MOGU Announces Financial Results Unaudited for the Six Months Ended Sept 30, 2022

HANGZHOU (China), March 03, 2023–(BUSINESS WIRE)–MOGU Inc. (NYSE: MOGU) (“MOGU” or the “Company”), a KOL-driven online fashion and lifestyle destination in China, today announced its unaudited financial results for the six months ended September 30, 2022.

MOGU Chairman and Chief Executive Officer, Mr. Chen Qi commented that the Live eCommerce industry was facing many challenges in 2022. These included ongoing macro-environment uncertainty, the effect of COVID-19’s resurgence of China on consumer demand, and intensifying competition among the major live platforms. The COVID-19 travel restrictions had a significant impact on the fulfillment of orders across the country, resulting in lower sales volumes and lower revenue. The Gross Merchandise Volume (“GMV”)²“” and MOGU’s revenue decreased by 48.1% (US$397.6 Million1) and 32.2% respectively to RMB2,828 millions (US$397.6 Miillion1) and RMB114.8 mil (US$16.1 Million) respectively. We proactively explored other opportunities despite these challenges.”

Our total revenue decreased 32.2% to RMB114.8 millions in the first half fiscal year 2023. We have continued to use a holistic approach to optimize our costs and improve operating efficiency throughout the Company in an effort to reduce losses from operations. For the same period in fiscal year 2022, the adjusted EBITDA was negative RMB17.1million and RMB48.1million, respectively. To diversify our revenue, we are still exploring new business opportunities. Ms. Qi Feng, Financial Controller, added.

Highlights from the Six Months Ended September 30, 2022

• Total revenues For the six months ending September 30, 2022, the decrease in revenue was 32.2% (US$16.1 Million) from RMB169.5 millions during the same period last fiscal year 2022.

• Live Video Broadcast (LVB) GMV associated for the six months ending September 30, 2022 fell by 45.6% over-the-period, to RMB2,703 millions (US$379.9million).¹). LVB-associated GMV accounted for 95.6% in our total GMV.

• Gross Merchandise Value (GMV²) The six-month ending September 30, 2022 saw a drop of 48.1% in the amount paid (RMB2,828 millions, US$397.6million).

Financial Results for the Six Months Ended September 30, 2022

Total revenues For the six months ending September 30, 2022, the decrease in revenue was 32.2% (US$16.1 Million) from RMB169.5 millions during the same period last fiscal year 2022.

• Commission revenues For the six months ending September 30, 2022, the decrease in revenue was 38.6%. It was RMB71.7 Million (US$10.1million) compared to RMB116.8 Million for the same period in fiscal year 2022. This decline is primarily due to the lower GMV resulting from the higher competitive environment and the COVID-19 pandemic’s resurgence.

• Marketing services revenues Due to the competitive environment, the six-month ending September 30, 2022 was 77.1% lower than the period of fiscal year 2022 (US$0.43 million).

• Revenues from financing solutions For the six months ending September 30, 2022, the decrease was 67.7% to RMB6.9million (US$1.0million) from RMB21.5million in the same period in fiscal year 2022. The reduction in service fees on loans to users was due to the lower GMV.

• Technology service revenues For the six months ending September 30, 2022, the increase in revenue was 170.8%, to RMB28.1 million (US$3.9 million) compared to RMB10.4 millions in the same period last fiscal year 2022. This increase is primarily due to the merger of Hangzhou Ruisha Technology Co. Ltd. (“Ruisha”) which was formed in July 2021 and provides brands merchants one-stop services for full-domain operation, including data platforms and value-added services like traffic placement.

• Other revenue The six-month period ending September 30, 2022 saw a decrease of 34.0% to RMB5.2 Million (US$0.7million) from RMB7.8 Million in the same period last fiscal year 2022.

Revenues cost The six-month period ending September 30, 2022 saw a decrease of 29.9% to RMB59.6 millions (US$8.4million) from RMB85.1million in the same period in fiscal year 2022. This was primarily due the decline in payroll, IT-related costs and payment handling, and outsource costs. These factors are related to overall revenue reduction.

Marketing and sales expenses For the six months ending September 30, 2022, the revenue decreased by 64.8%, to RMB32.6million (US$4.6million), from RMB92.8million for the same period in the fiscal year 2022. This was primarily due optimization of branding and user acquisition activities.

