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Moatable, Inc.
Form 10-Q
For the Quarterly Period Ended March 31, 2024
TABLE OF CONTENTS
i
Note About Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events, financial or operating performance. Forward-looking statements often include words such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, risks, or intentions. Forward-looking statements include, among other things, statements regarding:
● | future financial performance including statements about our revenue, cost of revenue, gross margins, operating expenses, and business strategies; |
● | predictions regarding the size and growth potential of the markets for our products or our ability to serve those markets; |
● | ability to retain our customer base, grow the average subscription revenue per customer, or sell additional products and services to the customer base; |
● | ability to expand our sales organization or research and development activities to address existing markets and serve new markets; |
● | anticipate and address the technological or service needs of our customers, to release upgrades to our existing software platforms, and to develop new and enhanced applications to meet the needs of our customers; |
● | likelihood of macro-economic events that may impact the ability to operate within certain markets or disrupt the flow of products and services such as pandemics, wars, and deterioration of relations between sovereign entities; |
● | future regulatory, judicial, and legislative changes or developments in the U.S. and foreign countries, particularly those in which we operate and sell products, including China; |
● | regulatory changes, business relationships, and operating risks that impact our ability to compete within the industries we serve; |
● | anticipated investments, including in sales and marketing, research and development, customer service and support, data center infrastructure, and our expectations relating to such investments; |
● | ability to attract, hire, and retain talent including sales, software development, or management personnel to expand operations; |
● | accuracy of our estimates regarding expenses, future revenues, gross margins, and needs for additional financing; |
● | ability to obtain funding for our operations; |
● | ability to integrate and grow acquired businesses and achieve anticipated results from strategic partnerships; |
● | anticipated effect on the business of litigation to which we are or may become a party; |
● | effectiveness of lead generation, branding, and other demand generation strategies to reach our customers and sustain growth. |
ii
Forward-looking statements may appear throughout this report and other documents we file with the Securities and Exchange Commission (“SEC”), including without limitation, the following sections: Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, and in particular, the risks discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and those discussed in other documents we file with the SEC. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
As used herein, (i) “Moatable,” “the company,” “we,” “us,” “our,” and similar terms include Moatable Inc. and its subsidiaries and, in the context of describing our consolidated financial information, also include the VIE and its subsidiaries, unless the context indicates otherwise; (ii) “ADSs” refers to American depositary shares, each of which represents 45 of our Class A ordinary shares, par value $0.001 per share; (iii) “Lofty” refers to Lofty, Inc., our majority-owned subsidiary incorporated in the state of Delaware and formerly known as Chime Technologies, Inc.; (iv) “PRC” or “China” refers to the People’s Republic of China, excluding, for purposes of this Quarterly Report on Form 10-Q only, Hong Kong, Macau, and Taiwan; (v) “Qianxiang Shiji” refers to Qianxiang Shiji Technology Development (Beijing) Co., Ltd., our wholly-owned subsidiary incorporated in China; (vi) “Qianxiang Tiancheng” or “VIE” refers to Beijing Qianxiang Tiancheng Technology Development Co., Ltd., a company incorporated in China; (vii) “Shares” or “ordinary shares” refers to our Class A ordinary shares and Class B ordinary shares, par value $0.001 per share; (viii) “Trucker Path” refers to Trucker Path, Inc., our majority-owned subsidiary incorporated in the state of Delaware; and (ix) all dollar amounts refer to United States (U.S.) dollars unless otherwise indicated.
“Moatable,” “Lofty,” “Trucker Path,” and other trademarks of ours appearing in this report are our property. We do not intend our use or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.
