DTSS - Earnings call transcript Q2 2022

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Operator

Greetings. Welcome to Datasea's Second Quarter Fiscal Year 2022 Financial Highlights and Updates. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. conference Annabelle the turn now over Zhang. to I'll you may begin. now Annabelle,

Annabelle Zhang

call. good so year Welcome conference Sun], are Chief you [Cathy] thank and Executive day, Liu, XXXX us Chief Zhixin much, results Financial fiscal Okay, [Ph] quarter and everyone. Officer; today second to to financial Annabelle Officer; Principal this in With webcast refer the the Web site. press call the today. from be the A This later call I'm more Zhang, of for U.S. IR Contact, replay will available being details. is release also Please Datasea's

harbor Let me quickly statement. go over the safe

So, forward-looking discussion today's may contain statements.

statements differ uncertainties materially and that inherent current to our results expectations. actual Forward-looking from involve may risks cause

quarterly with detailed other as the not For discussion on applicable report, undertake any this U.S. uncertainties, the and except risks Form to of of under please these based are do XX-Q, on Any assumptions we documents make the as law. statements, that required and today, update forward-looking our call statements filed a and on SEC. latest refer obligation to we

call, prepared will In English. today's consecutive team in in give translator will Zhixin and English. during read provide translation remarks the [Indiscernible] will member Chinese remarks addition, in first, the prepared a

CEO original Datasea, in will the I statements of With please the over are questions convenience session Q&A now will language call Zhixin, translations go Zhixin any we of managements' the discrepancies, purposes both the translator During also only. the case the will in for turn and -- will prevail. Liu. ahead. and All translation. the take In Chinese, English provided to that, consecutive the

Zhixin Liu

Language] us on My the for of CEO Datasea. in listed Zhixin I [Foreign second report Datasea Language] Liu. joining morning, NASDAQ the is was incorporated, [Foreign in Nevada, name September, and for earnings in call. ladies XXXX, quarter gentlemen. conference Thanks Good and today am XXXX.

corporation. become well-known high-tech to is vision multinational a Our

in continue Computing messaging, efforts application the XG costs. rights research domestic Information leading the with service To intelligence Technology, customers artificial to capabilities, messaging XG digital international of city, the of we Academy our services, CAICT, and and Ministry in intelligence, following Institute and objective, both establish Datasea aggressively accelerate provide Through advantages our Technology, development edge stands capital marketing high [Foreign drive [indiscernible] outstanding on technology build China's strong addition, awareness whitepaper achieve or and the markets, domestic to lay build society. Language] Big jointly team, appropriate smart In proprietary same technology plans. enter the policies and the advantages high promote mover through smart provide The companies and the provider. Continue benefiting awareness, Asian [Foreign GDP [Foreign the activities, key development share. our institutions Information the and China's and [informatization] products, and growth will strategic our in industry. international international intelligence and and set to the and of customer of this acoustic next-generation customer The to are and market lines, the our customer intellectual have China of optimize and Language] XG Industry overseas into Our mission MIIT, industrial consumption synergy experience, evaluation to will from and differentiation, the product innovation And the our time, and acoustic on cutting to services. for Data Cloud and revolution. financing Create strengthen acoustic with groundwork competitive Laboratory Expand [Ph], first with huge development released demand, explosive business acoustic intelligence Language] property change markets. countries, great enhance in At potential intelligence, including for and transparency the [Foreign rate intelligence partners the M&A Southeast venture and the both to via Language] Language] growth period current of products Team and drive artificial loyalty, strategic enhance countries, believes brand [Foreign technology such goodwill. together segment how series the messaging messaging including up live, between of people Language] as work and is also the create western city retail extremely and alliance customer exclusive [Foreign lower build Datasea, XG became we will commercial first and pro-market, management loyalty. government team business to with service, brand that globally. joint [Foreign Language] great Communications structure,

favorable on For example, XXth XG innovation are highly the accelerating technology and promoting the plan, to segments Datasea. MIIT's business plans, all the five-year new at all generation announcement artificial intelligence and applications,

significant trillion with The According provide X% tremendous key Language] intelligence on aligned potential of scale. highly GDP industry international world. X% on about global our market on team statistics to domestic is the messaging, with rate no billion various smart of second and The quarter. office billion, most the policies Insight, RMBXXX our you. acoustic and [Foreign RMBX.X businesses and the a business growth, applications the billion $XXX.X key transformation. will by to Datasea's approximately population in types for optimistic respectively to RMBXXX the doubt to become Dow other their Before an customers acoustic to [Foreign approximately would intelligence, economy China's approximately from released messaging, New and the growth. company's and solutions introduce our built and addition, and by during upgrade the majority driver to of generated XXXX In industrial the $XX.X in for Our plus overall the Language] are CFO, XX% the object technology, [Foreign XG to I management billion XG in enterprise Government size is $XX.X ask the outpaces broad Thank largest intelligence CAGR. the of like hand based reach is driven billion, demand outlook applications from other phone a the Language] our I city, industries. total progresses to XG representative York acoustic market growth