Research and development expenses For the six months ending September 30, 2022, the decrease was 53.7% to RMB20.9 millions (US$2.9million) compared to RMB45.2million for the same period in the fiscal year 2022. This is primarily because of a decrease in payroll expenses.

General and administrative expenses For the six months ending September 30, 2022, the decrease was 22.2% (US$4.6 Million) from RMB42.1 millions in the same period last fiscal year 2022. This was primarily due to a decrease of professional services fees and payroll costs.

Amortization intangible assets The six-month period ending September 30, 2022 saw a decrease of 87.5% to RMB20.0million (US$2.8 million) compared with RMB160.2million in the same period in fiscal year 2022. This is primarily due to the fact that most of the intangible assets recorded in connection with the business cooperation agreement MOGU signed in July 2018 and Tencent have been fully amortized by March 31, 2022.

Operations losses The six-month period ended September 30, 2022 saw a loss of RMB48.1million (US$6.8million) compared to RMB430.1million in the same period in fiscal year 2022. This was primarily due to goodwill impairment of RMB186.5million and greater amortization of intangible asset incurred in fiscal year 2022’s first half.

MOGU Inc. Net loss The six-month period ended September 30, 2022 saw a RMB57.4million (US$8.1million) loss, compared to a net loss of RMB411.9million attributable MOGU Inc. in the same period last fiscal year 2022.

Adjusted EBITDA³ For the six months ending September 30, 2022, the negative RMB17.1million (US$2.4m) was recorded. This compares to the negative RMB72.7m for the same period in fiscal year 2022.

Adjusted net loss⁴ For the six months ending September 30, 2022, the RMB11.8million (US$1.7million), was compared with an adjusted net loss RMB69.9million for the same period in fiscal year 2022.

Per ADS, loss in basic and diluted For the six months ending September 30, 2022, RMB6.79 was US$0.95 and RMB6.79 was US$0.95, respectively. These are in contrast to RMB49.07 or RMB49.07 for the same period in fiscal year 2022. Each ADS is equivalent to 300 Class A ordinary shares.

Cash and cash equivalents. They were RMB604.8 millions (US$85.0million) as of September 30, 2022. This was compared to RMB636.3 million on March 31, 2022.

Non-GAAP Financial Instruments

Non-GAAP measures like Adjusted EBITDA (or Adjusted Net Loss) are used by the Company to assess the company’s operating performance. These non-GAAP financial indicators are not intended to replace the financial information prepared according to United States GAAP. Adjusted EBITDA is defined by the Company as net loss before interest income and interest expense, (gain/loss) from investments, net and income tax benefits. It also includes share of results for equity investors, goodwill impairment and share-based compensation expenses. This also includes amortization of intangible asset and depreciation property and equipment. Adjusted Net Loss is the net loss less (gain/loss) from investments, net and goodwill impairment. It also includes share-based compens expenses, amortization intangible assets, tax adjustments, and adjustments for tax effects. This press release contains “Unaudited reconciliations of GAAP or Non-GAAP results”.

These non-GAAP financial measurements are presented by the Company because they are used to assess operating performance and create business plans. The Company believes that the non-GAAP financial measures help identify underlying trends in its business by excluding certain expenses, gain/loss and other items that are not expected to result in future cash payments or that are non-recurring in nature or may not be indicative of the Company’s core operating results and business outlook. The Company also believes that the non-GAAP financial measures could provide further information about the Company’s results of operations, enhance the overall understanding of the Company’s past performance and future prospects.

Non-GAAP financial measures cannot be defined according to U.S. GAAP. As analytical tools, the non-GAAP financial indicators have limitations. The Company’s non-GAAP financial measures do not reflect all items of income and expense that affect the Company’s operations and do not represent the residual cash flow available for discretionary expenditures. Additionally, non-GAAP measures can differ from non-GAAP information that is used by other companies and peer companies. This may limit their comparability. These limitations are compensated for by the Company reconciling non-GAAP financial measurements to the closest U.S. GAAP performance measurement. All of these should be considered when evaluating the performance. The Company encourages you to review the Company’s financial information in its entirety and not rely on a single financial measure.

