iHuman Inc. Announces Fourth Quarter and Fiscal Year 2023 Unaudited Financial Results
- Revenue growth in Q4 and FY 2023 demonstrates iHuman's resilience and market strength.
- Strategic acquisitions, like the 'Cosmicrew' IP assets, are expected to enhance product offerings and market reach.
- Average total MAUs reaching record levels in both periods indicate strong user engagement and market recognition.
- Profitability maintained for eight consecutive quarters signifies sustainable growth and financial stability.
- Issuance of a special cash dividend reflects confidence in long-term growth prospects and shareholder value.
- Enhanced product suite, international expansion, and industry accolades highlight iHuman's successful strategic initiatives.
- Operating income and net income declined in Q4 2023 compared to the same period last year.
- Increase in sales and marketing expenses in Q4 2023 may impact profitability despite revenue growth.
- Decline in gross profit margin in Q4 2023 raises concerns about cost management efficiency.
- Decrease in average total MAUs in FY 2023 compared to Q4 2023 may indicate potential user retention challenges.
- Deferred revenue and customer advances decreased, which could impact future revenue streams.
Insights
The recent financial results reported by iHuman Inc. reveal a nuanced picture of the company's performance. Despite a marginal year-over-year decline in fourth-quarter revenues and net income, the expansion in average total MAUs and the full-year revenue growth indicate a robust user base and product demand. The decrease in fourth-quarter revenues and operating income could be attributed to normalization post an exceptional year due to pandemic-related demand, a common trend seen across tech and educational sectors as global economies reopen.
From an investment perspective, the sustained profitability and the declaration of a special cash dividend are positive signals of the company's financial health and management's confidence in long-term growth. However, investors should be cautious about the marginal decline in quarterly performance and consider the potential implications of China's declining birth rate on the company's domestic market growth prospects. The acquisition of 'Cosmicrew' IP assets indicates strategic content expansion, potentially opening new revenue streams and enhancing user engagement, which could be favorable for long-term value creation.
iHuman's strategic pivot towards international markets and broader age demographics is a response to external challenges such as China's declining newborn population. The success of their globally-oriented app, 'Aha World' and flagship product, 'iHuman Chinese', in international and domestic markets respectively, illustrates the company's ability to capture diverse market segments. The acquisition of the 'Cosmicrew' IP is a significant move to bolster the company's content offerings and could enhance its competitive position in the children's entertainment sector.
Investors should note the company's effective utilization of digital and physical product integration, as seen with the 'iHuman Fantastic Friends' app and its complementary physical products. This strategy could lead to increased user engagement and revenue per user. The company's financial strategy, including the special dividend issuance, suggests a balanced approach to rewarding shareholders while retaining sufficient capital for future growth initiatives.
The broader economic context is essential when evaluating iHuman's performance. Despite the global economic downturn, iHuman's financial results indicate resilience and adaptability. The company's growth amidst economic challenges highlights the potential counter-cyclical nature of the educational technology sector, where demand for high-quality educational content may remain stable or even increase during economic uncertainty.
The strategic acquisition and international market expansion also suggest that iHuman is seeking to mitigate risks associated with economic fluctuations and demographic changes. The company's ability to maintain a high gross margin and control operating expenses reflects strong operational efficiency, an important factor for investors to consider in assessing the company's long-term profitability potential.
Fourth Quarter 2023 Highlights
- Revenues were
RMB250.4 million (US ), compared with$35.3 million RMB260.7 million in the same period last year. - Gross profit was
RMB178.2 million (US ), compared with$25.1 million RMB181.0 million in the same period last year. - Operating income was
RMB21.9 million (US ), compared with$3.1 million RMB39.1 million in the same period last year. - Net income was
RMB33.3 million (US ), compared with$4.7 million RMB35.4 million in the same period last year. - Average total MAUs[1] reached a record-high of 25.38 million, a year-over-year increase of
14.2% .
Fiscal Year 2023 Highlights
- Revenues were
RMB1,018.1 million (US ), compared with$143.4 million RMB985.5 million in fiscal year 2022. - Gross profit was
RMB721.3 million (US ), compared with$101.6 million RMB691.2 million in fiscal year 2022. - Operating income was
RMB159.9 million (US ), compared with$22.5 million RMB111.6 million in fiscal year 2022. - Net income was
RMB180.9 million (US ), compared with$25.5 million RMB109.8 million in fiscal year 2022. - Average total MAUs were 23.04 million, a year-over-year increase of
16.0% .