iii
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOATABLE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2023 AND MARCH 31, 2024
(In thousands, except per share amounts and shares) (Unaudited)
As of | ||||||
December 31, | March 31, | |||||
2023 | 2024 | |||||
ASSETS |
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Current assets |
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Cash and cash equivalents | $ | | $ | | ||
Restricted cash |
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Accounts receivable, net |
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Amounts due from related parties | | | ||||
Prepaid expenses and other current assets, net |
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Total current assets |
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Non-current assets | ||||||
Property and equipment, net |
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Intangible assets, net |
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Long-term investments |
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Right-of-use assets |
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Other non-current assets |
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Total non-current assets | | | ||||
TOTAL ASSETS | $ | | $ | | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities |
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Accounts payable | $ | | $ | | ||
Accrued expenses and other current liabilities |
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Operating lease liabilities - current |
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Amounts due to related parties |
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Deferred revenue | | | ||||
Income tax payable | | | ||||
Total current liabilities | | | ||||
Non-current liabilities | ||||||
Operating lease liabilities - non-current | | | ||||
Total non-current liabilities | | | ||||
TOTAL LIABILITIES | $ | | $ | |
1
MOATABLE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS- continued
DECEMBER 31, 2023 AND MARCH 31, 2024
(In thousands, except per share amounts and shares) (Unaudited)
As of | ||||||
December 31, | March 31, | |||||
2023 | 2024 | |||||
Commitments and contingencies | ||||||
Shareholders’ equity | ||||||
Class A ordinary shares, $ | $ | | $ | | ||
Class B ordinary shares, $ |
| | | |||
Treasury stock | ( | ( | ||||
Additional paid in capital |
| | | |||
Accumulated deficit |
| ( | ( | |||
Statutory reserves |
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Accumulated other comprehensive loss |
| ( | ( | |||
Total Moatable, Inc. shareholders’ equity |
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Non-controlling interest |
| ( | ( | |||
Total equity |
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TOTAL LIABILITIES AND EQUITY | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
MOATABLE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2023 and 2024
(In thousands, except per share amounts and shares) (Unaudited)
For the three months ended March 31, | ||||||
| 2023 |
| 2024 | |||
Revenues: |
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SaaS revenue | $ | | $ | | ||
Other services | |
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Total revenues |
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Cost of revenues: |
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SaaS business | | | ||||
Other services | |
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Total cost of revenues |
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Gross profit |
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Operating expenses |
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Selling and marketing |
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Research and development |
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General and administrative |
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Impairment of intangible assets |
| — |
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Total operating expenses |
| |
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Loss from operations |
| ( |
| ( | ||
Other (expense) income, net |
| ( |
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Gain (Loss) from fair value change of a long-term investment |
| |
| ( | ||
Interest income | | | ||||
Income (Loss) before provision of income tax and loss in equity method investments and non-controlling interest, net of tax |
| |
| ( | ||
Income tax expenses | — | ( | ||||
Income (Loss) before loss in equity method investments and noncontrolling interest, net of tax |
| |
| ( | ||
Impairment on and income (loss) in equity method investments, net of tax | | ( | ||||
Net income (loss) | $ | | $ | ( | ||
Net loss attributable to non-controlling interests | ( | ( | ||||
Net income (loss) attributable to Moatable Inc. | $ | | $ | ( | ||
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Net income (loss) per share: | ||||||
Net income (loss) per share attributable to Moatable Inc. shareholders: |
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Basic | $ | | $ | ( | ||
Diluted | | ( | ||||
Weighted average number of shares used in calculating net income (loss) per share attributable to Moatable Inc. shareholders: | ||||||
Basic | ||||||
Diluted |
3
MOATABLE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED MARCH 31, 2023 and 2024
(In thousands) (Unaudited)
Net income (loss) | $ | | $ | ( | ||
Other comprehensive income (loss), net of tax | ||||||
