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News Article | May 10, 2017
Site: www.nature.com

In 2013, Huang Song walked into a printing shop in northwestern Beijing and stumbled upon evidence of a brazen and widespread criminal enterprise. Huang was just 15 kilometres from Beijing’s National Institute of Biological Sciences, where he does synthetic-biology research. Scouting out a small desktop machine to produce the hundreds of labels needed for his experiments, he asked if a certain model could print on heat-resistant paper. The shop owner proudly pulled out some samples he had made for customers using the same machine. Huang was shocked to see names such as Abcam and Cell Signaling Technology on labels that looked exactly like those on vials of expensive antibodies produced by the Western companies. Although the writing meant nothing to the friendly shop owner, for Huang it directly corroborated what he and a number of his colleagues had long suspected: many of the antibodies sold by Chinese distributors were not what they were supposed to be. Counterfeiters were getting fake and diluted research reagents on to the market, and this shop in Zhongguancun, Beijing’s premier technology park, was one of the places they were buying machines to make their labels. “I had a suspicion. That confirmed it,” Huang says. China is famous for knock-off DVDs, Louis Vuitton bags and Rolex watches. But counterfeit reagents aren’t on sale in busy public markets. They are sold through sophisticated websites, mixed in with legitimate supplies, and sourced and sold using a network of unwitting partners, such as the Zhongguancun shopkeeper. Even university cleaning staff have been implicated in the hidden process that creates counterfeit laboratory products, including basic chemistry reagents, serum for cell culture and standard laboratory test kits. Although it’s difficult to quantify the effects of this illegal trade, Chinese scientists and some in Europe and North America say that fake products have led them astray, wasting time and materials. Some in China fear that the problem could undermine the country’s efforts to become a world leader in science. Options for combating the counterfeiters are limited. Reagent companies whose brands are tarnished — and the scientists taken in by fakes — shy away from legal action, partly because of embarrassment and partly because they have little faith that law-enforcement agencies can make much of a dent in the trade. “You cannot stop them from trying. The profit margin is just too high,” says Huang. Scientists and suppliers are now devising strategies that could help change the equation. Major reagent manufacturers have launched educational campaigns. Scientists are sharing their tales of frustration, along with tips for avoiding fraudulent supplies. And Huang has helped to establish a partly government-owned reagent-importing enterprise that takes advantage of new customs and quarantine procedures — something that could help shrink the market for fakes. But these measures won’t help everyone. Researchers at universities and institutes outside hubs such as Beijing and Shanghai are especially at risk. “I know a lot of labs who still buy and use fake imported chemical reagents,” says Can Xie, a biophysicist at Peking University in Beijing. “I feel sorry for them.” China is an attractive target for this specialized form of counterfeiting. Investment in research has expanded rapidly — the biomedical-science budget for the National Natural Science Foundation of China has quadrupled over the past decade. And the sheer size of the country means that foreign companies, unable to keep up with demand and loath to navigate China’s tricky distribution system, have become dependent on local distributors. “The country poses many distribution challenges and shipping is logistically difficult,” says Jay Dong, global vice-president and Asia Pacific general manager for Cell Signaling Technology, an antibody manufacturer based in Danvers, Massachusetts. So local companies often carry out the much-needed role of distribution. Some are authorized by the manufacturers. Many are not, however, and it is often difficult for scientists to tell the difference, says Jack Leng, chief executive of Shanghai Universal Biotech, one of the largest distributors of antibodies in China. Disreputable merchants can take advantage of the inflated prices and long waits created by China’s laborious customs and quality-control measures. They offer low prices and fast service for what appear to be the same products, sometimes claiming that the goods have been smuggled into the country. “We do notice counterfeiting in China more than other countries,” Dong says. Xie, who worked in the United States as a postdoc, says that it took him a few years after his return to China in 2009 to realize that some chemical reagents he was buying were sub par. Distributors, he says, claimed to represent foreign companies with premium products, but were actually selling cheap, domestically produced versions. He cannot say conclusively that impure, low-quality reagents were to blame for failed experiments, but he adds that “mysterious, insoluble stuff” he found in some solutions should have been a warning sign. He now buys only from well-known companies with branch offices in China. Huang, who is deputy director of administration at his institute, witnessed a colleague facing similar frustrations in 2012, when, for six months after publishing a paper, he found that he couldn’t repeat the results of some experiments. The researcher went through all the normal troubleshooting steps and asked colleagues for help. Finally, he discovered that a reagent used to introduce DNA into cells was hampering his replication efforts. Huang now attributes the problems to a counterfeit. “The last thing you think about is the reagent,” he says. “This is the kind of stress you cannot put a price on.” Counterfeit antibodies are a particularly widespread source of frustration. Antibodies are crucial in a variety of biological experiments, offering the ability to label and track proteins in a range of living systems. But even untainted ones present some difficulties: there can be natural variation from batch to batch, and they may target unanticipated proteins. These layers of uncertainty make fakes hard to ferret out. “When you look at a negative result it could be many reasons,” says Zhu Weimin, senior vice-president of antibody technology for Abcam, which is headquartered in Cambridge, UK, but has a regional base in Shanghai. “The problem is serious.” The effects of this confusion and uncertainty are not limited to China. In 2012, for example, researchers in London and Białystok, Poland, reported using an antibody-based kit, called an ELISA, to detect a certain protein in the blood of people with chronic kidney disease1. But when kidney-disease specialist Herbert Lin of Massachusetts General Hospital in Boston purchased the same kit — branded as a product of USCN Life Science in Wuhan, China — and subjected it to rigorous testing, he found that it targeted another protein altogether2. The authors of the original study agreed it was now clear that the antibody was targeting the wrong protein2. “The fact that we did not receive replies from the manufacturers in relation to a couple of e-mails about their assay should perhaps have alerted us that something was not quite right,” they wrote. Cancer researcher Ioannis Prassas of Mount Sinai hospital in Toronto, Canada, had a similar experience with USCN-branded ELISA kits. Prassas says his team spent two years and some US$500,000 trying to identify the problem3. Chris Sun, who heads technology development at Cloud-Clone Corporation, the company in Wuhan that sells USCN products, says the company investigated the kit purchased by Prassas, but never identified the problem. It partially reimbursed Prassas. Sun denies that the company intentionally sold bad antibodies. “We have thousands of antibodies that we produce ourselves. We have no reason to use fake antibodies when we have