Luokung Reports 2021 Year-end Financial Results, Reports Record Annual Revenues of $145.1 Million

Rhea-AI Summary

Luokung Technology Corp. reported a record revenue of $145.1 million for 2021, up from $18.3 million in 2020, primarily driven by its LBS advertising business. However, the company also experienced a net loss of $61.5 million, an increase from $40.1 million in the previous year, due to high R&D expenses. Gross profit margin improved to 11.1% from 4.3%. The company is optimistic about future growth, bolstered by the acquisition of EMG and partnerships with major players like Ford. A conference call is scheduled for May 12, 2022, to discuss these results.

Positive

• Revenue increased to $145.1 million, a growth of over 700% year-over-year.
• Gross profit margin improved to 11.1% from 4.3% in 2020.
• Successful integration of EMG's services into Ford's new vehicle models, contributing to revenue growth.
• Increased revenue contributions from smart transportation and software businesses.

Negative

• Net loss expanded to $61.5 million, up from $40.1 million in 2020.
• Loss per share increased to $0.21 from $0.18 in the previous year.
• Operating expenses rose to $81.7 million, primarily due to R&D investments.

Company to Host Conference Call on Thursday, May 12, 2022, at 8:00 a.m. ET

BEIJING, May 11, 2022 /PRNewswire/ -- Luokung Technology Corp. (NASDAQ: LKCO) ("Luokung" or the "Company"), a leading spatial-temporal intelligent big data services company and provider of interactive location-based services ("LBS") and high-definition maps ("HD Maps") in China, today announced results for the year ended December 31, 2021.

2021 Year-end Financial Highlights:

• Revenues of $145.1 million, compared to $18.3 million for 2020, primarily driven by increased contributions from the LBS advertising business
  
  
• Net loss of $61.5 million, compared to net loss of $40.1 million for 2020, primarily as a result of increased research and development ("R&D") expenses related to the hiring of additional staff and ongoing investment in related to autonomous driving-related business efforts.
  
  
• Basic and diluted loss per share of $0.21, compared to basic and diluted loss per share of $0.18 for 2020

Management Commentary

Mr. Xuesong Song, Chairman and CEO, stated, "We are pleased to have achieved record top line growth of $145.1 million in 2021, which is more than seven times total revenue in the prior year. This was primarily driven by significant growth in our LBS advertising business as a result of the integration and improvement of geographic information points of interest (POI), characteristic areas of interest (AOI) and other data with AI algorithms, which subsequently led to a growing customer base and increased demand. We also reported increased revenue contributions from our smart transportation and software and services businesses. Since closing the acquisition of eMapgo Technology (Beijing) Co., Ltd. ('EMG') in the first half of 2021, we have successfully integrated EMG's portfolio of technological services into Luokung. As anticipated, EMG has opened up opportunities for the Company in the areas of smart transportation, smart natural resource asset management and Internet LBS and related smart industry services. Our revenue growth was further supported by the tangible results of our research and development efforts, and with the addition of more than 500 employees to our R&D staff, we look forward to continuing to strengthen Luokung's strategic position and competitive advantages in our three core business pillars and to expanding our industrially recognized portfolio of products and services."

Mr. Song continued, "Our gross profit margin increased to 11.1% in 2021 from 4.3% in 2020. With the continuous optimization of our self-developed LBS intelligent advertisement placement platform in 2021, we expect gross profit margin will improve over time as we offered value-added services. As the Company continues to diversify its revenue streams with increased contributions from smart transportation and software and services, which tend to be higher margin businesses, we anticipate improving our margin profile. Luokung made significant investments in R&D and in the growth of our business in 2021, which led to increased cost of services and operating expenses. In 2022, we anticipate R&D investments as a percentage of total revenues to remain stable as that of 2021."

Mr. Song concluded, "We remain optimistic about our growth prospects from all lines of business in 2022 with the positive momentum we built in 2021. In recent months, we announced the strategic acquisition of Beijing Hongda Jiutong Technology Development Co., Ltd ('Hongda Jiutong'), which we anticipate enhancing the long-term development and growth of our business. We look forward to deepening our relationships with existing partners and establishing new partnerships that span across various industries and diverse application scenarios. In 2022, Luokung announced exciting business developments, including the successful integration of EMG's mapping services into two of Ford Motor Company's ('Ford') new vehicle models, and the launch of our remote sensing holographic spatial-temporal portfolio of products and services, both of which we believe will serve as growth drivers for Luokung."

Recent Operational Developments

• In February 2022, Luokung announced that its operating affiliate, EMG, began providing mapping services for two new Ford vehicle models—the Ford EVOS and Mustang Mach-E—both of which are equipped with Ford's BlueCruise active drive assist system, which supports L2 autonomous driving function as defined by SAE International. EMG provided approximately $2.5 million of services during the third quarter of 2021.
  
