Half Year 2021 Luokung Technology Corp Earnings Call
Ladies and gentlemen, thank you for standing by please continue to hold a moment we will begin shortly.
Once again, we thank you for standing by and please continue to hold we will begin in just a moment.
[music].
Greetings and welcome to the local technology corporations first half 2021 financial results at this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If you would like to ask a question. Please press star one on your telephone keypad if Ed.
Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
I'd now like to turn the conference over to your host Mr. Adam Prior Investor Relations for local Technology Corporation. Thank you you may begin.
Thank you and good morning, everyone and for those listening in Asia Good evening.
Hello Kong issued its 2021 first half financial results after the close of market yesterday.
You can find copies of the earnings release at the Investor Relations section of the company's website Www Dot Luo Com dotcom.
Before we get started I would like to note that except with respect to historical information statements made in this conference call may constitute forward looking statements within the meaning of the federal Securities law.
Statements relating to trends, the company's operations and financial results and the business and the products of the company and its subsidiaries actual results from the local and may differ materially from the results anticipated in these forward looking statements as a result of various risks and uncertainty underlying our forward looking statements, including risks and uncertainties associated with.
COVID-19, and its impact on the economy and our businesses as well as those risks described from time to time in the World Congress filings with the SEC, including our latest form 6K, and subsequent reports we will conquer specifically disclaims any obligation to update or revise any forward looking statements whether as a result of new information future development.
Or otherwise.
In addition, a replay of this call will be provided through a link on the Investor Relations section of our website.
I'd like to take a moment to discuss the format of today's call the COO.
Companys Chairman and CEO. Mr song will begin the call with some opening remarks, Mandarin, which we will then translate into English.
The presentation will be in English, we will translate all portions that are spoken in Mandarin into English please be patient as we work through the.
The company's CTO, Mr. Baumann, Lee will discuss the latest operating state operational developments and the CFO. Mr. Jay you will conclude with an overview of the financial results provide an outlook for the remainder of the year and beyond.
A Q&A session will follow management's prepared remarks, if any individuals' would prefer to email questions they'd like to ask during this session. Please feel free to email me directly at a prior at equity NY Dot com. Please specify if you'd like to add any read your name as well.
In addition, we received a number of questions. Following the issuance of 6K last night, where possible have integrated those into our comments today as well.
With that I'd now like to turn the call over to Mr. Chair.
Chairman and Chief Executive Officer of Luo Com.
Go ahead Mr song.
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Adam Please.
Okay.
Thank you Mr Chairman and thank you everyone for joining us this morning, including the members of Luo Com's Executive team, who are here on the call with me today.
This is our first earnings call and we are excited to have this opportunity to discuss the worldcom's rapid growth within the investment community I would like to begin this call with an update on business developments over the first six months of 2021.
We made considerable progress in the first half in terms of top line growth.
The World Congress of rapidly growing company connected by the core belief that our spatial and poor old technology will increase the company's value proposition.
Our society as a whole seeks to harness the intelligence that can connect cars cities and people will welcome considers itself a major player in enhancing daily lives and.
People surroundings.
We've established a leading position in HD maps.
Net of things intelligent big data autonomous driving.
Vehicle rolled collaboration carbon neutrality and remote sensing data services.
When we acquired <unk>. This year, we did so not only because of their leading position in China's HD mapping market.
Also because of the synergy business brings to worldcom's existing location based services, our lbs business as well as autonomous driving smart transportation business.
This has greatly increased the depth and breadth of business services.
All of this is strengthened willow com's competitive and market position.
In my recent shareholder letter, we noted the three pillars of the Worldcom business Smart transportation remote data sensing and lbs and derive our revenue from the growth in all three of these areas and are pleased to have continued to win large global customers that license our technology for these purposes.
To that end, we were pleased to see our revenues grow by over 400% during the six months ended June 32021.
While our bottom line was impacted by the pandemic in the first half of 2020.
<unk> to invest in R&D and partnership expansion.
Because of these investments we were able to achieve this record revenue growth. This year, which is only the beginning of the long term benefits we anticipate.
In the first half of the year, we saw substantial growth in our Obs services business, which is a reflection of the market potential for services targeting customers and as a primary driving force behind our overall revenue growth.
In the field of smart transportation and carbon neutral remote sensing data services.
We also have achieved growth and a year over year and the prior year period excuse me.
Although this business currently contributes a relatively small portion of the company's overall revenue we.
