Datasea Reports Second Fiscal Quarter 2025 Revenue of $20.5 Million, Up 81.4% Year-over-Year

Rhea-AI Summary

Datasea (NASDAQ: DTSS) reported strong Q2 2025 financial results with revenue reaching $20.5 million, up 81.4% year-over-year from $11.3 million. The growth was primarily driven by the expansion of its 5G+AI multimodal digital business in China and commercialization of acoustic high-tech products.

The company's gross profit improved to $0.4 million with a 2.0% margin, up from $0.1 million and 0.9% margin in the previous year. Intangible assets increased significantly by 647% to $4.08 million, while inventory grew 108.31% to $319,932.

The company secured new contracts worth approximately $30 million and was selected as a prospective strategic partner by China Mobile Internet. Datasea plans to expand globally, particularly in the U.S. market, through partnerships and M&A opportunities, focusing on scaling high-margin acoustic products and improving profitability.

Positive

• Revenue increased 81.4% YoY to $20.5 million
• Gross profit improved to $0.4 million with margin expansion to 2.0%
• Secured new contracts worth $30 million
• Intangible assets increased 647% to $4.08 million
• Selected as strategic partner by China Mobile Internet subsidiary

Negative

• Low gross margin at 2.0% despite improvement
• Significant inventory increase of 108.31% may impact working capital

Insights

Financial Analyst

A deep dive into Datasea's Q2 FY2025 results reveals a complex financial picture that requires careful analysis. While the headline 81.4% revenue growth to $20.5 million appears impressive, the underlying financial metrics raise significant concerns about the business model's sustainability.

The most pressing issue is the extremely low gross margin of 2.0%. Despite doubling from the previous year's 0.9%, this level of margin is unsustainable for a technology company, particularly one operating in high-value segments like 5G+AI and acoustic technologies. For context, typical software and technology companies maintain gross margins of 60-80%, while even hardware manufacturers usually achieve 20-40%.

The 647% increase in intangible assets to $4.08 million represents significant investment in intellectual property and patents. While this could create future competitive advantages, it also indicates substantial cash deployment that needs to generate returns in a market where technology rapidly becomes obsolete.

The company's strategic pivot towards acoustic high-tech products and services appears promising for margin improvement, but execution risks remain substantial:

• The projected sale of 260,000 acoustic devices for $19 million in revenue implies an average selling price of $73 per unit, which seems aggressive for consumer health devices.
• The planned U.S. and European expansion will require significant capital investment and face intense competition from established players.
• The 108.31% inventory increase, while modest in absolute terms at $319,932, needs careful management to avoid obsolescence risks.

The new contracts worth $30 million and partnership with China Mobile Internet demonstrate market validation, but the path to profitability remains unclear without substantial improvement in gross margins. The company's focus on scaling high-margin acoustic products is crucial, as the current margins in the 5G+AI business appear insufficient to support sustainable operations and growth.

Datasea's Top Line Growth Fueled by the Expansion of its State-of-the-Art 5G+AI Multimodal Digital Segment in China

BEIJING, Feb. 14, 2025 /PRNewswire/ -- Datasea Inc. (NASDAQ: DTSS) ("Datasea", the "Company", "we", "us", or "our"), a Nevada−based technology company specializing in 5G+AI multimodal digital solutions and acoustic high−tech innovations, today announced its financial results for its second fiscal quarter ended December 31, 2024. The Company reported revenue of approximately $20.5 million, an increase of approximately 81.4% compared to revenue of approximately $11.3 million for the same period in the prior year. The increase was driven by the accelerated adoption of its 5G+AI multimodal digital business services in China due to the Company's continued commercialization of acoustic high-tech products.

Ms. Zhixin Liu, CEO of Datasea, commented, "Our strong performance in the second fiscal quarter reflects the successful expansion of our 5G+AI multimodal digital business customer base, where we continue to be an industry leader. We believe the expanding footprint of our 5G+AI customer base and the initial market penetration of our high-margin acoustic products underscore our ability to innovate and capture emerging opportunities. We remain committed to advancing our technological innovation while driving sustainable growth."