[1] "Average total MAUs" refers to the monthly average of the sum of the MAUs of each of the Company's apps during a specific period, which is counted based on the number of unique mobile devices through which such app is accessed at least once in a given month, and duplicate access to different apps is not eliminated from the total MAUs calculation. |
Dr. Peng Dai, Director and Chief Executive Officer of iHuman, commented, "As we look back on 2023, I am truly inspired by the accomplishments that we have achieved, especially considering the decline in
"We are also thrilled to announce the acquisition of intellectual property assets related to "Cosmicrew" from Kunpeng, an animation production studio within the Perfect World Group. This strategic acquisition is expected to generate significant synergies with our business. Firstly, "Cosmicrew" is a popular cartoon adventure series that has established a strong presence in the children's entertainment sector. The light-hearted and delightful nature of this cartoon IP seamlessly compliments our overall product style and aesthetic. With the IP already integrated into some of our products before the acquisition, we now have greater autonomy over our creative content. In addition, we now can expand our product range further by developing additional IP offerings and derivatives, including animations, toys, and more. At the market level, "Cosmicrew" is a popular cartoon with a large audience base, and this acquisition will enable us to further extend our market reach and engage with a broader audience."
"As we continue to progress on our strategic initiatives, we remain fully dedicated to strengthening our core competencies through ongoing product enhancement. We have been enriching the content and functionality of our app products to elevate the digital experience of our users and have made further strides in integrating our online and offline offerings to create a more immersive and holistic journey for users. For example, we rolled out both multi-leveled physical books and a specially developed smart reading pen that complement our leveled English reading app, iHuman Fantastic Friends. This combination allows kids to explore captivating original English stories tailored to their proficiency level in physical and digital formats, offering them a flexible and simple reading experience while enhancing their understanding and engagement with the content."
"In 2023, we further strengthened our comprehensive product suite, significantly expanded our international presence, and earned increased market recognition with several prestigious industry accolades. We achieved all these milestones despite a highly volatile and challenging macroeconomic climate, which I believe is a testament to the caliber of our products, the effectiveness of our strategies, and the resilience of our team in overcoming diverse economic challenges. As we enter 2024, I am filled with anticipation for the continued success that lies ahead."
Ms. Vivien Weiwei Wang, Director and Chief Financial Officer of iHuman, added, "Our fourth quarter results ended 2023 on a positive note despite a turbulent global economic environment. While our fourth quarter results saw a marginal decrease year-over-year, it reflected a normalization from the exceptional fourth quarter performance last year, which was caused by a heightened demand driven by more indoor activities during the pandemic. From a full year perspective in 2023, despite the fact that everybody shifted back to regular routines and spent less time at home after the pandemic, we still achieved satisfactory growth as both revenues and MAUs increased compared to fiscal year 2022. We are also proud to announce our eighth consecutive quarter of profitability, with annual net income reaching
Fourth Quarter 2023 Unaudited Financial Results
Revenues
Revenues were
Average total MAUs for the quarter were 25.38 million, an increase of
Cost of Revenues
Cost of revenues was
Gross Profit and Gross Margin
Gross profit was
Operating Expenses
Total operating expenses were
Research and development expenses were
Sales and marketing expenses were
General and administrative expenses were
Operating Income
Operating income was
Net Income
Net income was
Basic and diluted net income per ADS were
Deferred Revenue and Customer Advances
Deferred revenue and customer advances were
Cash and Cash Equivalents
Cash and cash equivalents were
Fiscal Year 2023 Unaudited Financial Results
Revenues
Revenues were
Average total MAUs were 23.04 million, an increase of
Cost of Revenues
Cost of revenues was
Gross Profit and Gross Margin
Gross profit was
Operating Expenses
Total operating expenses were
Research and development expenses were
Sales and marketing expenses were
General and administrative expenses were
Operating Income
Operating income was
Net Income
Net income was
Basic and diluted net income per ADS were
Special Cash Dividend
To deliver return of capital to shareholders, the Company's board of directors (the "Board") approved a special cash dividend of
Acquisition of IP Assets
The Company, through one of its consolidated affiliated entities, entered into an asset transfer agreement (the "Asset Transfer Agreement") with Kunpeng, an animation production studio within the Perfect World Group (the "Transferors"). Pursuant to the Asset Transfer Agreement, the Company will acquire intellectual property assets related to "Cosmicrew" from Kunpeng, including copyrights and trademarks, among others, for a total consideration of
Exchange Rate Information
The
Non-GAAP Financial Measures
iHuman considers and uses non-GAAP financial measures, such as adjusted operating income, adjusted net income and adjusted diluted net income per ADS, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in
Non-GAAP financial measures are not defined under
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the United States 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" and similar statements. Statements that are not historical facts, including statements about iHuman's beliefs and expectations, are forward-looking statements. Among other things, the description of the management's quotations in this announcement contains forward-looking statements. iHuman may also make written or oral forward-looking statements in its periodic reports to the
About iHuman Inc.
iHuman Inc. is a leading provider of tech-powered, intellectual development products in
For more information about iHuman, please visit https://ir.ihuman.com/.