Please refer to the table titled “Unaudited Consolidations of GAAP and Non GAAP Results”, which is included at the end of the press release.

Safe Harbor Statement

Forward-looking statements are included in this announcement. These statements are made pursuant to the U.S. Safe Harbor provisions. Private Securities Litigation Reform Act of 2015. These forward-looking statements may be identified by terms such as “will”,” “expects”, and “anticipates”, aims,” future,” aims,” goals,” future,” “future,” plans,” believes,” plans,” estimates,” confident,” potential,” continuation, or similar expressions. Among other things, the business outlook and quotations from management in this announcement, as well as MOGU’s strategic and operational plans, contain forward-looking statements. MOGU may make oral or written forward-looking statements in periodic reports to U.S. Securities and Exchange Commissions (the “SEC”) in its annual shareholder report, press releases, and oral statements by its officers and directors to third parties. Statements that are not historical facts, including but not limited to statements about MOGU’s beliefs and expectations, are forward-looking statements. Forward-looking statements have inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: MOGU’s growth strategies; the risk that COVID-19 or other health risks in China or globally could adversely affect its operations or financial results; its future business development, results of operations and financial condition; its ability to understand buyer needs and provide products and services to attract and retain buyers; its ability to maintain and enhance the recognition and reputation of its brand; its ability to rely on merchants and third-party logistics service providers to provide delivery services to buyers; its ability to maintain and improve quality control policies and measures; its ability to establish and maintain relationships with merchants; trends and competition in China’s e­commerce market; changes in its revenues and certain cost or expense items; the expected growth of China’s e­commerce market; PRC governmental policies and regulations relating to MOGU’s industry, and general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in MOGU’s filings with the SEC. All information in this press release as well as the attached documents is current as of the date this press release was issued. MOGU assumes no obligation whatsoever to update forward-looking statements except as required by applicable law.

About MOGU Inc.

MOGU Inc. (NYSE, MOGU) is an online fashion destination and lifestyle site in China that’s driven by KOLs. MOGU gives people a more convenient and enjoyable shopping experience, especially for everyday fashion. By connecting merchants, KOLs and users together, MOGU’s platform serves as a valuable marketing channel for merchants, a powerful incubator for KOLs, and a vibrant and dynamic community for people to discover and share the latest fashion trends with others, where users can enjoy a truly comprehensive online shopping experience.

¹ Except for transaction amounts that were settled in U.S. Dollars, the U.S. dollar amounts (US$) disclosed in this press release are only for the convenience and information of the readers. The exchange rate of Renminbi in US$ is the one set forth in the H.10 statistical report of the Board of Governors of the Federal Reserve System on September 30, 2022. This was RMB7.1135-US$1.00. This press release uses the RMB amounts to calculate the percentages.

² GMV is the total order value on the MOGU platform. It does not matter if the products are delivered, sold or returned. The GMV calculation is based on the prices listed for the ordered products and does not take into account any discounts. Customers who place orders on the MOGU platform do not have to pay additional shipping charges beyond the price of the product. GMV will include shipping fees that merchants have included in the product’s price. As a prudent matter aiming at eliminating any influence on MOGU’s GMV of irregular transactions, the Company excludes from its calculation of GMV transactions over a certain amount (RMB100,000) and transactions by users over a certain amount (RMB1,000,000) per day.

³ Adjusted EBITDA is net loss before (i), interest income, (gain)/Loss of investments, net, income taxes benefits and share of results from equity investee. It also includes share-based compensation expenses and amortization of intangible asset. See “Unaudited Reconciliations of GAAP and Non­GAAP Results” at the end of this press release.

⁴ Adjusted Net Loss is net loss less (iii), (gain)/Loss of investments net, (iii), share based compensation expenses, goodwill impairment, and (v). adjustments for tax effects. See “Unaudited Reconciliations of GAAP and Non­GAAP Results” at the end of this press release.

Visit businesswire.com to see the source version https://www.businesswire.com/news/home/20230303005111/en/

Contacts

For media and investor inquiries:

MOGU Inc.

Ms. Qi Feng
Phone: +86-571-8530-8201
E-mail: [email protected]

Christensen Advisory

China
Eric Yuan
Phone: +86-10-5900-1548
E-mail: [email protected]

The United States
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: [email protected]