the real ones,” she says, adding that they have no record of a complaint about the kit Lin found problems with. Most of USCN’s kits are sold through distributors, Sun adds, and the company has sometimes found counterfeits posing as USCN products. Estimating the scale of the issue is difficult, although some companies are trying. Late last year, Abcam tallied up roughly a year’s worth of concerns that it had received from scientists in China about the authenticity of Abcam-labelled products. After checking barcodes, lot numbers and purchase times, the company determined that counterfeit products were to blame for 42% of the hundreds of cases raised. What scientists are getting in the vials can vary. Sometimes, cheap, common antibodies are relabelled and sold as expensive, rare ones, says Jade Zhang, general manager of Abcam’s Shanghai branch. The counterfeiters will try to find an antibody of similar molecular weight so that scientists who do a quick test to verify the reagents won’t be alarmed. But in experiments, the antibodies will miss their targets. More common than antibody substitution is dilution. Counterfeiters buy authentic products from Chinese distributors or from overseas, then dilute one packet to make five, says Leng. “Customers get much weaker versions. Sometimes they can use them, sometimes not.” The counterfeiters “work hard to replicate our packaging, creating tubes and labels that resemble our own so closely that it can be difficult to tell the difference”, says Dong. “The counterfeiting problem seems to come from a small but active segment in the market.” And many of the players don’t realize they are involved. The Zhongguancun shop owner had no idea he was mixed up in illegal activity. “They are all part of a chain, but they are not evil,” Huang says. In 2015, Huang noticed a cleaner in his lab plucking empty bottles out of the rubbish and setting them aside. Confused, he asked why. “I warned her that she shouldn’t drink from them,” he says. She told Huang that someone was coming to buy them for 40 yuan (about US$5) a piece. It was another ‘a-ha’ moment. The bottles had originally contained fetal bovine serum (FBS), a ubiquitous cell-culture product derived from blood harvested at slaughterhouses. But a ban on imports of beef products from the United States, Australia and New Zealand, because of infectious diseases, had put a stranglehold on the supply of high-quality FBS. The price for reserves of serum from banned locations has doubled over the past few years, to about 10,000 yuan per bottle. Low-quality FBS from other sources costs about one-quarter as much as the banned imports, but it is a poor substitute. Thermo Fisher Scientific of Waltham, Massachusetts, which makes one of the most popular brands of serum, noticed the problem and created labels and bottles that are difficult to duplicate. That’s where the cleaner’s ‘recycling’ efforts came in. Counterfeiters can simply refill the bottles with low-quality FBS and charge premium prices. It’s hard to know how widespread the problem is, but Huang offers a back-of-the-envelope estimate: given the number of bottles consumed and discarded by major labs, the potential market for FBS counterfeiters in Beijing alone could be tens of millions of yuan per year. Counterfeiters are slippery, moving targets. In most cases, distributors will return payment or replace goods if a customer complains. That means there is no way for researchers to make a legal claim about their lost time and resources, which are the real cost. “Police will only look at direct loss — which is nothing,” says Leng. Companies lose revenue and may suffer dilution of their brand, but they also have little recourse. Abcam confronted some of the un-authorized distributors that were supplying apparent counterfeits of its products. The distributors said that they did not know where the antibodies had come from or how the problem occurred. Lawyers have advised against pursuing legal action, which would be costly and probably not get far. “If we shut one down, another would just pop up,” says Zhang. Leng agrees. He says the counterfeit companies, usually one or two people, “register a new company every year, then do the same business again”. And some scientists, although angry, don’t want to make a fuss, which would draw attention to the fact that they had been using counterfeits, says Zhang. The admission might raise questions about their previous research results. Huang himself doesn’t want to follow up with the cleaners, printers and others who are cogs in the counterfeiting machine, because they are just trying to earn a living. “If the printer makes 1,000 copies of a label, what’s wrong with that? The people who sterilize the bottles — they are probably doing a really good job,” he says. But scientists can take action in other ways. Huang centralized ordering for his institute’s most common reagents, so that for the majority of purchases he can ensure scientists are not being duped. And he set up a system that requires researchers to return an old FBS bottle before they can get a new one; the used bottles are destroyed. Others told Nature that after having been burnt, they pay higher prices to avoid third-party distributors. Luo Wei, a chemist at the Shenzhen Academy of Metrology and Quality Inspection, a third-party testing company, says that a starch-catalysing enzyme he bought had a suspicious smell and packaging. Its label said it came from Sigma-Aldrich of St Louis, Missouri, and the batch number and related information matched details of products on the company’s website. But Sigma confirmed that the white bottle it came in was not something it used for that product. It was counterfeit. Some reagent companies have also developed programmes to fight counterfeiters. Abcam, Cell Signaling Technology and Universal Bio have been teaching current and prospective customers how to spot fakes through seminars and online manuals. They’ve also opened complaint lines for those who suspect forgery. “The choice was to take legal action or educate our customers. We chose the latter,” says Zhang. Scientists can work together to spread awareness. Online chat rooms are full of advice, often based on experience, about how to avoid counterfeits. Some include blacklists of companies that have been found to deliver bad products. But for the many scientists in China outside major research hubs, there are fewer choices of distributor, and the word may not be reaching them, says Zhang. They may also have less funding, so price becomes a factor. They are more likely to be persuaded by claims that they are buying smuggled, high-quality goods at a low price. “We think most customers do not know they’ve been given a counterfeit,” says Zhang. Huang says the ultimate solution is to destroy the profitability of the enterprise. He helped to establish iBio, a 60% state-owned company that opened in December 2015 and brings customs and quarantine inspection under one roof, right on his institute’s campus. Huang, who doesn’t profit from the business, says most reagents are now available within ten days, compared with the month or more it might have taken before. Similar companies have been established in Shanghai and Suzhou. The speed puts Chinese scientists on an even footing internationally. “For each experiment there are one or two reagents that are a bottleneck,” Huang says. If Chinese scientists need months to get something that others get in days, “there’s no way Chinese science can compete with the outside world”, he says. It was that logic that in 2012 helped convince government officials to amend regulations, enabling expedited imports of biological reagents. But change has taken time. Huang is grateful for these improvements because they promise to make Chinese science more competitive. An added benefit might be the direct impacts on counterfeiters. “If you get rid of the customs burden, you destroy their profit margin,” Huang says. That’s better than tracking down culprits, to his mind. “If you cut out the source, you don’t have to go after them,” he says.