Mingzhou Sun

developments second you, three recent financial believes converging our the Okay. XXXX, strategies. XXst development in of and the just shed the to on Thank and acoustic XG smart and our dive sustainable developments strong long-term you, continues is business by quarter. am solid messaging, Sunny, deeper quarter in lights will track Rachael. the intelligence, city Datasea development make in thank going the and team December business future. and to progress Sunny, supported on areas management establish growth into product ended innovative segments: for Datasea's China. is strategic [Ph] three business the This in of foundations business Datasea Based [based] long-term portfolio. a that results goal on I

introduce first developments in the so messaging. let business Okay, XG of terms me

developments a which And messaging categorized business in is in single be integrated XG IMMCP the and business prospect three signals company's For in parts. company's cloud Datasea. business, marketing marketing customer growing message XG this to can view. The the unify recent aims platform the line product flagship fastest in

over First, the delivery, has company in financing, in institutional by messaging diversification, field China, been of messaging establish leading and for the cloud XG clients industry XXXX recent marketing and to client provider expansion services from since engaged ecommerce, technology catering, a XXX service as platform. express to

to $XX.XX of integrated been worth December SMS, the messaging million which end of over value approximately sales marketing $X.X from contract October expansion value marketing Among XXXX, services contracts and also was to company XXXX terms cloud services In were of various and engaged added of related platform, in million. delivered. has that the with XG

messaging movers institutional users also begun messaging but the the broad terms to and and key the is industry express Datasea placement has beginning. formulation companies built messaging In In We of messaging is logistic range XG to assist messaging of December via of Lab assisted promote remember, R&D customers express messaging. of reach XXXX, do become messaging XG the industry the first becoming continually And market initiating one its certain business with application. XG complete mobile in in National the not cooperated XG only of XG momentum. Datasea services and first please core of hundreds works and XG effort of company technology, delivery to ZTO to the industry. the to recognition, player standards in the the company In China industry. at express is has The a through order to suppliers the to only promote millions phone Engineering services a nutshell, one in industry for information XG provide

intelligence's second for and is company tap The commits full strategic potential in segment intelligence. industries wield intelligence business across acoustic acoustic business meaningful Datasea The ways. acoustic

a technology to leading and determined in China product We are also Intelligence the Acoustic worldwide. field of and in become provider

"Industry are disinfecting health, and effects the the of Acoustic capability, to currently, with security, terms the intelligence China's such R&D comes Computing China environmental the sterilization into first-ever commercial the areas and with white Communications ultrasonic Company released possibilities equipped in products of These with Institute antivirus entered optics Research Technology co-authors, combines the to that address Academy Cloud most sterilization to the In and Technology. products of four COVID-XX unfold and Big with equipment, top-notch of antivirus first equipment ultrasonic lineup, When and which of itself solid sound China" partnerships Data, has in Application Development flagship Company product Partnerships, as this area, and inaugural Intelligence acoustic institutions Information protection. paper and has needs. it in wanted is sound

sound emergency The voice a analysis to processing [Ph] and necessary alarm, second product conduct [incidents] real-time which actually is warning respond is the early recognition to product and Tianer threats. data

under of be Intelligence Acoustic is will pilot industry products, in has are the for Intelligence business noise with Technological samples, not extensive will sound but directional the enhanced. degrees for tests market lab integration production and year the Acoustic user the real sound application, opportunities pollution, unlock progress device. more solutions and a products to scenario mass entered with in sound In these solution fiscal be Acoustic which based future, last to expansion. tremendous potentials recognizer, expected directional to Datasea Third, refreshing tests prepared completed will and these be Intelligence, varying rapid economy. and effect is least mature introduced of XXXX.

as solutions the that also tap not identify visual Smart analysis is and intelligence only behavioral so The capabilities, such algorithms. into combines intelligence, acoustic well intelligence algorithm has non-visual Datasea City. as artificial third data patterns. strategic Datasea but for also our area visibility, and to face edge recognition as company provide machine learning cutting

commercial enterprises provide meets Before the the a that, of we Chinese communities, application and market. in City that platform digital school needs residential Smart

current of Canteen. and supervision terms to was system October In XXXX community of the safety December Smart contracts in end XXXX, were related of company to that's the engaged the solutions expansion, from various smart food

In and resistance analysis is meet product capability. between the of in out recently terms with a the different and series enhance scenarios system major our update, to of and needs the client upgrades company us. differentiator a laid Technology competitors efficiency integration

and our XXXX, ended the long to and XX, strategy has newly our firmly bring copyrights returns to will creation technology execution We continue patents to will on lead December growth. approach investors. focus believe During eight to diversified that product Datasea customers building, value and the portfolio quarter and registered capability software