Foreign currency translation, net of | | ( | ||||
Net unrealized loss on available-for-sale investments, net of | ( | — | ||||
Other comprehensive income (loss) | | ( | ||||
Comprehensive income (loss) | | ( | ||||
Less: total comprehensive loss attributable to non-controlling interest | ( | ( | ||||
Comprehensive income (loss) attributable to Moatable Inc. | $ | | $ | ( |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
MOATABLE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2024
(In thousands, except share amounts and shares) (Unaudited)
Accumulated | |||||||||||||||||||||||||||||||||||||
other | Total | Non- | |||||||||||||||||||||||||||||||||||
Class A Ordinary shares | Class B Ordinary shares | Treasury stock | Additional | Accumulated | Statutory | comprehensive | Moatable | controlling | Total | ||||||||||||||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| paid-in capital |
| deficit |
| reserves |
| loss |
| Inc.’s Equity |
| interest |
| equity | ||||||||||||
Balance as of December 31, 2022 | | $ | | | $ | | — | $ | — | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | $ | | ||||||||||||||
Stock-based compensation | — | — | — | — | — | — | | — | — | — | | | | ||||||||||||||||||||||||
Repurchase of Class A ordinary shares |
| — |
| — |
| — |
| — |
| ( | ( | — |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||||||||||
Unrealized loss on short-term investments |
| — |
| — |
| — |
| — |
| — | — | — |
| — |
| — |
| ( |
| ( |
| — |
| ( | |||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | — | — | | | | | ||||||||||||||||||||||||
Reclassification of additional paid-in capital |
| — |
| — |
| — |
| — |
| — | — | |
| ( |
| — |
| — |
| — |
| — |
| — | |||||||||||||
Net income (loss) |
| — |
| — |
| — |
| — |
| — | — | — |
| |
| — |
| — |
| |
| ( |
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Exercise of share options and restricted shares vesting | | | — | — | — | — | | — | — | — | | — | | ||||||||||||||||||||||||
Balance as of March 31, 2023 | | | | | ( | ( | | ( | | ( | | ( | | ||||||||||||||||||||||||
Balance as of December 31, 2023 | | $ | | | $ | | ( | $ | ( | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | $ | | ||||||||||||||
Stock-based compensation | — | — | — | — | — | — | | — | — | — | | | | ||||||||||||||||||||||||
Repurchase of Class A ordinary shares |
| — |
| — |
| — |
| — |
| ( | ( | — |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||||||||||
Other comprehensive loss |
| — |
| — |
| — |
| — |
| — | — | — |
| — |
| — |
| ( |
| ( |
| ( |
| ( | |||||||||||||
Net loss |
| — | — |
| — | — | — | — | — | ( | — | — | ( | ( | ( | ||||||||||||||||||||||
Exercise of share option and restricted shares vesting | | | — | — | — | — | | — | — | — | | — | | ||||||||||||||||||||||||
Balance as of March 31, 2024 | | $ | | | $ | | ( | $ | ( | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | $ | |
The accompanying notes are integral part of these condensed consolidated financial statements.
5
MOATABLE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2023 and 2024
(In thousands) (Unaudited)
For the three months ended March 31, | ||||||
| 2023 |
| 2024 | |||
Cash flows from operating activities: |
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Net income (loss) | $ | | $ | ( | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||
Share-based compensation expense |
| |
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Impairment on and (loss) gain in equity method investments |
| ( |
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Amortization of the right-of-use assets |
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Depreciation and amortization | | | ||||
Impairment on intangible asset |
| — |
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Fair value change on long-term investment | ( | | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable |
| ( |
| ( | ||
Prepaid expenses and other current assets |
| |
| ( | ||
Other non-current assets | — | ( | ||||
Accounts payable | ( | ( | ||||
Amounts due from/to related parties | | — | ||||
Accrued expenses and other current liabilities |
| ( |
| | ||
Deferred revenue |
| ( |
| | ||
Operating lease liabilities |
| ( |
| ( | ||
Income tax payable |
| — |
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Net cash used in operating activities |
| ( |
| ( | ||
Cash flows from investing activities: | ||||||
Purchase of short-term investments | ( | — | ||||
Dividend received from equity investment | | — | ||||
Proceeds from disposal of equipment and property | | — | ||||
Purchases of property and refurbishment construction | ( | ( | ||||
Purchases of intangible assets |
| ( |
| — | ||
Net cash used in investing activities | ( | ( | ||||
Cash flows from financing activities: | ||||||
Proceeds from exercise of share options | | | ||||
Ordinary share buyback | ( | ( | ||||
Dividend received from stipulation settlement | | — | ||||
Net cash provided by financing activities | | | ||||
Net decrease in cash and cash equivalents and restricted cash | ( | ( | ||||
Cash and cash equivalents and restricted cash at the beginning of the period | | | ||||
Effect of exchange rate changes | | | ||||
Cash and cash equivalents and restricted cash at the end of the period | $ | | $ | | ||
Reconciliation of cash, cash equivalents, and restricted cash reported within the condense consolidated balance sheets | ||||||
Cash and cash equivalents | $ | | $ | | ||
Restricted cash | — | | ||||
Cash and cash equivalents and restricted cash at the end of the period | $ | | $ | | ||
