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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.

$10.1 Million

Management Commentary

“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.

Fiscal Year 2020 Financial Results

   -- 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.


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