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Gridsum's Stock Slides Further After-Hours on Higher Net Loss, Negative Outlook

In after-hours trading, after the Chinese company posted its first-half results, its shares dropped beyond its 52-week low of $1.60 at which it closed for the day,

Anna Vodopyanova
    Jan 07, 2019 6:25 PM  PT
Gridsum's Stock Slides Further After-Hours on Higher Net Loss, Negative Outlook

Shares in Gridsum Holding Inc. (Nasdaq: GSUM) plunged an additional 15 percent in after-hours trading Monday to $1.36 per American depositary share, dropping it more than one-third for the day, after the company said its net loss widened during the six months through June.

The Beijing company, which provides big data analytics and solutions in artificial intelligence, said in a statement after markets closed today that its loss during the first half of 2018 increased 60 percent to $27.5 million. Per share loss was 89 cents.

Wall Street was quick to respond, sending the stock of Gridsum sliding even further in the evening after it ended the day 20 percent below yesterday's close of $1.99 per share.

Meanwhile, Gridsum also said its revenue jumped 39 percent to $37.7 million compared with the same period of the prior year, driven mainly by a rise in enterprise revenues.

Costs of revenues were $5.9 million, up 23 percent year-over-year primarily stemming from increased system maintenance and system security expenses. Operating expenses reached $56.9 million, at a 52-percent rise, increasing across all sectors.

Looking ahead, Gridsum issued a pessimistic guidance for the year.

"2018 was a very challenging year for the Company," the company said. "For example, the filing of our annual report on Form 20-F for the year ended December 31, 2017 was delayed in part due to inadequate internal control over financial reporting and changes of auditor. Our ability to secure new financing has declined. Some customers have reduced their level of business with us or not renewed their contracts, and our ability to sign up new customers has weakened. We also lost a number of sales and other employees. These have had an adverse effect on our financial results."

The company added, "In terms of net revenues, despite the growth seen in the first half of 2018, the Company experienced a down year in 2018 based on our preliminary review."

Weighed down by an investigation initiated into Gridsum's audits in April, among other factors, shares in the tech company have been on continuous slide. From trading above $13 per share in February 2018, to near $8 per share in April, the company's stock today closed at its 52-week low of $1.60, before sliding further in the evening.