Renren Announces Unaudited First Half 2022 Financial Results
Renren Inc. (NYSE: RENN) reported its unaudited financial results for the first half of 2022, showing a 42% increase in total net revenues to US$21.3 million, up from US$15.0 million in H1 2021. Paying subscriptions for its SaaS businesses rose significantly, with Chime at 3,000 and Trucker Path at 86,000. However, the operating loss increased to US$8.5 million, while the net loss from continuing operations was US$4.7 million. The company also announced a special cash distribution of US$0.7013 per Class A share to be paid from a $300 million settlement fund.
- Total net revenues increased by 42% to US$21.3 million.
- Paying subscriptions for Chime and Trucker Path rose by 40% and 45%, respectively.
- Settlement fund distribution of US$0.7013 per Class A share is expected to enhance shareholder value.
- Operating loss increased to US$8.5 million, up 20% year-over-year.
- Gross margins decreased from 84% to 77% due to product mix shift and increased expenses.
- Adjusted net loss from continuing operations worsened to US$5.5 million, compared to adjusted net income of US$1.9 million in the previous year.
PHOENIX, Nov. 10, 2022 /PRNewswire/ -- Renren Inc. (NYSE: RENN) ("Renren" or the "Company"), which operates two US-based SaaS businesses, Chime Technologies Inc. © ("Chime") and Trucker Path Inc. © ("Trucker Path"), today announced its unaudited financial results for the six months ended June 30, 2022.
First Half of 2022 Highlights
Except where specified otherwise, the following commentary compares results for the six months ended June 30, 2022 to results for the corresponding period in 2021.
- Total net revenues improved
42% to US$21.3 million compared to US$15.0 million for the six months ended June 30, 2021. - Paying subscriptions to the Company's SaaS businesses, Chime and Trucker Path, as of June 30, 2022 reached 3,000 and 86,000, respectively, representing an increase of
40% and45% , respectively, compared to June 30, 2021. Chime's purchased seats, defined as eligible users on a paid subscription, increased to 37,300, a47% increase compared to June 30, 2021. - Gross Margins from the Company's SaaS businesses ended the period at
77% as compared to84% for the corresponding period ended June 30, 2021. - Operating loss of US
$8.5 million , increased20% from US$7.1 million in the corresponding period in 2021. - Net loss from continuing operations attributable to the Company was US
$4.7 million , compared to US$49.7 million in the corresponding period in 2021. - Adjusted loss from operations* (Non-GAAP) of US
$7.4 million , increased from an adjusted loss from operations of US$2.8 million in the corresponding period in 2021. - Adjusted net loss from continuing operations* (Non-GAAP) was US
$5.5 million , compared to adjusted net income from continuing operations of US$1.9 million in the corresponding period in 2021. - The Company's cash and cash equivalents decreased to US
$56.8 million from US$65.2 million and US$70.6 million at December 31, 2021 and June 30, 2021, respectively, primarily due to the acquisition of our new Headquarter building in Phoenix, Arizona and increased operating expenses partially offset by increased revenue during the period.
* Adjusted loss from operations and adjusted net income (loss) from continuing operations are measures other than US Generally Accepted Accounting Principles (non-GAAP) measures. Adjusted loss from operations is defined as loss from operations excluding share-based compensation expenses, depreciation of property and equipment and gain on debt extinguishment. Adjusted net income (loss) from continuing operations is defined as net income (loss) from continuing operations excluding share-based compensation expenses, depreciation of property and equipment, fair value change of contingent consideration, gain on debt extinguishment, fair value change of long-term investment, pick up of loss from Kaixin goodwill impairment and pick up of loss from the equity method investment in Kaixin. See "About Non-GAAP Financial Measures" below. |
First Half 2022 Results
The Company
The following results compare the results for the first half of 2022 to the results for the first half of 2021.