We anticipate this line of business will see continuing growth for the coming quarters.
The first six months of 2021, we're not without challenges from a regulatory perspective, we endure and ultimately we're successful in resolving worldcom designation Communist China military company by the U S Department of defense.
However, this particular concern did have some impact on our bottom line for the period due to added legal and consulting expenses that were necessary to defend the company. During this time.
With those challenges behind us, it's been a productive year, thus far.
For the remainder of 2021, our focus will continue to be on accelerating growth.
From all sources in and always with improvements to our top line.
Furthermore, based on internal projections and the outstanding results, we achieved in the revenue growth in the first half. We believe that we will achieve revenue of 100 million an incredible milestone for our company its portfolio for the full year ended 2021.
With that I'd now like to turn the call over to Mr. Baumann Lee our CTO for more detailed discussion of our operations. Mr. Lee. Please go ahead.
Thank you chairman.
Before I begin I'd.
I'd like to note that La Cantera result for the first half after 2021 <unk>.
Include only about three and half months of contributions from the email from coal business.
The acquisition closed mid March 2021.
We have successfully merged even have close operation with that outflow car.
We are pleased to realize the synergies between the two entities.
However, as the Chairman noted this business is only part of what is the ability.
During the Q&A session and happy to discuss the specifics of our lbs business to whatever extent investors who would like.
But in the interim.
I would like to highlight some of the recent partnerships, we have signed with large multinational companies.
Over the past few months.
<unk> has initiated a decent relationships with leading industry players.
The common element to each of this development.
Is that the first pillar of our business some of our transportation.
Continues to be the forest the grill segment of our business.
Due to continued advancement in autonomous driving.
Yeah drew in 'twenty or 'twenty, one Wolfgang announced that he might have golf signed an agreement with the Geely Automobile Research Institute.
Goodbye he must all via provide autonomous driving simulation testing services for CEB.
Completion of this initial phase occurred during the third quarter I'll pass it on to walk.
Company anticipates that there will be additional opportunities for what can be repeated in the future.
In September 20th Anti-war, EMACS golf bind two agreement.
First a cooperation agreement with Microsoft to launch autonomous driving services for automakers and the second and agreement to provide autonomous driving test services for its intact.
Oh, the subsidiary of mobile cards.
Autonomous driving of the Swedish multinational manufacturing companies.
But continue with the licensing of our RBS technology is resulting in automobiles and connected Iot devices, creating greater efficiency.
This leads to the second pillar of our business, which is carbon neutrality.
I think that investors in the United States classified those as E. S. G.
This is really just inherent in what our technology for wives.
We devote survey show record in Asia that improves the efficiency of our licensing customers and as a result.
Transportation becomes safer with fewer emissions.
Mercedes become more sensitive towards power needs.
Finally.
We need to note that the largest component of our revenue at the moment is the lvs.
The market here.
Huge.
The way that works is that meets our strict adherence to privacy.
We provide location and spatial data for a wide variety of beach will be applications.
In September 20th one here one there.
Now that he must go find agreement to be the technical service provider for the management of market on the service information for China Mobile Group Heilongjiang Corporation limited.
Our Hayden via mobile the Heilongjiang Division for China, mobile, the leading telecommunications provider in mainland China.
Hey, Linda on mobile is Vodafone fourth new client win.
In the telecommunications industry seems to be at launch our Internet RBS b to B business.
Data.
<unk> has been a crucial.
A sensitive topic, but a long call.
The data service provider <unk> has made it a priority to operate its business, while maintaining compliance with all applicable laws and regulations.
We are also using technology and co innovation, including blockchain to ensure data security integrity and compliance of data services, while protecting the data right off our clients.
This is the source of confidence and the reason behind our clients' long term trust in long haul.
Overall.
We could not be more pleased with the platform the ability and the progress that we're making.
With that.
I will turn the call over to Jay.
Yeah, Paul for a brief review of financials and our outlook for the year.
Jay.
Thank you. Thank you all for joining US I will quickly review the financial statement on the welcome each of you to review both our press release as well as our form 6K, which was filed with SEC yesterday afternoon.
<unk>, which has additional data available for all investors to review.
The six months and David joined Citi 2021 revenue increased to 37 8 million compared to $7 3 million for the same period of last year.
The increase was principally as a result of the.
The new $4 5 million and increased revenue contribution from the <unk> business as well.
Both in the software and the service business and it.
Our reading cost increased during the period as a result of two new sectors.
