PR Newswire
BEIJING
,
Aug. 19, 2022
/PRNewswire/ — Kuke Music Holding Limited (“Kuke” or the “Company”) (NYSE: KUKE), a leading classical music service platform, today announced its unaudited financial results for the second quarter ended
June 30, 2022
.
Second Quarter 2022 Financial Highlights
-
Total revenue was
RMB54.4 million
(
US$8.1 million
), compared to
RMB84.1 million
in the same period of 2021. -
Total gross profit was
RMB28.9 million
(
US$4.3 million
), compared to
RMB49.7 million
in the same period of 2021. -
Net profit was
RMB3.4 million
(
US$0.5 million
), compared to net loss of
RMB11.4 million
in the same period of 2021. -
Non-IFRS net profit
[1]
was
RMB16.9 million
(
US$2.5 million
), compared to a Non-IFRS net loss of
RMB18.3 million
in the same period of 2021.
Second Quarter 2022 Business Developments
-
During the second quarter of 2022, the Company added nearly 4,000 tracks of traditional classical music. The Company’s copyrighted classical music content included over 2.9 million music tracks as of
June 30, 2022
. This is comprised of more than 2 million tracks of traditional classical music, more than 360 thousand tracks of jazz, world, folk and other genres of music, as well as over 1000 video titles, more than 470 thousand spoken content tracks and more than 5000 volumes of sheet music. These contents span across more than 95 thousand musicians, more than 2 thousand musical instruments and more than 200 countries and regions. - In addition, the company has added more long-form videos including opera, live concert, ballet, documentary, master class, international competition, live streaming to further enrich its classical music library and capture the growth opportunities in the market.
-
With regard to the subscription business segment, the aggregated institutional subscribers increased to 812 from 809 across
China
. -
The 25
th
Beijing Music Festival (“BMF”) will commence in the month of September, 2022
Mr. He Yu, Chief Executive Officer of Kuke, commented, “Despite, firstly, the negative impact of local COVID-19 resurgence and subsequent lockdowns in certain cities in
China
, including where our clients are based, secondly, the smart music learning business is in the process of transiting from private kindergarten subscription model to public school model, which has impacted our revenues and revenue mix, we still recorded a total of revenues of
RMB54.4 million
during the second quarter of 2022, and achieved IFRS-based positive net income of
RMB3.4 million
.
Going forward, in view of the challenges presented by macroeconomic environment during the second quarter, we will continue to focus on strengthening our existing product and service portfolio, and executing cost saving initiatives to help us achieve a more optimized cost structure going forward.”
|
|
Second Quarter 2022 Financial Results
Total Revenue
Total revenue decreased by 35.2% to
RMB54.4 million
(
US$8.1 million
) from
RMB 84.1 million
in the same period of 2021.
-
Total licensing and subscription segment revenue
decreased by 14.2% to
RMB33.9 million
(
US$5 million
) from
RMB39.6 million
in the same period of 2021. Specifically, licensing revenue decreased by 15% to
RMB29.0 million
(
US$4.3 million
) from
RMB34.2 million
in the same period of 2021, due to the adverse impact from the COVID-19. Subscription revenue decreased to
RMB4.9 million
(
US$0.7 million
) from
RMB5.4 million
in the same period of 2021, mainly due to the decrease in sales of hardware products. -
Total smart music learning solutions segment revenue
decreased by 59% to
RMB8.5 million
(
US$1.3 million
) from
RMB20.7 million
in the same period of 2021. Specifically, smart music learning solutions sales revenue from public schools and commercial clients decreased by 71.5% to
RMB4.1 million
(
US$0.6 million
) from
RMB14.4 million
in the same period of 2021, mainly due to the decreased sales to commercial clients. Smart music learning solutions subscription revenue from kindergarten students decreased by 30.1% to
RMB4.4 million
(
US$0.7 million
) from
RMB6.2 million
in the same period of 2021, due to the strategic contraction of our private kindergarten business starting from 2022. -
Total live music events segment revenue
decreased to
RMB11.9 million
(
US$1.8 million
) from
RMB23.8 million
in the same period of 2021, due to the decreased revenues of live music events service due to the adverse impact by COVID-19. -
Total one-time disposal of obsolete inventory revenue
was
RMB0.1 million
, as a result of the strategic contraction of our private kindergarten business.
Gross Profit and Gross Margin
Gross profit in the second quarter of 2022 decreased to
RMB28.9 million
(
US$4.3 million
) from
RMB49.7 million
in the same period of 2021, which was largely attributable to the decreased revenues. Gross margin was 53.1%, compared to 59.1% in the same period of 2021.
-
The gross margin of classical music licensing and subscription segment
was 81.7%, compared to 86% in the same period of 2021. Specifically, the gross margin of classical music licensing slightly improved to 89.1% from 87.4% in the same period of 2021. The gross margin of classical music subscription decreased to 37.6% from 77.4% in the same period of 2021, due to the higher linear amortization costs of royalty payments. -
The gross margin of smart music learning solutions segment
was (5.0)%, compared to 63.8% in the same period of 2021. Specifically, the gross margin of smart music learning solution sales decreased to 43.0% from 89.0% in the same period of 2021, due to lower-margin business representing a larger percentage of our revenue mix compared to the prior quarter. The gross margin of smart music learning solution subscriptions from private kindergarten students was (50.3)%, compared to 5.5% in the same period of 2021 due to higher depreciation costs as a result of the strategic contraction of the private kindergarten subscription business
.
