Blue Hat(US:BHAT)2020-03-23 17:38Financial Data and Key Metrics Changes - In Q4 2019, total revenues increased by 18.3% year-over-year to $11.8 million, with gross profit rising by 15.2% to $7.9 million [12] - Income from operations increased by 24.4% year-over-year to $6.2 million, and net income rose by 26.2% to $6.2 million [12] - For the full year 2019, total revenues were $26.8 million, an increase of 28.6% from $18.5 million in 2018 [12][13] - Gross profit for the fiscal year 2019 was $16.3 million, up 31.2% from $12.4 million in 2018, with a gross margin of 68.4% compared to 67% in 2018 [14][15] Business Line Data and Key Metrics Changes - Revenues from interactive toys in the games series category were $21.2 million for 2019, a 25.2% increase from $16.9 million in 2018 [13] - Revenues from mobile games reached $2.5 million, a significant increase of 126.8% from $1.1 million in 2018, driven by the popularity of the mobile game Quan Min Dou Yu [14] - Revenues from interactive toys in the animation series category decreased to $160,672, a drop of 69.3% from $522,638 in 2018, due to a strategic shift towards the games series category [13] Market Data and Key Metrics Changes - The AR Racer product has a user base of over 4 million, with significant numbers of players in China and international markets including Russia, Korea, UK, and Saudi Arabia [9] - The company is seeing encouraging progress in international expansion, with products gaining attention from international buyers [10] Company Strategy and Development Direction - The company is focusing on diversification by launching new smart education offerings alongside traditional toy and game lines [7] - International expansion remains a key goal, with ongoing discussions with major retailers in the U.S. following the issuance of a U.S. patent for AR Racer technology [10] - The company aims to grow its smart education products in preschools, targeting an increase from over 30 to at least 100 schools by the end of the year [24] Management's Comments on Operating Environment and Future Outlook - Management does not foresee a substantial impact from the coronavirus outbreak for the full year, although the first quarter is expected to be affected [20] - The company anticipates a rebound in sales as strict measures taken by the Chinese government are expected to restore normalcy in the second quarter [20] - The potential market size for educational products is significant, with around 300,000 preschools and 180 million children in China [24] Other Important Information - Total operating expenses for the fiscal year 2019 were $6.8 million, an increase of 64.6% from $4.1 million in 2018, primarily due to increases in selling, general and administrative, and research and development expenses [15][16] - Cash, cash equivalents, and restricted cash totaled $15.5 million as of December 31, 2019, including net proceeds of approximately $6.4 million from the IPO [17] Q&A Session Summary Question: How will the current virus outbreak affect Blue Hat's business? - Management believes the coronavirus outbreak will not have a substantial impact for the full year, but the first quarter will be affected, with expectations for a sales rebound in the second quarter [20] Question: What is the pipeline for new products and will there be delays due to the coronavirus? - New products are expected to launch at the end of Q2 or beginning of Q3, with a pipeline across all business lines including AR toys, games, and educational products [22] Question: What is the outlook for the educational business and its growth in 2020? - The company anticipates significant growth in the educational sector, aiming to expand from over 30 preschools to at least 100 by year-end, leveraging a large potential market [24]