News Article | May 25, 2017
Site: globenewswire.com

BEIJING, May 25, 2017 (GLOBE NEWSWIRE) -- Gridsum Holding Inc. (“Gridsum” or the “Company”) (NASDAQ:GSUM), a leading provider of cloud-based big-data analytics, machine learning and artificial intelligence (“AI”) solutions in China, today reported its unaudited financial results for the first quarter ended March 31, 2017. The Company will hold a conference call at 8:30 p.m. Eastern Time on May 25, 2017, or 8:30 a.m. Beijing Time on May 26, 2017. Dial-in details are provided at the end of this release. “The first quarter of 2017 was another solid quarter with robust financial and operating results,” stated Mr. Guosheng Qi, Chief Executive Officer of Gridsum. “We are pleased to see our topline continue its strong growth momentum, primarily driven by solid customer base expansion, which we target to grow by 30-40% in 2017, and a steady increase in Average Revenue Per User (“ARPU”). Meanwhile, we are glad to report that for the third consecutive year, Gridsum was named one of the Top 10 companies in Beijing's high-tech Zhongguancun district in terms of the number of the patent applications filed. This is a strong testament to our innovation DNA and unwavering commitment to continuing to drive market leading R&D efforts. This commitment is exemplified by the fact that we have filed 1,653 patent applications in China, of which 583 are big-data focused and 148 are explicitly Enterprise-AI focused, as of March 31, 2017. In addition, we have consolidated all of our AI activities strategically, technically and organizationally into a new division: Gridsum Prophet, which encompasses all of our AI capabilities: machine learning, natural language processing, image recognition, predictive industry modeling, and knowledge graph. We believe that the increased intelligent features of our products that come from this will continue to be key going forward in driving new customer acquisition and ARPU growth.” Mr. Qi continued, “We have also strengthened our partnership with Tencent Cloud, having jointly developed an integrated speech to text solution for court trials and conferences, which we have the exclusive right to distribute in China’s nationwide court system. We see tremendous growth opportunities in front of us and will continue to penetrate into new markets, including financial services and intelligent CRM. With our first-mover advantage and cutting-edge technology, we will continue to enhance and build upon our product offerings and capitalize on the immense potential in the market. We believe we can further fortify our position as China’s leading provider of cloud-based big-data analytics, machine learning and AI solutions, and generate great value for our shareholders going forward.” Mr. Michael Zhang, Chief Financial Officer of the Company, commented, “In the first quarter of 2017, our net revenues increased by 57.3% year over year to RMB100.6 million, driven by a solid 51.5% increase in our Enterprise revenues and 112.4% increase in e-Government and other revenues. The significant growth of our e-Government and other business was primarily driven by the better-than-expected performance in all the three revenue streams of e-Government, new media and legal services with legal services, in particular, exhibiting exceptional growth. To fuel further topline growth, we will leverage our superior sales efficiency and continue our targeted investment in sales and marketing to broaden our market visibility. R&D will remain another key area of focused investment to strengthen our technology leadership and drive expansion into new products and services.” REVENUES: Net revenues for the first quarter of 2017 increased by 57.3% to RMB100.6 million (US$14.6 million) from RMB64.0 million in the comparable period in 2016, driven by growth in Enterprise revenues and e-Government and other revenues. Enterprise revenues increased by 51.5% to RMB88.9 million (US$12.9 million) in the first quarter of 2017 from RMB58.7 million in the comparable period in 2016. e-Government and other revenues increased by 112.4% to RMB13.8 million (US$2.0 million) in the first quarter of 2017 from RMB6.5 million in the comparable period in 2016. These growths were due to an increased number of customers as well as increased average revenue per customer. COST OF REVENUES: Cost of revenues were RMB10.6 million (US$1.5 million), as compared with RMB9.3 million in the comparable period in 2016. The increase was primarily due to the RMB2.6 million increased cost of technical service fee, which was in line with total revenues growth. GROSS PROFIT AND GROSS MARGIN: Gross profit for the first quarter of 2017 increased by 64.6% to RMB90.0 million (US$13.1 million) from RMB54.7 million in the comparable period in 2016. Gross margin for the first quarter of 2017 increased to 89.5%, as compared with 85.5% in the comparable period in 2016. The increase in gross margin was primarily attributable to the relatively larger portion of revenues coming from e-Government and other related sales, which have a higher gross margin, and improved revenue contribution from Enterprise revenue due to optimized service offering. OPERATING EXPENSES: Total operating expenses for the first quarter of 2017 were RMB139.0 million (US$20.2 million), as compared with RMB76.3 million in the comparable period in 2016. As a percentage of net revenues, operating expenses were 138.2%, as compared with 119.3% in the comparable period in 2016, primarily due to the increased sales and marketing expenses and research and development expenses. LOSS FROM OPERATIONS: Loss from operations for the first quarter of 2017 was RMB49.0 million (US$7.1 million), as compared with RMB21.6 million in the comparable period in 2016. NET LOSS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Net loss attributable to Gridsum’s ordinary shareholders for the first quarter of 2017 was RMB57.2 million (US$8.3 million), as compared with RMB31.1 million in the comparable period in 2016. The increase was primarily due to the increased operating expenses, including the incremental expenses as a result of being a publicly listed company. NON-GAAP NET LOSS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Non-GAAP net loss attributable to Gridsum’s ordinary shareholders, which is defined as net loss attributable to Gridsum’s ordinary shareholders before share-based compensation expense, for the first quarter of 2017 was RMB52.2 million (US$7.6 million), as compared with RMB28.4 million in the comparable period in 2016. EBITDA: Loss before interest, income tax, depreciation and amortization for the first quarter of 2017 was RMB43.0 million (US$6.2 million), as compared with RMB16.1 million in the comparable period in 2016. The increase was mainly due to the increase in loss from operation of RMB27.4 million, an increase in foreign exchange expense and other expense of RMB1.8 million, partially offset by depreciation and amortization expense of RMB2.3 million. ADJUSTED EBITDA: Adjusted loss before interest, income tax, depreciation and amortization, which excludes share-based compensation expenses, was RMB38.0 million (US$5.5 million) for the first quarter of 2017, as compared with RMB13.4 million in the comparable period in 2016. NET LOSS PER ADS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Net loss per ADS attributable to Gridsum’s ordinary shareholders for the first quarter of 2017 narrowed by 38.3% to RMB1.92 (US$0.28), as compared with RMB3.11 in the comparable period in 2016. NON-GAAP NET LOSS PER ADS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Non-GAAP net loss per ADS attributable to Gridsum’s ordinary shareholders for the first quarter of 2017 narrowed by 38.4% to RMB1.75 (US$0.25), as compared with RMB2.84 in the comparable period in 2016. Each ADS represents one Class B ordinary share. For purposes of determining net loss per ADS attributable to Gridsum’s ordinary shareholders, the weighted average number of ordinary shares for the first quarter of 2017 was 29,735,166. As of March 31, 2017, total number of ordinary shares outstanding was 29,735,166. Balance Sheet As of March 31, 2017, the Company had cash and cash equivalent of RMB183.4 million (US$26.7 million), time deposit of RMB68.8 million (US$10.0 million) and restricted cash of RMB258.1 million (US$37.5 million). The Company has recently consolidated all of its AI activities, technically, organizationally and strategically, into a new division called Gridsum Prophet. Gridsum Prophet is directly headed by the Company’s Chief Technology Officer, John Jiyang Liu. Gridsum Prophet encompasses all of the Company’s AI capabilities, including machine learning, natural language processing, image recognition, predictive industry modeling, and knowledge graph. It powers the Company’s intelligent products and solutions across the matrix of clients and industry verticals. It also allows the Company to see cross-industry, client and demographic correlations and relationships to add further value for clients. Gridsum Prophet is increasingly key in creating new differentiated product features for the Company’s existing products (e.g. marketing automation) and is central in defining and shaping new products, such as the Company’s social listening and brand management suite as well as the legal services suite and intelligent CRM product suites. Gridsum Prophet is also instrumental in defining Gridsum’s new product pipeline, such as the intelligent CRM and financial services product suites. The Company sees the new division playing an increasingly key role in customer acquisition, ARPU growth, new product development, and others. For the full year of 2017, the Company retains its previous outlook that net revenues are expected to be in the range of RMB622 million to RMB634 million, representing approximately 57% year-over-year growth at the mid-point. These forecasts reflect the Company's current and preliminary view, which may be subject to change. The Company will hold a conference call on May 25, 2017 at 8:30 pm U.S. Eastern Time, or May 26, 2017 at 8:30 am Beijing Time to discuss its financial results. A live and archived webcast of the conference call will be available through the Company's investor relations website at http://ir.gridsum.com. This announcement contains translations of certain RMB amounts into U.S. dollars ("USD") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.8832 to US$1.00, the noon buying rate in effect on March 31, 2017 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. The unaudited financial information set forth above is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company's year-end audit, which could result in significant differences from this preliminary unaudited condensed financial information. Use of Non-GAAP Financial Measures In evaluating the Company’s business, the Company considers and uses the following non-GAAP financial measures as supplemental measures to review and assess the Company’s operating performance: non-GAAP net loss attributable to Gridsum’s ordinary shareholders, non-GAAP net loss per share attributable to Gridsum’s ordinary shareholders, EBITDA and adjusted EBITDA. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with U.S. GAAP. Non-GAAP net loss attributable to Gridsum’s ordinary shareholders is net loss attributable to Gridsum's ordinary shareholders before share-based compensation, non-GAAP net loss per share attributable to Gridsum’s ordinary shareholders is the per share equivalent and non-GAAP net loss per ADS attributable to Gridsum's ordinary shareholders is the per ADS equivalent, EBITDA is net loss before interest income and expenses, income tax expenses and depreciation expenses, and adjusted EBITDA is EBITDA before share-based compensation. The Company presents these non-GAAP financial measures because they are used by the Company’s management to evaluate the Company’s operating performance and formulate the Company’s business plans. These non-GAAP financial measures enable the Company’s management to assess the Company’s operating results without considering the impact of non-cash charges, including depreciation expenses and share-based compensation, and without considering the impact of non-operating items such as interest income and expenses and income tax expenses. The Company also believes that the use of these non-GAAP measures facilitates investors' assessment of the Company’s operating performance. These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using these non-GAAP financial measures is that they do not reflect all items of income and expense that affect the Company’s operations. Interest income and expenses, income tax expenses, depreciation expenses and share-based compensation have been and may continue to be incurred in the Company’s business and are not reflected in the presentation of adjusted EBITDA. Further, these non-GAAP financial measures may differ from the non-GAAP financial measures used by other companies, including Gridsum’s peer companies, so their utility for comparison purposes may be limited. The Company compensates for these limitations by reconciling the Company’s non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures, which should be considered when evaluating the Company’s performance. Gridsum Holding Inc. is a leading provider of cloud-based big-data analytics, machine learning and AI solutions for multinational and domestic enterprises and government agencies in China. Gridsum’s core technology, the Gridsum Big Data Platform, is built on a distributed computing framework and performs real-time multi-dimensional correlation analysis of both structured and unstructured data. This enables Gridsum’s customers to identify complex relationships within their data and gain new insights that help them make better business decisions. The Company is named “Gridsum” to symbolize the combination of distributed computing (Grid) and analytics (sum). As a digital intelligence pioneer, the Company’s mission is to help enterprises and government organizations in China use data in new and powerful ways to make better informed decisions and be more productive. For more information, please visit http://www.gridsum.com/. This announcement contains forward-looking statements. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as “may,” "will," "expects," "anticipates," “aims,” "future," "intends," "plans," "believes," "estimates," “likely to” and similar statements. Among other things, quotations from management in this announcement, Gridsum’s financial outlook as well as Gridsum's strategic and operational plans contain forward-looking statements. Gridsum may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Gridsum's beliefs and expectations, are forward-looking statements. Forward-looking statements involve 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: unexpected difficulties in Gridsum's pursuit of its goals and strategies; the unexpected developments, including slow growth, in the digital intelligence market; reduced demand for, and market acceptance of, Gridsum's solutions; difficulties keeping and strengthening relationships with customers; potentially costly research and development activities; competitions in the digital intelligence market; PRC governmental policies relating to media, software, big data, the internet, internet content providers and online advertising; and general economic and business conditions in the regions where Gridsum provides solutions and services. Further information regarding these and other risks is included in Gridsum’s reports filed with, or furnished to, the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and Gridsum undertakes no duty to update such information except as required under applicable law.


