ZW Data Action Technologies Inc. (ZW Data) reported total revenues of $15.44 million for the fiscal year ending December 31, 2024, a significant decrease from the $30.59 million reported in 2023. The company attributed this decline primarily to the strategic decision to wind down its distribution of search engine marketing services in the PRC, focusing instead on higher-margin digital advertising opportunities, including influencer marketing. Net loss attributable to stockholders was $3.76 million in 2024, compared to $5.97 million in 2023. The company's gross profit margin improved to 3.7% in 2024 from 1.1% in 2023, reflecting the shift in business strategy.
A key development during the fiscal year was the acquisition of Rahula Digital Media (HK) Limited for $600,000. Rahula specializes in intellectual property related to agent management, marketing data management, and targeted marketing systems. Additionally, ZW Data entered into securities purchase agreements with several investors, though these transactions were not yet completed as of the filing date. The company also implemented a 1-for-4 reverse stock split, effective September 30, 2024, reducing the number of outstanding shares from 8,704,506 to 2,301,205. This action was taken to regain compliance with Nasdaq listing requirements, which the company successfully achieved.
Operational highlights included a decrease in customer count from 634 in 2023 to 426 in 2024 for internet advertising, precision marketing, and related data services. Revenue from this segment decreased to $14.7 million in 2024 from $30.51 million in 2023. Conversely, revenue from blockchain-based SaaS services increased to $0.75 million in 2024 from $0.08 million in 2023. The company employed 25 full-time employees as of December 31, 2024. The company's cost of revenues decreased to $14.99 million in 2024 from $31.02 million in 2023, largely due to the reduction in search engine marketing service costs.
The 10-K filing also detailed the company's variable interest entity (VIE) structure in China, highlighting the contractual arrangements used to operate in the PRC due to restrictions on foreign ownership. The filing extensively discussed the implications of the Holding Foreign Companies Accountable Act (HFCAA) and the PCAOB's ability to inspect auditing firms in China and Hong Kong, noting that while full access was achieved in 2022, continued access remains uncertain. The company stated that it does not expect to be identified as a Commission-Identified Issuer following the filing of its annual report for the fiscal year ended December 31, 2024. The filing concluded with a discussion of various risks associated with operating in China, including regulatory uncertainties, competition, and the potential for additional capital needs. The company stated that its ability to continue as a going concern is dependent upon its uncertain ability to increase gross profit margin and reduce operating loss from its core business and/or obtain additional equity and/or debt financing.
About ZW Data Action Technologies Inc.
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