  
• In March 2022, Luokung announced the signing of an agreement pursuant to which the Company's operating affiliate, Beijing Zhong Chuan Shi Xun Technology Limited, has agreed to acquire Hongda Jiutong, a leading big data service provider for intelligent transportation and connected vehicles in China. The Company expects to close this transaction by the end of the second quarter of 2022.
  
  
• In April 2022, Luokung announced the launch of its remote sensing holographic spatial-temporal portfolio of products and services for natural resource monitoring and carbon sink accounting, including applications such as real 3D natural resource spatial-temporal holograms, dynamic monitoring of natural ecological carbon sinks, forestry carbon sink remote sensing intelligent accounting and measurement, farmland protection remote sensing AI monitoring and crop growth and disaster monitoring. Select products have been successfully applied as pilot projects in Huangshan and Jixi, Anhui Province, in Jixian, Heilongjiang Province and in other county-level regions.
  
  
• In May 2022, Luokung announced that its operating affiliate, Beijing BotAiot Intelligent Co., Ltd. ("BotAiot"), has signed a service contract to provide electronic blockchain data and certificate storage platform services, to improve the efficiency of highway transport infrastructure and equipment calibration and to enhance traffic flow rates.

2021 Financial Review – GAAP Results

Revenue 

For 2021, revenues increased to $145.1 million, compared to $18.3 million for 2020. The increase was primarily due to increased revenue contributions from the LBS advertising business, which was supported by improved advertising conversion due to a growing customer base and increased demand, as well as revenue growth in both the remote sensing and GIS data management service platform software and services and smart transportation businesses.

Cost of Revenues

Total cost of revenues increased to $129.0 million in 2021, compared to $17.5 million for 2020. The increase was primarily a result of increased traffic acquisition costs to meet the growth of revenue and increased salary and benefit expenses associated with the hiring of additional employees directly involved in data collection and processing and data collection costs during the period.

Operating expenses

Total operating expenses increased to $81.7 million in 2021, compared to $41.0 million for 2020. The increase was primarily driven by:

• a $36.1 million increase in R&D expenses attributable to increased salaries and share-based compensation for additional staff in the R&D department, software development expenses and amortization of intangible assets; and
• a $4.3 million increase in selling and marketing expenses related to increased compensation related to the hiring of additional marketing personnel and increased promotional and marketing expenses.

Loss from operations

Loss from operations was $65.6 million in 2021, compared to loss from operations of $40.3 million in 2020, as a result of the increased operating expenses described above.

Net loss

Net loss was $61.5 million, or $0.21 per share, in 2021, compared to net loss of $40.1 million, or $0.18 per share, for 2020. Weighted average shares outstanding for the year ended December 31, 2021, and 2020 were 334,907,324 and 221,984,037, respectively.

Balance Sheet Highlights

At December 31, 2021, Luokung's cash balance was $16.4 million, working capital deficit was $44.0 million and total shareholders' equity was $153.8 million, compared to a cash balance of $0.07 million, working capital deficit of $61.6 million and total shareholders' equity of $52.7 million, respectively, at December 31, 2020.

Conference Call and Webcast Information

Luokung will host a conference call at 8:00 a.m. Eastern Time on Thursday, May 12, 2022, during which management will discuss 2021 year-end results. Investors and analysts are welcomed to participate or send questions in advance.

To participate in the conference call, please use the following dial-in numbers:

U.S. & Canada (Toll-Free):		+1 (866) 682-6100
International (Toll):		+1 (862) 298-0702

A live webcast of the conference call can be accessed at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=N22lRjLu. A replay will be available shortly after the call and will remain available for 90 days.

ABOUT LUOKUNG TECHNOLOGY CORP.

Luokung Technology Corp. is a leading spatial-temporal intelligent big data services company, as well as a leading provider of LBS and HD Maps for various industries in China. Backed by its proprietary technologies and expertise in HD Maps and multi-sourced intelligent spatial-temporal big data, Luokung established city-level and industry-level holographic spatial-temporal digital twin systems and actively serves industries including smart transportation (autonomous driving, smart highway and vehicle-road collaboration), natural resource asset management (carbon neutral and environmental protection remote sensing data service), and LBS smart industry applications (mobile Internet LBS, smart travel, smart logistics, new infrastructure, smart cities, emergency rescue, among others). The Company routinely provides important updates on its website: https://www.luokung.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Information regarding the Company's future growth prospects and the preliminary unaudited financial results contained in this press release may constitute forward-looking-information within the meaning of securities laws. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The financial estimates provided in this press release are to provide early guidance on the semi-annual financial performance of the Company and readers are cautioned that this information may not be appropriate for any other purpose. When relying on the Company's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events including that the Company has not finished its review of the full financial positions and the Company may continue to incur net losses. The Company has assumed that the material factors referred to herein will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. 