News Article | May 25, 2017
Site: globenewswire.com

BEIJING, May 25, 2017 (GLOBE NEWSWIRE) -- Gridsum Holding Inc. (“Gridsum” or the “Company”) (NASDAQ:GSUM), a leading provider of cloud-based big-data analytics, machine learning and artificial intelligence (“AI”) solutions in China, today reported its unaudited financial results for the first quarter ended March 31, 2017. The Company will hold a conference call at 8:30 p.m. Eastern Time on May 25, 2017, or 8:30 a.m. Beijing Time on May 26, 2017. Dial-in details are provided at the end of this release. “The first quarter of 2017 was another solid quarter with robust financial and operating results,” stated Mr. Guosheng Qi, Chief Executive Officer of Gridsum. “We are pleased to see our topline continue its strong growth momentum, primarily driven by solid customer base expansion, which we target to grow by 30-40% in 2017, and a steady increase in Average Revenue Per User (“ARPU”). Meanwhile, we are glad to report that for the third consecutive year, Gridsum was named one of the Top 10 companies in Beijing's high-tech Zhongguancun district in terms of the number of the patent applications filed. This is a strong testament to our innovation DNA and unwavering commitment to continuing to drive market leading R&D efforts. This commitment is exemplified by the fact that we have filed 1,653 patent applications in China, of which 583 are big-data focused and 148 are explicitly Enterprise-AI focused, as of March 31, 2017. In addition, we have consolidated all of our AI activities strategically, technically and organizationally into a new division: Gridsum Prophet, which encompasses all of our AI capabilities: machine learning, natural language processing, image recognition, predictive industry modeling, and knowledge graph. We believe that the increased intelligent features of our products that come from this will continue to be key going forward in driving new customer acquisition and ARPU growth.” Mr. Qi continued, “We have also strengthened our partnership with Tencent Cloud, having jointly developed an integrated speech to text solution for court trials and conferences, which we have the exclusive right to distribute in China’s nationwide court system. We see tremendous growth opportunities in front of us and will continue to penetrate into new markets, including financial services and intelligent CRM. With our first-mover advantage and cutting-edge technology, we will continue to enhance and build upon our product offerings and capitalize on the immense potential in the market. We believe we can further fortify our position as China’s leading provider of cloud-based big-data analytics, machine learning and AI solutions, and generate great value for our shareholders going forward.” Mr. Michael Zhang, Chief Financial Officer of the Company, commented, “In the first quarter of 2017, our net revenues increased by 57.3% year over year to RMB100.6 million, driven by a solid 51.5% increase in our Enterprise revenues and 112.4% increase in e-Government and other revenues. The significant growth of our e-Government and other business was primarily driven by the better-than-expected performance in all the three revenue streams of e-Government, new media and legal services with legal services, in particular, exhibiting exceptional growth. To fuel further topline growth, we will leverage our superior sales efficiency and continue our targeted investment in sales and marketing to broaden our market visibility. R&D will remain another key area of focused investment to strengthen our technology leadership and drive expansion into new products and services.” REVENUES: Net revenues for the first quarter of 2017 increased by 57.3% to RMB100.6 million (US$14.6 million) from RMB64.0 million in the comparable period in 2016, driven by growth in Enterprise revenues and e-Government and other revenues. Enterprise revenues increased by 51.5% to RMB88.9 million (US$12.9 million) in the first quarter of 2017 from RMB58.7 million in the comparable period in 2016. e-Government and other revenues increased by 112.4% to RMB13.8 million (US$2.0 million) in the first quarter of 2017 from RMB6.5 million in the comparable period in 2016. These growths were due to an increased number of customers as well as increased average revenue per customer. COST OF REVENUES: Cost of revenues were RMB10.6 million (US$1.5 million), as compared with RMB9.3 million in the comparable period in 2016. The increase was primarily due to the RMB2.6 million increased cost of technical service fee, which was in line with total revenues growth. GROSS PROFIT AND GROSS MARGIN: Gross profit for the first quarter of 2017 increased by 64.6% to RMB90.0 million (US$13.1 million) from RMB54.7 million in the comparable period in 2016. Gross margin for the first quarter of 2017 increased to 89.5%, as compared with 85.5% in the comparable period in 2016. The increase in gross margin was primarily attributable to the relatively larger portion of revenues coming from e-Government and other related sales, which have a higher gross margin, and improved revenue contribution from Enterprise revenue due to optimized service offering. OPERATING EXPENSES: Total operating expenses for the first quarter of 2017 were RMB139.0 million (US$20.2 million), as compared with RMB76.3 million in the comparable period in 2016. As a percentage of net revenues, operating expenses were 138.2%, as compared with 119.3% in the comparable period in 2016, primarily due to the increased sales and marketing expenses and research and development expenses. LOSS FROM OPERATIONS: Loss from operations for the first quarter of 2017 was RMB49.0 million (US$7.1 million), as compared with RMB21.6 million in the comparable period in 2016. NET LOSS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Net loss attributable to Gridsum’s ordinary shareholders for the first quarter of 2017 was RMB57.2 million (US$8.3 million), as compared with RMB31.1 million in the comparable period in 2016. The increase was primarily due to the increased operating expenses, including the incremental expenses as a result of being a publicly listed company. NON-GAAP NET LOSS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Non-GAAP net loss attributable to Gridsum’s ordinary shareholders, which is defined as net loss attributable to Gridsum’s ordinary shareholders before share-based compensation expense, for the first quarter of 2017 was RMB52.2 million (US$7.6 million), as compared with RMB28.4 million in the comparable period in 2016. EBITDA: Loss before interest, income tax, depreciation and amortization for the first quarter of 2017 was RMB43.0 million (US$6.2 million), as compared with RMB16.1 million in the comparable period in 2016. The increase was mainly due to the increase in loss from operation of RMB27.4 million, an increase in foreign exchange expense and other expense of RMB1.8 million, partially offset by depreciation and amortization expense of RMB2.3 million. ADJUSTED EBITDA: Adjusted loss before interest, income tax, depreciation and amortization, which excludes share-based compensation expenses, was RMB38.0 million (US$5.5 million) for the first quarter of 2017, as compared with RMB13.4 million in the comparable period in 2016. NET LOSS PER ADS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Net loss per ADS attributable to Gridsum’s ordinary shareholders for the first quarter of 2017 narrowed by 38.3% to RMB1.92 (US$0.28), as compared with RMB3.11 in the comparable period in 2016. NON-GAAP NET LOSS PER ADS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Non-GAAP net loss per ADS attributable to Gridsum’s ordinary shareholders for the first quarter of 2017 narrowed by 38.4% to RMB1.75 (US$0.25), as compared with RMB2.84 in the comparable period in 2016. Each ADS represents one Class B ordinary share. For purposes of determining net loss per ADS attributable to Gridsum’s ordinary shareholders, the weighted average number of ordinary shares for the first quarter of 2017 was 29,735,166. As of March 31, 2017, total number of ordinary shares outstanding was 29,735,166. Balance Sheet As of March 31, 2017, the Company had cash and cash equivalent of RMB183.4 million (US$26.7 million), time deposit of RMB68.8 million (US$10.0 million) and restricted cash of RMB258.1 million (US$37.5 million). The Company has recently consolidated all of its AI activities, technically, organizationally and strategically, into a new division called Gridsum Prophet. Gridsum Prophet is directly headed by the Company’s Chief Technology Officer, John Jiyang Liu. Gridsum Prophet encompasses all of the Company’s AI capabilities, including machine learning, natural language processing, image recognition, predictive industry modeling, and knowledge graph. It powers the Company’s intelligent products and solutions across the matrix of clients and industry verticals. It also allows the Company to see cross-industry, client and demographic correlations and relationships to add further value for clients. Gridsum Prophet is increasingly key in creating new differentiated product features for the Company’s existing products (e.g. marketing automation) and is central in defining and shaping new products, such as the Company’s social listening and brand management suite as well as the legal services suite and intelligent CRM product suites. Gridsum Prophet is also instrumental in defining Gridsum’s new product pipeline, such as the intelligent CRM and financial services product suites. The Company sees the new division playing an increasingly key role in customer acquisition, ARPU growth, new product development, and others. For the full year of 2017, the Company retains its previous outlook that net revenues are expected to be in the range of RMB622 million to RMB634 million, representing approximately 57% year-over-year growth at the mid-point. These forecasts reflect the Company's current and preliminary view, which may be subject to change. The Company will hold a conference call on May 25, 2017 at 8:30 pm U.S. Eastern Time, or May 26, 2017 at 8:30 am Beijing Time to discuss its financial results. A live and archived webcast of the conference call will be available through the Company's investor relations website at http://ir.gridsum.com. This announcement contains translations of certain RMB amounts into U.S. dollars ("USD") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.8832 to US$1.00, the noon buying rate in effect on March 31, 2017 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. The unaudited financial information set forth above is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company's year-end audit, which could result in significant differences from this preliminary unaudited condensed financial information. Use of Non-GAAP Financial Measures In evaluating the Company’s business, the Company considers and uses the following non-GAAP financial measures as supplemental measures to review and assess the Company’s operating performance: non-GAAP net loss attributable to Gridsum’s ordinary shareholders, non-GAAP net loss per share attributable to Gridsum’s ordinary shareholders, EBITDA and adjusted EBITDA. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with U.S. GAAP. Non-GAAP net loss attributable to Gridsum’s ordinary shareholders is net loss attributable to Gridsum's ordinary shareholders before share-based compensation, non-GAAP net loss per share attributable to Gridsum’s ordinary shareholders is the per share equivalent and non-GAAP net loss per ADS attributable to Gridsum's ordinary shareholders is the per ADS equivalent, EBITDA is net loss before interest income and expenses, income tax expenses and depreciation expenses, and adjusted EBITDA is EBITDA before share-based compensation. The Company presents these non-GAAP financial measures because they are used by the Company’s management to evaluate the Company’s operating performance and formulate the Company’s business plans. These non-GAAP financial measures enable the Company’s management to assess the Company’s operating results without considering the impact of non-cash charges, including depreciation expenses and share-based compensation, and without considering the impact of non-operating items such as interest income and expenses and income tax expenses. The Company also believes that the use of these non-GAAP measures facilitates investors' assessment of the Company’s operating performance. These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using these non-GAAP financial measures is that they do not reflect all items of income and expense that affect the Company’s operations. Interest income and expenses, income tax expenses, depreciation expenses and share-based compensation have been and may continue to be incurred in the Company’s business and are not reflected in the presentation of adjusted EBITDA. Further, these non-GAAP financial measures may differ from the non-GAAP financial measures used by other companies, including Gridsum’s peer companies, so their utility for comparison purposes may be limited. The Company compensates for these limitations by reconciling the Company’s non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures, which should be considered when evaluating the Company’s performance. Gridsum Holding Inc. is a leading provider of cloud-based big-data analytics, machine learning and AI solutions for multinational and domestic enterprises and government agencies in China. Gridsum’s core technology, the Gridsum Big Data Platform, is built on a distributed computing framework and performs real-time multi-dimensional correlation analysis of both structured and unstructured data. This enables Gridsum’s customers to identify complex relationships within their data and gain new insights that help them make better business decisions. The Company is named “Gridsum” to symbolize the combination of distributed computing (Grid) and analytics (sum). As a digital intelligence pioneer, the Company’s mission is to help enterprises and government organizations in China use data in new and powerful ways to make better informed decisions and be more productive. For more information, please visit http://www.gridsum.com/. This announcement contains forward-looking statements. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as “may,” "will," "expects," "anticipates," “aims,” "future," "intends," "plans," "believes," "estimates," “likely to” and similar statements. Among other things, quotations from management in this announcement, Gridsum’s financial outlook as well as Gridsum's strategic and operational plans contain forward-looking statements. Gridsum may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Gridsum's beliefs and expectations, are forward-looking statements. Forward-looking statements involve 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: unexpected difficulties in Gridsum's pursuit of its goals and strategies; the unexpected developments, including slow growth, in the digital intelligence market; reduced demand for, and market acceptance of, Gridsum's solutions; difficulties keeping and strengthening relationships with customers; potentially costly research and development activities; competitions in the digital intelligence market; PRC governmental policies relating to media, software, big data, the internet, internet content providers and online advertising; and general economic and business conditions in the regions where Gridsum provides solutions and services. Further information regarding these and other risks is included in Gridsum’s reports filed with, or furnished to, the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and Gridsum undertakes no duty to update such information except as required under applicable law.


