SOS Limited Reports 2023 Financial Results
SOS (NYSE: SOS) reported significant changes in its financial performance for the year ending December 31, 2023. Revenue decreased from $260 million in 2022 to $92.4 million in 2023, driven by a recession in China's economy. However, cryptocurrency mining revenue surged from $0.33 million to $18.9 million due to a substantial increase in BTC prices. Operating loss narrowed to $4.8 million from $215 million in the previous year. Operating expenses decreased from $204 million to $18.9 million, primarily due to reduced G&A expenses and impairments. Cash and cash equivalents increased to $280 million. Despite a decline in commodity trading revenue, SOS saw improved cash flows, turning a $72.9 million deficit in 2022 to a positive $9.7 million in 2023.
- Cryptocurrency mining revenue increased from $0.33M to $18.9M.
- Operating loss reduced from $215M in 2022 to $4.8M in 2023.
- Operating expenses decreased significantly from $204M to $18.9M.
- Cash and cash equivalents increased to $280M, up from $259.5M.
- Positive net cash from operating activities at $9.7M in 2023, up from a $72.9M deficit.
- Total revenue declined from $260M in 2022 to $92.4M in 2023.
- Commodity trading revenue dropped sharply from $255.7M to $68.5M.
- Significant decrease in general and administrative expenses from $180.7M to $11.1M, indicating reduced operations.
- Share-based compensation expenses dropped from $14.7M to $7.3M, possibly affecting employee motivation.
Insights
The financial performance of SOS Limited in 2023 reflects a mixed bag of results, with both encouraging and concerning elements. The revenue decline from
The most notable positive development is the crypto-mining revenue, which surged from
Additionally, the company’s cash position is strong, with cash and cash equivalents growing to
In the short term, the significant cost reductions and increased crypto-mining revenues are positive signs. However, the long-term sustainability of these trends, especially within the volatile cryptocurrency market, remains uncertain. Retail investors should consider both the potential for continued growth in the crypto sector and the risks associated with the broader economic conditions in China.
The surge in cryptocurrency mining revenue for SOS Limited is a key highlight of their 2023 financial results. The increase in Bitcoin's price from around
However, investors should be aware that the cryptocurrency market is inherently volatile. While the past year's performance has been strong, future revenues from crypto-mining are highly dependent on the prices of Bitcoin and Ethereum, which can fluctuate widely. Additionally, the environmental impact and regulatory scrutiny of cryptocurrency mining are increasing, potentially posing future operational challenges.
Moreover, the company's decision to suspend most of its ETH production while maintaining some operations indicates a strategic approach to manage resources effectively. This adaptability is important in the ever-evolving crypto landscape. However, the sustainability of these revenue streams should be closely monitored, given the sector's unpredictability and the potential for rapid technological changes.
In summary, while the crypto-mining revenue boom presents a lucrative opportunity, it comes with substantial risks that investors should consider. Diversification and regular monitoring of crypto-market trends are essential for those looking to invest in companies with significant exposure to this sector.
- Operating loss of
$4.8 million $215 million - Revenues declined from
$260.0 million $92.4 million China economic activity. - Crypto-Mining revenue up over 50X
- Cash and cash equivalents of approximately
$280 million
Results of operations
Revenue
The company reported a notable decline in revenue from 2022 to 2023, with revenues dropping from
FY 2023 | FY 2022 | |||||||||||||||
Amount | Percentage | Amount | Percentage | |||||||||||||
Commodity trading | 68,456 | 74 | % | 255,668 | 98.4 | % | ||||||||||
Cryptocurrency mining | 18,898 | 20 | % | 329 | 0.1 | % | ||||||||||
Hosting service | 2,365 | 2.6 | % | - | - | |||||||||||
Other | 2,746 | 3 | % | 4,113 | 1.5 | % | ||||||||||
Total | 92,465 | 100 | % | 260,110 | 100 | % | ||||||||||
As of December 31, 2023, SOS has centered its operations around four primary product lines and services: commodity trading, cryptocurrency mining, hosting services and others. These product lines constitute
The Company commenced generating revenue from cryptocurrency mining in February 2021. As of December 31, 2023, it had successfully mined an aggregate of 675.65 units of BTC and 2,949.79 units of ETH from its mining pools. Revenue from cryptocurrency mining experienced a significant surge, soaring from
Costs of revenue
Revenue costs decreased from
Operating expenses
The following table presents our operating expense by source and proportion for the periods indicated (in thousands, except percentages):
FY 2023 | FY 2022 | |||||||||||||||
Selling | 672 | 4 | % | 8,556 | 4 | % | ||||||||||
General and administrative | 11,058 | 58 | % | 180,704 | 89 | % | ||||||||||
Share-based compensation | 7,264 | 38 | % | 14,714 | 7 | % | ||||||||||
18,994 | 203,974 | |||||||||||||||
Operating expenses decreased from
Selling expenses decreased from
General and administrative expenses decreased from
GAAP Operating Loss and EPS
The Company had operating loss of
GAAP EPS Basic (Diluted EPS is the same as EPS Basic）was
Income Tax
The company incurred
Balance Sheet and Cash Flow
As of December 31, 2023, we had cash and cash equivalents of approximately
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(US$ thousands, except share data and per share data, or otherwise noted) | ||||||||
Year ended | Year ended | |||||||
December 31, | December 31, | |||||||
2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (3,651 | ) | $ | (229,447 | ) | ||
Net loss from continuing operation | (3,651 | ) | (229,186 | ) | ||||
Net loss from discontinued operation | (3,597 | ) | (261 | ) | ||||
Adjustments for: | ||||||||
Depreciation of property, plant and equipment | 4,975 | 7,960 | ||||||
Depreciation of right-of-use asset | 800 | 693 | ||||||
Share-based compensation | 7,264 | 14,714 | ||||||