Just to be certain traffic acquisition cost tragic extradition calls marry to meet varied depending on scale target audience and as a geography of traffic.
The second factor was and euro amount of legal.
And the cone consulting fees directly related to services when they are too deep.
And as a company against the designation by.
The U S Department of defense during the six months ended June 30.
2002, one I'd now like to discuss the current status of our balance sheet as well as our capital deployment strategy.
As of June 32021, low cost cash balance was 45.
$5 million.
As we detailed in our cash flow statement.
Majority of our capital from the first half of the year, including the capital raised in February we devoted to the closing of the <unk> go transaction.
As the chairman noted that.
<unk> is a critical component of what we're trying to build at a little club.
Not only to the time you met goes leading position in the 90 market.
How AG served to accelerate the growth of our other businesses. It is part of our growth engine that helps us greatly attaining.
New customers, while positioning the company to be the principal beneficiary of the shift to autonomous driving.
In September.
We accomplished that.
Closing of.
$72 8 million.
Red registered direct offering.
Primary consideration for why we raised capital at that time.
Are the following.
First we won't look wont to be even a petition to take advantage of M&A concentration.
As they present themselves.
Be mindful of desert daze opportunities would help to improve our market leading position knowledge.
We are doing so we just throw an understanding of this cost of capital.
Bye bye that I mean that any new transaction to be pursue must have a routine characteristic that is far superior to where we raised capital over time.
We know what do we want to walk on to D and heavy of solely the balance sheet is a critical component of entities.
Second.
He says in support of our growth.
We expect to generate at least $100 million remedies.
Our current projection in 2021.
This include a second half of the year that integrate.
Six months of revenue from the EMA co as well as continued to grow with RBS business.
Going forward, we expect to issue more regular updates on our financial metrics, including sales and the margin progression to provide greater visibility into our business.
As management, we believe that it is our responsibility to provide a transparent and open communication to shareholders.
To operate our business and honest and proactive manner.
Our goal is to be at.
At least regulatory update on.
Our activities just like what is expected of a public company and if you listen to feedback our shareholders provided.
To that end the company is expecting to provide a press release on it.
Revenue over the first nine months is within the next months.
After all it took the view.
We think this is yes.
This will serve as a catalyst for investors to follow in the coming weeks.
And with that operator, let's open up for question. Please.
Thank you at this time well be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad our COO.
Confirmation tone will indicate your line is in the question Kim.
You May press star two if you'd like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment. Please while we poll for questions now.
Now I'll turn the call over to Mr. Pryor.
Thank you Melissa I appreciate it at the beginning of the call. We received a number of different questions related to the.
Company's operations and specifically I'll ask one to management, while we wait for parties to queue up by pressing star one.
So Jay I'll refer to you we received a question relating to how long do you think knee.
Capital raised during 2021 will provide the company with working capital for its operation.
Oh, thanks, Thanks, Adam.
As we mentioned in the presentation.
We used the majority of the financing you're standing ready to close the acquisition of E medical.
And the purpose.
Of the recent financing is not for daily operation to provide a strong cash position.
Order to achieve our business plan.
Development.
From the Trumpf business daily operations perspective.
Actually there is no need to raise additional capital to loss to the operation. However, we do require additional capital.
And are planning to use the cash effectively to strengthen the company's competitive advantage.
And again more market shares, especially in smart transportation.
Got it.
Thank you, ladies and gentlemen, if you'd.
Like to ask a question. Please press star one on your telephone keypad.
We'll pause a moment to allow for questions.
I have another from the Internet audience that I will oh posed to you Jay and environment as well and then we'll take a question as they came up after this.
Well actually I see that an individual has queued up please operator, let's take the questions.
Thank you our question comes from the line of Matt Scott Private Investor. Please proceed with your question.
Hi, guys.
First and foremost I would like to say thank you on behalf of all the shareholders for making this call.
I know it is not the easy since we're not the nature and the speaker like like myself.
My question is a follow up.
What is the current status of the <unk>.
At this point in time.
I remember it was the delay in the last the interview with Georgia.
You mentioned it was the.
Still under way and not completely.
Okay.
Close.
So what's the current status of that.
No.
Yeah.
Okay. Thank you.
I just want to confirm the question is you mentioned the gilly or.
Which company.
No for now.
Well.
I would like to know both but it was the CEO Jim <unk>.
First.
Of the Gilly Okay.
No, yes, and Oh.
That's okay, I'm, sorry, I'm sorry.