News Article | May 25, 2017
Site: globenewswire.com

BEIJING, May 25, 2017 (GLOBE NEWSWIRE) -- Gridsum Holding Inc. (“Gridsum” or the “Company”) (NASDAQ:GSUM), a leading provider of cloud-based big-data analytics, machine learning and artificial intelligence (“AI”) solutions in China, today reported its unaudited financial results for the first quarter ended March 31, 2017. The Company will hold a conference call at 8:30 p.m. Eastern Time on May 25, 2017, or 8:30 a.m. Beijing Time on May 26, 2017. Dial-in details are provided at the end of this release. “The first quarter of 2017 was another solid quarter with robust financial and operating results,” stated Mr. Guosheng Qi, Chief Executive Officer of Gridsum. “We are pleased to see our topline continue its strong growth momentum, primarily driven by solid customer base expansion, which we target to grow by 30-40% in 2017, and a steady increase in Average Revenue Per User (“ARPU”). Meanwhile, we are glad to report that for the third consecutive year, Gridsum was named one of the Top 10 companies in Beijing's high-tech Zhongguancun district in terms of the number of the patent applications filed. This is a strong testament to our innovation DNA and unwavering commitment to continuing to drive market leading R&D efforts. This commitment is exemplified by the fact that we have filed 1,653 patent applications in China, of which 583 are big-data focused and 148 are explicitly Enterprise-AI focused, as of March 31, 2017. In addition, we have consolidated all of our AI activities strategically, technically and organizationally into a new division: Gridsum Prophet, which encompasses all of our AI capabilities: machine learning, natural language processing, image recognition, predictive industry modeling, and knowledge graph. We believe that the increased intelligent features of our products that come from this will continue to be key going forward in driving new customer acquisition and ARPU growth.” Mr. Qi continued, “We have also strengthened our partnership with Tencent Cloud, having jointly developed an integrated speech to text solution for court trials and conferences, which we have the exclusive right to distribute in China’s nationwide court system. We see tremendous growth opportunities in front of us and will continue to penetrate into new markets, including financial services and intelligent CRM. With our first-mover advantage and cutting-edge technology, we will continue to enhance and build upon our product offerings and capitalize on the immense potential in the market. We believe we can further fortify our position as China’s leading provider of cloud-based big-data analytics, machine learning and AI solutions, and generate great value for our shareholders going forward.” Mr. Michael Zhang, Chief Financial Officer of the Company, commented, “In the first quarter of 2017, our net revenues increased by 57.3% year over year to RMB100.6 million, driven by a solid 51.5% increase in our Enterprise revenues and 112.4% increase in e-Government and other revenues. The significant growth of our e-Government and other business was primarily driven by the better-than-expected performance in all the three revenue streams of e-Government, new media and legal services with legal services, in particular, exhibiting exceptional growth. To fuel further topline growth, we will leverage our superior sales efficiency and continue our targeted investment in sales and marketing to broaden our market visibility. R&D will remain another key area of focused investment to strengthen our technology leadership and drive expansion into new products and services.” REVENUES: Net revenues for the first quarter of 2017 increased by 57.3% to RMB100.6 million (US$14.6 million) from RMB64.0 million in the comparable period in 2016, driven by growth in Enterprise revenues and e-Government and other revenues. Enterprise revenues increased by 51.5% to RMB88.9 million (US$12.9 million) in the first quarter of 2017 from RMB58.7 million in the comparable period in 2016. e-Government and other revenues increased by 112.4% to RMB13.8 million (US$2.0 million) in the first quarter of 2017 from RMB6.5 million in the comparable period in 2016. These growths were due to an increased number of customers as well as increased average revenue per customer. COST OF REVENUES: Cost of revenues were RMB10.6 million (US$1.5 million), as compared with RMB9.3 million in the comparable period in 2016. The increase was primarily due to the RMB2.6 million increased cost of technical service fee, which was in line with total revenues growth. GROSS PROFIT AND GROSS MARGIN: Gross profit for the first quarter of 2017 increased by 64.6% to RMB90.0 million (US$13.1 million) from RMB54.7 million in the comparable period in 2016. Gross margin for the first quarter of 2017 increased to 89.5%, as compared with 85.5% in the comparable period in 2016. The increase in gross margin was primarily attributable to the relatively larger portion of revenues coming from e-Government and other related sales, which have a higher gross margin, and improved revenue contribution from Enterprise revenue due to optimized service offering. OPERATING EXPENSES: Total operating expenses for the first quarter of 2017 were RMB139.0 million (US$20.2 million), as compared with RMB76.3 million in the comparable period in 2016. As a percentage of net revenues, operating expenses were 138.2%, as compared with 119.3% in the comparable period in 2016, primarily due to the increased sales and marketing expenses and research and development expenses. LOSS FROM OPERATIONS: Loss from operations for the first quarter of 2017 was RMB49.0 million (US$7.1 million), as compared with RMB21.6 million in the comparable period in 2016. NET LOSS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Net loss attributable to Gridsum’s ordinary shareholders for the first quarter of 2017 was RMB57.2 million (US$8.3 million), as compared with RMB31.1 million in the comparable period in 2016. The increase was primarily due to the increased operating expenses, including the incremental expenses as a result of being a publicly listed company. NON-GAAP NET LOSS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Non-GAAP net loss attributable to Gridsum’s ordinary shareholders, which is defined as net loss attributable to Gridsum’s ordinary shareholders before share-based compensation expense, for the first quarter of 2017 was RMB52.2 million (US$7.6 million), as compared with RMB28.4 million in the comparable period in 2016. EBITDA: Loss before interest, income tax, depreciation and amortization for the first quarter of 2017 was RMB43.0 million (US$6.2 million), as compared with RMB16.1 million in the comparable period in 2016. The increase was mainly due to the increase in loss from operation of RMB27.4 million, an increase in foreign exchange expense and other expense of RMB1.8 million, partially offset by depreciation and amortization expense of RMB2.3 million. ADJUSTED EBITDA: Adjusted loss before interest, income tax, depreciation and amortization, which excludes share-based compensation expenses, was RMB38.0 million (US$5.5 million) for the first quarter of 2017, as compared with RMB13.4 million in the comparable period in 2016. NET LOSS PER ADS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Net loss per ADS attributable to Gridsum’s ordinary shareholders for the first quarter of 2017 narrowed by 38.3% to RMB1.92 (US$0.28), as compared with RMB3.11 in the comparable period in 2016. NON-GAAP NET LOSS PER ADS ATTRIBUTABLE TO GRIDSUM’S ORDINARY SHAREHOLDERS: Non-GAAP net loss per ADS attributable to Gridsum’s ordinary shareholders for the first quarter of 2017 narrowed by 38.4% to RMB1.75 (US$0.25), as compared with RMB2.84 in the comparable period in 2016. Each ADS represents one Class B ordinary share. For purposes of determining net loss per ADS