Okay.

the results. through will you turn financial over go Cathy, our Cathy. of Now who it I details walk Please to ahead, will

Mingzhou Sun

My Sun, my the and pleasure morning, of the to name financial It's Cathy QX CFO Datasea. introduce everyone. am highlights. I Good is

ever most Firstly, customers of chip that, rapidly QX of the which increase is last flow period. recorded recent, months quarter, top proven three to are the revenue the XXX% the the a net first strong change On time positive accumulated. cash are model generated, This blue income growth. compared total and in

entity Secondly, Datasea with results the and of in leadership industry was innovation released established terms the Aquatic in [indiscernible] institution. allocation. paper the the partnership jointly position Recently, of Intelligence white the

XG XX, the and rapidly of company's policy-driven generated which XG the towards government, segments Finally, search notice July of December business five-year XG city from XXXX Industry SMS the and consisted revenue and central the was is $X,XXX,XXX.XX, from with It fiscal of due lines operations ended The on consisting XG have three of including mobile IMMCP while value-added amount developing XXX% smart is the of started the business the XXXX. period Information XXXX Datasea China XG X,XXX% Ministry increase From Technology from immediate cloud $X,XXX,XXX.XX the ended as December XXth XX, projects the XG with business service, made months in of messaging IMMCP are from XXXX, last $X,XXX,XXX.XX amount of XXXX. of the three $X,XXX,XXX compared and for by expansion projects. attenders the in rate $XX,XXX.XX is to $X,XXX,XXX $X,XXX,XXX.XX, major to full growth the plan, company segments of XG the year. prior year same to generated $X,XXX,XXX.XX The over sales September messaging of XXXX. business quarter SMS

XXXX business. three consisted service flexibility in Three help December the improving XX, service of pricing company proceeds revenues equip the platform company from the months ended the as mainly and For fee XG later margin. with the the of will factors the messaging XG more SMS into gross stage

the and larger of over spread First, the costs will increasing number customers keeps as products a Company the scaling productivity. be

Company's clients to power. needs will the with brand strengthen recognition complex serve growing capabilities help and pricing Second, technology

Third, the first will expected be Chinese of the the product of customers in commercialization messaging XXXX, and in XG market expanded. quarter target after the forms

For to of provide the the SaaS size of XG effective is is active The $XX,XXX,XXX outside which value. [indiscernible] example, IMMCP the management from data XX.XX% as comparing No and quarter. the extremely customization Datasea margin. services Company last assets improve total and software, doubt, profit increase the to will value-added

As is of from XX.X% previous a account level Datasea well matching optimally account the X, $X,XXX,XXX of with receivable shows is of liabilities surge payable position. the XXXX, which The increase liability period. capital to of due working is the January total

key equity taking is balance advantage receive sheet. that is $X,XXX,XXX The total increases. of decreasing last amazing As major badly XX.XX% of a from in control of decrease equity They low amount It the the adjusting when rights quarter. held is in shareholders scale the capital by indicated terms structure.

total low ago increase sales. offering, amount obtained $XX,XXX,XXX. of and the the the to the in much The year third-party. shown, the constantly Besides fixed proposed total didn't assets production accounts receivable quarter-by-quarter received to most were is from change because also assets cash group generating the increased As assets patients due is of have seasoned from the a of

same The As means assets margin $X,XXX,XXX financing of and December approximately which is account short-term in accounts receivable the cost is accounts payable of the as perfectly achieved. of payable weighted is the to and amount accounts XXXX XX, maturity debt of current the optimal capital $X,XXX,XXX. is average for receivable, level is

tariffs. $X,XXX,XXX, So, that QX/QX is cash activities flow decrease XX.XX% activities Cash decrease flow periods. previous is which negative X.XX% decrease of flow periods. from operating a activities Cash shows for from investment indicates $X,XXX,XXX, financing a is previous from previous XXX.XX% from negative which $XXX,XXX a X,XXX and shows

product as more Acoustic XG messaging more the forward starts the under digital Going mass smart by getting business share. city market penetrated the business Intelligence customers, gains production

rate predicted of revenue is quarter fiscal to months. year third three which be is XXX% The a growth this $XX,XXX,XXX, last from

for you. making would I contribution great leadership finish outstanding the like for successful. my to XXXX remarks, Chairman, I our our Before Zhixin and Liu thank Thank

Zhixin Liu

to Annabelle Zhang. transfer holder, I our Now

Annabelle Zhang

of English do forward, can And -- remarks. session. the Q&A already we Yes, all going so, just finished our we

with you're any so, for give the Q&A and the questions only raise to if instructions call, this the a to And can to session company. there's you questions on already if you session, access, company, about instructions proceed below. if the any have And by -- Q&A so you you for webcast, there's like some beforehand you

Annabelle Zhang

has And have already some been [indiscernible] that we questions proposed.

