Smart Share Global Limited (Nasdaq: EM) (“Energy Monster” or the “Company”), a consumer tech company providing mobile device charging service, today announced its unaudited financial results for the quarter ended June 30, 2023.

HIGHLIGHTS FOR THE SECOND QUARTER OF 2023

  • Net income for the second quarter of 2023 was RMB24.5 million, compared to a net loss of RMB184.5 million in the same period last year.
  • As of June 30, 2023, the Company’s services were available in 1,109 thousand POIs, compared with 1,001 thousand as of March 31, 2023.
  • As of June 30, 2023, 62.0% of POIs were operated under our network partner model, compared with 58.8% as of March 31, 2023.
  • As of June 30, 2023, the Company’s available-for-use power banks2 were 8.0 million, compared with 7.2 million as of March 31, 2023.
  • As of June 30, 2023, cumulative registered users3 reached 362.5 million, with 15.4 million newly registered users acquired during the quarter.
  • Mobile device charging orders4 for the second quarter of 2023 was 171.8 million, representing an increase of 24.1% compared to the same period last year.

“We are pleased with the positive recovery trend during the second quarter of 2023 both in terms of our revenue and profitability,” said Mars Guangyuan Cai, Chairman and Chief Executive Officer. “Our core strategies of coverage expansion and operational optimization remain central to our business philosophy, allowing us to achieve market-leading growth and operational leverage. With our competitive advantages in place, we are able to leverage our advantages in our network effect to more rapidly consolidate market share. Going into the rest of 2023, we remain positive that we can continue delivering positive values to our stakeholders.”

“Both our direct and network partner models provide flexibility to the expansion of our POI network, continuously propelling Energy Monster’s operation to new heights and placing us in a position to best capture market opportunities,” said Peifeng Xu, Chief Operating Officer. “On one hand, our direct model continues to gain momentum as offline traffic continues to return to normal, allowing us to better capture the opportunities to expand into KAs. On the other hand, our network partner model allows us to more efficiently scale into more regions and diversify our POI composition. We believe that the swift execution and ability to acquire KAs for our direct model and the efficient and expansive reach of our network partner model provide the flexibility required to continue increasing our market share in the industry.”

“During the second quarter of 2023, we made an important change to our contractual arrangement with our network partners that further unlocks our growth potential under the network partner model,” said Maria Yi Xin, Chief Financial Officer. “We also continue to improve our operating efficiency on all fronts during the quarter with profitability continuously trending up. Notably, we were able to regain operating profit for the quarter with further improvements in the near future. We believe that the strength of our core mobile device charging operation’s financials and overall balance sheet serve as pillars to Energy Monster’s growth in the future.”

UPDATE IN CONTRACTUAL ARRANGEMENTStarting in the second quarter of 2023, the Company has updated its contractual arrangement with its network partners under the network partner model, shifting the principal role of providing mobile device charging service from the Company to network partners. Under the new contractual arrangement, the Company generates revenue by providing mobile device charging solutions to network partners, including software and system service, billing and settlement service, customer call center service and other services. The ownership rights of cabinets and power banks under the network partner model, which were previously held by the Company, have also been transferred to the network partners under the new contractual arrangement.

Starting in the second quarter of 2023, mobile device charging revenue generated under the network partner model has therefore been recorded under mobile device charging solution, which is now net of incentive fees paid to network partners. Additionally, all incentive fees paid to network partners will be excluded from the Company’s sales and marketing expenses going forward under the new contractual arrangement. Due to the new contractual arrangement, the Company now also generates revenue from cabinet and power bank sales to its network partners as a result of the shift in ownership rights of the cabinets and power banks under the network partner model from the Company to the network partner, and cost of cabinets and power banks sold to network partners will be recognized accordingly.

Starting from the second quarter of 2023, the classification of revenue has been updated accordingly to more clearly reflect the results of the two mobile device charging models. The Company’s classification of mobile device charging operation now consists of the direct model and network partner model. Under the direct model, the Company generates revenue by offering mobile device charging service and sales of power banks to users. Under the network partner model, the Company generates revenue by offering mobile device charging solution and sales of power banks and cabinets to network partners.