attributable to Gridsum’s ordinary shareholders, the weighted average number of ordinary shares for the first quarter of 2017 was 29,735,166. As of March 31, 2017, total number of ordinary shares outstanding was 29,735,166. Balance Sheet As of March 31, 2017, the Company had cash and cash equivalent of RMB183.4 million (US$26.7 million), time deposit of RMB68.8 million (US$10.0 million) and restricted cash of RMB258.1 million (US$37.5 million). The Company has recently consolidated all of its AI activities, technically, organizationally and strategically, into a new division called Gridsum Prophet. Gridsum Prophet is directly headed by the Company’s Chief Technology Officer, John Jiyang Liu. Gridsum Prophet encompasses all of the Company’s AI capabilities, including machine learning, natural language processing, image recognition, predictive industry modeling, and knowledge graph. It powers the Company’s intelligent products and solutions across the matrix of clients and industry verticals. It also allows the Company to see cross-industry, client and demographic correlations and relationships to add further value for clients. Gridsum Prophet is increasingly key in creating new differentiated product features for the Company’s existing products (e.g. marketing automation) and is central in defining and shaping new products, such as the Company’s social listening and brand management suite as well as the legal services suite and intelligent CRM product suites. Gridsum Prophet is also instrumental in defining Gridsum’s new product pipeline, such as the intelligent CRM and financial services product suites. The Company sees the new division playing an increasingly key role in customer acquisition, ARPU growth, new product development, and others. For the full year of 2017, the Company retains its previous outlook that net revenues are expected to be in the range of RMB622 million to RMB634 million, representing approximately 57% year-over-year growth at the mid-point. These forecasts reflect the Company's current and preliminary view, which may be subject to change. The Company will hold a conference call on May 25, 2017 at 8:30 pm U.S. Eastern Time, or May 26, 2017 at 8:30 am Beijing Time to discuss its financial results. A live and archived webcast of the conference call will be available through the Company's investor relations website at http://ir.gridsum.com. This announcement contains translations of certain RMB amounts into U.S. dollars ("USD") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.8832 to US$1.00, the noon buying rate in effect on March 31, 2017 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. The unaudited financial information set forth above is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company's year-end audit, which could result in significant differences from this preliminary unaudited condensed financial information. Use of Non-GAAP Financial Measures In evaluating the Company’s business, the Company considers and uses the following non-GAAP financial measures as supplemental measures to review and assess the Company’s operating performance: non-GAAP net loss attributable to Gridsum’s ordinary shareholders, non-GAAP net loss per share attributable to Gridsum’s ordinary shareholders, EBITDA and adjusted EBITDA. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with U.S. GAAP. Non-GAAP net loss attributable to Gridsum’s ordinary shareholders is net loss attributable to Gridsum's ordinary shareholders before share-based compensation, non-GAAP net loss per share attributable to Gridsum’s ordinary shareholders is the per share equivalent and non-GAAP net loss per ADS attributable to Gridsum's ordinary shareholders is the per ADS equivalent, EBITDA is net loss before interest income and expenses, income tax expenses and depreciation expenses, and adjusted EBITDA is EBITDA before share-based compensation. The Company presents these non-GAAP financial measures because they are used by the Company’s management to evaluate the Company’s operating performance and formulate the Company’s business plans. These non-GAAP financial measures enable the Company’s management to assess the Company’s operating results without considering the impact of non-cash charges, including depreciation expenses and share-based compensation, and without considering the impact of non-operating items such as interest income and expenses and income tax expenses. The Company also believes that the use of these non-GAAP measures facilitates investors' assessment of the Company’s operating performance. These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using these non-GAAP financial measures is that they do not reflect all items of income and expense that affect the Company’s operations. Interest income and expenses, income tax expenses, depreciation expenses and share-based compensation have been and may continue to be incurred in the Company’s business and are not reflected in the presentation of adjusted EBITDA. Further, these non-GAAP financial measures may differ from the non-GAAP financial measures used by other companies, including Gridsum’s peer companies, so their utility for comparison purposes may be limited. The Company compensates for these limitations by reconciling the Company’s non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures, which should be considered when evaluating the Company’s performance. Gridsum Holding Inc. is a leading provider of cloud-based big-data analytics, machine learning and AI solutions for multinational and domestic enterprises and government agencies in China. Gridsum’s core technology, the Gridsum Big Data Platform, is built on a distributed computing framework and performs real-time multi-dimensional correlation analysis of both structured and unstructured data. This enables Gridsum’s customers to identify complex relationships within their data and gain new insights that help them make better business decisions. The Company is named “Gridsum” to symbolize the combination of distributed computing (Grid) and analytics (sum). As a digital intelligence pioneer, the Company’s mission is to help enterprises and government organizations in China use data in new and powerful ways to make better informed decisions and be more productive. For more information, please visit http://www.gridsum.com/. This announcement contains forward-looking statements. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as “may,” "will," "expects," "anticipates," “aims,” "future," "intends," "plans," "believes," "estimates," “likely to” and similar statements. Among other things, quotations from management in this announcement, Gridsum’s financial outlook as well as Gridsum's strategic and operational plans contain forward-looking statements. Gridsum may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Gridsum's beliefs and expectations, are forward-looking statements. Forward-looking statements involve 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: unexpected difficulties in Gridsum's pursuit of its goals and strategies; the unexpected developments, including slow growth, in the digital intelligence market; reduced demand for, and market acceptance of, Gridsum's solutions; difficulties keeping and strengthening relationships with customers; potentially costly research and development activities; competitions in the digital intelligence market; PRC governmental policies relating to media, software, big data, the internet, internet content providers and online advertising; and general economic and business conditions in the regions where Gridsum provides solutions and services. Further information regarding these and other risks is included in Gridsum’s reports filed with, or furnished to, the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and Gridsum undertakes no duty to update such information except as required under applicable law.