For investor and media enquiries, please contact:
iHuman Inc.
Mr. Justin Zhang
Investor Relations Director
Phone: +86 10 5780-6606
E-mail: ir@ihuman.com
Christensen
In
Ms. Alice Li
Phone: +86-10-5900-1548
E-mail: alice.li@christensencomms.com
In the US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
E-mail: linda.bergkamp@christensencomms.com
iHuman Inc. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands of Renminbi ("RMB") and except for number of shares, ADSs, per share and per ADS data) | |||||
December 31, | December 31, | December 31, | |||
2022 | 2023 | 2023 | |||
RMB | RMB | US$ | |||
ASSETS | |||||
Current assets | |||||
Cash and cash equivalents | 1,049,999 | 1,213,767 | 170,956 | ||
Accounts receivable, net | 79,614 | 60,832 | 8,568 | ||
Inventories, net | 19,127 | 16,518 | 2,327 | ||
Amounts due from related parties | 2,286 | 1,810 | 255 | ||
Prepayments and other current assets | 102,765 | 89,511 | 12,607 | ||
Total current assets | 1,253,791 | 1,382,438 | 194,713 | ||
Non-current assets | |||||
Property and equipment, net | 9,205 | 6,169 | 869 | ||
Intangible assets, net | 24,872 | 23,245 | 3,274 | ||
Operating lease right-of-use assets | 12,782 | 3,648 | 514 | ||
Long-term investment | 26,333 | 26,333 | 3,709 | ||
Other non-current assets | 6,416 | 8,662 | 1,218 | ||
Total non-current assets | 79,608 | 68,057 | 9,584 | ||
Total assets | 1,333,399 | 1,450,495 | 204,297 | ||
LIABILITIES | |||||
Current liabilities | |||||
Accounts payable | 24,206 | 22,139 | 3,118 | ||
Deferred revenue and customer advances | 379,063 | 318,587 | 44,872 | ||
Amounts due to related parties | 6,944 | 4,428 | 624 | ||
Accrued expenses and other current liabilities | 144,717 | 143,677 | 20,236 | ||
Current operating lease liabilities | 6,123 | 1,927 | 271 | ||
Total current liabilities | 561,053 | 490,758 | 69,121 | ||
Non-current liabilities | |||||
Non-current operating lease liabilities | 2,894 | 1,933 | 272 | ||
Total non-current liabilities | 2,894 | 1,933 | 272 | ||
Total liabilities | 563,947 | 492,691 | 69,393 | ||
SHAREHOLDERS' EQUITY | |||||
Ordinary shares (par value of | 185 | 185 | 26 | ||
Additional paid-in capital | 1,079,099 | 1,088,628 | 153,330 | ||
Treasury stock | (7,123) | (16,665) | (2,347) | ||
Statutory reserves | 7,967 | 8,164 | 1,150 | ||
Accumulated other comprehensive income | 10,497 | 17,955 | 2,529 | ||
Accumulated deficit | (321,173) | (140,463) | (19,784) | ||
Total shareholders' equity | 769,452 | 957,804 | 134,904 | ||
Total liabilities and shareholders' equity | 1,333,399 | 1,450,495 | 204,297 | ||
iHuman Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
except for number of shares, ADSs, per share and per ADS data) | |||||||||||||
For the three months ended | For the year ended | ||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||
2022 | 2023 | 2023 | 2023 | 2022 | 2023 | 2023 | |||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Revenues | 260,704 | 261,496 | 250,447 | 35,275 | 985,517 | 1,018,139 | 143,402 | ||||||
Cost of revenues | (79,707) | (74,871) | (72,201) | (10,169) | (294,343) | (296,868) | (41,813) | ||||||
Gross profit | 180,997 | 186,625 | 178,246 | 25,106 | 691,174 | 721,271 | 101,589 | ||||||
Operating expenses | |||||||||||||
Research and development expenses | (66,796) | (66,168) | (66,293) | (9,337) | (313,481) | (257,546) | (36,275) | ||||||