Financial Highlights

• Revenue: Revenue for the Company's second fiscal quarter of 2025 was approximately $20.5 million, an increase of approximately 81.4% compared to revenue of approximately $11.3 million for the second fiscal quarter of 2024. This increase was primarily driven by the growth of the Company's 5G+AI multimodal digital business in China, especially the continuous enhancement of the effectiveness and efficiency of 5G multimodal digital products and services through AI technology.
• Gross Profit: Gross profit for the Company's second fiscal quarter of 2025 was approximately $0.4 million, and our gross margin for the second fiscal quarter was approximately 2.0%. This marks an improvement from the same period in the prior year when the Company recorded gross profit of approximately $0.1 million and a gross margin of approximately 0.9%.
• Intangible Assets: As of December 31, 2024, and June 30, 2024, the Company's net value of intangible assets was $4,081,544 and $546,001, respectively, reflecting an increase of $3,535,543, or 647%. The increase in intangible assets is crucial to the Company's growth and success. The enhancement of intangible assets, including patents, has simultaneously increased the overall value of the business, promoted sustainable development, and contributed to the Company's long-term success.
• Inventory: As of December 31, 2024, the Company's inventory was $319,932, an increase of $166,349 from $153,583 on June 30, 2024, marking an increase of 108.31%. The increase in inventory primarily reflects the continued rise in customer orders within the acoustic high-tech business. Maintaining an appropriate inventory level helps the Company address sudden surges in demand or price hikes, secure discounts through bulk purchases, reduce procurement costs, and ensure timely capture of sales opportunities during promotions or peak seasons. The inventory growth reflects the healthy expansion of the Company's business and strategic preparations for future growth.

Business Highlights – 5G+AI Multimodal Digital Business

1. Technological Leadership

• The Company's AI multimodal models have made breakthroughs in areas such as sentiment analysis, machine translation, and natural language processing, expanding the boundaries of intelligent system applications. Currently, the Company is integrating DeepSeek's distributed training methods and mixed-precision training techniques, utilizing half-precision (FP16) and single-precision (FP32) floating-point numbers. After fusing multiple sensory inputs, the models are able to enhance data understanding, analysis accuracy, and decision-making reliability.
• In line with the Company's business needs, a self-designed Transformer model architecture has been developed, which is capable of processing inputs from multiple modalities in parallel. Datasea's 5G+AI platform incorporates this architecture, utilizing the self-attention mechanism to deeply learn the complex interactions between modalities. This approach excels in applications such as image-text correlation analysis and audio-video synchronization. After integrating DeepSeek's training methods, the platform will further advance in areas such as natural language generation, multilingual processing, code optimization, and logical reasoning, providing more comprehensive and accurate responses.

2. Key Contracts

• The Company's subsidiaries have signed new contracts worth up to an aggregate of approximately $30 million with Qingdao Ruizhi Yixing, Wuhan Xiaoming Technology, and other clients since last quarter, further reinforcing market penetration.

3. Strategic Collaboration

• We were selected as a prospective strategic partner by China Mobile Internet (a subsidiary of China Mobile), which has the potential to expand our opportunities for large-scale 5G infrastructure project collaborations.
• Our 5G+AI platform is capable of serving 52 million enterprises and 124 million individual businesses in China, facilitating digital transformation across sectors including finance, logistics, and agriculture.

Business Highlights – Acoustic High-Tech Business

1. Technological Innovation

• We are focused on the research and application of multiple advanced acoustic technologies, including ultrasound, infrasound, and Schumann resonance. By integrating the latest findings in acoustics, mechanical transduction, and vibration dynamics, the Company is developing AI-driven acoustic high-tech products with unique competitive advantages.
• We have developed distinct technical expertise in the study and application of non-audible mechanical wave effects, leveraging the cavitation, thermal, and mechanical effects of ultrasound to support a variety of applications such as environmental disinfection, crop pest control, photosynthetic absorption, seed treatment, water purification, safety monitoring, skincare, and healthcare.

2. Product Development

• Our ultrasonic disinfection machine series and the "Star Dream" non-contact sleep aid device utilize Schumann resonance and AI-powered acoustic algorithms to enhance health living and company's product performance.
• Our planned calendar year 2025 acoustic product releases include applications in environmental acoustic technology and neurological acoustic technology, such as the development of a pet deodorizing purifier and mechanical wave-based brain cortical cortisol regulation device, both of which target growing consumer markets.