The table below sets forth the breakdown of mobile device charging revenue components based on the latest classification:

  Three months ended  
  2022Q2   2023Q1   2023Q2  
  thousands RMB   thousands RMB   thousands RMB  
Mobile device charging:            
Direct Model 440,902   282,625   300,701  
Mobile device charging service 433,208   275,716   293,922  
Power bank sales 7,694   6,909   6,779  
Network Partner Model 245,081   530,420   725,577  
Mobile device charging service 239,430   518,743   -  
Mobile device charging solution -   -   53,793  
Power bank and cabinet sales 5,651   11,677   671,784  
Total mobile device charging 685,983   813,045   1,026,278  
             

FINANCIAL RESULTS FOR THE SECOND QUARTER OF 2023

Revenues were RMB1.0 billion (US$142.8 million5) for the second quarter of 2023, representing a 50.0% increase from the same period in 2022. The increase was primarily due to the increase in mobile device charging revenues due to the change in the contractual arrangement with network partners.

  • Mobile device charging revenues, which consist of revenues generated under both direct and network partner models, increased by 49.6% to RMB1.0 billion (US$141.5 million) for the second quarter of 2023, from RMB686.0 million in the same period of 2022.
    • Revenues generated under the direct model, which comprise of mobile device charging service fee of RMB293.9 million and power bank sales of RMB6.8 million, decreased by 31.8% to RMB300.7 million for the second quarter of 2023, from RMB440.9 million in the same period of 2022. The decrease was primarily due to the decrease in number of POIs operated under the direct model.
    • Revenues generated under the network partner model, which comprise of mobile device charging solution fee of RMB53.8 million and sales of cabinets and power banks of RMB671.8 million, increased by 196.1% to RMB725.6 million for the second quarter of 2023, from RMB245.1 million in the same period of 2022. The increase was primarily due to the addition of revenue generated from sales of cabinets and power banks as a result of the change in the contractual arrangement with network partners, which includes a one-time recognition of RMB500.6 million in sales of cabinets and power banks to network partners.
  • Other revenues, which primarily comprise of revenue from advertising services and new business initiatives, increased by 107.8% to RMB9.4 million (US$1.3 million) for the second quarter of 2023, from RMB4.5 million in the same period of 2022. The increase was primarily attributable to the increase in user traffic from the general recovery in offline foot traffic in China during the second quarter of 2023 and the increase in advertisement efficiency.

Cost of revenues increased by 310.5% to RMB668.5 million (US$92.2 million) for the second quarter of 2023, from RMB162.9 million in the same period last year. The increase was primarily due to the increase in sales of cabinets and power banks in relation to the shift in ownership rights of cabinets and power banks under the network partner model, which includes a one-time recognition of RMB455.8 million in cost of cabinets and power banks sold to network partners. The increase was partially offset by the decrease in depreciation cost.

Research and development expenses decreased by 21.5% to RMB18.7 million (US$2.6 million) for the second quarter of 2023 from RMB23.7 million in the same period last year. The decrease was primarily due to the decrease in personnel related expenses.

Sales and marketing expenses decreased by 55.6% to RMB295.2 million (US$40.7 million) for the second quarter of 2023 from RMB664.9 million in the same period last year. The decrease was primarily due to the decrease in incentive fees paid to network partners as a result of the change in the contractual arrangement with network partners and the decrease in incentive fees paid to location partners.

General and administrative expenses increased by 9.3% to RMB31.1 million (US$4.3 million) for the second quarter of 2023 from RMB28.5 million in the same period last year. The increase was primarily due to the general decrease in efficiency of our operation.

Income from operations for the second quarter of 2023 was RMB13.6 million (US$1.9 million), compared to a loss from operations of RMB191.0 million in the same period last year.

Net income for the second quarter of 2023 was RMB24.5 million (US$3.4 million), compared to a net loss of RMB184.5 million in the same period last year.

Adjusted net income6 for the second quarter of 2023 was RMB30.1 million (US$4.1 million), compared to an adjusted net loss of RMB177.5 million in the same period last year.