Schedule of non-cash activities: |
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| ||||
Obtaining right-of-use assets in exchange for operating lease liabilities | $ | | $ | — |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
Moatable, Inc. was incorporated in the Cayman Islands. Moatable, Inc., which includes its consolidated subsidiaries, variable interest entity (“VIE”) and VIE’s subsidiaries (collectively referred to as the “Company”), operates
As of March 31, 2024, Moatable, Inc.’s major subsidiaries, VIE and VIE’s subsidiaries are as follows:
Later of date | Percentage of | |||||||
of incorporation | Place of | legal ownership | Principal | |||||
Name of Subsidiaries |
| or acquisition |
| incorporation |
| by Moatable Inc. |
| activities |
Subsidiaries: |
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Lofty, Inc.(“Lofty”) |
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| | % | ||||
Trucker Path, Inc. (“Trucker Path”) |
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Renren Giantly Philippines Inc. |
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| | % | ||||
Qianxiang Shiji Technology Development (Beijing) Co., Ltd. (“Qianxiang Shiji”) |
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| | % | ||||
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Variable Interest Entity: |
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Beijing Qianxiang Tiancheng Technology Development Co., Ltd. (“Qianxiang Tiancheng”) |
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| N/A | |||||
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Subsidiaries of Variable Interest Entity: |
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Beijing Qianxiang Wangjing Technology Development Co., Ltd. (“Qianxiang Wangjing”) |
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| N/A | |||||
Shandong Jieying Huaqi Automobile Service Co., Ltd (“Shandong Jieying”) |
|
| N/A |
The VIE arrangements
PRC regulations limit direct foreign ownership of business entities providing value-added telecommunications services, online advertising services and internet services in the PRC where certain licenses are required for the provision of such services. Although the Company no longer operates businesses requiring the VIE, historically, the Company provided online advertising, internet value-added services (“IVAS”), and internet finance services through its VIE, Qianxiang Tiancheng, which is referred to as the “VIE”.
Qianxiang Shiji (“WFOE”), the Company’s Wholly Foreign-Owned Enterprise, entered into a series of contractual arrangements, including: (1) Power of Attorney; (2) Business Operation Agreements; (3) Exclusive Equity Option Agreement; (4) Spousal Consent Agreement; (5) Exclusive Technical and Consulting Services Agreement; (6) Intellectual Property Licenses Agreement; (7) Loan Agreements, and (8) Equity Interest Pledge Agreement with the VIE that enable the Company to (1) have power to direct the activities that most significantly affects the economic performance of the VIE, and (2) receive the economic benefits of the VIE that could be significant to the VIE. Accordingly, the WFOE is considered the primary beneficiary of the VIE and has consolidated the VIE’s financial results of operations, assets and liabilities in the Company’s consolidated financial statements. In making the conclusion that the Company is the primary beneficiary of the VIE, the Company believes the Company’s rights under the terms of the exclusive option agreement and power of attorney are substantive as they relate to operating matters, which provide the Company with a substantive kick-out right.
7
More specifically, the Company believes the terms of the contractual agreements are valid, binding, and enforceable under PRC laws and regulations currently in effect. In particular, the Company believes that the minimum amount of consideration permitted by the applicable PRC law to exercise the exclusive option does not represent a financial barrier or disincentive for the Company to exercise its rights under the exclusive option agreement. A simple majority vote of the Company’s board of directors is required to pass a resolution to exercise the Company’s rights under the exclusive option agreement, for which the consent from Mr. Joe Chen, who holds the most voting interests in the Company and is also the Company’s chairman and CEO, is not required. The Company’s rights under the exclusive option agreement give the Company the power to control the shareholders of the VIE and thus the power to direct the activities that most significantly impact the VIE’s economic performance. In addition, the Company’s rights under powers of attorney also reinforce the Company’s abilities to direct the activities that most significantly impact the VIE’s economic performance. The Company also believes that this ability to exercise control ensures that the VIE will continue to execute and renew service agreements that benefit the Company, currently largely comprised of Research and Development services to the Company’s SaaS businesses. By charging service fees at the sole discretion of the Company, and by ensuring that service agreements are executed and renewed indefinitely, the Company has the right to receive substantially all of the economic benefits from the VIE.
The VIE and its subsidiaries hold the requisite licenses and permits necessary to conduct the Company’s business in PRC under the current business arrangements.
