 BEIJING, Aug. 14, 2020 GLOBE NEWSWIRE -- ChinaNet Online Holdings, Inc. Nasdaq: CNET ChinaNet or the Company, an integrated online advertising, precision marketing, data analytics and other value-added services provider serving enterprise clients, today announced its unaudited financial results for the second quarter and six months ended June 30, 2020. Second Quarter of 2020 Financial Highlights For the Three Months Ended June 30, millions, except per share data2020 2019 Change Revenues10.42 15.45 -32.6 Gross profit0.30 0.37 -18.6 Gross margin2.9 2.4 0.5 pp Loss from operations1.02 1.22 16.5 Operating loss margin-9.8 -7.9 -1.9 pp Net loss attributable to CNET0.97 0.38 155.4 Loss per share0.04 0.02 100.0 pp: percent points Revenues decreased by 32.6 to 10.42 million for the second quarter of 2020, primarily due to a decrease in revenues from Internet advertising and distribution of the right to use search engine marketing service business categories, as a result of the COVID-19 outbreak during the first quarter of 2020 and slow recovery in the second quarter of 2020. Gross profit decreased by 18.6 to 0.30 million while gross margin improved by 0.5 percentage points to 2.9 for the second quarter of 2020. Loss from operations improved by 16.5 to 1.02 million for the second quarter of 2020, primarily attributable to a decrease in operating expenses, which was partially offset by the decrease in gross profit during the second quarter of 2020. Net loss attributable to CNET was 0.97 million, or 0.04 per share, for the second quarter of 2020, compared to net loss of 0.38 million, or 0.02 per share, for the same period of last year.Mr. Handong Cheng, Chairman and Chief Executive Officer of ChinaNet, commented, Our second quarter results highlight continuing impact of the COVID-19 pandemic, despite significant sequential uptick from the first quarter. With growth and profitability remaining elusive, our second quarter results underscore the need for improvement in our existing business model and the need for new strategic initiatives going forward. While we remain fully committed to the blockchain technology initiative and view it as a potential game-changer for us, we are also actively exploring other strategic alternatives to turn around our business.First Half of 2020 Financial Highlights For the Six Months Ended June 30, millions, except per share data2020 2019 Change Revenues14.80 24.02 -38.4 Gross profit1.20 0.81 48.1 Gross margin8.1 3.4 4.7 pp Loss from operations3.30 1.96 68.2 Operating loss margin-22.3 -8.2 -14.1 pp Net loss attributable to CNET3.28 1.52 116.1 Loss per share0.16 0.09 77.8 pp: percent points Revenues decreased by 38.4 to 14.80 million for the first half of 2020, primarily due to the decrease in revenues from our Internet advertising and distribution of the right to use search engine marketing service business categories, as a result of the COVID-19 outbreak during the first quarter of 2020 and slow recovery in the second quarter of 2020. Gross profit increased by 48.1 to 1.20 million while gross margin improved by 4.7 percentage points to 8.1 for the first half of 2020. Loss from operations increased by 68.2, to 3.30 million for the first half of 2020, primarily attributable to an increase in operating expenses. Net loss attributable to CNET was 3.28 million, or 0.16 per share, for the first half of 2020, compared to net loss of 1.52 million, or 0.09 per share, for the same period of last year. Second Quarter 2020 Financial ResultsRevenues For the Three Months Ended June 30, 2020 2019 Change - Internet advertising and related data service2,302 3,598 -36.0 - Distribution of the right to use search engine marketing service7,310 11,855 -38.3 - Data and technical services300 0 NM Internet advertising and related services9,912 15,453 -35.9 Ecommerce O2O advertisement and marketing services504 0 NM Technical solution services0 0 NM Total revenues10,416 15,453 -32.6 For the second quarter of 2020, revenues decreased by 5.04 million, or 32.6, to 10.42 million from 15.45 million for the same period of last year. The decrease in revenues was primarily attributable to the decrease in revenues from the Internet advertising and distribution of the right to use search engine marketing service business categories, as a result of slow business recovery after the COVID-19 outbreak during the first fiscal quarter of 2020. Cost of revenues For the Three Months Ended June 30, 2020 2019 Change - Internet advertising and related data service2,072 3,484 -40.5 - Distribution of the right to use search engine marketing service7,405 11,598 -36.2 - Data and technical services266 5 NM Internet advertising and related services9,743 15,087 -35.4 Ecommerce O2O advertisement and marketing services375 0 NM Technical solution