Leading Chinese Networking Equipment Manufacturers To Build Systems Using Barefoot's Tofino To Deliver New Features Enabling Revolutionary Visibility, Operational Efficiency And Scale To Meet Surging Customer Demands BEIJING, CHINA and PALO ALTO, CA--(Marketwired - May 7, 2017) - Barefoot Networks today announced that three of the world's largest technology companies operating some of the most demanding networks -- Alibaba Group Holding Ltd., Baidu Inc. and Tencent Holding Ltd. are partnering with Barefoot to take advantage of its ground-breaking programmable forwarding plane technology in their networks. Barefoot's 6.5Tb/s Tofino™ switch, the world's fastest and P4™ programmable switch chip, can be deployed in networks to enable unrivaled visibility, down to the packet level, without sacrificing performance. The demand for performance, scale and visibility in networks today is exceeding the capability of existing fixed-function switch chips used to build them. From mega-scale data centers delivering new applications to carriers rolling out next-generation data rates and services, networks are being subjected to requirements that cannot be fulfilled by traditional fixed-function switch-silicon based systems. Barefoot is enabling its customers to design, develop and deploy custom forwarding plane functionality addressing the unmet needs of customers, whether it be new network functions like load balancing and DDoS protection, or full visibility into the network using In-band Network Telemetry (INT). "Tencent's network needs to provide high-quality services to businesses and be programmable to accommodate the massive scale requirements and new applications," said Tom Bie, VP of Technology and Engineering Group at Tencent. "Barefoot Tofino and P4 technologies allow for rolling out required network features quickly and respond to network anomalies and failures with a global view and real-time deep insights." "At Baidu, we continuously deliver state-of-the-art services to our customers and this requires our network to be simple, fast and programmable," said Liu Chao, Senior Director, System Department at Baidu. "Barefoot Tofino and P4 have enabled us to deploy new network functions like layer 4 load balancing and network address translation right on the top-of-rack-switch." Delivering high-performance switch products that match different customers' requirements has been a challenge for networking equipment manufacturers due to their reliance on fixed-function silicon and the limitations associated with them. Barefoot Tofino is enabling network equipment manufacturers like H3C, Ruije and ZTE to build products that will uniquely meet the exacting requirements of their customers. "As a leading provider of new IT infrastructure and solutions, H3C welcomes innovation in Ethernet switching ASICs," said Shouwen Bi, Vice General Manager of Product Marketing Department, New H3C Group. "Barefoot Tofino brings significant value to all the stakeholders of the IT industry accelerating the industry into SDN 2.0 era." "ZTE looks to deliver ground-breaking innovation to its customers by partnering with Barefoot," said Zhu Yongxing, Vice President at ZTE. "We are excited to use Barefoot Tofino and P4 to create products that deliver scale, performance and customer-specific functionality for data center, 5G transport and NFV deployments." "Barefoot Tofino's programmability at the forwarding plane level is very attractive to Ruije," said Liu Zhongdong, President at Ruije. "It allows us to create innovative and differentiated products for our data center customers allowing them to build networks that are agile and efficient." "Barefoot has started a revolution in the tech industry with its programmable forwarding plane technology, including the P4-programmable 6.5Tb/s Tofino Ethernet switch ASIC along with the Capilano software development environment," said Craig Barratt, CEO of Barefoot Networks. "We are excited to see our customers embrace the simplicity and efficiency that our technology brings to networking and we look forward to seeing higher volume shipments and deployments later this year." Barefoot Networks is presenting at the P4 2017 China Summit in Beijing, China on May 8, 2017. The event is hosted at the Crowne Plaza Zhongguancun hotel. The event includes talks by luminaries from industry and academia talking about the future of networking. Speakers include Liu Yunjie, Professor at the Chinese Academy of Engineering; Yu Yingtao, CEO of H3C; Qiao Yan, Principal Architect at H3C; Yiqun Cai, Vice President at Alibaba Group; Dennis Cai, Chief Architect at Alibaba Group; Craig Barratt, CEO of Barefoot Networks; and Nick McKeown, Chief Scientist and Co-founder of Barefoot Networks. The event is organized by P4.org and SDNLab. For more details visit http://www.sdnlab.com/18989.html Sampling to customers since Q4 2016, Barefoot Networks' Tofino ethernet switch ASICs and Capilano SDE remove the last barrier to full network programmability by opening the forwarding plane, enabling full and granular control of the networking stack down to the packets flowing on the wire. About Baidu Baidu, Inc. is a Chinese language Internet search provider. The Company offers a Chinese language search platform on its Baidu.com Website that enables users to find information online, including Webpages, news, images, documents and multimedia files, through links provided on its Website. In addition to serving individual Internet search users, the Company provides a platform for businesses to reach customers. Its business consists of three segments: search services, transaction services and iQiyi. Search services are keyword-based marketing services targeted at and triggered by Internet users' search queries, which mainly include its pay-for-performance (P4P) services and other online marketing services. Its transaction services include Baidu Nuomi, Baidu Takeout Delivery, Baidu Maps, Baidu Connect, Baidu Wallet and others. iQiyi is an online video platform with a content library that includes licensed movies, television series, cartoons, variety shows and other programs. For more information, visit https://www.baidu.com/ About Tencent Tencent uses technology to enrich the lives of Internet users. Every day, hundreds of millions of people communicate, share experiences, consume information and seek entertainment through our integrated platforms. Tencent's diversified services include QQ, Weixin/ WeChat for communications; Qzone for social networking; QQ Game Platform for online games; QQ.com and Tencent News for information and Tencent Video for video content. Tencent was founded in Shenzhen in 1998 and went public on the Main Board of the Hong Kong Stock Exchange in 2004. The Company is one of the constituent stocks of the Hang Seng Index. Tencent seeks to evolve with the Internet by investing in innovation, providing a mutually beneficial environment for partners, and staying close to users. For more information, visit http://www.tencent.com About Barefoot Networks Barefoot Networks launched in 2016 after two years of developing the most programmable and -- at 6.5Terabits/second -- the fastest switches ever built; twice as fast as the previous on record. By enabling organizations to define the network forwarding plane in software, Barefoot empowers network owners and their infrastructure partners to design, optimize, and innovate to meet their specific requirements and gain competitive advantage. In combining the P4 programming language with fast programmable switches, Barefoot has also created an ecosystem for compilers, tools, and P4 programs to make P4 accessible to anybody. Barefoot's founders -- Pat Bosshart, Martin Izzard, Dan Lenoski, Nick McKeown -- bring the company more than 100 years of experience in building the fastest and biggest networking systems in the world. Backed by Google Inc., Goldman Sachs Principal Strategic Investments, Alibaba, Tencent, and by premier venture capital firms Sequoia Capital, Lightspeed Venture Partners, and Andreessen Horowitz, Barefoot Networks is headquartered in Silicon Valley. For more information, visit http://www.barefootnetworks.com. Follow us on Twitter: @barefootnetwork. Follow us on Facebook https://www.facebook.com/barefootnetworks Barefoot Networks, the Foot Logo and Tofino are trademarks of Barefoot Networks.