Sales and marketing expenses | (45,811) | (53,994) | (64,511) | (9,086) | (156,916) | (199,504) | (28,100) | ||||||
General and administrative expenses | (29,253) | (26,070) | (25,547) | (3,598) | (109,195) | (104,334) | (14,695) | ||||||
Total operating expenses | (141,860) | (146,232) | (156,351) | (22,021) | (579,592) | (561,384) | (79,070) | ||||||
Operating income | 39,137 | 40,393 | 21,895 | 3,085 | 111,582 | 159,887 | 22,519 | ||||||
Other income, net | 5,315 | 19,507 | 8,965 | 1,263 | 21,190 | 42,686 | 6,012 | ||||||
Income before income taxes | 44,452 | 59,900 | 30,860 | 4,348 | 132,772 | 202,573 | 28,531 | ||||||
Income tax (expenses) / benefits | (9,019) | (7,984) | 2,411 | 340 | (22,953) | (21,666) | (3,052) | ||||||
Net income | 35,433 | 51,916 | 33,271 | 4,688 | 109,819 | 180,907 | 25,479 | ||||||
Net income per ADS: | |||||||||||||
- Basic | 0.67 | 0.98 | 0.63 | 0.09 | 2.06 | 3.43 | 0.48 | ||||||
- Diluted | 0.66 | 0.95 | 0.61 | 0.09 | 2.03 | 3.30 | 0.46 | ||||||
Weighted average number of ADSs: | |||||||||||||
- Basic | 53,205,925 | 52,747,426 | 52,740,067 | 52,740,067 | 53,307,044 | 52,810,587 | 52,810,587 | ||||||
- Diluted | 54,033,560 | 54,772,536 | 54,753,503 | 54,753,503 | 54,040,908 | 54,753,025 | 54,753,025 | ||||||
Total share-based compensation expenses included in: | |||||||||||||
Cost of revenues | 168 | 67 | 64 | 9 | 348 | 299 | 42 | ||||||
Research and development expenses | 2,564 | 1,160 | 1,115 | 157 | 6,377 | 4,055 | 571 | ||||||
Sales and marketing expenses | 559 | 147 | 122 | 17 | 1,599 | 707 | 100 | ||||||
General and administrative expenses | 1,757 | 1,105 | 817 | 115 | 4,720 | 4,374 | 616 | ||||||
iHuman Inc. UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS (Amounts in thousands of Renminbi ("RMB") and except for number of shares, ADSs, per share and per ADS data) | |||||||||||||
For the three months ended | For the year ended | ||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||
2022 | 2023 | 2023 | 2023 | 2022 | 2023 | 2023 | |||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Operating income | 39,137 | 40,393 | 21,895 | 3,085 | 111,582 | 159,887 | 22,519 | ||||||
Share-based compensation expenses | 5,048 | 2,479 | 2,118 | 298 | 13,044 | 9,435 | 1,329 | ||||||
Adjusted operating income | 44,185 | 42,872 | 24,013 | 3,383 | 124,626 | 169,322 | 23,848 | ||||||
Net income | 35,433 | 51,916 | 33,271 | 4,688 | 109,819 | 180,907 | 25,479 | ||||||
Share-based compensation expenses | 5,048 | 2,479 | 2,118 | 298 | 13,044 | 9,435 | 1,329 | ||||||
Adjusted net income | 40,481 | 54,395 | 35,389 | 4,986 | 122,863 | 190,342 | 26,808 | ||||||
Diluted net income per ADS | 0.66 | 0.95 | 0.61 | 0.09 | 2.03 | 3.30 | 0.46 | ||||||
Impact of non-GAAP adjustments | 0.09 | 0.04 | 0.04 | 0.00 | 0.24 | 0.18 | 0.03 | ||||||
Adjusted diluted net income per ADS | 0.75 | 0.99 | 0.65 | 0.09 | 2.27 | 3.48 | 0.49 | ||||||
Weighted average number of ADSs – diluted | 54,033,560 | 54,772,536 | 54,753,503 | 54,753,503 | 54,040,908 | 54,753,025 | 54,753,025 | ||||||
Weighted average number of ADSs – adjusted | 54,033,560 | 54,772,536 | 54,753,503 | 54,753,503 | 54,040,908 | 54,753,025 | 54,753,025 | ||||||
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SOURCE iHuman Inc.
FAQ
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