Net income attributable to ordinary shareholders for the second quarter of 2023 was RMB24.5 million (US$3.4 million), compared to a net loss attributable to ordinary shareholders of RMB184.5 million in the same period last year.

As of June 30, 2023, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB3.2 billion (US$436.2 million). 

CONFERENCE CALL INFORMATIONThe company will hold a conference call at 8:00 A.M. Eastern Time on Monday, August 21, 2023 (8:00 P.M. Beijing Time on Monday, August 21, 2023) to discuss the financial results. Upon registration, each participant will receive dial-in details to join the conference call.

Event Title: Energy Monster Second Quarter 2023 Earnings Conference CallPre-registration link: https://s1.c-conf.com/diamondpass/10033014-fbu4m1.html

Participants may also access the call via webcast: https://edge.media-server.com/mmc/p/2stpb8co

A telephone replay will be available through August 28, 2023. The dial-in details are as follows:

International: +61-7-3107-6325
United States: +1-855-883-1031
Mainland China: +86-400-120-9216
China Hong Kong: +852-800-930-639
   
Access Code: 10033014

A live and archived webcast of the conference call will also be available at the Company’s investor relations website at https://ir.enmonster.com/

ABOUT SMART SHARE GLOBAL LIMITEDSmart Share Global Limited (Nasdaq: EM), or Energy Monster, is a consumer tech company with the mission to energize everyday life. The Company is the largest provider of mobile device charging service in China with the number one market share. The Company provides mobile device charging service through its power banks, which are placed in POIs such as entertainment venues, restaurants, shopping centers, hotels, transportation hubs and public spaces. Users may access the service by scanning the QR codes on Energy Monster’s cabinets to release the power banks. As of June 30, 2023, the Company had 8.0 million power banks in 1,109,000 POIs across more than 1,900 counties and county-level districts in China.

CONTACT USInvestor RelationsHansen Shiir@enmonster.com

SAFE HARBOR STATEMENTThis press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to,” or other similar expressions. Among other things, the business outlook and quotations from management in this announcement, as well as the Company’s strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission (“SEC”), in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Energy Monster’s strategies; its future business development, financial condition and results of operations; the impact of technological advancements on the pricing of and demand for its services; competition in the mobile device charging service industry; Chinese governmental policies and regulations affecting the mobile device charging service industry; changes in its revenues, costs or expenditures; the risk that COVID-19 or other health risks in China or globally could adversely affect its operations or financial results; general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.

NON-GAAP FINANCIAL MEASUREIn evaluating its business, the Company considers and uses non-GAAP adjusted net income/(loss) in reviewing and assessing its operating performance. The presentation of this non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company presents this non-GAAP financial measure because it is used by management to evaluate operating performance and formulate business plans. The Company believes that this non-GAAP financial measure helps identify underlying trends in its business, provide further information about its results of operations, and enhance the overall understanding of its past performance and future prospects.

Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP, and have limitations as analytical tools. The Company’s non-GAAP financial measure does not reflect all items of expenses that affect its operations and does not represent the residual cash flow available for discretionary expenditures. Further, the Company’s non-GAAP measure may differ from the non-GAAP information used by other companies, including peer companies, and therefore its comparability may be limited. The Company compensates for these limitations by reconciling its non-GAAP financial measure to the nearest U.S. GAAP performance measure, which should be considered when evaluating performance. Investors and others are encouraged to review the Company’s financial information in its entirety and not rely on a single financial measure.

The Company defines non-GAAP adjusted net income/(loss) as net income/(loss) excluding share-based compensation expenses. For more information on the non-GAAP financial measure, please see the table captioned “Unaudited Reconciliation of GAAP and Non-GAAP Results” set forth at the end of this press release.

