Datasea Inc. Q4 FY2022 earnings call

• Revenue increased by $16.9 million or 9,653% from the prior year, mainly due to expansion in 5G messaging. • R&D expenses increased to $1.26 million in 2022 from $0.85 million in 2021, with product launches like 5G-related co-products and acoustic intelligence systems. • Owns 27 patents and 77 software copyrights as of September 28, 2022. • Announced $41.72 million procurement agreements for 5G messaging services from June to August 2022. • Acoustic intelligence products like ultrasonic air sterilizers have completed development and have sales agreements. • Smart City business has synergies with other segments.

For the year ended June 30, 2022, Datasea had total revenues of $17.08 million. The 5G messaging business contributed $17.02 million, which is the majority of the revenue. The Smart City project contributed $56k. The acoustic intelligence business had product development but no specific revenue figure provided. The gross margin was 5.6% for the 12 months ended June 30, 2022.

• Confident in new fiscal year development. • 5G messaging business had $41.72 million procurement agreements from June to August 2022. • Plans to expand overseas market, including setting up U.S. business subsidiaries for acoustic intelligence products. • Aim to expand revenue stream and achieve annual profit in new fiscal year.

• General market and economic uncertainties, though domestic economy shows resilience but external situation is complicated. • Risks associated with forward-looking statements as actual results may differ from expectations.

Q: How will you describe the company's competitiveness in the 5G messaging and acoustic intelligence?

A: For 5G messaging, competitiveness comes from large market size (1.6 billion mobile users in China), authorized access to national market by major operators, comprehensive product portfolio including own online cloud platforms, and being one of the first movers with strong industry relationships. For acoustic intelligence, it's due to co-authoring China's first white paper on acoustic intelligence and its commercial applications, wide application areas (healthcare, medical, beauty, etc.), and pending patents.

Q: Why the company decide to keep the Smart City solutions despite not generating significant revenue?

A: Smart City solutions have promising market opportunities and strong synergies with other segments like 5G messaging and acoustic intelligence. For example, 5G messaging and acoustic intelligence can reinforce Smart City solutions, making them stronger.