Ucommune(UK) - 2022 Q2 - Quarterly Report

Financial Performance - Total revenue for the six months ended June 30, 2022, was RMB 297,327, a decrease of 40.6% compared to RMB 501,035 for the same period in 2021[14] - Workspace membership revenue decreased to RMB 161,336, down 12.8% from RMB 185,079 in the prior year[14] - Net loss attributable to Ucommune International Ltd for the six months ended June 30, 2022, was RMB 229,269, compared to a net loss of RMB 298,122 for the same period in 2021, representing a 23.1% improvement[19] - For the six months ended June 30, 2022, Ucommune reported a net loss of RMB 251,742 thousand, compared to a net loss of RMB 283,737 thousand for the same period in 2021, representing a decrease of approximately 11.2%[23] - Total comprehensive loss attributable to Ucommune International Ltd's shareholders for the six months ended June 30, 2022, was RMB 227,899 thousand, down from RMB 300,155 thousand in the prior year, indicating a reduction of about 24.1%[23] Assets and Liabilities - Total assets as of June 30, 2022, were RMB 1,342,088, down from RMB 1,873,015 as of December 31, 2021, reflecting a decrease of 28.3%[10] - Total liabilities decreased to RMB 1,191,411 as of June 30, 2022, from RMB 1,495,304 as of December 31, 2021, a reduction of 20.3%[10] - Ucommune's accumulated deficit increased to RMB 4,466,873 as of June 30, 2022, from RMB 4,237,604 as of December 31, 2021[10] - Ucommune's total shareholders' equity as of June 30, 2022, was RMB 150,677 thousand, a decrease from RMB 2,185,616 thousand as of December 31, 2021, indicating a significant decline of approximately 93.1%[28] Cash Flow and Financing - Cash and cash equivalents as of June 30, 2022, were RMB 80,941, a significant decrease of 51.1% from RMB 165,792 as of December 31, 2021[4] - The company experienced a net cash used in operating activities of RMB 107,225 thousand for the six months ended June 30, 2022, slightly improved from RMB 109,696 thousand in the same period of 2021[32] - Ucommune's net cash provided by financing activities was RMB (268) thousand for the six months ended June 30, 2022, a stark contrast to RMB 113,029 thousand in the same period of 2021, reflecting a significant change in financing strategy[32] - The company issued convertible bonds that generated RMB 17,684 thousand in cash during the six months ended June 30, 2022[32] Impairment and Expenses - The company reported an impairment loss on long-lived assets and long-term prepaid expenses of RMB 97,740 for the six months ended June 30, 2022[15] - The Group recorded impairment losses of RMB1,504,525 for the year ended December 31, 2021, and RMB43,011 for the six months ended June 30, 2022[75] - The company reported a stock-based compensation expense of RMB 183,659 thousand for the six months ended June 30, 2022, which is a new strategy to incentivize employees and align their interests with shareholders[28] Revenue Sources - The Group's workspace membership revenue is recognized under ASC 842, reflecting the primary source of its revenues[88] - The Group's marketing and branding services revenue is generated from advertising services, recognized over the service period[89] - Other services revenue includes interior design and construction revenue, co-working space management fees, SaaS services, and IOT solutions revenue, with design revenue recognized over time based on customer value[90] Tax and Legal Matters - The effective tax rate reconciliation showed a total tax expense of RMB 3,772 for the first half of 2022, compared to RMB 1,082 for the same period in 2021[140] - The company has no material unrecognized tax benefits that would favorably affect the effective income tax rate in future years[136] - The Group does not anticipate any material adverse outcomes from ongoing legal and regulatory proceedings[180] Future Outlook and Strategy - The company plans to transition from an asset-heavy model to an asset-light model to improve profitability and cash flow[60] - The company aims to raise additional capital, including debt financing, to support future operations and business development[60] - The Group continues to experience operating losses and negative cash flows, with expectations that this trend will persist in the foreseeable future[62]