As of December 31, | As of March 31, | |||||
| 2023 |
| 2024 | |||
Total assets | $ | |
| $ | | |
Total liabilities | $ | | $ | |
For the three months ended March 31, | ||||||
| 2023 |
| 2024 | |||
Revenues | $ | |
| $ | | |
Net Loss | $ | ( | $ | ( |
For the three months ended March 31, | ||||||
| 2023 |
| 2024 | |||
Net cash provided by operating activities | $ | |
| $ | | |
Net cash used in investing activities | $ | ( | $ | ( | ||
Net cash used in financing activities | $ | — |
| $ | — |
There are no consolidated VIE assets that are collateral for the VIE obligations and can only be used to settle the VIE obligations. There are no creditors (or beneficial interest holders) of the VIE that have recourse to the general credit of the Company or any of its consolidated subsidiaries. However, if the VIE ever needs financial support, the Company or its subsidiaries may, at its option and subject to statutory limits and restrictions, provide financial support to its VIE through loans to the shareholders of the VIE or entrustment loans to the VIE.
Relevant PRC laws and regulations restrict the VIE from transferring a portion of its net assets, equivalent to the balance of its statutory reserve and its share capital, to the Company in the form of loans and advances or cash dividends.
8
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and E Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with audited consolidated financial statements and accompanying notes in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Principles of consolidation
The condensed consolidated financial statements of the Company include the financial statements of Moatable, Inc., its subsidiaries, its VIE and VIE’s subsidiaries. All inter-company transactions and balances are eliminated upon consolidation.
Use of estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the reported amounts of revenues and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the Company’s consolidated financial statements include, but are not limited to, allowance for doubtful accounts, the fair value of share-based compensation awards, the realization of deferred income tax assets, impairment of long-lived assets, and impairment of long-term investments.
Fair value
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.
Authoritative literature provides a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows:
Level 1-inputs are based upon unadjusted quoted prices for identical assets or liabilities traded in active markets.
Level 2-inputs are based upon quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3-inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
Restricted Cash
On August 28, 2023, the Company entered into an Escrow Agreement with U.S. Bank National Association to enhance directors and officers’ insurance coverage. The Company set aside $
9
Accounts receivable and allowance for credit loss
Accounts receivable are stated at the original amount less an allowance for credit loss. Accounts receivable are recognized in the period when the Company has provided services to its customers and when its right to consideration is unconditional. The Company evaluates its accounts receivable for expected credit losses on a regular basis. The Company maintains an estimated allowance for credit losses to reduce its accounts receivable to the amount that it believes will be collected. The Company considers factors in assessing the collectability of its receivables, such as the age of the amounts due, the customer’s payment history, credit-worthiness, current market conditions, reasonable and supportable forecasts of future economic conditions, and other specific circumstances related to the accounts. The Company adjusts the allowance percentage periodically when there are significant differences between estimated bad debts and actual bad debts. If there is strong evidence indicating that the accounts receivable is likely to be unrecoverable, the Company also makes specific allowance in the period in which a loss is determined to be probable. Accounts receivable balances are written off after all collection efforts have been exhausted. For the three months ended March 31, 2023 and 2024, the Company recorded
Revenue recognition
The Company recognizes revenue when control of the service has been transferred to the customer, generally upon delivery to a customer. The contracts have a fixed contract price and revenue is measured as the amount of consideration the Company expects to receive in exchange for providing services. The Company collects taxes from customers on behalf of governmental authorities at the time of sale. These taxes are accounted for on a net basis and are not included in revenues and cost of revenues. The Company generally expenses sales commissions when incurred because the amortization period is less than one year. These costs are recorded within selling and marketing expenses. The Company does not have any significant financing payment terms as payment is received at or shortly after the point of sale.
Revenue from Contracts with Customers (“ASC 606”) prescribes a five-step model that includes: (1) identify the contract; (2) identify the performance obligations; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when (or as) performance obligations are satisfied.
The Company generated the majority of revenue from SaaS services.
SaaS revenue: SaaS revenue mainly includes the revenue generated from the subscription and advertising services provided by Lofty and Trucker Path. The Company recognizes revenue for subscription services over the life of the subscription. For Lofty’s advertising service, the Company acts as an agent to place advertisements on third-party websites or platforms. For Trucker Path’s advertising service, the Company acts as principal to place advertisements on Trucker Path’s platform. The Company recognizes revenue for advertising services over the advertising periods.
Other services: Other services mainly include revenue from the provision of back-office services to Oak Pacific Investment (“OPI”) and revenue from non-recurring sources.