Total net revenues from SaaS and other for the first half of 2022 were US
Gross Margins from SaaS and other were
Operating expenses were US
Selling and marketing expenses were US
Research and development expenses were US
General and administrative expenses were US
Share-based compensation expenses, included in operating expenses, were US
Loss from operations of US
Net loss from continuing operations attributable to the Company was US
Adjusted loss from operations* (non-GAAP) of US
Adjusted net loss from continuing operations* (non-GAAP) was US
* Adjusted loss from operations and adjusted net income (loss) from continuing operations are measures other than US Generally Accepted Accounting Principles (non-GAAP) measures. Adjusted loss from operations is defined as loss from operations excluding share-based compensation expenses, depreciation of property and equipment and gain on debt extinguishment. Adjusted net income (loss) from continuing operations is defined as net income (loss) from continuing operations excluding share-based compensation expenses, depreciation of property and equipment, fair value change of contingent consideration, gain on debt extinguishment, fair value change of long-term investment, pick up of loss from Kaixin goodwill impairment and pick up of loss from the equity method investment in Kaixin. See "About Non-GAAP Financial Measures" below. |
Renren Settlement
On October 7, 2021, Renren entered into a Stipulation of Settlement (the "Stipulation") as a nominal defendant to the consolidated shareholder derivative lawsuits before the New York State Supreme Court (the "Court") with other defendants and the plaintiffs who have brought claims derivatively on behalf of Renren (the "Action").
The Stipulation contemplated (a) the Action will be dismissed with prejudice, (b) the claims brought by the plaintiffs against the defendants will be released, and (c) the administrator approved by the Court will distribute the Settlement Fund (as defined below) pursuant to the Stipulation (the "Settlement").
As the claims are brought nominally in the name of Renren, the plaintiffs purport to assert claims on behalf Renren and do not seek to impose any liability on Renren. Renren is a party to the Stipulation but did not contribute any amount to the Settlement or any amount for the administration of the Settlement. In connection with the Settlement, Oak Pacific Investment and Duff & Phelps, LLC have contributed to a settlement fund (the "Settlement Fund"), of which the final amount before any deduction of expenses will be the greater of
On May 27, 2022, Renren entered into an Amendment (the "Stipulation Amendment") to the Stipulation of Settlement reached on October 7, 2021 (the "Initial Stipulation," together with the Stipulation Amendment, the "Stipulation"). The Court declined to approve the Initial Stipulation by order dated December 10, 2021, raising concerns about (i) objections raised regarding the settlement fund recipients, (ii) the amount of requested attorneys' fees, and (iii) the reversion to Renren of any settlement funds remaining after completion of distribution to eligible recipients. In the May 27, 2022 Stipulation Amendment, Plaintiffs and Defendants reached an agreement on modifications to the Initial Stipulation, including to the definitions of certain terms and modification to the reversion provision, which provides for the distribution of remaining settlement funds. Plaintiffs and Defendants entered into the Stipulation Amendment to reach a new overall settlement of the entire Action (the "Settlement"). However, certain plaintiffs that previously intervened in the case filed objections to the Settlement. The judge held a hearing on the motion to approve the Amended Stipulation on June 9, 2022. The judge, by written decision dated June 14, 2022, overruled the intervenor plaintiffs' objections to the Settlement and issued an order and final judgment granting the Settlement. The intervenor plaintiffs appealed the denial of their objections to the Settlement. The intervenor plaintiffs withdrew their appeal by notices dated August 26, 2022 and October 20, 2022. As a result, no appeals are outstanding and the Settlement became effective as of October 20, 2022. The Settlement Fund will be distributed in accordance with the terms and conditions of the Stipulation.
On November 3, 2022, the board of directors of Renren declared a special cash distribution to distribute the Settlement Fund. In accordance with the Stipulation, the Defendants deposited
The special cash distribution is payable to all holders of Renren's Class A ordinary shares (including those in the form of Renren American Depositary Shares ("ADSs"), each one (1) ADS currently representing 45 Renren Class A ordinary shares) of record as of 5:00 p.m. Eastern Time on November 21, 2022 (the "Record Date"), except the Defendants and D&O Releasees (each as specifically identified in the Stipulation). The amount of the special cash distribution is US
The special cash distribution is expected to be paid on December 21, 2022. The due bill period is expected to run from November 18, 2022 to December 21, 2022. Due bills function to track trades of stock in the interim period between the Record Date and the Dividend Payment Date and ensure the right stockholder receives the special distribution. In order to receive the special cash distribution, shareholders must continue to hold their Renren ADSs at least through the market close on the special cash distribution payment date, which is expected to be December 21, 2022. According to the NYSE, the Ex-Dividend date for NYSE trading will be December 22, 2022.
