BlueCity Holdings Ltd. (Nasdaq: BLCT) posted better-than-expected revenue for the third quarter Wednesday, but the upcoming vote on the Holding Foreign Companies Accountable Act has held back its stock in early trading.
Asia’s top LGBTQ+ network Blued reported today that its revenue in the three months through September increased 47% year-over-year to $43.8 million, beating analysts’ expectations. BlueCity said it enjoyed a 44% jump in paying users to 494,000, while monthly active users reached 6.3 million.
Net loss widened to $20.3 million from $1.1 million in the same period a year ago. In non-GAAP adjusted terms, however, the company booked income of $1 million in contrast to non-GAAP net loss of $990,000 in the third quarter of 2019. Non-GAAP figures exclude share-based compensation expenses and changes in the fair value of financial instruments.
BlueCity’s chief financial officer, Ben Li, noted that the company achieved positive adjusted net income for the first time.
By segment, revenues from livestreaming services grew 43% to $37.6 million, membership services jumped 56% to $2.7 million, ads gained 39% to $1.5 million, and the rest accounted for other services and merchandise sales, according to the report.
Baoli Ma, BlueCity’s founder, chairman and chief executive officer, said in a statement that for the company, the third quarter was about service optimization and global expansion. He highlighted the launch of the “Community” feature for users in China and the merged and revamped app for the lesbian users, LESDO, as well as Blued’s localized custom features for users in Latin America.
Ma, formerly a closeted policeman, also commented on the acquisition of Finka. The 240-million-yuan deal with the social gay app targeting younger users in China has been successfully closed, Ma announced.
“Targeting a younger generation, Finka complements our Blued app both in functionality and in users’ demographics,” Ma said. “We look forward to building a better future for our community.”
In the fourth quarter, BlueCity said it expects to generate 277 million yuan to 297 million yuan in revenue, representing year-over-year growth of between 24% to 33%.
Despite the improved performance in the third quarter, BlueCity’s stock was trading down nearly 16% Wednesday morning, at $12.15 per American depositary share. The fate of Chinese companies trading in New York is decided this evening by the House of Representatives, which prepares to vote on a bill that would force all foreign firms to submit to U.S. PCAOB auditing and disclose any ties to the government.
While the bill is expected to be passed, according to Reuters, without a possibility for amendments, not all Chinese companies listed in the U.S. will suffer. The stock drops, seen across the board for Chinese companies this week, are likely to be short-term for many of them before Beijing and Washington reach an agreement on opening up their financial books. This short-term pullback might represent a good buying opporunity for select Chinese stocks.
BlueCity positions itself as the leading LGBTQ+ social app in China, India, Vietnam, Thailand, and Korea. The company completed its initial public offering on July 8, scoring net proceeds of $84.4 million.
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