Other than as required under securities laws, we do not undertake to update this information at any particular time.

Forward-looking information contained in this press release, including with respect to any future growth, is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. All forward-looking information contained in this press release is expressly qualified in its entirety by this cautionary statement.

CONTACT:

The Company:
Mr. Jay Yu
Chief Financial Officer
Tel: +86-10-5327-4727
Email: ir@luokung.com  

Investor Relations:
Ms. Carolyne Sohn
Vice President
The Equity Group Inc.
Tel: 415-568-2255
Email: csohn@equityny.com  

 

LUOKUNG TECHNOLOGY CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN U.S. DOLLARS)
		As of December 31,
		2021				2020
Assets
Current assets:
Cash		$	16,443,929			$	71,793
Restricted cash			351,334				-
Accounts receivable, net of allowance for expected credit losses			13,803,367				3,980,942
Other receivables and prepayment			26,455,037				7,996,378
Notes receivable			672,347				-
Total current assets			57,726,014				12,049,113
Non-current assets:
Property and equipment, net			5,582,480				514,363
Intangible assets, net			102,885,017				42,716,594
Goodwill			81,770,963				11,957,839
Investment			438,647				196,798
Right-of-use assets			4,484,843				369,747
Other assets			4,155,236				-
Other receivables, net (long term)			8,145,659				61,378,420
Total non-current assets			207,462,845				117,133,761
TOTAL ASSETS			265,188,859				129,182,874
Liabilities
Current liabilities:
Accounts payable			9,192,619				5,841,511
Accrued liabilities and other payables			89,358,279				66,467,084
Contract liabilities			1,575,067				657,542
Lease liabilities – current portion			1,446,823				336,537
Amounts due to related parties			135,718				310,464
Total current liabilities			101,708,506				73,613,138
Non-current liabilities:
Lease liabilities – non-current portion			3,064,357				-
Accrued liabilities and other payables			3,666,995				2,663,835
Deferred tax liabilities			2,900,999				211,796
Total non- current liabilities			9,632,351				2,875,631
TOTAL LIABILITIES			111,340,857				76,488,769

 

LUOKUNG TECHNOLOGY CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN U.S. DOLLARS)
		As of December 31,
		2021				2020
Commitments and contingencies
Shareholders' Equity
Share capital
Preferred shares, $0.01 par value; 22,794,872 shares authorized, issued and outstanding at December 31, 2021; 24,295,182 shares authorized, issued and outstanding at December 31, 2020			227,949				242,952
Ordinary shares, $0.01 par value; 500,000,000 shares authorized; 385,542,224 and 239,770,000 shares issued and outstanding at December 31, 2021 and 2020			3,855,422				2,397,701
Additional paid-in capital			326,309,353				164,753,586
Accumulated deficit			(182,710,276)				(113,242,512)
Accumulated other comprehensive loss			(1,592,762)				(1,523,978)
Total equity attributable to owners of the company			146,089,686				52,627,749
Non-controlling interest			7,758,316				66,356
Total Shareholders' Equity			153,848,002				52,694,105
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	265,188,859			$	129,182,874

 

LUOKUNG TECHNOLOGY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(IN U.S. DOLLARS)
		For the years ended December 31,
		2021				2020
Revenues		$	145,067,965			$	18,263,788
Less: Cost of revenues			129,026,086				17,479,479
Less: Operating expenses:
Selling and marketing			6,057,161				1,708,222
General and administrative			30,127,176				29,925,057
Research and development			45,476,113				9,401,883
Total operating expenses			81,660,450				41,035,162
Loss from operations			(65,618,571)				(40,250,853)
Other (expense) income:
Interest expense			(4,122,434)				(3,625,748)
Foreign exchange (losses) gains, net			(70,776)				2,078,714
Other income, net			214,459				1,740,922
Total other (expense) income, net			(3,978,751)				193,888
Loss before income taxes			(69,597,322)				(40,056,965)
Income tax benefit			8,126,337				-
Net loss		$	(61,470,985)			$	(40,056,965)
Less: Net (income) loss attributable to non-controlling interest			(7,330,267)				191,325
Net loss attributable to owners of the Company		$	(68,801,252)			$	(39,865,640)
Comprehensive loss:
Net loss			(61,470,985)				(40,056,965)
Other comprehensive (loss) income:
Foreign currency translation adjustment			(58,700)				(2,937,074)
Comprehensive loss		$	(61,529,685)			$	(42,994,039)
Less: Comprehensive (income) loss attributable to the non-controlling interest			(10,084)				41,022
Comprehensive loss attributable to owners of the Company		$	(61,539,769)			$	(42,953,017)
Net loss per ordinary share:
Basic and Diluted		$	(0.21)			$	(0.18)
Weighted average number of ordinary shares outstanding Basic and Diluted			334,907,324				221,984,037

