AirNet Technology Inc.

Revenue from continuing operations was $10.4 million, down 41.7% year over year and 12.4% quarter over quarter. Cost of revenues was $22.9 million, down 9.5% year over year and 4.7% sequentially, while gross profit was negative $12.5 million versus negative $7.6 million a year ago and negative $12.4 million last quarter. Gross margin was negative 120.9%, compared with negative 43.3% a year ago and negative 106.7% in the prior quarter. Net loss attributable to shareholders was $9.7 million, versus a $5.5 million loss a year ago and a $19.4 million loss in Q2. Adjusted EBITDA from continuing operations was a loss of $17.5 million, versus a loss of $9.5 million a year ago and a loss of $15.8 million in the prior quarter. Cash and cash equivalents, restricted cash and short-term investments totaled $127.7 million as of September 30, 2015, up from $81.1 million at year-end 2014, helped by receipt of RMB800 million. Management did not provide formal revenue or earnings guidance, but said it expects to close the transaction before year-end and believes it is on track to meet or exceed the 2015 profit target tied to the earn-out.

The CEO did not speak on the call; CFO Richard Wu led the discussion. His strategic message centered on transaction execution rather than operating turnaround, emphasizing that the Longde Wenchuang process is moving forward and that the company is close to completing the preconditions for the second installment. Tone was cautiously optimistic, especially around the earn-out and year-end closing timeline.

Richard Wu highlighted that the first installment of consideration from Longde Wenchuang has been received and that the company is working through divestiture-related preconditions for the second installment. He said net income from discontinued operations attributable to shareholders increased 53.8% year over year to $10 million, giving management confidence to achieve the 2015 earn-out profit target. On the operating side, he cited $10.4 million of continuing-operations revenue, $22.9 million of cost of revenues, negative $12.5 million gross profit, and $9.7 million of net loss attributable to shareholders. He also noted $127.7 million in cash, restricted cash and short-term investments, with the increase largely due to the RMB800 million first installment, and said capital expenditures were $8.9 million.

Analysts focused on three issues: the timing of the second installment in the 75% equity sale, the status of the privatization process, and whether litigation over the privatization price was material. Management said the second payment is delayed by business divestiture filings and government system upgrades, but still expects the deal to close before year-end; the 13-E was filed and they are waiting for next steps. On financing, Wu said the China Merchants Bank loan guarantee is in place and is largely standard aside from share pledges by the founders and buying group. He added that the number of litigants is small and based on public information represents only a minimal percentage of ADS or trading shares.