3. Product Placement and Expansion Plans

• In January 2025, the Company reported that it has partnered with a significant number of beauty and health management companies in Tianjin and Hubei Provinces, introducing acoustic high-tech products to 463 beauty and personal care stores. By the end of calendar year 2025, the Company expects to sell up to 260,000 units of acoustic air disinfection devices and sleep products, with total projected revenue of approximately $19 million (approximately ¥1.33 billion RMB), achieving significant market penetration in Northern China.
• We plan to expand into the U.S. market, including partnerships with U.S. e-commerce platforms and distributors.
• We are strengthening our intellectual property (IP) portfolio, enhancing patents covering ultrasound medical imaging, precision acoustic industrial manufacturing, acoustic applications in agriculture, and acoustic IoT (Internet of Things) technologies.

Operational and Strategic Outlook

• Margin Improvement: We intend to drive profitability by scaling high-margin acoustic products (e.g., ultrasonic sterilizers, sleep aids) and offering technical services through the Company's 5G+AI platform, thereby reducing customer acquisition costs for Company's industrial clients.
• Global Expansion: We plan to accelerate international market entry into the U.S. and Europe and expand our acoustic high-tech business through strategic partnerships and mergers & acquisitions.
• Gross Margin Improvement: We expect to focus on scaling high-margin acoustic products (e.g., ultrasonic sterilizers, sleep aids) and reducing 5G+AI customer acquisition costs.
• Global Expansion: We aim to accelerate U.S. and European market entry through partnerships and M&A opportunities in acoustic IoT and precision agriculture.

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 

DATASEA INC.
CONSOLIDATED BALANCE SHEETS
		DECEMBER 31, 2024				JUNE 30, 2024
		(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash		$	268,101			$	181,262
Accounts receivable			210,980				718,546
Inventory, net			319,932				153,583
Value-added tax prepayment			111,300				107,545
Prepaid expenses and other current assets			684,783				1,486,956
Total current assets			1,595,096				2,647,892
NONCURRENT ASSETS
Property and equipment, net			41,399				48,466
Intangible assets, net			4,081,544				546,001
Right-of-use assets, net			185,494				49,345
Total noncurrent assets			4,308,437				643,812
TOTAL ASSETS		$	5,903,533			$	3,291,704
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable		$	314,367			$	1,075,641
Unearned revenue			135,514				49,239
Accrued expenses and other payables			499,637				596,714
Due to related parties			411,619				654,560
Operating lease liabilities			79,308				53,530
Bank loan payable			1,119,860				1,170,298
Total current liabilities			2,560,305				3,599,982
NONCURRENT LIABILITIES
Operating lease liabilities			116,820				-
Total noncurrent liabilities			116,820				-
TOTAL LIABILITIES			2,677,125				3,599,982
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value, 25,000,000 shares authorized,       7,164,402 and 3,589,620 shares issued and outstanding as of       December 31, 2024 and June 30, 2024 , respectively			7,164				3,589
Additional paid-in capital			45,633,189				38,957,780
Accumulated comprehensive income			134,302				242,208
Accumulated deficit			(42,538,589)				(39,440,322)
TOTAL COMPANY STOCKHOLDERS' EQUITY (DEFICIT)			3,236,066				(236,745)
Noncontrolling interest			(9,658)				(71,533)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)			3,226,408				(308,278)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)		$	5,903,533			$	3,291,704

The accompanying notes are an integral part of these consolidated financial statements.

