NEW YORK, Nov. 13, 2017 /PRNewswire/ — Seven Stars Cloud Group, Inc. (NASDAQ: SSC) (“SSC” or the “Company”), announced today its Q3 2017 operating results for the period ended September 30, 2017 (a full copy of the Company’s quarterly report on Form 10-Q will also be posted at www.sec.gov).  

Conference Call: SSC’s management, including Bruno Wu (Executive Chairman & CEO), Robert G. Benya (President, Director & Chief Revenue Officer), Simon Wang (CFO) and Jason Wu (Finance Director), will host an earnings conference call at 8:00 a.m. on Monday, November 13, 2017, U.S. Eastern Time (9:00 p.m. on Monday, Beijing/Hong Kong Time).

To join the webcast, please visit the ‘Events & Presentations’ section of the SSC corporate website (http://www.sevenstarscloud.com/events), or call the toll-free dial-in number: 877-407-3107; International callers should dial: 201-493-6796.

SSC Q3 2017 OPERATING RESULTS

Revenue for Q3 2017 was $30.2 million as compared to $1.6 million for the same period in 2016, an increase of approximately $28.6 million, or 17.6x. The increase was mainly due to our new business line acquired in January 2017.  All revenues from January to the end of September of this year consisted primarily of our supply chain management business, in the consumer electronic / information & communications technology vertical.

This increase was partially offset by a decrease of our legacy YOD business in the amount of $1.6 million, as the legacy YOD business shifts to a new exclusive distribution agreement with Zhejiang Yanhua Culture Media Co., Ltd. (“Yanhua “) which was announced in Q4 2016.  As revenue generated by Yanhua did not exceed the revenue sharing threshold, no additional revenue was recorded in Q3 2017.  Year-to-Date revenue for the nine months ended September 30, 2017 was approximately $106.7 million, as compared to $4.4 million for the same period in 2016, an increase of 2338%.

Cost of revenues was approximately $28.3 million Q3 2017 as compared to $0.9 million for the same period in 2016.  Our cost of revenues increased by $27.4 million, which is in line with our increase in revenues. Our cost of revenues is primarily comprised of cost to purchase consumer electronics products from suppliers.

Gross profit ratio for Q3 2017 decreased from 45.06% to 6.45%, as the Wecast Services business, which currently is engaged mostly in lower margin consumer electronics, is still in its relative infancy and the business service offerings as well as profit sharing arrangements with a growing range of suppliers, are in transition.

Selling, general and administrative expense for Q3 2017 was $3.6 million as compared to $2.3 million for the same period in 2016, an increase of approximately $1.3 million or 56%. The majority of the increase was due to 1) the increase of our sales and marketing expense to introduce and promote our business models to various potential investors and business partners, as well as to promote Wecast Services, which was acquired in January 2017; and 2) financial advisory expenses that were paid to independent professional companies to assist the Company in contacting and negotiating with new business partners.  The Company is also continuing to focus on more cost-saving activities to reduce daily operating expenses.

Professional fees for Q3 2017 were $0.8 million as compared to $0.3 million for the same period in 2016, an increase of approximately $0.5 million. The increase in professional fees was mainly caused by legal, valuation and auditing service fees incurred in Q3 2017 in relation to the acquisitions in January 2017.  Specific to auditing, the Company incurred increased service fees charged by our external auditor for the opening audit due to our auditor change in 2017.

Loss per share for Q3 was $0.05 as compared to loss per share of $0.05 for the same period in 2016. 2017 YTD loss per share was $0.08 as compared to YTD loss per share of $0.18 in the same period in 2016.

OCASIA

On August 14, 2017, Seven Stars Cloud announced a Joint Venture Partnership (“JV Partnership) with Ocasia Group Holdings (“Ocasia”), which is engaged in a broad range of energy related activities including the trading of physical crude oil, fuel oil and refined oil products as well as the storage of oil.  Ocasia is a purchasing agent for major energy companies, including Petro China and China Petroleum & Chemical Corporation (Sinopec). 

Seven Stars Cloud today announced that:

1. Ocasia is guaranteeing a minimum of $500 million USD worth of sales volume to the JV Partnership from December 1, 2017 until December 31, 2018.
2. Ocasia has committed to use Seven Stars Cloud’s Digital Financial Derivatives Trading Platform, for the issuance and exchange of digital asset securities, energy index futures and other financial derivatives.

Chairman Bruno Wu stated, “Our transformation has steadily continued in Q3 as we have remained focused on business fundamentals; that is, operational integrity, controlling costs, disciplined investment, and a steady stream of strategic partnerships, all with the objective of increasing revenues and growing value.  With that in mind, YTD revenue for Seven Stars Cloud, a company aiming to become a global leader in providing next-generation Artificial-Intelligent & Fintech Powered, Supply Chain and Digital Finance Solutions, was approximately $107 million USD.  That is up 23x over the same period YTD period in 2016.  Additionally, revenues for the year thus far only reflect our supply chain management business line and do not yet reflect the other parts of our growing ecosystem such as supply chain finance, our digital financial derivatives trading platform (BBD Finance Group JV) and asset-backed securitization and tokenization (ABST). With all that being said, I am pleased to say we are still on track to reach our top line revenue guidance of $300 million USD as projected by the Company in early 2017.”

President & Chief Revenue Officer Robert Benya stated, “Today we announced more detail and financial commitments for the JV Partnership we formed with Ocasia Group Holdings back in August 2017.  This agreement, along with other already formed and future partnerships, will be the drivers that propel this Company moving forward.  The year 2017 was both a transitional and transformational year:  a transition away from the legacy business and a transformation towards being a global leader in providing next-generation Artificial-Intelligent & Fintech Powered, Supply Chain + Digital Finance Solutions.  Remarkably, through this transitional and transformational build-out year, the Company did something quite remarkable.  It produced, and will continue to produce, exponential growth on the revenue side.  From my experience, that is almost unheard of for a company to do while simultaneously going through such a complete and thorough change.  With the deep pipeline of partnership activity and business commitments that are forthcoming, I am enthusiastic to lead and be a part of such a promising and exciting endeavor.”

About Seven Stars Cloud Group, Inc. (http://corporate.sevenstarscloud.com/)

Seven Stars Cloud Group, Inc. (NASDAQ: SSC) is aiming to become a global leader in providing next-generation Artificial-Intelligent (AI) & Fintech Powered, Supply Chain + Digital Finance Solutions.  SSC’s innovative model helps businesses enhance and unlock operational and capital value from both the supply chain and real assets.  In addition, SSC offers a closed trade ecosystem for buyers and sellers designed to eliminate transactional middlemen and create a more direct and margin-expanding path for principals.  There are three engines that drive our business platform to date: 1. Intelligent Supply Chain Management; 2. Asset-Backed Securitization and Tokenization, Issuance & Trading Platform 3. Digital Index & Financial Derivatives Issuance and Trading Platform.  All three engines are supported by “ABCD” Technology & Infrastructure (A: Artificial Intelligence, B: Blockchain, C: Cloud Computing, D: Data).  

Safe Harbor Statement

This press release contains certain statements that may include “forward looking statements.” All statements other than statements of historical fact included herein are “forward-looking statements.” These forward looking statements are often identified by the use of forward-looking terminology such as “believes,” “expects” or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

CONTACT:
Jason Finkelstein    
VP, Investor Relations                         
Seven Stars Cloud Group, Inc.                                 
212-206-1216
Twitter: @sevenstarscloud         

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SOURCE Seven Stars Cloud Group, Inc.