 

Smart Share Global Limited
Unaudited Consolidated Balance Sheets
(In thousands, except share and per share data, unless otherwise noted)
                     
      December 31, 2022     June 30, 2023     June 30, 2023  
  RMB RMB US$  
         
  ASSETS                  
  Current assets:                  
  Cash and cash equivalents   948,773       480,271       66,232    
  Restricted cash   14,608       14,848       2,048    
  Short-term investments   2,091,198       2,646,645       364,989    
  Accounts receivable, net7   16,482       243,068       33,521    
  Inventory   1,051       129,532       17,863    
  Prepayments and other current assets7   228,672       401,716       55,398    
                     
  Total current assets   3,300,784       3,916,080       540,051    
                     
  Non-current assets:                  
  Long-term restricted cash   21,000       21,000       2,896    
  Property, equipment and software, net   886,460       300,940       41,502    
  Long-term prepayments to related parties   71       -       -    
  Right-of-use assets, net   12,442       19,024       2,624    
  Other non-current assets7   35,898       19,402       2,676    
  Deferred tax assets, net   30,986       30,986       4,273    
                     
  Total non-current assets   986,857       391,352       53,971    
                     
  Total assets   4,287,641       4,307,432       594,022    
                     
  LIABILITIES AND SHAREHOLDERS' EQUITY                  
  Current liabilities:                  
  Accounts and notes payable   810,197       688,213       94,909    
  Salary and welfare payable   111,274       116,002       15,997    
  Taxes payable   147,367       262,152       36,152    
  Financing payable-current   76,272       -       -    
  Current portion of lease liabilities   9,761       9,301       1,283    
  Accruals and other current liabilities   268,007       307,195       42,364    
                     
  Total current liabilities   1,422,878       1,382,863       190,705    
                     
  Non-current liabilities:                  
  Financing payable-non-current   32,281       -       -    
  Non-current lease liabilities   854       7,539       1,040    
  Amounts due to related parties-non-current   1,000       1,000       138    
  Other non-current liabilities   189,323       187,610       25,873    
                     
  Total non-current liabilities   223,458       196,149       27,051    
                     
  Total liabilities   1,646,336       1,579,012       217,756    
                     
  SHAREHOLDERS' EQUITY                  
  Ordinary shares   347       347       48    
  Treasury stock   (6,816 )     (3,090 )     (426 )  
  Additional paid-in capital   11,786,482       11,784,764       1,625,193    
  Statutory reserves   16,593       16,593       2,288    
  Accumulated other comprehensive income   163,928       214,350       29,560    
  Accumulated deficit78   (9,319,229 )     (9,284,544 )     (1,280,397 )  
                     
  Total shareholders' equity   2,641,305       2,728,420       376,266    
                     
  Total liabilities and shareholders' equity   4,287,641       4,307,432       594,022    
                     
  7On January l, 2023, the Company adopted ASU 2016-13, Financial Instruments -- Credit Losses (Topic 326), using the modified retrospective method and the adoption did not have material impact on the consolidated financial statements.  
   
  8On January 1, 2023, the Company adopted ASU 2016-13, Financial Instruments -- Credit Losses (Topic 326) and recognized a cumulative-effect adjustment of RMB640 (US$93) to the opening accumulated deficit at the adoption date.  
   

 

Smart Share Global Limited
Unaudited Consolidated Statements of Comprehensive Income/(Loss)
(In thousands, except share and per share data, unless otherwise noted)
 
                         
    Three months ended June 30,   Six months ended June 30,
    2022    2023     2022     2023  
    RMB   RMB   US$   RMB   RMB   US$
                         
Revenues:                        
Mobile device charging   685,983     1,026,278     141,530     1,416,654     1,839,323     253,654  
Others   4,546     9,448     1,303     10,952     19,238     2,653  
                         
Total revenues   690,529     1,035,726     142,833     1,427,606     1,858,561     256,307  
                         
Cost of revenues   (162,869 )   (668,547 )   (92,197 )   (290,422 )   (795,936 )   (109,765 )
Research and development expenses   (23,747 )   (18,651 )   (2,572 )   (50,809 )   (40,095 )   (5,529 )
Sales and marketing expenses   (664,918 )   (295,150 )   (40,703 )   (1,324,597 ) (960,424 )   (132,449 )
General and administrative expenses   (28,458 )   (31,117 )   (4,291 )   (55,834 )   (57,888 )   (7,983 )
Other operating (loss)/income   (1,565 )   (8,703 )   (1,200 )   3,712     (6,435 )   (887 )
                         
(Loss)/income from operations   (191,028 )   13,558     1,870     (290,344 )   (2,217 )   (306 )
                         
