Q4 2019 Earnings Call
Ladies and gentlemen to this conference is scheduled to begin showing me finish called <unk>.
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Thank you for all patients.
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Thank you for standing by for its fourth quarter fiscal year.
These conference calls.
At this time all participants.
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The management.
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Josh.
Please go ahead.
Thank you operator.
Hello, everyone and thank you for joining us on state schools.
No its fourth quarter fiscal year 2019, unaudited financial results.
<unk> to 20 thought Twentytwenty before you are smoking.
Turning to release is available in the company's website.
Today, you will have complete Hotseat mr. Shao dump truck.
So with a review of the company's basic operating results and report recent developments for the company.
You will be followed by Mr. cycling.
You got Chief Financial Officer.
A detailed account the companys onwards, and financial results.
No we don't take the time, so just some specific questions such as a company buying best as part of the cool.
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Well we proceed well liked your Mcgee of all Safe Harbor statement.
Corporate school. They agreed forward looking statements made under the Safe Harbor provisions of the private Securities Litigation Reform Act a bunch of 95.
All forward looking statements are inherently uncertain.
Based on current expectations and assumptions concerning future events.
Each of performance of the company.
You are cautioned not to place undue reliance on forward looking statements, which are any predictions and speak only as of the page Carol.
Such statements should Kathy your view for their risks and uncertainties about conceptual and the company's filings with the Securities Exchange Commission.
These risks and uncertainties could cause actual results could differ materially somebody's indicates important segments.
Sure that's such forward looking statements will prove to be.
Information about the best obsolescent genes another losses associated with the best thing you helped them choosing the company's filings with the Securities Exchange Commission.
Which we encourage you to review Kathy before making an investment decision.
The company dismal any obligation to update any forward looking statements. As a result, you information feature that's changing market conditions for otherwise except as required fundable.
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Thank you Hello, everyone and thank you for joining us on things cool.
We are pleased to report, but in the fourth quarter 2019, <unk> profitability continued to grow encouraging bridge walking the strong finish to the two yet how much we became a U.S. public company you have left the public company and made significant progress in sales business development.
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Oh and haven't deployed games continue to receive strong market approval from customers place in China. They the seats.
Q4 children launching several new products, including a version of all bouncing bundled products produced in partnership with talking told them trends.
As one of the dinosaur and educational toys that comes in five different types of times each with their personality.
Understood the 18 Chinese National Toy Fair in China.
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Look most of the product to decide how we've had the attract a large number of is demonstrating its broad base of appeal.
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During the fourth quarter and the second half of the yet we're lucky or is it because it's been a diversification above business as we launch new small education offerings in preschool alongside all traditionally strong business lines toys and games.
Now if the title that small education products.
These are all technology to bring early education for life, but state operated and privately run preschools in China.
Including by far establish a all child safety courses and launched a massive education initiatives small education products.
You are already more than 33 schools in the Chinese provinces, Jen I got them.
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During the fourth quarter, we announced the launch of off small massive education classes.
Product range. The Carty includes three separate products that can be sold and you separately for together.
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Small screen size of education courses on small immersive physical education classes.
Three products developed flight in house team of educational Expos under suitable for different teaching scenarios.
Having received wide praise from parents teachers and students.
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Another significant recent developments in the small education states during the quarter.
With the upgrade of office.
Valuation children's ability and an educational context.
The system is essential component of all small had you small busted educational products.
As expected to be officially put to use after the beginning of the Twentytwenty preschool spring semester in China.
It was all of the update our evaluation system Canal truck and record to children bloody behavior running processes I'm developmental data and each activity to form a traceable great track.
We believe this states are based approach subs valuable resource when designing curriculum structure, hi, Notching students you many are quite extra attention underlying for efficient allocation of the appropriate teaching content.
We believe it would approve improve our ability to obtain partnership agreements with additional pre schools in China.
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International expansion remains a key go for Blue and.
We have seen encouraging progress and how this is developed over the last few months.
AOL race or for that right do you have the user base like the 4 million.
Significant numbers of plays in China as well.
These communities, such as Russia, Korea, UK and Saudi Arabia.
You recently excited to announce the issuance of U.S. Peyton They all races core technology that connects and physical toyed with the virtual comes out of the my ball game.
