Chinanet Online Holdings Inc (NASDAQ: CNET) is making its way for the top in a big way in the market this morning, and for a very good reason. The company released its unaudited financial results for the fourth quarter and fully 2017 year. Of course, the results proved to be overwhelmingly positive, exciting investors and sending the stock screaming for the top. Today, we’ll talk about:
- The results released by CNET;
- what we’re seeing from the stock as a result;
- and what we’ll be watching for ahead.
CNET Releases Unaudited Financial Results
As mentioned above, Chinanet Online Holdings is having an incredibly strong start in the market this morning after releasing unaudited financial results for the fourth quarter and full 2017 year. Here’s what we saw from the press release:
- Net Revenue – During the quarter, CNET saw some pretty impressive growth in terms of net revenue. During the fourth quarter of 2016, the company generated net revenue in the amount of $9.4 million. However, just 1 year later, in the fourth quarter of 2017, revenue came in 64.1% higher at $15.3 million.
- SEM Revenue – In the release, the company said that revenue from search engine marketing (SEM) came in at $13.1 million. That’s a 121.1% gain over the same quarter one year before when the company generated $5.9 million in SEM revenue.
- Operating Expenses – Finally, operating expenses as a percentage of revenue saw a pretty strong decrease as well. During the fourth quarter of 2016, operating expenses accounted for 42.9% of the company’s revenue. However, in the fourth quarter of 2017, operating expenses fell to 40.7% of the company’s total revenue.
- Net Revenue – On a full year basis, net revenue grew by 34.2% in the 2017 year, bringing revenue for the year to $46.6 million.
- SEM Revenue – On a full year basis, search engine marketing revenues grew 111.9% to come in at $37.4 million.
- Operating Expenses – When it comes to operating expenses as a percentage of revenue, that figure came in at 30.1%. That’s a drastic decline from the 2016 figure of 40.0%.
In a statement, Mr. Handong Cheng, Chairman, President and CEO at CNET, had the following to offer:
2017 has been a transitional year for us. Realizing that our small-to-medium enterprise or SME customers are struggling as the Chinese economy slows down, we have actively migrated our business focus towards servicing larger customers and providing search-engine advertising solutions. As a result, we achieved 64.1% of year-over-year revenue growth in the fourth quarter of 2017 and 34.2% in full year 2017.
At the same time, we see tremendous opportunities in applying block chain technology to helping SMEs to achieve better business results than ever before. To seize the new opportunities, we have taken active steps to establish a complete ecosystem with transaction capabilities that can help our SME clients to target, acquire, and retain end consumers. With favorable government policies, block chain technology is being rapidly recognized and accepted in China. We believe that we can leverage block chain’s decentralized systems, distributed ledgers, immutable record, consensus protocol and provenance of assets to provide reliable and verifiable transaction services to our clients with higher security and protection than ever before.
We recently announced a strategic partnership with Wuxi Jingtum Network Technology to jointly develop our block chain technology. As we further enhance our block chain capabilities, we will provide our shareholders relevant updates regarding the strategies and applications of our block chain technology. We will remain focused on establishing and improving our close-loop B2B2C ecosystem with our block chain technology as its foundation. We are confident that we have the right strategy and team in place to secure a market leading position in China.
What We’re Seeing From The Stock
Earnings season is one of my favorite times of the year. After all, it’s the season of opportunity in the market, and the China Online Holdings earnings release generated just that, an opportunity. With such strong results, it only makes sense that we’re seeing drastic movement in the value of the stock this morning. At the moment (9:16), CNET is trading at $4.13 per share after a gain of $1.66 per share or 67.21% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on CNET. In particular, we’re interested in watching the continued growth the company is seeing in search engine marketing revenue as the growth in this area is impressive to say the least. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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