Executive Summary

Q1 2020 revenue declined 29.1% year over year to $9.76M as COVID-19 dampened advertising demand and curtailed copyrights activity; net income attributable to shareholders was $2.90M with basic/diluted EPS of $0.06 .
Mix shift and cost reductions drove gross margin expansion to 48.8% (from 40.3% YoY), though operating margin and net margin compressed modestly to 29.7% and 29.1%, respectively .
Platform KPIs inflected: CHEERS App downloads reached 100.5M, DAUs rose to 4.1M, and e-Mall GMV was $5.8M with ~$3.0M in March GMV; SKUs carried were 9,602 .
No formal guidance issued; consensus estimates from S&P Global were unavailable, limiting beat/miss assessment. Near-term stock catalysts center on e-Mall traction and user growth offset by ad/copyright recovery pace post-COVID-19 .

What Went Well and What Went Wrong

What Went Well

Gross margin improved to 48.8% (from 40.3% YoY) as the company reduced payments to third-party channels and leveraged its own CHEERS App for advertising delivery .
Strong user and commerce traction: downloads hit 100.5M, DAUs 4.1M, and e-Mall recorded $5.8M GMV with nearly $3.0M in March; SKUs reached 9,602 .
Management emphasized prudent cost control and platform leverage: “we remained prudent in our finances… leveraged the increasing influence of our CHEERS App… to reduce expenditure on payments to various channel owners” — CFO Ian Lee .

What Went Wrong

Advertising revenue fell 24.2% to $7.88M on reduced demand and production constraints; copyrights revenue dropped 63.6% to $0.99M amid fewer channel licenses (one vs. three YoY) .
EPS declined to $0.06 (basic/diluted) vs. $0.10/$0.09 a year ago; operating margin and net margin compressed modestly despite higher gross margin .
G&A doubled to $1.29M (+101%) due to public company costs and higher bad debt provision; collections slowed in Q1 before recovering in April .

Financial Results

Headline Metrics (YoY comparison)

Metric	Q1 2019	Q1 2020
Revenue ($USD Millions)	$13.75	$9.76
Net Income Attributable to Shareholders ($USD Millions)	$4.14	$2.90
EPS (Basic) ($USD)	$0.10	$0.06
EPS (Diluted) ($USD)	$0.09	$0.06
Gross Margin %	40.3%	48.8%
Operating Margin %	32.3%	29.7%
Net Margin %	30.1%	29.1%
Cash & Equivalents ($USD Millions)	$1.34	$9.96

Revenue Breakdown

Category ($USD Millions)	Q1 2019	Q1 2020
Advertising	$10.40	$7.88
Copyrights	$2.73	$0.99
Customized Content Production	$0.62	$0.29
CHEERS e-Mall Marketplace Service	N/A (launched April 2019)	$0.05
Other	$0.00	$0.55
Total Revenue	$13.75	$9.76

KPIs

KPI	Q1 2019	Q1 2020
CHEERS App Downloads (cumulative)	17.2M	100.5M
DAUs (Average for period)	0.49M	4.12M
e-Mall GMV ($USD Millions)	N/A (platform launched April 2019)	$5.8
e-Mall SKUs (count)	N/A	9,602
March GMV ($USD Millions)	N/A	~$3.0

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Q2 onward	Not provided	Not provided	Not provided
Margins (Gross/Operating/Net)	FY/Q2 onward	Not provided	Not provided	Not provided
OpEx (Sales & Marketing, G&A, R&D)	FY/Q2 onward	Not provided	Not provided	Not provided
Tax Rate	FY/Q2 onward	Not provided	Not provided	Not provided

Note: The company did not issue quantitative guidance in the Q1 2020 materials .

Earnings Call Themes & Trends

No earnings call transcript was available for Q1 2020 based on document searches [ListDocuments: earnings-call-transcript returned 0]. Key narrative themes from filings:

Topic	Previous Mentions (FY 2019)	Current Period (Q1 2020)	Trend
Platform leverage and margin expansion	FY19 operating margin 40.8%; reduced third-party channel spend as CHEERS App scaled	Gross margin up to 48.8% via shift to CHEERS App; margins slightly compressed at operating/net levels	Continued platform leverage; near-term margin mix pressure
User growth and engagement	Downloads 85M; DAUs 1.9M in 2019	Downloads 100.5M; DAUs 4.12M; MAUs +7% sequentially	Accelerating user metrics
E-commerce scale (GMV/merchants)	GMV $19.36M in 2019; expanding SKUs	Q1 GMV $5.8M; March ~$3.0M; SKUs 9,602; cumulative GMV $27.8M by Apr 30	Strong ramp in GMV post-launch
COVID-19 operational impact	Early 2020 noted shift to online consumption	Filming constraints; ad/copyright declines; collections slowed Jan–Mar, recovery in April	Near-term headwinds; April recovery signs
R&D/IT investment	Incremental tech spend to enhance capabilities	R&D steady; higher as % of revenue to strengthen platform	Ongoing investment

Management Commentary

CEO Bing Zhang: “In the face of the COVID-19… we delivered a solid operating performance… continued to have success in converting content viewers into CHEERS App users… MAUs… grew by 7% on a sequential basis… more than US$3.0 million in GMV for the month of March” .
CFO Ian Lee: “We remained prudent in our finances… leveraged the increasing influence of our CHEERS App platform to reduce… payments to various channel owners… confident that we will pick up where we left off” .

Q&A Highlights

No public earnings call or Q&A transcript was found for Q1 2020; therefore, no Q&A highlights or guidance clarifications were available in primary sources [ListDocuments: earnings-call-transcript returned 0].

Estimates Context

Wall Street consensus (S&P Global) for Q1 2020 EPS and revenue was unavailable due to request limits; beat/miss vs estimates cannot be assessed.
Implication: Absent consensus, focus shifts to trajectory of margins and platform KPIs.

Financial Context and Prior Periods

Comparison is anchored to Q1 2019 as the closest like-for-like quarter. Sequential references (downloads +18% vs Q4 2019; DAUs +8%; MAUs +7%) are disclosed but detailed Q4 2019 quarterly financials are not presented in filings; FY 2019 provides full-year context .

Key Takeaways for Investors

Mix resilience: Despite a 29% YoY revenue decline, gross margin expanded to 48.8%, evidencing platform leverage and reduced third-party spend; monitor sustainability as ad/copyright markets normalize .
Platform momentum: DAUs, downloads, and GMV are scaling rapidly; March GMV (~$3.0M) and April cumulative GMV ($27.8M) suggest e-Mall traction that may diversify revenue beyond advertising .
Near-term risk: Advertising and copyrights remain sensitive to production and macro conditions; collections slowed in Q1 but improved in April—watch working capital dynamics and bad debt provisioning .
Margin outlook: Operating/net margins compressed modestly amid lower revenue and higher G&A; as content production restarts, evaluate margin recovery vs elevated public company costs .
Capital/liquidity: Cash rose to ~~$10.0M with new bank facilities; working capital of $46.8M supports investment in platform enhancement (~~$12.0M planned capex) .
No guidance: With no formal guidance and unavailable consensus, trading likely hinges on high-frequency KPIs (DAUs/GMV) and signs of ad/copyright recovery post-COVID-19 .
Strategy execution: Continued investment in CHEERS App technology and content pipeline underpins medium-term thesis of monetizing a scaled user base across advertising and commerce .

Citations:
All figures and statements sourced from the 8-K press release and Q1 2020 10-Q: . FY 2019 context from 8-K press release dated March 31, 2020: .

Cheer Holding, Inc. (CHR)·Q1 2020 Earnings Summary