ZW Data Action Technologies Inc. (CNET) stock prices were down by 6.63% as of the market closing on May 24th, 2021, bringing the price per share down to USD$1.69 at the end of the trading day. Subsequent pre-market fluctuations have seen the stock rise by 6.51%, bringing it up to USD$1.80.
Revenue Reports
Revenues for the first quarter of the fiscal year 2021, ended March 31st, 2021, were reported at USD$8.40 million, up from the USD$4.38 million reported for the same time period over the prior year. The 91.5% increase is largely attributable to the increase in revenues from the company’s internet advertising and related services business segment. The improved segment performance, in turn, was up as a result of the economic recovery from the devastation caused by the global pandemic since its outbreak earlier in fiscal 2020.
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Cost of Revenue
The company reported a meteoric rise in total costs of revenues, with Q1 2021 reporting USD$9.11 million for the three-month period ended March 31st, 2021. This is a 161.55 increase from the USD$3.49 reported for the same time period of the prior year. The year-over-year increase is primarily attributable to an increase in costs associated with the distribution of the right to use search engine marketing service, purchased from key search engines, as well as costs relating to the provision of internet advertising services on the company’s ad portals.
Gross Profits and Margins
Gross profit for the first quarter of the fiscal year 2021 were reported at USD$0.72 million, compared to the USD$0.90 million reported for the same quarter of the previous year. This difference is primarily attributable to the negative gross margin rate incurred by the company’s mainstream of service revenues. Gross loss margin was down to 8.5% in Q1 2021 from the gross profit margin of 20.5% reported in Q1 2020.
Loss from Operations
CNET reported a loss from operations amounting to USD$1.82 million for the first fiscal quarter of 2021, compared to the USD$2.28 million reported for the same quarter of the previous year. Operating loss margin came in at 21.6% for Q1 2021, with Q1 2020 having reported an operating loss margin of 51.9%.
Solid Liquidity Position
The company reported having cash and cash equivalents amounting to USD$15.79 million as of March 31st, 2021, up from the USD$4.30 million reported as of December 31st, 2020. Meanwhile, accounts receivable net was reported at USD$1.69 million as of March 31st, 2021, compared to the USD$2.41 reported as of December 31st, 2020. Working capital came in at USD$8.36 as of March 31st, 2021, with USD$4.86 having been reported as of December 31st, 2020.
Future Outlook for 2021
Armed with a solid liquidity position and a promising start to the fiscal year 2021, CNET is poised to capitalize on a recovering economy to maximize potential growth. Current and potential investors are hopeful that the company will leverage the resources at its disposal to usher in significant and sustained increases in shareholder value.