Not only do I know what you so but yes, yes, both bolt.
Good.
Okay.
Oh, okay, Okay, sorry for interrupting.
And.
We have always maintained a good business relationship with Kelly and the we are still in negotiation with them about the extension of the investment, but unfortunately I'm sorry.
Im not able to share any further information at this moment.
Also.
But Doug you mentioned.
Do you see it has been for a while and however, we have informed them.
If they are building to close this deal.
It has to be done within this year.
What should we be negotiating some new term.
They arent any new terms, we will make a timely announcement. Thank you.
Thanks.
Okay.
Thank you once again, if you'd like to ask a question. Please press star one on your telephone keypad.
I'll ask the question that I'm, an individual investor posed over.
Over E mail.
When do you expect the company to breakeven or turned towards profitability.
Jay.
Oh, Okay. Yeah, Yeah, yes, yes. Thank you I think I'm going to take this country.
Our company is we're marching and accelerated the growth phase.
As we continued to extend our respected business.
We anticipate our finish.
Financial performance will improve over time.
We could breakeven.
When we postponed our investment in R&D and other related areas.
However.
It would cost us more to catch up in the future.
Our goal is to create good value for our shareholders and stakeholders long term.
But we.
We are going to provide regular updates on our progress to the investment community.
As we move forward.
Yeah.
Thank you once again, if you'd like to ask a question. Please press star one on your telephone keypad.
Several online and a number on the dial and but I'll ask another question.
Mr. Li oppose this to you.
I've received a number of questions relating to whats the growth prospects and the various pillars that Luo Kong operates and so of the three pillars, we mentioned today and in the shareholder letter what are the growth prospects for each line of business from lbs to autonomous driving and the like so I'll pause.
Is that to you Mr. Li.
Thank you Adam.
The effect all major lines of business to grow substantially.
We expect the RBS business will grow.
Faster rate in terms of revenue.
Because everyone know in China, it's a huge market and we already build a good momentum.
In building, our Rps business.
There's more automakers entering the massive production of our Tau ASO reliable autonomous driving vehicles.
Very optimistic about our growth in the autonomous driving field, especially you know simulation.
Paas services.
Mark Transportation is another growth area in which we see great potential.
I think Jorge from some potential and government clients.
Carbon neutrality is one of the hottest topic around the globe right now.
And he is much more so in China.
As a comprehensive survey show, a temporary or a data service provider.
<unk> uniquely positioned to serve different application need more efficiently in this area.
We anticipate a salary as growth in this area because it's a blue ocean and we can take advantage of the opportunity there.
Thank you Adam.
Thank you ladies and gentlemen, we have a follow up question from the line of Max <unk> Private Investor. Please proceed with your question.
Yes, I have another question.
Is there anything else you can any details you can share with us about.
The recent partnership.
You might go in.
Global automakers.
European parts suppliers.
Is there anything on that that you can share with us at this point in time.
Thank you.
Thank you.
Yes.
Okay.
I'd like to offer a little bit more detail.
The execution of the cooperation this.
International Auto makers and we have made.
Very productive progress.
Offering the simulation test and HD map integration is in the process.
So I.
Everyone knows the autonomous driving will be a long road I have and then there is a lot of.
Technical obstacles to overcome to realize its potential.
And we are providing data services and the testing on the simulation services with them and it will be a very long and fruitful cooperation.
For the long term.
And we are not only serving our current customer via our in park spend.
A number of different customers that go up but we will make appropriate updates one of the things mature lives and if appropriate for sure. Thank.
Thank you.
Thanks.
Yeah.
Thank you, ladies and gentlemen, as a final reminder, it is star one to ask a question, we'll pause a moment to allow for other question.
Well. Thank you Melissa I think at this time, we can turn it back to management for closing remarks.
Yes.
Thank you thank you Ed.
Thank you again for joining us, including low Kwang has overcome a challenge for.
Almost half of the year, but we believe we remain well positioned to carry out.
Our growth strategy.
The company will continue working toward becoming a leading specialty insurer intelligent baked data service company and prolonged.
Interactive location based service and HD map in China.
We are confident that our continued investment in R&D and improved diversity employee structure.
Will only strengthen our core competitiveness.
And that.
Our growing partnership base really empowered the company and its customers to achieve success in the future and we really appreciate your time and interest in the company and invite you to reach out to us with any additional questions.
Again, I think with that.
Yeah.
Thank you ladies and gentlemen. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.