-
The gross margin of live music events segment
increased to 15.9% compared to 10.4% in the same period of 2021. -
The
gross margin
of one-time disposal of obsolete inventory was (287.7)%, due to the strategic contraction of the private kindergarten business.
Operating Expenses
Total operating expenses in the second quarter of 2022 decreased by 53.2% to
RMB27.8 million
(
US$4.2 million
) from
RMB59.5 million
in the same period of 2021.
-
Selling and distribution expenses
in the second quarter of 2022 decreased by 53.9% to
RMB6.0 million
(
US$0.9 million
) from
RMB13.0 million
in the same period of 2021. The decrease was mainly due to decreased expenses in relation to kindergarten business. -
Administrative expenses
in the second quarter of 2022 decreased by 48.5% to
RMB19.3 million
(
US$2.9 million
) from
RMB37.5 million
in the same period of 2021, due to the deceased stock-based compensation costs that incurred in the second quarter of 2021. -
Impairment losses on financial assets
in the second quarter of 2022 decreased by 75.5% to
RMB2.2 million
from
RMB9million
in the same period of 2021. This was mainly due to increased impairment losses on accounts receivable.
Operating Profit
Operating profit in the second quarter of 2022 was
RMB4.4 million
(
US$0.65 million
), compared to operating loss of
RMB8.4 million
in the same period of 2021.
Net Profit
for the Period
Net profit was
RMB3.4 million
(
US$0.5 million
), compared to net loss of
RMB11.4 million
in the same period of 2021.
Non-IFRS Net Profit for the Period
Non-IFRS net profit was
RMB16.9 million
(
US$2.5 million
), compared to non-IFRS loss of
RMB18.3 million
in the same period of 2021.
Net Profit per ADS and Non-IFRS Net Profit per ADS
Basic and diluted net profit per American Depositary Share (“ADS”) were both
RMB0.13
(US$0.02)
in the second quarter of 2022, compared to basic and diluted net loss per ADS of
RMB0.42
in the same period of 2021. Basic and diluted non-IFRS net profit per ADS were both
RMB0.57
(US$0.09)
in the second quarter of 2022, compared to basic and diluted non-IFRS net loss per ADS of
RMB0.62
in the same period of 2021. Each ADS represents one Class A ordinary share of the Company.
Balance Sheet
As of
June 30, 2022
, cash and cash equivalents were
RMB18.8 million
(
US$2.8 million
).
About Kuke Music Holding Limited
Kuke is a leading classical music service platform in
China
encompassing the entire value chain from content provision to music learning services. By collaborating with its strategic global business partner Naxos, the largest independent classical music content provider in the world, the foundation of Kuke’s extensive classical music content library is its unparalleled access to more than 900 top-tier labels and record companies. Leveraging its market leadership in international copyrighted classical music content, Kuke provides highly scalable classical music licensing services to various online music platforms and classical music subscription services to over 800 universities, libraries and other institutions across China. In addition, it has hosted the Beijing Music Festival (“BMF”), the most renowned classical music festival in China, for 24 consecutive years. Through KUKEY, the Company’s proprietary AI music learning system, Kuke aims to democratize music learning via technological innovation, bring fascinating music content and professional music techniques to more students, and continuously improve the efficiency and penetration of music learning in China.
For more information about Kuke, please visit https://ir.kuke.com/
Exchange Rate Information
This announcement contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of
RMB6.6981
to
US$1.00
, the noon buying rate in effect on
June 30, 2022
, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.
Forward-looking Statements
This announcement contains forward looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident,” “potential,” “continue” or other similar expressions. Statements that are not historical facts, including but not limited to statements about Kuke’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including those in Kuke’s registration statement filed with the Securities and Exchange Commission. Further information regarding these and other risks is included in Kuke’s filings with the SEC. All information provided in this press release is as of the date of this press release, and Kuke undertakes no obligation to update any forward-looking statement, except as required under applicable law.
Use of Non-IFRS Financial Measures
The Company uses non-IFRS profit for the period, which is a non-IFRS financial measure, in evaluating its operating results and for financial and operational decision-making purposes. The Company believes that non-IFRS profit helps management to analyze trends in the Company’s business that could otherwise be distorted by the effect of certain expenses that the Company includes in its profit or loss for the period.
Non-IFRS profit for the period should not be considered in isolation or construed as an alternative to net profit for the period or any other measure of performance or as an indicator of its operating performance. Investors are encouraged to review non-IFRS profit for the period and the corresponding footnote explaining the calculation of such measure together. Non-IFRS profit for the period presented here may be different to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, and should not be compared to the measure adopted by the Company’s data. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.
Non-IFRS profit for the period represents profit or loss for the year excluding the combined effect of amortization and depreciation, share-based compensation, impairment losses on financial assets, net, and the corresponding income tax effects of these non-IFRS adjustments.
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View original content:
https://www.prnewswire.com/news-releases/kuke-reports-second-quarter-2022-unaudited-financial-results-301609097.html
SOURCE Kuke Music Holding Limited
Featured image: DepositPhotos © monkeybusiness