Okay.

confident from Capital. is translator by CEO the growth translate of please CEO? So, question to which this rate, in the his the from [indiscernible] [so question [Scott] growth? question CEO. the Before that? for there color] Does is made for that, CEO is [indiscernible] the [Foreign keep proposed Chinese, what is [Ph] And first Morgan the can type So, Thank this can Language] address [Ph], this you. and you feel

Unidentified Company Representative

a second Annabelle, repeat could you there the was second mentioned question, you one.

first one confidence. is about The

Annabelle Zhang

is Yes, type the you one of [indiscernible] the second what made growth. from

Unidentified Company Representative

Got it, you. Language] [Foreign thank

Zhixin Liu

growth obviously, as far, of policies, projected [Foreign have growth potential the but the -- about about quarter, earlier, mentioned as project, of market. terms in that's extremely confidant confident out what extremely beyond. I'm am Language] I beyond risks control, policies terms I understand said, But and pro our government we extremely a Language] In is prospect. from the our or our [Foreign second quarter our next in there, in so government factor seen growth

Annabelle Zhang

Okay.

Q&A still the first growth, this So, the the the company to sure? The profitable? is, first that's question the our the analyst be delivered the question everything is question, I proceed from the at with when want expect return to wants Morgan company terms the share right? over for but [XXXX%] better What's all will question of can Just the also is in and company make be handled question, CFO. a the that's And is company next If session. Capital. to we to loss. to cost, [Ph] think from

Mingzhou Sun

I question the just add to would growth. asked the potential our want impact risk earlier to about

reiterate, government [Ph] want the policy. are we about to [actually] extremely confident Just

We the to are China. factor will that market, taking. the its even though current pro policy promoting that really confident it's of consider in direction control, currently we overall, direction is so, the don't government services because but Really, XG really in stay risk beyond a something be our

Annabelle Zhang

Morgan you. from repeat question I second Capital. the the This question. will Okay, from And thank is the analyst

second The loss. is company [growth] a over the is, at question delivered X,XXX% still company but return [Ph],

Language] So, handled when think be to the question cause, CFO. to what's I will should and Yes, expected company profitable? [Foreign the be this

Mingzhou Sun

should And able what we to we a profit. the be of spent QX, profit. will I quarter, that R&D could in we and turn coming in significant be QX, in in activities. breakeven we expect beginning; Yes, recognize is, Language] [Foreign the reason that a negative have traced lot back, we our And amount

Annabelle Zhang

do question you have for Okay, more add? or that is all CFO, to you this

Mingzhou Sun

In of phonetically major well growth. we exponential in both [Foreign Language] Language] confirm messaging decided completed have XXXX, just because Language] And our [Foreign as our our And, lines. expect we XXXX, segments strategic experience in that positioning. as [Foreign will I'll revamping that services three CFO solutions business our intelligence we acoustic XG number --

Mingzhou Sun

followed. Yes,

Annabelle Zhang

Okay.

Mingzhou Sun

from QX flow reach we total QX will reach million. expect XX million. The Language] $X.X month $XX revenue cash the to And [Foreign will

Annabelle Zhang

to you CFO, add? Okay, have more do

Mingzhou Sun

XG business Yes, related messaging XG Also, company and SMS value-added XG so the last entered in I'll the speak fiscal IMMVP its and services, and year. the English. formally markets

XG [indiscernible] complications, attract stage, possible, still market gain as messaging users, expand and to as adopted mover the is company industry strategy in competitive first initial our to early the As advantage. share early pricing a

As the gross company into help [indiscernible] the will factors stability with three messaging stage margin. the XG equip company of pricing proceeds the and the the later improving business, more in

The cost keeps of the a spread number customers the the scaling large will first company productivity. products as increasing over is and

complex The company's will recognition second brand to needs pricing technology client-based strengthen growing is power. serve help capabilities and the

the customers [Ph] That's The messaging initialization will product of third Chinese be [forms] and XG in all. XXXX, quarter the market of the is after expanded. the first target expected in

Annabelle Zhang

thank team. management the you Okay, thank CFO, you, and

the of any be our are call. the this also I feel forward, we Datasea, again, And with today's this thanks coming this might out like contact I question are today. reach to and free able for company you end if all call. team you some paying info and call, As for attention and question, appreciate like joining reach who the to to really investors be that's going forward attached our thank PPT. representing extend Operator? all we please that. And there and have like will to But, you out, always can address not IR And I going close gratitude to to the to our

Operator

today's concludes Thank This conference. you.

your for this thank disconnect may We You your time. you lines participation.

Datasea (DTSS) 14 Feb 222022 Q2 Earnings call transcript