Change in Accounting Method for Kaixin Investment
As of June 30, 2022, the Company determined that the investment in Kaixin Auto Holdings (NASDAQ: KXIN) ("Kaixin") should be accounted for as equity investment with readily determinable fair value, a change in accounting from the equity method. This determination is substantiated by the decrease in ownership to
2021 Deconsolidation of Kaixin Auto Holdings
On June 25, 2021, Kaixin completed a reverse acquisition with Haitaoche Limited ("Haitaoche"), in which Kaixin issued an aggregate of 74,035,502 ordinary shares to acquire
Under GAAP, loss of control of a subsidiary is deemed to have occurred when, among other things, a parent Company owns less than a majority of the outstanding common stock of the subsidiary, and is unable to unilaterally control the subsidiary through other means such as having the ability or being able to obtain the ability to elect a majority of the subsidiary's Board of Directors. Renren determined that all of those loss of control factors were present with respect to Kaixin on June 25, 2021. Accordingly, Renren deconsolidated Kaixin's financial statements and results of operations from Renren, effective June 25, 2021, in accordance with ASC 810, Consolidation.
For periods on and after June 25, 2021, Renren is accounting for its retained noncontrolling investment in Kaixin under the equity method of accounting. Renren held 47.8 million shares of Kaixin ordinary shares, or approximately
In connection with the Kaixin Deconsolidation and in accordance with ASC 810, Renren recorded a gain on deconsolidation of US
Kaixin's results of operations for the period from January 1, 2021 through June 24, 2021, the date immediately preceding the Kaixin Deconsolidation, and for the years ended December 31, 2020 and 2019, shown in the table below, are included in the unaudited condensed consolidated results of operations of Renren as net gain/loss from the discontinued operations, net of nil taxes, for those respective periods, after intercompany eliminations, as applicable.
For the Period from | ||||||||
January 1, 2021 through | Year Ended | |||||||
June 24, 2021 | December 31, 2020 | |||||||
(Unaudited, in thousands of U.S. dollars) | ||||||||
Loss from Discontinued Operations, net of nil taxes | $ | (10,896) | $ | (5,320) | ||||
Conference Call Information
The Company will not host a conference call regarding first half 2022 financial results. Please contact our Investor Relations Department if you have any questions.
About Renren Inc.
Renren Inc. (NYSE: RENN) operates several US-based SaaS businesses including Chime, Inc. and Trucker Path. Renren's American depositary shares ("ADS"), each of which currently represents forty-five Class A ordinary shares, trade on NYSE under the symbol "RENN".
Safe Harbor Statement
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," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook for the second half of 2022 and quotations from management in this announcement, as well as Renren's strategic and operational plans, contain forward-looking statements. Renren may also make written or oral forward-looking statements in its filings with the U.S. Securities and Exchange Commission ("SEC"), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Renren'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 but not limited to the following: Renren's goals and strategies; Renren's future business development, financial condition and results of operations; Renren's expectations regarding demand for and market acceptance of its services; Renren's plans to enhance user experience, infrastructure and service offerings. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Renren does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
About Non-GAAP Financial Measures
To supplement Renren's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Renren uses "adjusted loss from operations" and "adjusted net income (loss) from continuing operations" which are defined as non-GAAP financial measures by the SEC, in evaluating its business. Renren defines adjusted loss from operations as loss from operations excluding share-based compensation expenses, depreciation of property and equipment and gain on debt extinguishment and adjusted net income (loss) from continuing operations as net income (loss) from continuing operations excluding share-based compensation expenses, depreciation of property and equipment, fair value change of contingent consideration, gain on debt extinguishment, fair value change of long-term investment, pick up of loss from Kaixin goodwill impairment and pick up of loss from the equity method investment in Kaixin. Renren continuously and periodically reviews its operating results and business performance. Starting from the first quarter of 2018, there was a significant impact on net (loss) income due to the material and significant noncash amount of fair value change of contingent consideration relating to the used auto dealerships of the emerging used auto business. Kaixin completed the reverse acquisition with Haitaoche on June 25, 2021, which created significant goodwill on Kaixin's financial statements, and a significant portion of such goodwill was impaired as of June 30, 2021. Subsequent to completion of the reverse acquisition, Renren started to account for its retained non-controlling investment in Kaixin under the equity method of accounting through June 30, 2022. As of June 30, 2022, the Company changed the method of accounting of the Kaixin investment from equity method to fair value. Due to the nature of the business, Renren believes that in disclosing adjusted net income (loss) from continuing operations by excluding the impact of fair value changes, gain on debt extinguishment, pick-up of loss from the equity method investment in Kaixin, pick-up of loss derived from Kaixin's goodwill impairment and also expenses for share-based compensation, and depreciation of property and equipment, Renren provides investors with useful information to understand Renren's business performance. To facilitate investors' and analysts' comparative analysis, the aforesaid impact is presented retrospectively in "Reconciliation of non-GAAP results of operations measures to the comparable GAAP financial measures". Renren presents adjusted loss from operations and adjusted net income (loss) from continuing operations because they are used by Renren's management to evaluate its operating performance. Renren also believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Renren's consolidated results of operations in the same manner as Renren's management and in comparing financial results across accounting periods and to those of Renren's peer companies.