Interest and investment income   10,949     28,054     3,869     22,536     54,290     7,487  
Interest expense to third parties   (8,596 )   -     -     (17,010 )   (4,228 )   (583 )
Foreign exchange gain/(loss), net   4,160     (17,269 )   (2,382 )   3,892     (12,509 )   (1,725 )
Other (loss)/income, net   (12 )   172     24     (12 )   (11 )   (2 )
                         
(Loss)/income before income tax expense   (184,527 )   24,515     3,381     (280,938 )   35,325     4,871  
                         
Income tax expense   -     -     -     -     -     -  
                         
Net (loss)/income   (184,527 )   24,515     3,381     (280,938 )   35,325     4,871  
                         
Net (loss)/income attributable to ordinary shareholders of Smart Share Global Limited   (184,527 )   24,515     3,381     (280,938 )   35,325     4,871  
                         
Other comprehensive income                        
Foreign currency translation adjustments, net of nil tax   75,646     68,489     9,445     69,811     50,422     6,954  
                         
Total comprehensive (loss)/income   (108,881 )   93,004     12,826     (211,127 )   85,747     11,825  
                         
Comprehensive (loss)/income attributable to ordinary shareholders of Smart Share Global Limited   (108,881 )   93,004     12,826     (211,127 )   85,747     11,825  
                         
Weighted average number of ordinary shares used in computing net (loss)/income per share                        
- basic   518,158,156     520,059,564     520,059,564     517,786,898     519,652,925     519,652,925  
- diluted   518,158,156     520,059,564     520,059,564     517,786,898     519,652,925     519,652,925  
                         
Net (loss)/income per share attributable to ordinary shareholders                        
- basic   (0.36 )   0.05     0.01     (0.54 )   0.07     0.01  
- diluted   (0.36 )   0.05     0.01     (0.54 )   0.07     0.01  
                         
Net (loss)/income per ADS attributable to ordinary shareholders                        
- basic   (0.72 )   0.10     0.01     (1.08 )   0.14     0.02  
- diluted   (0.72 )   0.10     0.01     (1.08 )   0.14     0.02  
                         

 

Smart Share Global Limited
Unaudited Reconciliation of GAAP and Non-GAAP Results
(In thousands, except share and per share data, unless otherwise noted)
                           
    Three months ended June 30,   Six months ended June 30,  
    2022     2023   2022     2023  
    RMB   RMB   US$   RMB   RMB   US$  
                           
  Net (loss)/income (184,527 )   24,515   3,381   (280,938 )   35,325   4,871  
  Add:                        
  Share-based compensation 7,036     5,540   764   13,752     11,825   1,631  
  Less:                        
  Adjusted for tax effects -     -   -   -     -   -  
                           
  Adjusted net (loss)/income (non-GAAP) (177,491 )   30,055   4,145   (267,186 )   47,150   6,502  
                           

 ___________________________________

1 The Company defines number of points of interests, or POIs, as of a certain day as the total number of unique locations whose proprietors (location partners) have entered into contracts with the Company or its network partners on that day and have at least one cabinet assigned to the location.2 The Company defines available-for-use power banks as of a certain date as the number of power banks in circulation on that day.3 The Company defines cumulative registered users as the total number of users who have agreed to register their mobile phone numbers with the Company via its mini programs since inception, and the number of cumulative registered users of the Company on a certain date is the number of unique mobile phone numbers that have been registered with the Company since inception on that date.4 The Company defines mobile device charging orders for a given period as the total number of completed orders placed by registered users of the mobile device charging business under both the direct and network partner models in that given period, without any adjustment for orders that may qualify for discounts or incentives.5 The U.S. dollar (US$) amounts disclosed in this press release, except for those transaction amounts that were actually settled in U.S. dollars, are presented solely for the convenience of the readers. The conversion of Renminbi (RMB) into US$ in this press release is based on the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of June 30, 2023, which was RMB7.2513 to US$1.0000. The percentages stated in this press release are calculated based on the RMB amounts.6 See the sections entitled “Non-GAAP Financial Measure” and “Unaudited Reconciliation of GAAP and Non-GAAP Results” in this press release for more information.

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