Accretion of finance leases | 32 | 75 | ||||||
Allowance for doubtful accounts - accounts receivable | 451 | (500 | ) | |||||
Allowance for doubtful accounts - other receivables | 228 | 170,842 | ||||||
Impairment of intangible assets | 970 | 8,425 | ||||||
Impairment of mining equipment | 4,455 | 25,043 | ||||||
Inventory impairment | 194 | 16,786 | ||||||
Adjustments, total | 19,369 | 244,038 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 1,172 | 17,911 | ||||||
Investment securities | (307 | ) | - | |||||
Other receivables | (25,194 | ) | (60,083 | ) | ||||
Amount due from related parties | 29,456 | (53,732 | ) | |||||
Inventories | 13,204 | (5,267 | ) | |||||
Intangible assets | (15,960 | ) | (329 | ) | ||||
Accrued liabilities | (5,193 | ) | 1,076 | |||||
Tax (recoverable)/payable | 1,247 | 3,650 | ||||||
Accounts payable | (94 | ) | 1,458 | |||||
Other payables | (4,795 | ) | 5,760 | |||||
Amount due to related parties | 998 | 607 | ||||||
Lease liabilities | (544 | ) | 921 | |||||
Net cash generated from/(used in) operating activities from continuing operations | 9,708 | (73,176 | ) | |||||
Net cash generating from discontinued operating activities | - | 261 | ||||||
Net cash generated from/(used in) operating activities | 9,708 | (72,915 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property, plant and equipment | - | (16,030 | ) | |||||
Net cash used in investing activities from continuing operations | - | (16,030 | ) | |||||
Net cash used in investing activities from discontinued operation | - | - | ||||||
Net cash (used in)/generated from investing activities | - | (16,030 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Repayment of principle portion of lease liabilities | (288 | ) | (768 | ) | ||||
Proceed from share issuance, net of issuance costs | 17,884 | 18,463 | ||||||
Proceeds from disposal of subsidiaries | - | 17,000 | ||||||
Net cash generated from financing activities | 17,596 | 34,695 | ||||||
EFFECT OF EXCHANGE RATES ON CASH | (7,619 | ) | (24,283 | ) | ||||
NET CHANGES IN CASH AND CASH EQUIVALENTS | 19,685 | (78,533 | ) | |||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 259,492 | 338,025 | ||||||
CASH AND CASH EQUIVALENTS, END OF YEAR | $ | 279,177 | $ | 264,434 | ||||
Net cash used in operating activities was
- A cash inflow of
$13.0 million $5.3 million - A cash outflow of
$25.2 million $60.1 million - A cash inflow of
$29.5 million $53.7 million
Cash Flow Used For Investment Activities
There was no net cash used in investing activities for the year. The Company disposed off its data mining business segment on November 2, 2022 for a consideration of
Financing Activities
The net cash generated from financing activities was
We have financed our operations primarily through cash flows from operations, working capital from our shareholders, and equity financing through public and private offerings of our securities. We plan to support our future operations primarily from cash generated from our operations and equity financing.
About SOS Limited
SOS is an emerging blockchain-based and big data-driven marketing solution provider, with a nationwide membership base of approximately 20 million in
Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the federal securities laws, including, but not limited to, our expectations for future financial performance, business strategies or expectations for our business. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. SOS cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Words such as "may," "can," "should," "will," "estimate," "plan," "project," "forecast," "intend," "expect," "anticipate," "believe," "seek," "target," "look" or similar expressions may identify forward-looking statements. Specifically, forward-looking statements may include statements relating to the Company's:
- ability to execute its business plan;
- changes in the market for SOS' products and services; and
- expansion plans and opportunities.
These forward-looking statements are based on information available as of the date of this press release and our management's current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
These risks and uncertainties include, but not are limited to, the risk factors described by SOS in its filings with the Securities and Exchange Commission ("SEC"). These risk factors and those identified elsewhere in this press release, among others, could cause actual results to differ materially from historical performance and include, but are not limited to:
- US government's policies and regulatory oversight of crypto currency mining operation and our other operations;
- SOS's cryptocurrency mining, commodity trading and marketing solutions businesses are still under development, with many uncertainties in integration of these various business segments;
- Failure to manage the newly launched commodities trading business effectively;
- Loss of key customers in the commodity trading business;
- failure to access a large quantity of power at reasonable costs could significantly increase SOS operating expenses and adversely affect our demand for SOS's mining activities;
- shortages in, or rises in the prices of mining machines may adversely affect the Company's business;
- any significant or prolonged failure in the data warehouse facilities and data mining facilities that SOS operates or services it provides, including events beyond its control, would lead to significant costs and disruptions and would reduce the attractiveness of its facilities, harm its business reputation and have a material adverse effect on its results of operation;
- security breaches or alleged security breaches of our data warehouses could disrupt SOS operations and have a material adverse effect on its business, financial condition and results of operation; and
- other risks and uncertainties indicated in SOS's SEC reports or documents filed or to be filed with the SEC by SOS.
Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and you should not place undue reliance on these forward-looking statements in deciding whether to invest in our securities. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
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SOURCE SOS Ltd.
FAQ
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