Yahoo Finance FingerMotion Inc (FNGR) Faces Revenue Decline in Q3 2024 Amid Market Challenges
Revenue: Reported a significant decrease of 46% year-over-year to $6.14 million.
Net Loss: Quarterly loss narrowed by 23% to $1.94 million compared to the same period last year.
Gross Profit: Decreased by 26% year-over-year, yet gross margins improved from 7.5% to 10.4%.
Assets and Liabilities: Total assets stood at $17.57 million, with total current liabilities at $4.92 million.
Share Structure: 52,545,350 common shares were issued and outstanding as of November 30, 2023.
Cash Position: Cash and cash equivalents were $1.93 million, with a working capital surplus of $12.51 million.
Earnings Per Share (EPS): Basic and Diluted loss per share improved to $0.04 from a loss per share of $0.06 in Q3 2023.
On January 16, 2024, FingerMotion Inc (NASDAQ:FNGR) released its 8-K filing, detailing the financial outcomes for the third quarter of fiscal year 2024, which ended on November 30, 2023. FingerMotion Inc, a mobile services and data company operating primarily in China, reported a notable decrease in revenue across its business segments, including SMS & MMS, Telecommunications Products & Services, and Big Data. Despite the downturn in revenue, the company saw an improvement in gross margins, indicating more efficient management of its product lines.
Financial Performance Overview
FingerMotion Inc's revenue for the quarter was $6.14 million, a significant decrease from the previous year's third quarter, which saw $5.26 million more in revenue. This 46% year-over-year decline was attributed to decreases across all business segments, with the Telecommunications Products & Services business experiencing a 41% drop and the Big Data and SMS & MMS businesses also reporting reduced revenues. The cost of revenue decreased by 48% to $5.50 million, resulting in a gross profit of $0.64 million, down 26% from Q3 2023.
The company also reported a net loss of $1.94 million, which is an improvement from the previous year's loss, decreasing by 23%. The basic and diluted loss per share improved to $0.04, compared to a loss of $0.06 per share in the same quarter of the previous year. FingerMotion Inc ended the quarter with $1.93 million in cash and cash equivalents, a working capital surplus of $12.51 million, and a positive shareholders' equity of $12.63 million. Total assets were reported at $17.57 million, with total current liabilities at $4.92 million.
Market Challenges and Strategic Adaptations
FingerMotion Inc faced a challenging market environment, impacting all its business segments. Despite these challenges, the company's gross margins improved from 7.5% to 10.4%, reflecting better management of its diversified product line. The regulatory climate, particularly affecting the SMS and MMS business, prompted the company to adapt its approach and seek alternative revenue streams for growth.
The Big Data segment is evolving, with the company working closely with existing partners and aiming for large-scale commercialization in the coming years. FingerMotion Inc's behavioral algorithms are becoming integral to its partners' product models, suggesting that future commercialization could be structured as a profit-sharing deal.
"The numbers do not reflect the optimism that management sees going forward," said Martin Shen, CEO of FingerMotion Inc. "We were looking for positive cash flow from our diversification into new business segments by the end of the quarter, but missed the cutoff. Exciting new business segments are underway in the current quarter that could improve revenues, margins, and get us close to our goal of profitability. We are building this business for the long term and innovate our way out of market challenges."
Operational and Financial Developments
General and administrative expenses increased by 38% during the quarter due to a range of costs related to company administration. However, research and development expenses saw a slight decrease of 2% due to savings from data access fees charged by telecom companies.
FingerMotion Inc is committed to growing its user base organically and developing an ecosystem of highly engaged users utilizing its applications. The company's long-term vision includes serving over 1 billion users in the China market and potentially expanding to other regional markets.
For investors and those interested in the telecommunications services industry, FingerMotion Inc's latest financial results provide a mixed picture. While the company is facing revenue declines and a net loss, its improved gross margins and strategic adaptations to market challenges indicate potential for recovery and growth. The company's focus on innovation and long-term business development may appeal to value investors looking for opportunities in evolving technology companies.
For further details on FingerMotion Inc's financial performance and strategic outlook, interested parties are encouraged to review the full financial results in the company's recent 10-Q filing and visit the investor relations section of their website.
Explore the complete 8-K earnings release (here) from FingerMotion Inc for further details.
This article first appeared on GuruFocus.