The awarding of the Peyton represents a huge step forward in our marketing efforts legacy. Another result, we're in discussions with major distributors.
International appealing about products also being realized one recent example, being attention given to the <unk> interactive close to what I'd like.
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The 126, China imports and exports Guam Jay in November.
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Looking ahead, we are excited about the future.
Blue Hot team continues to operate.
Nothing edge weight gain education on daily industry.
We believe our industry, leading technology strong intellectual property research and development capabilities, an understanding of child focused content.
Will help us to stand out for mark investors onto be well placed continuing future growth.
I'll products can help parents and show that children and sustained as what is educated and we intend to continue to accomplish even more in years ahead.
Results for your continued support.
This concludes my rough patch remarks mountain Nikolay buttons to Siphonophores cfos laid out certain financial results for the fourth quarter fiscal year 2019.
Let's go ahead. Please go ahead.
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Thank you very much out though.
Everyone. Thanks for joining us today.
Now I'll go through the quarterly financial highlights the full year financial results I'm financial outlook.
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Well the fourth quarter 2019.
Total revenues increased by 18.3% yard the yet.
Q1 hundred and a Uh huh.
$11.8 million, our gross profit increased by 15.2% year over year.
$7.9 million <unk>.
Income from operations increased by 24.4% year idea.
$6.2 million.
And on net income increased by 26.2% married yet to $6.2 billion.
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For the full year 2019 title revenues were 26.8.
And others.
For the fiscal year 2019.
An increase of $5.3 million for 28.6% from 18.5 million buttons for the same period ended December 31st 2018.
The overall increase was primarily a trend.
So the increased sales of interactive displays.
James Evans category and mobile games.
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Revenues from sales of interactive toys and games or he's got degree what $21.2 million for the fiscal year 2019.
An increase of $4.3 million or 25.2%.
From $16.9 million for the same period ended December 31st 2018.
Interactive toys and games series kind of screen or a range of toys and Collins with Al technology, which we believe make them you get the play more interactive on more instructive and traditional toys increase is primarily result of the improvement of market recognition.
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Well 106672.
Well as.
For the fiscal year 2019.
Increase of $361966 for 69.3 person.
From 522600.
$8 for the same period ended December 31st 2018.
This decrease was the results of our business strategy to shift away from interactive toys and be animation series costs agreed on towards plays.
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Revenues from mobile games was 2.5 million buttons for the fiscal year 2019.
An increase of $1.4 million or 126.8%.
From $1.1 million for the same period ended December 31st 2018.
This increase was the result of the popularity of office move all game trend, though.
Which was launched in the fourth quarter 2018.
And received positive feedback from the market.
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Gross profit.
Was.
$16.3 million for the fiscal year 2019, an increase of $3.9 million for 31.2%.
$12.4 million for the same period ended December 31st.
2018.
Gross margin of the three different sub segments were as follows.
Interactive twice in the game series category increased 24 consent amounting to.
$2.7 million.
Interactive toys and on a nation series country decreased 43.77 amounting to.
600.
$62805 on mobile games increased 124.3 person amounting to $1.2 million.
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Chris Marr profit margin was 64, 68.4% for the fiscal year 2019, compared to 67 cents, let's same period of 2018.
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Total operating expenses.
$6.8 million for the fiscal year 2019, an increase of $2.7 million will 64.6%.
From fool.
<unk> point $1 million for the same period and that somebody bust.
This increase was mainly attributable to the 162549 fold increase in southern senses, but.
The 1.7 million dollar increase in general and administrative expenses on the $743657 increase.
Research and development expenses for the fiscal year 2019, compared the same period of 2018.
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Research and development expenses were 1.030 million $419 million for the fiscal year 2019, an increase of $743657 for 259.
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From.
$286842.
Well the same period ended December 35 to 2018.
This increase was primarily a result of research and development to develop a small it's preschool platform in treating a range of the massive educational products, an interactive toys and games series category.
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[noise] income from operations.
Was $9.5 million for the fiscal year 2019, an increase of $1.2 million for 14.8%.
From $8.3 million for the same period ended December 31st 2018.
Total other income net.
Was.
45000.
$422 for the fiscal year 2019.
Compared to total other income.
$207000.
307 to $207371 for the same period ended.
With that because 2018.