The Company provides back-office services including accounting, legal, and business-related consulting services, which is a single performance obligation provided over the contract periods with pre-determined stand-alone selling price. The Company recognizes revenue over the contract periods.
Contract balances: Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represent amounts invoiced and revenue recognized when the Company has satisfied the Company’s performance obligation and has the unconditional right to payment. There were
Deferred revenue mainly represents payments received from customers related to unsatisfied performance obligations for SaaS. The Company’s total deferred revenue was $
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Recent accounting pronouncements not yet adopted
In November 2023, the FASB issued ASU 2023-07, which modifies the disclosure and presentation requirements of reportable segments. The new guidance requires the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit and loss. In addition, the new guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. The update is to be adopted retrospectively to all periods presented and is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company .is in the process of evaluation the impact of adopting this new guidance on its consolidated financial statement.
In December 2023, the FASB issued ASU 2023-09, Improvement to Income Tax Disclosure. This standard requires more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This standard also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is to be adopted on a prospective basis with the option to apply retrospectively and is effective for public business entities, for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025. The Company is in the process of evaluation the impact of adopting this new guidance on its consolidated financial statement.
Recently issued ASUs by the FASB, except for the ones mentioned above, have no material impact on the Company’s consolidated results of operations or financial position.
3. LONG-TERM INVESTMENTS
Long-term investments consisted of the following (in thousands):
As of December 31, | As of March 31, | |||||||
| Note |
| 2023 |
| 2024 | |||
Equity method investments: |
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Fundrise, L.P. |
| (i) | $ | | $ | | ||
Other | (ii) | | — | |||||
Total equity method investments |
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Equity investment with readily determinable fair values |
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Kaixin Auto Holdings | (iii) | $ | | $ | | |||
Equity investment without readily determinable fair values |
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Suzhou Youge Interconnection Venture Capital Center | | | ||||||
Total equity investments without readily determinable fair values |
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Total long-term investments |
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| $ | | $ | |
(i) | In October 2014, the Company entered into an agreement to purchase limited partnership interest of Fundrise, L.P. for a total consideration of $ |
(ii) | In May 2014, the Company entered into an agreement to purchase limited partnership interest of Beijing Fenghou Tianyuan Investment and Management Center L.P. for a total consideration of $ |
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(iii) | As of March 31, 2024, the Company’s equity interest in Kaixin was |
4. OPERATING LEASES
The Company leases its facilities and offices under non-cancellable operating lease agreements. These leases expire through 2025 and are renewable upon negotiation.
For the three months ended March 31, 2023 and 2024, cash paid for amounts included in the measurement of lease liabilities was $
The operating lease cost and short-term lease cost for the three months ended March 31, 2023 and 2024 were as follows (in thousands):
For the three months ended March 31, | ||||||
| 2023 |
| 2024 | |||
Selling expenses | $ | | $ | | ||
Research and development expenses | | | ||||
General and administrative expenses | | | ||||
Total operating lease cost | | | ||||
Short-term lease cost | | | ||||
Total lease cost | $ | | $ | |
The weighted average remaining lease term as of December 31, 2023 and March 31, 2024 was
Maturities of lease liabilities as of March 31, 2024 were as follows (in thousands):
| Operating Lease | ||
Remainder of 2024 |
| $ | |
2025 |
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Total undiscounted lease payment |
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Less: Imputed interest |
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| ( |
Present value of lease liabilities |
| $ | |
5. ORDINARY SHARES
Exercise of share options and restricted shares vesting
During the three months ended March 31, 2023 and 2024,
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Stock Repurchase from public market
On November 7, 2022, the Company’s Board of Directors (the “Board”) authorized the repurchase of up to an aggregate of $
The Stock Repurchase Program does not obligate the Company to repurchase any amount of the Company’s ordinary shares, and may be modified, extended, suspended, or discontinued at any time. The timing and amount of repurchases will be determined by the Company’s management based on a variety of factors such as the market price of the Company’s ordinary shares, the Company’s corporate cash requirements, and overall market conditions. The Stock Repurchase Program is subject to applicable legal requirements, including federal and state securities laws.
For the three months ended March 31, 2023 and 2024, the Company repurchased
The following table sets forth repurchase activity under the Stock Repurchase Program for the three months ended March 31, 2024 (amount in thousands, except share and per share amounts):
Approximate Dollar | |||||||||||
Value of ADSs That | Approximate Dollar | ||||||||||