bank loans $ 4,216     $ 4,421  
Accounts payable   9,599       6,405  
Contract liabilities   130       147  
Accrued liabilities and other payables   3,764       2,632  
Other taxes payable   28,178       19,090  
Lease liabilities current   330       208  
Total current liabilities   46,217       32,903  
Long-term bank loan   1,408        
Lease liabilities non-current         471  
Warrant liability         86  
Total non-current liabilities   1,408       557  
TOTAL LIABILITIES $ 47,625     $ 33,460  
               
Equity              
Ordinary shares  (par value of $0.001 per share; 200,000,000 shares authorized as of December 31, 2023 and 2022; 10,070,012 and 6,812,440 shares issued and outstanding as of December 31, 2023 and 2022, respectively)* $ 10     $ 7  
Additional paid-in capital   106,215       27,009  
Statutory reserve   1,411       1,411  
Retained earnings   181,162       150,685  
Accumulated other comprehensive loss   (8,869 )     (6,684 )
TOTAL CHEER HOLDING, INC SHAREHOLDERS’ EQUITY   279,929       172,428  
Non-controlling interest   78       75  
TOTAL EQUITY   280,007       172,503  
TOTAL LIABILITIES AND EQUITY $ 327,632     $ 205,963  
               


CHEER HOLDING, INC.

(Formerly known as “Glory Star New Media Group Holdings Limited”)
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
(In U.S. dollars in thousands, except share and per share data)

       
    For the Years Ended December 31,  
    2023     2022     2021  
                   
Revenues   $ 152,327     $ 157,079     $ 153,012  
                         
Operating expenses:                        
Cost of revenues     (39,549 )     (40,580 )     (34,944 )
Selling and marketing     (76,200 )     (82,534 )     (77,520 )
General and administrative     (5,658 )     (5,908 )     (3,341 )
Research and development     (1,635 )     (1,331 )     (920 )
Total operating expenses     (123,042 )     (130,353 )     (116,725 )
                         
Income from operations     29,285       26,726       36,287  
                         
Other income (expenses):                        
Interest income (expense), net     3       (93 )     (513 )
Change in fair value of warrant liability     86       (62 )     809  
Other income (expense), net     1,215       282       (255 )
Total other income     1,304       127       41  
                         
Income before income tax     30,589       26,853       36,328  
Income tax expense     (61 )     (413 )     (976 )
Net income     30,528       26,440       35,352  
Less: net gain (loss) attributable to non-controlling interest     51       (450 )     65  
Net income attributable to Cheer Holding, Inc.’s shareholders   $ 30,477     $ 26,890     $ 35,287  
                         
Other comprehensive income (loss)                        
Unrealized foreign currency translation (loss) gain     (2,233 )     (13,357 )     2,945  
Comprehensive income     28,295       13,083       38,297  
Less: comprehensive gain (loss) attributable to non-controlling interests     3       (478 )     119  
Comprehensive income attributable to Cheer Holding, Inc.’s shareholders   $ 28,292     $ 13,561     $ 38,178  
                         
Earnings per ordinary share                        
Basic and dilutive*   $ 3.53     $ 3.95     $ 5.40  
                         
Weighted average shares used in calculating earnings per ordinary share                        
Basic and dilutive*     8,637,504       6,812,387       6,538,118  
                         


CHEER HOLDING, INC.

(Formerly known as “Glory Star New Media Group Holdings Limited”)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. dollars in thousands)

       
    For the Years Ended December 31,  
    2023     2022     2021  
CASH FLOWS FROM OPERATING ACTIVITIES:                  
Net income   $ 30,528     $ 26,440     $ 35,352  
Adjustments to reconcile net income to net cash provided by operating activities:                        
Provision (reversal of provision) for doubtful accounts     2,096       440       (268 )
Provision for unamortized produced content     112       770        
Depreciation and amortization     3,385       2,884       2,090  
Amortization of right-of-use assets     394       454       426  
Deferred income tax expense (benefits)     63       (53 )     713  
Share based compensation for employees                 4  
Share based compensation for non-employees           391       181  
Loss on disposal of property and equipment     2              
Gains on disposal of a subsidiary                 (26 )
Amortization of loan origination fees     16       76       104  
Change in fair value of warrant liability     (86 )     62       (809 )
Changes in assets and liabilities                        
Accounts receivable     15,205       (42,105 )     19,904  
Prepayment and other current assets     (22,270 )     16,872       (10,681 )
Unamortized produced content     682       170       (537 )
Accounts payable     3,325       (5,576 )     4,750  
Contract liabilities     (14 )     (356 )     (87 )
Accrued liabilities and other payables     (370 )     565       (9,236 )
Other taxes payable     9,477       7,346       4,964  
Lease liabilities     (371 )     (641 )     (389 )
Net cash provided by operating activities     42,174       7,739       46,455  
                         
CASH FLOWS FROM INVESTING ACTIVITIES:                        
Purchase of property, plant and equipment     (3 )     (25 )     (72 )
Prepayments for acquisition of intangible assets           (7,964 )     (2,718 )
Cash disposed for sales of subsidiaries                 (12 )
Return for short term investment                 1,751  
Net cash used in investing activities     (3 )     (7,989 )     (1,051 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:                        
Proceeds from short-term bank loans     4,660       6,096       5,114  
Repayments of short-term bank loans     (4,802 )     (6,244 )     (6,818 )
Proceeds from long-term bank loans     1,412              
Payment of loan origination fees     (58 )     (87 )     (68 )
Contribution from shareholders     (791 )     743        
Borrowings from related parties     1,600              
Repayments to related parties                 (232 )
Proceeds from issuance of ordinary shares in connection with a private placement     80,000             15,290  
Net cash provided by financing activities     82,021       508       13,286  
                         
Effect of exchange rate changes     (149 )     (7,078 )     881  
                         
Net increase (decrease) in cash and cash equivalents     124,043       (6,820 )     59,571  
Cash, cash equivalents and restricted cash, at beginning of year     70,482       77,302       17,731  
Cash, cash equivalents and restricted cash, at end of year   $ 194,525     $ 70,482     $ 77,302  
                         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                        
Interests paid   $ 271     $ 247     $ 336  
Income tax paid   $     $     $  
                         
NONCASH INVESTING AND FINANCING ACTIVITIES                        
Acquisition of intangible assets from prepayments   $ 4,464     $     $  
                         


RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS

             
    December 31,
2023
    December 31,
2022
 
Cash and cash equivalents   $ 194,227     $ 70,482  
Restricted cash     298        
    $ 194,525     $ 70,482  

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