CooTek (Cayman) Inc.

Q4 2021 net revenue was $53 million, down 48% year over year from $102.4 million. Gross profit margin was 88.7% versus 93.1% a year earlier and 83.1% last quarter. GAAP net loss was $0.3 million, and adjusted net income was about $0.5 million. For full-year 2021, net revenue was $272.1 million, down 38% from $441.5 million in 2020; gross margin was 87.9% versus 94.5% in 2020; and net loss was $13.9 million versus $47.4 million in 2020. Cash, cash equivalents, and restricted cash were about $18.4 million at year-end, down from $49.6 million at December 31, 2020. Management said it expects meaningful net income for full-year 2022 and operating cash flow to turn positive in the first half of 2022. It also said sales and marketing expense as a percentage of revenue is targeted at a stable 70% for the next few quarters, with R&D around 10% and G&A around 6% of revenue for 2022.

Karl Zhang framed the strategy as a balanced model built around two content businesses: overseas mobile games and online literature. He emphasized the synergy between novels and games, citing Love Fantasy as proof that interactive storylines from Readict/Fengdu content can translate into stronger game performance. His tone was confident and forward-looking, highlighting overseas expansion, more match-3 plus storyline games, and the launch of a game publishing SaaS platform.

Robert Cui focused on margin discipline and expense control. He detailed that Q4 cost and expenses were about $52.4 million, down 2% sequentially and 57% year over year, while full-year operating expenses were $280.9 million, down 43% from 2020; sales and marketing was $200.2 million, or 73% of revenue, down from 95% in 2020. He said the company is targeting sales and marketing at about 70% of revenue in 2022, with R&D around 10% and G&A around 6%, and noted year-end cash of about $18.4 million.

Analysts pressed for more color on how online literature and games will be integrated in 2022, and Zhang answered that CooTek uses a data-driven IP evaluation platform to test ideas, then turns successful novels into game content, with Love Fantasy validating the model. Questions also focused on expense flexibility if the macro backdrop stays weak; Cui said the company will keep spending reasonable and maintain the 70% sales-and-marketing target while improving efficiency in R&D and G&A. On policy risk in China, Zhang said he would not predict government action, but acknowledged weak domestic ad demand and remaining uncertainties, which is why the company is shifting more resources to overseas markets.