Moatable(MTBL) - 2025 Q2 - Quarterly Report

Part I. FINANCIAL INFORMATION Comprehensive financial data including statements, management analysis, and internal controls Financial Statements The company's Q2 2025 financial statements reflect decreased assets, a $0.4 million net income turnaround, and negative operating cash flow due to a special dividend payment Condensed Consolidated Balance Sheets A summary of the company's financial position, highlighting changes in assets, liabilities, and equity - Total assets decreased by $10.2 million from December 31, 2024, to June 30, 2025, mainly driven by a $9.5 million decrease in cash and cash equivalents. Total equity also decreased by $11.0 million, reflecting the net loss and dividend payments during the period[18][19] Condensed Consolidated Balance Sheet Summary (in thousands) | Balance Sheet Item | Dec 31, 2024 | June 30, 2025 | Change | | :--- | :--- | :--- | :--- | | Total Current Assets | $43,942 | $30,540 | ($13,402) | | Cash and cash equivalents | $26,642 | $17,121 | ($9,521) | | Total Assets | $69,468 | $59,255 | ($10,213) | | Total Current Liabilities | $23,590 | $23,460 | ($130) | | Total Liabilities | $24,707 | $25,483 | $776 | | Total Equity | $44,761 | $33,772 | ($10,989) | Condensed Consolidated Statements of Operations Overview of revenue, gross profit, and net income trends for the quarter and six-month periods Key Operational Metrics (in thousands, except EPS) | Metric | Q2 2024 | Q2 2025 | YoY Change | H1 2024 | H1 2025 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $15,289 | $19,276 | +26.1% | $29,312 | $37,276 | +27.2% | | SaaS revenue | $15,249 | $19,237 | +26.1% | $29,231 | $37,195 | +27.2% | | Gross Profit | $11,789 | $14,293 | +21.2% | $22,496 | $27,707 | +23.2% | | (Loss) Income from Operations | ($788) | $446 | Turnaround | ($2,220) | ($528) | Improvement | | Net (Loss) Income | ($492) | $435 | Turnaround | ($3,622) | ($659) | Improvement | | Diluted EPS | ($0.0006) | $0.0006 | Turnaround | ($0.005) | ($0.0004) | Improvement | Condensed Consolidated Statements of Cash Flows Analysis of cash inflows and outflows from operating, investing, and financing activities - For the first six months of 2025, the company used $11.1 million for a special cash dividend, which was the primary driver for the $11.2 million net cash used in financing activities. Net cash from investing activities was positive $3.8 million due to the redemption of $5.0 million in short-term investments[27] Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2024 | 2025 | Change | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | ($289) | ($2,836) | ($2,547) | | Net cash (used in) provided by investing activities | ($136) | $3,837 | $3,973 | | Net cash provided by (used in) financing activities | $858 | ($11,192) | ($12,050) | | Net (decrease) in cash | $433 | ($10,191) | ($10,624) | Notes to Condensed Consolidated Financial Statements Key notes detail business segments, a sales tax liability revision, the TBI acquisition, and significant shareholder activities including an $11 million special cash dividend - The company operates two primary SaaS businesses: Lofty, a real estate platform, and Trucker Path, a platform for the trucking industry. The majority of revenue is generated from the U.S. market[29] - Management discovered that the sales tax liability was understated by $3.0 million as of June 30, 2024, with $2.4 million related to prior years (2021-2023). The company determined the misstatement was not material but has revised the prior period financial statements[39][40] - On May 1, 2025, the company acquired 100% of Truckers Best Insurance LLC (TBI) to enter the insurance brokerage business. The total purchase consideration was $2.8 million, including $1.0 million in cash and $1.8 million in contingent consideration[79] - On March 5, 2025, the company's board declared a special cash dividend of $0.01346 per ordinary share, totaling approximately $11 million, which was paid on March 27, 2025[93] - The company continued its stock repurchase program, buying back 1,235,655 Class A ordinary shares for $29 thousand in Q2 2025 and 2,753,055 shares for $86 thousand in H1 2025[96] Segment Revenue for Six Months Ended June 30 (in thousands) | Segment | 2024 | 2025 | YoY Change | | :--- | :--- | :--- | :--- | | Lofty | $16,440 | $19,706 | +19.9% | | Trucker Path | $12,791 | $17,489 | +36.7% | | Total SaaS Revenue | $29,231 | $37,195 | +27.2% | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2025 revenue growth driven by SaaS expansion, gross margin decline, increased operating expenses, and sufficient liquidity Results of Operations Analysis of Q2 2025 operational results, highlighting 26.1% revenue growth, gross margin contraction, and shifts in operating expenses - Q2 2025 revenue increased 26.1% YoY, primarily from SaaS businesses. Subscription services revenue grew 21.7%, driven by an expanded Trucker Path subscriber base, which increased 30% to 144,800 paying subscriptions as of June 30, 2025[150] - Lofty's purchased seats (eligible users on a paid subscription) increased by 9% to 85,600 as of June 30, 2025, from 78,500 a year prior, despite a 5% decrease in the number of paying subscriptions[150] - Q2 2025 gross margin decreased to 74.1% from 77.1% in Q2 2024, attributed to increased costs of service features within the real estate SaaS platform[153] - Q2 2025 R&D expenses increased 32.6% YoY to $6.1 million due to higher headcount for new projects. Selling and marketing expenses decreased 10.2% to $4.4 million, mainly due to lower sales tax expenses[157] Liquidity and Capital Resources Assessment of the company's liquidity, including $17.1 million in cash, negative operating cash flow, and future capital sufficiency - The company had cash and cash equivalents of $17.1 million as of June 30, 2025, and management expects this to be sufficient to meet operating needs for at least the next twelve months[171] - Net cash used in operating activities was $2.8 million for the first six months of 2025, compared to $0.3 million in the same period of 2024[173] Contractual Obligations as of June 30, 2025 (in thousands) | Obligation | Total | Less than 1 year | 1-3 years | 4-5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating lease obligations | $1,356 | $322 | $807 | $91 | $136 | | Contingent earn-out consideration | $2,723 | $928 | $1,795 | $— | $— | | Total | $4,079 | $322 | $3,530 | $91 | $136 | Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing quantitative and qualitative market risk disclosures - As a smaller reporting company, Moatable, Inc. is not required to provide the information specified under this item[187] Controls and Procedures Management concluded that disclosure controls were ineffective due to unremediated material weaknesses, with remediation plans underway - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were not effective[189] - Three material weaknesses in internal control remain unremediated as of June 30, 2025: - Lack of a systematic risk assessment process for financial reporting - Lack of evaluation in assessing sales tax applicability, leading to an understated accrual - Lack of evaluations to ensure internal control components are present and functioning[190][191] - Remediation plans include recruiting personnel with U.S. GAAP knowledge, designing an improved control environment, implementing a consolidated general ledger, and engaging experts for sales tax compliance[191][192] Part II. OTHER INFORMATION Additional disclosures covering legal proceedings, risk factors, equity sales, and other relevant corporate information Legal Proceedings The company is not currently involved in any material legal proceedings or aware of any significant threatened actions - The company is not currently a party to any material legal proceedings[196] Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's latest annual report - There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024[197] Unregistered Sales of Equity Securities and Use of Proceeds Details on the continued stock repurchase program, including Q2 2025 repurchases of 27,459 ADSs for $29 thousand Share Repurchases for Q2 2025 | Period | Total ADSs Purchased | Average Price Paid Per ADS | Total Cost (in thousands) | | :--- | :--- | :--- | :--- | | May 2025 | 7,066 | $1.02 | $7 | | June 2025 | 20,393 | $1.06 | $22 | | Total | 27,459 | - | $29 | Other Information No officers or directors adopted or terminated Rule 10b5-1 trading arrangements during the first six months of 2025 - No officers or directors adopted or terminated any Rule 10b5-1 trading arrangements during the six months ended June 30, 2025[202]