DATASEA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
		THREE MONTHS ENDED DECEMBER 31,								SIX MONTHS ENDED DECEMBER 31,
		2024				2023				2024				2023
Revenues		$	20,456,404			$	11,348,469			$	41,537,498			$	18,229,212
Cost of revenues			20,038,952				11,246,234				40,923,065				18,052,242
Gross profit			417,452				102,235				614,433				176,970
Operating expenses
Selling			407,669				1,149,944				1,403,718				1,234,391
General and administrative			1,173,733				623,456				2,302,136				1,316,516
Research and development			74,402				117,371				177,481				272,375
Total operating expenses			1,655,804				1,890,771				3,883,335				2,823,282
Loss from operations			(1,238,352)				(1,788,536)				(3,268,902)				(2,646,312)
Non-operating income (expenses)
Other income (expenses), net			109,761				(46,187)				165,587				(54,051)
Interest income			875				1,623				4,930				1,729
Total non-operating income (expenses), net			110,636				(44,564)				170,517				(52,322)
Loss before income tax			(1,127,716)				(1,833,100)				(3,098,385)				(2,698,634)
Income tax			-				-				-				-
Loss before noncontrolling interest from    continuing operations			(1,127,716)				(1,833,100)				(3,098,385)				(2,698,634)
Income before noncontrolling interest from    discontinued operations			-				-				-				833,546
Less: loss attributable to noncontrolling interest    from continuing operations			8,562				(61)				(118)				(9,993)
Less: loss attributable to noncontrolling interest    from discontinued operations			-				-								-
Net loss attribute to noncontrolling interest			8,562				(61)				(118)				(9,993)
Net loss to the Company from continuing    operations			(1,136,278)				(1,833,039)				(3,098,267)				(2,688,641)
Net income to the Company from discontinued    operations			-				-				-				833,546
Net loss to the Company			(1,136,278)				(1,833,039)				(3,098,267)				(1,855,095)
Other comprehensive item
Foreign currency translation gain (loss)    attributable to the Company			(94,752)				34,601				(107,906)				(126,615)
Foreign currency translation gain attributable to    noncontrolling interest			19,296				116				60,602				29,850
Comprehensive loss attributable to the    Company		$	(1,231,030)			$	(1,798,438)			$	(3,206,173)			$	(1,981,710)
Comprehensive income attributable to    noncontrolling interest		$	27,858			$	55			$	60,484			$	19,857
Basic and diluted net loss per share		$	(0.16)			$	(0.72)			$	(0.56)			$	(0.82)
Weighted average shares used for computing    basic and diluted loss per share *			7,170,852				2,538,286				5,582,115				2,250,711
* retroactively reflect 1-for-15 reverse stock split effective on January 19, 2024

The accompanying notes are an integral part of these consolidated financial statements.

DATASEA INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
SIX AND THREE MONTHS ENDED DECEMBER 31, 2024 AND 2023
(UNAUDITED)
		Common Stock								Additional paid-in				Accumulated				Accumulated other comprehensive								Noncontrolling
		Shares				Amount				capital				deficit				income				Total				interest
Balance at    July 1, 2024			3,589,620			$	3,590			$	38,957,780			$	(39,440,322)			$	242,208			$	(236,745)			$	(71,533)
Net loss			-				-				-				(1,961,989)				-				(1,961,989)				(8,680)
Noncontrolling    interest    disposal at    closure of    the entity			-				-				-				-				-				-				1,391
Issuance of    common    stock for    equity    financing			692,308				692				1,958,059				-				-				1,958,751				-
Issuance of    common    stock for    equity    financing -    related    parties			1,932,224				1,932				3,978,449				-				-				3,980,381				-
Shares issued    for stock    compensation    expense			75,000				75				374,925				-				-				375,000				-
Shares issued    for purchase     of    intangible    assets from    the    Company's    major    shareholders			797,850				798				(798)				-				-				-				-
Foreign    currency    translation    gain (loss)			-				-				-				-				(13,154)				(13,154)				41,306
Balance at    September    30, 2024			7,087,002				7,087				45,268,415				(41,402,311)				229,054				4,102,245				(37,516)
Net loss			-				-				-				(1,136,278)				-				(1,136,278)				8,562
Forgiveness of    debt by    shareholder			-				-				183,351				-				-				183,351				-
Shares issued    for stock    compensation    expense			77,400				77				181,423				-				-				181,500				-
Foreign    currency    translation    gain (loss)			-				-				-				-				(94,752)				(94,752)				19,296
Balance at    December    31, 2024			7,164,402			$	7,164			$	45,633,189			$	(42,538,589)			$	134,302			$	3,236,066			$	(9,658)
Balance at    July 1, 2023			1,889,315			$	1,889			$	24,148,868			$	(28,063,258)			$	393,252			$	(3,519,249)			$	(60,848)
Net loss			-				-				-				(22,056)				-				(22,056)				(9,932)
Issuance of    common    stock for    equity    financing			685,940				686				8,060,600				-				-				8,061,286				-
Shares issued    for stock    compensation    expense			-				-				20,100				-				-				20,100				-
Foreign    currency    translation    loss			-				-				-				-				(161,216)				(161,216)				(8)
Balance at    September    30, 2023			2,575,255				2,575				32,229,568				(28,085,314)				232,036				4,378,865				(70,788)
Net loss			-				-				-				(1,833,039)				-				(1,833,039)				(61)
Shares issued    for stock    compensation    expense			-				-				22,103				-				-				22,103				-
Foreign    currency    translation    gain			-				-				-				-				34,601				34,601				116
Balance at    December    31, 2023			2,575,255			$	2,575			$	32,251,671			$	(29,918,353)			$	266,637			$	2,602,530			$	(70,733)

The accompanying notes are an integral part of these consolidated financial statements.