News Article | November 5, 2016
Site: www.prweb.com

“We’ve never seen such an advantageous position for Chinese investors,” said Bril Wang, President of the CPC. “Chinese buyers are taking over 23% of the global M&A. Industries that just became stable in the US are still emerging in China.” “The window of opportunities is still open, the question is whether and when it will close,” said Marcus Cole, professor of Stanford Law School. Forty five investor professionals joined panel discussions, fireside chats on topics of high return investment areas and risk control, future investment trends, and collaborative investment opportunities between the U.S. and China. In terms of highlights from the discussions – Carmen Chang from NEA, one of the most influential venture backers of Uber, shared her insider opinion of the Didi and Uber China merger. James Huang from KPCB looks ahead to further developments in the healthcare industry and the future of China-US cooperation in this field. Patrick Eggen from Qualcomm Ventures, Paulo Pereira from GE, and Tim Merel from Digi-Capital, also vigorously discussed topics including artificial intelligence (AI), virtual-enhanced hybrid reality (VR / AR / MR) and robotics. David Chao, cofounder of DCM predicts a strong relationship between investment trends and demographic distribution. Separately, famous Chinese angel investor Bob Xu gave an opening speech on “The fourth Startup Wave” along with Yihang Yang, Consulate General of the People's Republic of China in San Francisco, who discussed cross border investment growth between US and China; Letitia Chow, representative of Stanford FARM and Bril Wang, president of the CPC. Hans Tung from GGV Capital, Jonathan Qiu from Sky9 and Yong Liu from WI Harper shared their experience on investing in China during the past decade, including on e-commerce, mobile, O2O, fintech and AI. On the second day, Cameron Teitelman from Stanford StartX and Minglan Wang from Zhongguancun Development Group led a discussion on incubator difference between US and China. The conference also included enterprise investment, consumer investment and investment innovation discussions with industry experts like Aymerik Renard from Sandisk Ventures, Zhang Qian from ChinaAMC Fund, Sanjit Singh Dang from Intel Capital, Rashmi Gopinath from Microsoft Ventures, Robert Neivert from 500 Startups, Michael Cohen from SAIC, Michael Daugherty from AngelList, Ran Wang from Qihoo 360 and so on. “State-owned enterprises and public listed companies in China are taking advantage of the current exchange rate, allocating high-quality assets overseas and leveraging domestic growth based on China's huge market,” added Bril Wang, President of the CPC “It makes good sense since in 2016, currency issuance in China is expected to be 13%, and by the end of the year, China's total money supply (M2) will exceed the sum of the U.S. and the EU, reaching 23 trillion US dollars (calculated with current exchange rate). However, the SDR weight of RMB is 10.9% compare to USD 41.7% and EUR 30.9% starting Oct 2016. Current foreign exchange reserve of China is only $3.2 trillion USD. There aren’t enough recognized funds available for Chinese buyers. We do see, however, this condition will change in the long run.” About Cardinal Pitch Club (CPC) Cardinal Pitch Club (CPC) founded by Stanford affiliates in April, 2015, devotes to connecting our network startups with some of the Bay Area’s best recognized VCs. With growing requests from Chinese capital, CPC also helps our startups with exit opportunities like cross border M&A, share acquisition of Pre-IPO companies, e.g. Uber, Airbnb etc.


News Article | December 11, 2015
Site: www.techtimes.com

When German and Chinese automotive powers combine, they can end up beating Silicon Valley's best and brightest. Baidu, often touted as China's Google, has partnered up withBMW to create its first autonomous vehicle. The company reports that it just completed the first successful tests of its driverless car through the streets of Beijing. Using a revamped BMW 3 Series, Baidu's road tests included a complex set of driving instructions while the vehicle had to respond to its surroundings. "Fully autonomous driving under mixed road conditions is universally challenging, with complexity further heightened by Beijing's road conditions and unpredictable driver behavior," says Wang Jing, the SVP of Baidu and General Manager of Baidu's Autonomous Driving Business Unit. Previously, however, Baidu's chief scientist Andrew Ng had a close call in one of the autonomous vehicles. Proving that anything can happen and that it will happen, another vehicle had suddenly swerved in front of the driverless car with Ng in the passenger seat. "I was glad our driver hit the brakes, but then I found out it was the car that did it automatically," Ng said. "If I had been driving, we would have hit the car in front." In its latest successful test drive, Baidu's BMW 3 Series came equipped with software the company calls Baidu AutoBrain. The software serves as the core of Baidu's driverless car technology which makes use of highly automated driving maps, positioning, detection, and smart decision making and control. The technology thus helped the BMW maneuver the 18.6-mile route that began at Baidu's Beijing corporate offices near Zhongguancun Science Park in Haidian District, through to the G7 highway, Fifth Ring Road, Olympic Park, and finally rerouting back to where it began at Baidu's homebase. Along the way, the Baidu's car traversed across side streets, made left and right turns, switched lanes, and overtook other regular cars, even merging onto and off traffic along highways as fast as 62mph. In development since 2013, Baidu joins Google, and Tesla in the race to bring self-driving vehicles to the masses.


News Article | December 15, 2016
Site: en.prnasia.com

BEIJING, Dec. 15, 2016 /PRNewswire/ -- Hollysys Automation Technologies Ltd. (NASDAQ: HOLI) ("Hollysys" or the "Company"), a leading provider of automation and control technologies and applications in China, today announced that Dr. Jianfeng He retired from his positions as a member and Chairman of the Board of Directors of the Company (the "Board"). To fill the vacancies, Ms. Li Qiao was elected as a director of the Company and Mr. Baiqing Shao, the current CEO and a director of the Company, was elected as the Chairman of the Board. The Board currently consists of five members, Ms. Li Qiao, Mr. Colin Sung, Ms. Jerry Zhang, Mr. Jianyun Chai and Mr. Baiqing Shao. Dr. He joined Hollysys in 1997, serving the company for about 19 years. He was appointed as Director and Chairman of the Board in 2013. Dr. He stated, "I've decided to retire due to personal reasons. Hollysys has been more than a significant part of my career, which I will always treasure." Dr. He added, "I leave Hollysys with confidence that under the continued leadership of Mr. Baiqing Shao, Hollysys will successfully continue its track record as a leading automation company. I will continuously cheer for every success achieved by Hollysys on the side-line. From my heart, I will always be part of the Hollysys team." "We are pleased to welcome Ms. Qiao back," said Mr. Baiqing Shao, Hollysys' Chairman and Chief Executive Officer. "Her vast experience in managing complex, growing, multi-national businesses will provide Hollysys valuable insight. I also would like to thank Dr. He for his immeasurable contributions to Hollysys. We've been very lucky to work with him over the past years and have significantly benefited from his leadership," Mr. Baiqing Shao continued. "China needs internationally competitive high-tech companies and Hollysys is definitely one of them," said Ms. Qiao. "It is an honor to work with other directors in witnessing the rapid growth of Hollysys and share the great momentum in future." Ms. Qiao is the Chairman of Agriculture Resources Pte Ltd. and the Director of CSIC International Pte Ltd. She served as Chairman of Hollysys from 2007 to 2010 and as Director of Beijing Hollysys Co., Ltd. from 1999 to 2008. Before that, Ms. Qiao had worked in government for more than ten years. She was the Minster of Enterprise Division in Business Administration Committee of The Beijing Municipality Concerning the Experimental Area for Developing New-Technology Industries, and also served as the head of the Zhongguancun Technology Park ("Zhongguancun") Administrative Committee. Ms. Li Qiao participated in setting the Five-year plan of Chinese High-Tech Industrial Area and Zhongguancun High-Tech Development and Industrial Policy. She also participated in organizing and editing "The Regulations of Zhongguancun High-Tech Development Park" which is regarded as the fundamental law of Zhongguancun. Ms. Qiao also has extensive experience in equity investment. She organized twelve industry annual analysis reports and participated in establishing the first Beijing venture capital company, invested and successfully helped a number of companies listed in domestic and abroad. The investment projects that Ms. Qiao has been involved with include biological medicine, high-end equipment manufacturing, new energy, chemical and energy, agriculture, education, integrated circuits, aerospace, fast moving consumer goods, electronic information and other industries. She holds an iEMBA of Science and Technology from Hong Kong University. Hollysys Automation Technologies is a leading provider of automation and control technologies and applications in China that enables its diversified industry and utility customers to improve operating safety, reliability, and efficiency. Founded in 1993, Hollysys has approximately 3,600 employees with nationwide presence in over 60 cities in China, with subsidiaries and offices in Singapore, Malaysia, Dubai, India, and serves over 6,000 customers more than 20,000 projects in the industrial, railway, subway & nuclear industries in China, South-East Asia, and the Middle East. Its proprietary technologies are applied in its industrial automation solution suite including DCS (Distributed Control System), PLC (Programmable Logic Controller), RMIS (Real-time Management Information System), HAMS (HolliAS Asset Management System), OTS (Operator Training System), HolliAS BATCH (Batch Application Package), HolliAS APC Suite (Advanced Process Control Package), SIS (Safety Instrumentation System), high-speed railway signaling system of TCC (Train Control Center), ATP (Automatic Train Protection), Subway Supervisory and Control platform, SCADA (Supervisory Control and Data Acquisition), nuclear power plant automation and control system and other products. This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are "forward-looking statements," including statements regarding: the ability of the Company to achieve its commercial objectives; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Such forward-looking statements, based upon the current beliefs and expectations of Hollysys' management, are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements. For further information, please contact: To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/hollysys-automation-technologies-announces-changes-of-directors-300378947.html

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