Remark Holdings (MARK) Misses Q1 EPS by 2c, Revenues Miss

May 17, 2021 4:23 PM EDT

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Remark Holdings (NASDAQ: MARK) reported Q1 EPS of ($0.05), $0.02 worse than the analyst estimate of ($0.03). Revenue for the quarter came in at $4.4 million versus the consensus estimate of $5.12 million.

  • Revenue for the fiscal first quarter of 2021 totaled $4.4 million, up from $0.4 million during fiscal first quarter of 2020.
    • First quarter 2021 revenue in China grew by $3.4 million to $3.7 million due to ramped up execution of larger projects, the continued roll out of bank branch conversions to smart branches, and the recognition of revenue from ongoing projects with school districts.
    • Revenue from the US contributed $0.7 million compared to $0.1 million, as the company delivered health security solutions to a variety of businesses including the aforementioned Midwest health clinic, and completed the initial phase of an AI marketing program.
  • Gross profit improved to $1.7 million in the first quarter of 2021 from $0.4 million in the first quarter of 2020, commensurate with increased revenue. The overall gross profit margin for the first quarter of 2021 was 37.5%.
  • The company incurred an operating loss of $3.7 million in the first quarter of 2021 compared to an operating loss of $3.5 million in the comparable quarter of 2020. Increased technology and development costs of $0.9 million, primarily associated with continuous improvement of the company's biosafety products, were the primary reason for the increased expense.
  • Net loss totaled $5.5 million, or $0.05 per diluted share in the first quarter ended March 31, 2021, compared to a net loss of $2.4 million, or $0.05 per diluted share in the quarter ended March 31, 2020. The increase in the company's stock price between December 31, 2020 and March 31, 2021 led to a $1.6 million increase in the liability associated with certain outstanding warrants. In the first quarter of 2020, the company recorded a $1.5 million gain on the termination of a lease.
  • At March 31, 2021, the cash and cash equivalents balance totaled $0.9 million, compared to a cash position of $0.9 million at December 31, 2020. A short-term debt issuance of $4.8 million and stock issuances associated with options exercises of $0.8 million was offset by $5.5 million of cash used to generally operate the business.

Management Commentary

"Our first quarter was highlighted by substantial increases in revenue coming from the United States and China, despite each country's slow emergence from COVID-19 lockdowns that dampened business in the first quarter of last year. Momentum from last year's second half continued with first quarter U.S. revenue increasing by over half a million dollars and revenue from China increasing by more than 10 times compared to the first quarter of 2020," noted Kai-Shing Tao, Chairman and Chief Executive Officer of Remark Holdings. "Demand for our AI solutions came from schools, retail outlets, bank branches, and medical facilities and we expect demand momentum, particularly in the United States, to carry forward throughout 2021. Additionally, during the quarter we saw the initial implementation of our AI marketing program that we believe will be a big catalyst for 2021."

"First quarter revenue growth set a positive tone for 2021. Our China business was strong and is expected to get stronger as the year progresses with retail, banking, school, smart community and environmental sustainability opportunities growing. Our U.S. business is expanding in health security, predictive analytics and retail, as seen with our recently won deal to outfit Shryne Group's flagship Stiiizy Cannabis retail location. Finally, we anticipate the closing of the Sharecare merger with Falcon Acquisition will fund our balance sheet while simultaneously supporting working capital needs to meet our growth goals," concluded Mr. Tao.

For earnings history and earnings-related data on Remark Holdings (MARK) click here.

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