These non-GAAP financial measures are not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliation of non-GAAP results of operations measures to the comparable GAAP financial measures" at the end of this release.
RENREN INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(In thousands of US dollars) | ||||||||
As of | ||||||||
December 31, | June 30, | |||||||
2021 | 2022 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 65,247 | $ | 56,834 | ||||
Accounts receivable, net | 1,618 | 1,886 | ||||||
Prepaid expenses and other current assets | 6,272 | 4,256 | ||||||
Amounts due from related parties | 762 | 768 | ||||||
Inventory | 358 | 26 | ||||||
Total current assets | 74,257 | 63,770 | ||||||
Non-current assets: | ||||||||
Property and equipment, net | 216 | 4,828 | ||||||
Intangible assets, net | 325 | 3,058 | ||||||
Goodwill | 124 | 124 | ||||||
Long-term investments | 94,195 | 95,638 | ||||||
Right-of-use lease assets | 888 | 477 | ||||||
Other non-current assets | 170 | 168 | ||||||
Total non-current assets | 95,918 | 104,293 | ||||||
TOTAL ASSETS | $ | 170,175 | $ | 168,063 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,652 | $ | 2,440 | ||||
Short-term debt | 1,585 | - | ||||||
Accrued expenses and other current liabilities | 12,054 | 12,819 | ||||||
Short-term operating lease liabilities | 706 | 374 | ||||||
Amounts due to related parties | 714 | 679 | ||||||
Deferred revenue and advance from customers | 2,622 | 3,655 | ||||||
Income tax payable | 13,767 | 13,096 | ||||||
Total current liabilities | 33,100 | 33,063 | ||||||
Non-current liabilities: | ||||||||
Long-term operating lease liabilities | 63 | - | ||||||
Total non-current liabilities | 63 | - | ||||||
TOTAL LIABILITIES | $ | 33,163 | $ | 33,063 | ||||
Shareholders' Equity: | ||||||||
Class A ordinary shares | 816 | 833 | ||||||
Class B ordinary shares | 305 | 305 | ||||||
Additional paid-in capital | 772,207 | 774,748 | ||||||
Statutory reserves | 6,712 | 6,712 | ||||||
Accumulated deficit | (620,391) | (625,064) | ||||||
Accumulated other comprehensive loss | (10,012) | (9,293) | ||||||
Total Renren Inc. shareholders' equity | 149,637 | 148,241 | ||||||
Noncontrolling interests | (12,625) | (13,241) | ||||||
TOTAL EQUITY | 137,012 | 135,000 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 170,175 | $ | 168,063 | ||||
RENREN INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(In thousands of US dollars, except share data and per share data, ADS data, and per ADS data) | ||||||||
For the six months ended | ||||||||
June 30, | ||||||||
2021 | 2022 | |||||||
Net revenues | $ | 14,992 | $ | 21,306 | ||||
Cost of revenues | (2,472) | (4,961) | ||||||
Gross profit | 12,520 | 16,345 | ||||||
Operating expenses: | ||||||||
Selling and marketing | (6,072) | (9,628) | ||||||
Research and development | (4,664) | (7,690) | ||||||
General and administrative | (8,875) | (7,561) | ||||||
Total operating expenses | (19,611) | (24,879) | ||||||
Loss from operations | (7,091) | (8,534) | ||||||
Other income | 404 | 1,406 | ||||||
Net gain on investments | - | 13,363 | ||||||
Fair value change of contingent consideration | 761 | - | ||||||
Provision of restricted cash | - | (27) | ||||||
Interest income | 143 | 222 | ||||||
Interest expenses | (51) | (24) | ||||||
Total other income, net | 1,257 | 14,940 | ||||||
