CooTek's Q3 Performance Trails Consensus

CooTek (Cayman) Inc CTK reported a third-quarter FY21 revenue decline of 52% year-on-year to $51.1 million, missing the consensus of $82.5 million.
Mobile advertising revenues decreased 52.5% Y/Y to $49.8 million.
Drivers: Monthly active users of the portfolio products declined 40% Y/Y to 57.2 million. MAUs of the online literature products dropped 54% Y/Y to 13.5 million.
The average daily reading time of its online literature product in the Chinese market, Fengdu Novel's users was stable at 153 minutes in September 2021.
"We are encouraged by the solid business fundamental of Fengdu Novel, which continued to contribute efficiently to the overall gross margin of the group, Chair Karl Zhang said. At the same time, we have been further strengthening our exposure in the overseas mobile games and online literature markets based on our recently launched Metaverse and NFT plan. We developed and published 14 new mobile games in the third quarter of 2021 and currently have a pipeline of 15-20 games in the fourth quarter of 2021 with 2 key mobile casual games."
Margin: The gross margin contracted 1,140 bps to 82.2% as costs jumped 35% Y/Y.
Adjusted net income per ADS of $0.006 missed the consensus of $0.01.
CooTek held $36.2 million in cash and equivalents and generated $5 million in operating cash flow.
Price Action: CTK shares traded higher by 29.5% at $0.7 in premarket on the last check Wednesday.