Remark Holdings, Inc. (NASDAQ: MARK), a diversified global technology company with leading artificial intelligence (“AI”) solutions and digital media properties, today announced financial results for its fiscal year ended December 31, 2020.
“After a challenging start to 2020 with COVID-19 lockdowns in both China and the United States, we saw significant positive momentum in our second half, and in particular, the fourth quarter. For the fourth quarter we reported nearly $5.0 million in revenue, representing more than ten times the $0.4 million recorded in the fourth quarter of 2019,” 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 corporate facilities and we expect demand momentum, particularly in the United States, to carry forward into 2021. Additionally, during the quarter we expanded channel partnerships which provide additional opportunities for a further acceleration of growth in 2021.”
Fiscal Year 2020 Business Highlights
-- China Mobile continues to implement Remark's KanKan AI Platform across all 17,800 of their retail stores despite delays caused by COVID-19 lockdowns. As previously noted, Remark's KanKan AI business also won Phase 2 which will increase the total spend per store, and we expect this to be the first of many additional software services added to the initial scope that will significantly grow the addressable opportunity. -- Smart retail bank branch solutions and new products including the recently launched Digital Marketing Platform were delivered to approximately 150 Bank of China branches in the Szechuan province. Currently servicing 1.8 million customers, the DMP quantifies customer behavior and measures against benchmark performance metrics, allowing for better customized service. Our first installations reflect the initial capture of the $2 billion annual upgrade budget market opportunity as 20,000 branches are scheduled to be upgraded each year. -- Smart school solutions were delivered to over 150 campuses during the year. Software upgrades were implemented to improve computer vision, time attendance system, epidemic prevention system and smart energy saving systems. Discussions are underway to expand our sales channel to additional regions to compete for the 160,000 schools in major cities, and we expect to triple the number of school installations in 2021. -- KanKan worked with China Mobile to begin installations of KanKan AI's smart community offerings, delivering Phase 1 applications which include access control for vehicles, residents, and delivery personnel. Phase 2 is expected to begin later this year with additional applications including elderly and child safety, elevator access control, restricted area access control, behavioral analysis, and messaging via communication screens. We are targeting 200 new smart communities this year. -- Remark AI's heath security solutions were chosen by several large medical centers including the UMC group in Las Vegas and Morton Comprehensive Health Services in Tulsa, Oklahoma. One of the world's largest gaming companies based in Las Vegas, chose Remark AI's health security platform for access point temperature monitoring at all of their domestic and international facilities. -- Remark's research and development team released its edge computing systems, the S and T series Smart Boxes, AI-based edge computing boxes equipped with NVIDIA's new generation of high-performance edge computing modules, with a smaller size and lower power requirements. The Remark AI team also won three out of five championships in the Visual Object Tracking category at the 16th European Conference on Computer Vision. -- New channel partnership programs were signed, including a recently-announced relationship with Hewlett Packard Enterprises whereby Remark and HP Enterprises will jointly market AI solutions addressing retail management, security, surveillance, and health security. Additional partnerships and the expansion of existing partnerships are expected throughout 2021.
-- Revenue for fiscal year 2020 totaled $10.1 million, up from $5.0 million during fiscal year 2019. -- Revenue in China grew by $4.3 million in 2020 to $7.9 million due to ramped up execution of larger projects such as China Mobile, the initial roll out of bank branch conversions, and the recognition of revenue from ongoing projects with school districts. -- Revenue from the US-based biosafety business contributed $1.7 million as the company launched thermal imaging products that were delivered to casinos, a school, hotels, medical centers, office buildings, and customers in industries throughout the United States. -- The increases in revenue from project acceleration in China and our new health safety business was offset by decreases in revenue of $0.6 million in the Remark Entertainment business due to contracts that ended in 2019 that were not renewed, and a decrease in e-commerce revenue of $0.3 million due to our decision to liquidate certain inventory at lower cost. -- Gross Profit improved to $3.7 million in fiscal 2020 from $1.5 million in fiscal 2019 commensurate with increased revenue and improved efficiency experienced by our China business. The overall gross profit margin improved to 37% in 2020 from 30% in 2019. -- The company incurred an operating loss of $14.2 million in 2020, an improvement from the operating loss of $22.8 million in 2019. Headcount reductions and lower rent expense contributed to the improvement, offsetting slight increases in sales and marketing, and technology and development costs. -- Net Loss from continuing operations totaled $13.7 million, or $0.16 per diluted share in the fiscal year ended December 31, 2020, compared to a net loss from continuing operations of $23.0 million, or $0.52 per diluted share in the fiscal year ended December 31, 2019. The company recorded a $3.6 million gain on the termination of a lease which was partially offset by a $1.6 million non-cash loss from the change in the fair value of warrant liability as a result of the increase in the share price of Remark's common stock and the expiration of a substantial number of warrants during the year. -- At December 31, 2020, the cash and cash equivalents balance totaled $0.9 million, compared to a cash position of $0.3 million at December 31, 2019. Cash increased primarily due to $32.1 million in proceeds from common stock issuances, whose increase was partially offset by use of the proceeds to make debt principal repayments of $13.8 million, to make other liability payments, and to generally operate the business.
“After doubling revenue in 2020, we are forecasting that we can further accelerate growth in 2021 by continuing to execute projects and bringing in new AI-driven opportunities. Our pipeline of domestic business opportunities is growing dramatically, and we plan to add additional channel partnerships in order to leverage our award winning software. Finally, we plan to fortify our balance sheet through a partial monetization of our stake in Sharecare in our second quarter to fund the many opportunities we are currently pursuing,” concluded Mr. Tao.
Conference Call Information
Management will hold a conference call this afternoon at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss the Company’s financial results and provide an update on recent business developments. A question and answer session will follow management’s presentation.