(Loss) income before provision of income tax and loss in equity method investments | (5,834) | 6,406 | ||||||
Income tax expenses | - | - | ||||||
(Loss) income before loss in equity method investments and noncontrolling interest | (5,834) | 6,406 | ||||||
Loss in equity method investments, net of tax | (43,586) | (11,638) | ||||||
Loss from continuing operations | (49,420) | (5,232) | ||||||
Discontinued operation: | ||||||||
Loss from operations of discontinued operation net of income tax | (10,896) | - | ||||||
Gain on deconsolidation of the discontinued operation, net of income tax | 123,667 | - | ||||||
Income from discontinued operation, net of tax | 112,771 | - | ||||||
Net income (loss) | 63,351 | (5,232) | ||||||
Net loss attributable to noncontrolling interests | 3,440 | 559 | ||||||
Net loss from continuing operations attributable to Renren Inc. | (49,655) | (4,673) | ||||||
Net income from discontinued operations attributable to Renren Inc. | 116,446 | |||||||
Net income (loss) attributable to Renren Inc. | $ | 66,791 | $ | (4,673) | ||||
Net loss per share from continuing operations attributable to Renren Inc. shareholders: | ||||||||
Basic and diluted | (0.046) | (0.004) | ||||||
Net income per share from discontinued operations attributable to Renren Inc. shareholders: | ||||||||
Basic and diluted | 0.108 | - | ||||||
Net income (loss) per share attributable to Renren Inc. shareholders: | ||||||||
Basic and diluted | 0.062 | (0.004) | ||||||
Net income (loss) attributable to Renren Inc. shareholders per ADS*: | ||||||||
Basic and diluted | 2.776 | (0.186) | ||||||
Weighted average number of shares used in calculating net (loss) income per ordinary share | ||||||||
Basic and diluted | 1,082,621,413 | 1,129,725,020 | ||||||
* Each ADS represents 45 Class A ordinary shares. | ||||||||
Reconciliation of Non-GAAP results of operations measures to the comparable GAAP financial measures | ||||||||
(Unaudited) | ||||||||
(In thousands of US dollars) | ||||||||
For the six months ended | ||||||||
June 30, | ||||||||
2021 | 2022 | |||||||
Loss from operations | $ | (7,091) | $ | (8,534) | ||||
Add back: Share-based compensation expenses | 4,292 | 2,367 | ||||||
Add back: Depreciation of property and equipment | - | 106 | ||||||
Less: Gain on debt extinguishment | - | (1,357) | ||||||
Adjusted loss from operations | $ | (2,799) | $ | (7,418) | ||||
Net loss from continuing operations | $ | (49,420) | ||||||
Add back: Pick up of loss from the equity method investment in Kaixin[1] | - | 11,986 | ||||||
Add back: Pick up of loss from Kaixin Goodwill impairment[1] | 47,837 | - | ||||||
Less: Fair value increase of long-term investment Kaixin[2] | - | (13,363) | ||||||
Less: Fair value change of Kaixin contingent consideration | (761) | - | ||||||
Add back: Share-based compensation expenses | 4,292 | 2,367 | ||||||
Add back: Depreciation of property and equipment | - | 106 | ||||||
Less: Gain on debt extinguishment | - | (1,357) | ||||||
Adjusted net income (loss) from continuing operations | $ | 1,948 | $ | (5,493) | ||||
[1] Adjustment of net loss from equity method investment in KAIXIN AUTO HOLDINGS, in which the Company retained a non- | ||||||||
[2] Adjustment of unrealized gain as a fair value increase to the long-term investment in Kaixin. | ||||||||
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SOURCE Renren Inc.
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