The decrease in total other income net is huge decrease and interest income from short term deposits.
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King come taxes was 488.
Thousand dollars for the fiscal year 2019, compared to provision for income taxes.
600000 does for the same period ended December 31st 2018.
Decreases due to tax deduction divided by the local government.
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Net income was $9.1 million for the fiscal year 2019, an increase of $1.2 million or 14.9%.
From 7.9 million goes to the same period ended December 31st 2018.
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Basic and diluted earnings per share was 26 cents for the fiscal year 2018, 19 compared to 24 cents for the same period ended December 31st 2018.
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Cash cash equivalents unrestricted cash.
As of December 30, plus 2019.
The company's cash cash equivalents, how much stricter cash totaled.
$15.5 million intuitive net proceeds of approximately $6.4 million to the company from the IPO, which closed in July 2019.
In connection with the IPO the company's ordinary shares began trading on NASDAQ capital markets on July 26, 2019 under the symbol who age 18.
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Finally, I'd like to update you on the first quarter Twentytwenty.
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Not much of the Ritchie <unk> Union Peasquito sold compete shutdown trajenta bound to assist us I'm docile.
He lives that's rather than the first quarter twentytwenty to decrease 20% to 25% due to the adverse impact of the pay that mine team outbreak from the company's sales on operations.
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[noise] you above outlook.
To make them available, but they also today's press release.
And reflects the Companys current and preliminary expectations estimates, which are subject to change.
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Please note on on.
Unaudited financial information and clearly.
The order and the financial statements and when they took nights to be included in the company's on your report on form 20-F.
Yeah ended December 31st 2019 and steady progress.
This concludes managements favorable a pool of business and financial results. The company would not have lights take this opportunity to address a few questions asked to prior to the cool like when investors.
I'd say the first question that we received was the extent to which occurred in the virus outbreak could affect me how its business.
Mr. Chen would you like to address that.
Well, we've just seen grown.
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I missed the Chen Lonza was would you not foresee the current the virus outbreak, having a substantial impact on our business for the full yeah, well. The first quarter is expected to be impacted on parallel guidance. We believe that sales will likely rebound, we hope to the strict measures taken by the Chinese government will help fewer tons.
Back to normal in second quarter.
By the on the kids, but based on information available to date on reflects all current and preliminary expectations on estimates which are subject to change.
Thank you Mr. John.
And now the second question received a was from some investments he wants to know about <unk> pipeline of new products on that specific questions. What will the company launch new products. During the first hall or Twentytwenty or will the current a virus outbreak delayed the release of products.
Senator Chuck do let's go ahead.
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Yeah.
Looking forward to turn she launching new products at the end of Q2 full beginning of Q3 around the time of chime until you actually.
We have new products in the pipeline across pool of all business lines, you know toys <unk> games on educational products.
And the final question that we received a was what's the outlook for the occasion business, how fast you expected to grow and Twentytwenty.
And with our yield sounds the ones you again.
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John which in the sauces.
DOCSIS device.
China has around 300000, preschools and around 180 million Chujah.
So the potential market size for products is huge.
We have a unique products that we believe a highly attractive.
See preschools across China, and can be tailored to a school individual needs.
We partner with play state afraid said I'm probably that preschools.
On the courses on products are designed by our team of educational X, but.
You have an intimate understanding of requirement in the market.
We anticipate the member preschools, we offer a small education products and will grow from current level of I thought he schools. So at least 100 schools by the end of the yet.
This concludes our prepared remarks, we will not only from school. The question operator. Please go ahead.
Ladies and gentlemen, I'll begin today's question and answer session. If you wish Asa question. Please press star one biotech.
You know if you wish to conceal requests <unk> <unk>.
For the benefit all participants on today's call. If you wish to offshore question to management in Chinese.
Immediately repeat your question English <unk> no Doug Shaw <unk> question I thought being translated.
Once again, if you wish also question.
Please press star one final typhoon <unk> need to be I know.
Once again to offer question you saw one on your telephone.
As David No further questions no I would like to turn the call back over to the company for closing remarks.
Thank you once again for joining us today, if you have any further questions. Please feel free to cone types Blue hops Investor Relations Department crude email address Oh I flew hops group.
Thank you very much.
This concludes this conference call you may now disconnect your lines. Thank you.
[music].