August 13, 2018

Seven Stars Cloud’s 2Q net falls on increased overhead

Seven Stars Cloud, the New York fintech planning to bring hundreds of jobs to UConn's former West Hartford campus, posted more red ink during the second quarter despite a revenue surge.

For the quarter ended June 30, SSC recorded a net loss of $8.6 million, or a loss of 12 cents a diluted share, compared to a $3.8 million loss, or 6 cents a diluted share loss, in the year-ago period.

Revenue rose to $132.9 million from $43.3 million recorded in the same period last year mainly due to SSC expanding its supply chain business, which will be a large focus of the company's $280 million West Hartford innovation hub that also aims to prioritize artificial intelligence.

Higher revenues were offset by a significant spike in expenses. The company's cost of revenue totaled $131.1 million during the quarter vs. $43.3 million in the year-ago period. SSC says the spike aligns with its revenue growth.

Operating expenses, meantime, rose to $10.1 million compared to $3.8 million in the year-ago period.

As reported last week, SSC said it raised $12 million from private equity firm Advantech Capital Investment II Ltd.

But the fintech also said it reduced the size of a previously announced funding deal, restructuring a $40 million private placement agreement with Singapore-based digital technology and lifestyle company GT Dollar Pte. Ltd. to a $10 million stock purchase agreement.

Connecticut will provide SSC a forgivable $10 million loan for renovations at the West Hartford campus that Gov. Dannel P. Malloy has said will create 330 jobs.

SSC will retain its corporate headquarters in New York.

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