Datasea Pre-Announces Second Quarter Revenue of $20.5 Million, up 81% Year-over-Year

Rhea-AI Summary

Datasea (NASDAQ: DTSS) pre-announced its financial results for Q2 FY2025, ending December 31, 2024. The company reported projected revenue of $20.5 million, an 81% increase from $11.3 million in the same period last year. Gross profit is estimated at $0.41 million, showing a significant 310% increase from $0.1 million year-over-year.

The growth was primarily driven by the company's expanding 5G AI multimodal digital business and increased market penetration across China. The company has positioned its acoustic high-tech products in over 400 physical retail stores throughout China. Datasea's business strategy focuses on two main segments: acoustics high-tech and 5G+AI multimodal digital, both powered by core AI-driven technologies.

Positive

• Revenue growth of 81% YoY to $20.5 million
• Gross profit increase of 310% YoY to $0.41 million
• Expansion to 400+ physical retail stores across China
• Improved cost management and operational efficiency

Negative

• Low gross profit margin of 2% ($0.41M/$20.5M)

Insights

Financial Analyst

The pre-announced Q2 FY2025 results from Datasea reveal a complex picture of high growth coupled with profitability challenges. The 81% year-over-year revenue growth to $20.5 million demonstrates strong market traction for their 5G+AI multimodal solutions. However, the gross profit of $0.41 million, while showing a 310% increase, translates to a gross margin of just 2%, suggesting significant cost management challenges despite the company's claims of operational improvements.

The expansion into 400+ physical retail stores represents a strategic pivot toward a hybrid distribution model. This retail presence could potentially improve margins through direct-to-consumer sales, reducing intermediary costs. However, the associated overhead costs of physical retail operations need careful monitoring given the current thin margins.

A critical analysis of the numbers reveals some concerns:

• Despite the impressive revenue growth, the absolute gross profit remains modest, indicating potential pricing pressure or high cost structure in the competitive Chinese tech market
• The 310% gross profit growth, while notable, is from a very low base of $0.1 million
• The company's focus on "high-margin technical products" hasn't yet translated into substantial margin improvements, suggesting possible market penetration strategies prioritizing growth over profitability

Looking ahead, Datasea's dual focus on acoustics high-tech and 5G+AI multimodal digital solutions provides diversified revenue streams. However, the company needs to demonstrate sustainable margin expansion alongside revenue growth to prove the viability of its business model. The retail expansion strategy could be a pivotal factor in achieving this balance, but execution risks remain significant in China's competitive tech landscape.

Gross Profit achieved a 310% Increase Year-over-Year

BEIJING, Feb. 5, 2025 /PRNewswire/ -- Datasea Inc. (Nasdaq: DTSS) ("Datasea" or "the Company"), a Nevada-based digital technology company specializing in acoustics high-tech and 5G+AI multimodal digital innovations, today pre-announced that its revenue for the second quarter of fiscal year 2025, ended December 31, 2024, is expected to be approximately $20.5 million, representing an 81% increase compared to $11.3 million for the same year-ago period. Gross profit for the second quarter is estimated to be $0.41million, a 310% increase from $0.1million for the same year-ago period. The expected second quarter increase of these two key income statement metrics was driven by the continued high growth of the Company's 5G AI multimodal digital business and its increased market penetration across China.

Ms. Zhixin Liu, CEO of Datasea, commented, "We are pleased to report another quarter of strong growth, with revenue increasing by over 81% year-over-year. These projected results are attributable to our laser-like focus on 5G + AI multimodal solutions which has resulted in more companies using our multimodal high-margin technical products and services."

"We are especially encouraged by our projected growth in gross profit which reflects our progress in cost management and operational efficiency improvements. We expect that our strategic placement of our acoustic high-tech products in over 400 high quality Physical retail stores across China will also contribute to our financial results in the second quarter which we expect to ramp in future periods."

"Our two business segments, acoustics high-tech and 5G+AI multimodal digital, are powered by core AI-driven technologies that we believe gives us a competitive advantage in their respective market segments. We are confident that the financial results of our businesses with their distinct sources of revenue will create long-term value for our shareholders," CEO Zhixin Liu concluded.

About Datasea Inc.

Datasea Inc. ("Datasea") is a leading provider of products, services, and solutions for enterprise and retail customers in two innovative industries, acoustic high tech and 5G-AI multimodal digitalization. The Company's advanced R&D technology serves as the core infrastructure and backbone for its products. Its 5G multimodal digital segment operates on a cloud platform based on AI. Datasea leverages cutting-edge technologies, precision manufacturing, and ultrasonic, infrasound and directional sound technology in its acoustics business to combat viruses and prevent human infections, and it is also developing applications in medical ultrasonic cosmetology. In July 2023, Datasea established a wholly-owned subsidiary, Datasea Acoustics LLC, in Delaware, in a strategic move to enter the U.S. markets and to mark its global expansion plan. For additional information, please visit www.dataseainc.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will", "expects", "anticipates", "future", "intends", "plans", "believes", "estimates", "target", "going forward", "outlook," "objective" and similar terms. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and which are beyond Datasea's control, which may cause Datasea's actual results, performance or achievements (including the RMB/USD value of its anticipated benefit to Datasea as described herein) to differ materially and in an adverse manner from anticipated results contained or implied in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in Datasea's filings with the SEC, which are available at www.sec.gov. Datasea does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.

Investor and Media Contact: 

Datasea Investor Relations
Email: 
investorrelations@shuhaixinxi.com
sunhezhi@shuhaixinxi.com 

Precept Investor Relations LLC
David Rudnick
+1 646-694-8538
david.rudnick@preceptir.com

View original content to download multimedia:https://www.prnewswire.com/news-releases/datasea-pre-announces-second-quarter-revenue-of-20-5-million-up-81-year-over-year-302368557.html

SOURCE Datasea Inc.

FAQ

What is Datasea's (DTSS) projected revenue for Q2 FY2025?

Datasea's projected revenue for Q2 FY2025 is $20.5 million, representing an 81% increase compared to $11.3 million in the same period last year.

How much did Datasea's (DTSS) gross profit grow in Q2 FY2025?

Datasea's gross profit for Q2 FY2025 is estimated at $0.41 million, showing a 310% increase from $0.1 million in the same year-ago period.

How many retail stores does Datasea (DTSS) have in China?

Datasea has positioned its acoustic high-tech products in over 400 physical retail stores across China.

What are the main business segments of Datasea (DTSS)?

Datasea operates in two main business segments: acoustics high-tech and 5G+AI multimodal digital, both powered by core AI-driven technologies.

What drove Datasea's (DTSS) revenue growth in Q2 FY2025?

The growth was driven by the continued expansion of the company's 5G AI multimodal digital business and increased market penetration across China.