 

LUOKUNG TECHNOLOGY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN U.S. DOLLARS)
		For the years ended December 31,
		2021				2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(61,470,985)			$	(40,056,965)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization			13,432,153				5,597,137
Amortization of right-of-use assets			1,148,071				408,843
Exchange difference			70,777				(2,019,441)
Loss on disposal of property and equipment			107,495				13,663
Allowance for expected credit losses			5,249,448				17,005,297
Share-based compensation expense			21,186,441				4,804,378
Gain on derecognition of lease			-				(65,479)
Write-off of accounts and other payables			(1,355)				(169,886)
Impairment of goodwill			1,994,986				3,619,968
Impairment of property and equipment			-				-
Loss on disposal of a subsidiary			-				126,373
Deferred tax liability			(8,222,748)				-
Changes in assets and liabilities:
Accounts receivable			(8,003,940)				(1,830,920)
Notes receivable			(664,448)				-
Other receivables and prepayment			(23,049,706)				(10,355,091)
Accounts payable			100,905				1,078,131
Accrued liabilities and other payables			4,547,481				7,936,699
Deferred revenue			702,595				(1,483,240)
Change in lease liability			(997,298)				(433,275)
Tax payable			(1,126)				-
Inventories			83,295				-
Net cash used in operating activities			(53,787,959)				(15,823,808)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(1,541,831)				(33,974)
Purchase of other assetss			(4,150,786)				-
Partial payment made for acquisition of a subsidiary			(67,957,424)				(18,743,810)
Disposal of subsidiary			-				(126,374)
Increase in investment			(439,502)				(188,403)
Deposit for investments			(6,435,734)				(289,851)
Proceeds from disposal of property and equipment			155				-
Net cash inflow from acquisition of subsidiaries			2,128,637				1,016
Net cash used in investing activities			(78,396,485)				(19,381,396)

 

LUOKUNG TECHNOLOGY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN U.S. DOLLARS)
		For the years ended December 31,
		2021				2020
CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayment to) Advances from related parties			1,090,770				(82,829)
Additional capital investment from  minority shareholders			378,207				-
Payment of preferred stock dividends			(666,512)				-
Redemption of preferred stock			(6,123,201)				-
Proceeds from issuance of debt			-				21,738,815
Proceeds from issuance of shares			154,231,470				9,882,432
Net cash provided by financing activities			148,910,734				31,538,418
Effect of foreign exchange rate changes			(2,820)				42,892
Net increase (decrease) in cash			16,723,470				(3,623,894)
Cash at beginning of year			71,793				3,695,687
Cash at end of year		$	16,795,263			$	71,793
Supplemental cash flow disclosures:
Cash paid for amounts included in the measurement of lease liabilities			(997,298)				(433,275)
Interest paid			119,814				3,504
Income taxes paid			-				-
RECONCILIATION TO AMOUNTS ON CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents			16,443,929				71,793
Restricted cash			351,334				-
Total cash, cash equivalents and restricted cash		$	16,795,263			$	71,793
Non- cash investing and financing transaction:
Right-of-use assets obtained in exchange for new operating lease liabilities			-				889,403
Share-based compensation expense			21,186,441				4,804,378

 

View original content:https://www.prnewswire.com/news-releases/luokung-reports-2021-year-end-financial-results-reports-record-annual-revenues-of-145-1-million-301545440.html

SOURCE Luokung Technology Corp.

FAQ

What were Luokung Technology's 2021 financial results?

Luokung reported revenues of $145.1 million with a net loss of $61.5 million for 2021.

How much did Luokung's revenue increase from 2020 to 2021?

Revenue increased from $18.3 million in 2020 to $145.1 million in 2021, marking a growth of over 700%.

What is Luokung's gross profit margin in 2021?

Luokung's gross profit margin improved to 11.1% in 2021, up from 4.3% in 2020.

When will Luokung host its conference call to discuss financial results?

Luokung's conference call is scheduled for May 12, 2022, at 8:00 a.m. ET.

What significant partnerships did Luokung announce in 2021?

Luokung announced a partnership with Ford, providing mapping services for Ford's new vehicle models.