services0 0 NM Total cost of revenues10,118 15,087 -32.9 For the second quarter of 2020, our total cost of revenues decreased by 4.97 million, or 32.9, to 10.12 million for the second quarter of 2020 from 15.09 million for the same period of last year. The decrease in our total cost of revenues during the second quarter of 2020 was primary attributable to the decrease in costs associated with distribution of the right to use search engine marketing service and cost related to providing Internet advertising services on our ad portals, which was in line with the decrease in the related revenues as discussed above. Gross profit and gross marginTotal gross profit decreased by 0.07 million, or 18.6, to 0.30 million for the second quarter of 2020 from 0.37 million for the same period of last year, which was primarily due to gross loss incurred from our core revenue stream, the distribution of the right to use search engine marketing service, as a result of tightened ad investment budgets by our client under the COVID-19 pandemic circumstance, which was partially offset by the increase in gross profit generated from Internet advertising business and our new Ecommerce O2O advertising and marketing services.Overall gross margin was 2.9 for second quarter of 2020, compared to 2.4 for the second quarter of 2019, primarily due to improvement in gross margin of our Internet advertising business and new revenues generated form Ecommerce O2O advertising and marketing services during the period, which have a relatively higher gross margin than our core businesses.Operating expensesSales and marketing expenses decreased by 0.11 million, or 61.3, to 0.07 million for the second quarter of 2020 from 0.18 million for the same period of last year. The decrease in sales and marketing expenses was mainly attributable to decreased performance-based salary and bonus expenses. As a percentage of total revenues, sales and marketing expenses were 0.7 for the second quarter of 2020, compared to 1.2 for the same period of last year. General and administrative expenses decreased by 0.12 million, or 9.3, to 1.13 million for the second quarter of 2020 from 1.25 million for the same period of last year. The decrease in general and administrative expenses was mainly attributable to the following reasons: 1 the increase in allowance for doubtful accounts of 0.07 million; 2 the decrease in share-based compensation expenses of 0.03 million; and 3 the decrease in general departmental expenses of 0.16 million, due to a cost reduction plan executed by management after the COVID-19 outbreak. General and administrative expenses accounted for 10.9 of the total revenues for the second quarter of 2020 compared to 8.1 for the same period of last year.Research and development expenses decreased by 0.04 million, or 27.0, to 0.12 million for the second quarter of 2020 from 0.16 million for the same period of last year. Research and development expenses accounted for 1.1 of total revenues for the second quarter of 2020, compared to 1.0 for the same period of last year.Operating lossLoss from operations decreased by 0.20 million, or 16.5, to 1.02 million for the second quarter of 2020 from 1.22 million for the same period of last year. Operating loss margin was 9.8 for the second quarter of 2020, compared to 7.9 for the same period of last year.Other income expense, netTotal other income decreased to 0.04 million for the second quarter of 2020, compared to 0.81 million for the same period of last year, which was primarily due to a decrease in gain from change in fair value of warrant liabilities. Net loss attributable to CNET and loss per shareNet loss attributable to CNET was 0.97 million, or net loss per share of 0.04, for the second quarter of 2020, compared to 0.38 million, or net loss per share of 0.02, for the same period of last year.First Half 2020 Financial ResultsRevenues For the Six Months Ended June 30, 2020 2019 Change - Internet advertising and related data service3,250 5,435 -40.2 - Distribution of the right to use search engine marketing service9,298 18,580 -50.0 - Data and technical services600 5 NM Internet advertising and related services13,148 24,020 -45.3 Ecommerce O2O advertisement and marketing services1,007 0 NM Technical solution services645 0 NM Total revenues14,800 24,020 -38.4 For the first half year of 2020, revenues decreased by 9.22 million, or 38.4, to 14.80 million from 24.02 million for the same period of last year. The decrease in revenues was primarily attributable to the decrease in revenues from our Internet advertising and distribution of the right to use search engine marketing service business categories, as a result of the COVID-19 outbreak during the first quarter and slow recovery in the second quarter of 2020. 