DATASEA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
		SIX MONTHS ENDED DECEMBER 31,
		2024				2023
Cash flows from operating activities:
Loss including noncontrolling interest		$	(3,098,385)			$	(1,865,088)
Adjustments to reconcile loss including noncontrolling interest to net cash         used in operating activities:
Gain on disposal of subsidiary			-				(833,546)
Bad debt reversal			(7,005)				-
Depreciation and amortization			395,741				276,116
Loss on disposal of fixed assets			3,155				-
Operating lease expense			77,320				107,355
Forgiveness of debt by shareholder			184,663				-
Stock compensation expense			556,500				42,203
Changes in assets and liabilities:
Accounts receivable			504,995				(52,805)
Inventory			(168,864)				59,809
Value-added tax prepayment			(4,710)				(25,932)
Prepaid expenses and other current assets			802,142				(2,589,743)
Accounts payable			(759,065)				(138,820)
Unearned revenue			87,317				(462,043)
Accrued expenses and other payables			(90,587)				(39,242)
Payment on operating lease liabilities			(70,789)				(111,547)
Net cash used in operating activities			(1,587,572)				(5,633,283)
Cash flows from investing activities:
Acquisition of property and equipment			(7,255)				(3,683)
Acquisition of intangible assets			(3,950,272)				(68,098)
Cash disposed due to disposal of subsidiary			-				(35)
Net cash used in investing activities			(3,957,527)				(71,816)
Cash flows from financing activities:
Proceeds from (repayment to) related parties			(239,307)				116,841
Proceeds from loan payables			-				153,659
Repayment of loan payables			(40,698)				(2,090,005)
Net proceeds from issuance of common stock			5,939,133				8,061,286
Net cash provided by financing activities			5,659,128				6,241,781
Effect of exchange rate changes on cash			(27,190)				(118,694)
Net increase in cash			86,839				417,988
Cash, beginning of period			181,262				19,728
Cash, end of period		$	268,101			$	437,716
Supplemental disclosures of cash flow information:
Cash paid for interest		$	17,973			$	10,535
Cash paid for income tax		$	-			$	-
Supplemental disclosures of non-cash financing activities:
Right-of-use assets obtained in exchange for operating lease liabilities		$	196,783			$	124,824
Transfer of debt owing to the Company's' CEO to Mr. Wanli Kuai		$	-			$	727,503

IMPORTANT NOTICE TO USERS

The information provided is a summary only, please refer to the Form 10-Q for the full text of this notice. All information is unaudited unless otherwise noted or accompanied by an audit opinion and is subject to the more comprehensive information contained in our SEC reports and filings. We do not endorse third-party information All information speaks as of the last fiscal quarter or year for which we have filed a Form 10-K or 10-Q, or for historical information the date or period expressly indicated in or with such information. We undertake no duty to update the information. Forward-looking statements are subject to risks and uncertainties described in our Forms 10-Q and 10-K.

View original content to download multimedia:https://www.prnewswire.com/news-releases/datasea-reports-second-fiscal-quarter-2025-revenue-of-20-5-million-up-81-4-year-over-year-302376882.html

SOURCE Datasea Inc.

FAQ

What was Datasea's (DTSS) revenue growth in Q2 2025?

Datasea reported Q2 2025 revenue of $20.5 million, representing an 81.4% increase compared to $11.3 million in Q2 2024.

How much did DTSS's gross margin improve in Q2 2025?

DTSS's gross margin improved to 2.0% in Q2 2025 from 0.9% in the same period last year.

What is the value of new contracts secured by DTSS in Q2 2025?

DTSS secured new contracts worth approximately $30 million with clients including Qingdao Ruizhi Yixing and Wuhan Xiaoming Technology.

How much did DTSS's intangible assets increase as of December 31, 2024?

DTSS's intangible assets increased by $3,535,543 or 647% to $4,081,544 as of December 31, 2024.

What are DTSS's expansion plans for 2025?

DTSS plans to expand into the U.S. and European markets through partnerships and M&A opportunities, focusing on acoustic IoT and precision agriculture.