Datasea (DTSS) Reports 81% Revenue Surge, Expands 5G AI Business and Acoustic Tech

Datasea Inc. (NASDAQ: DTSS), a Nevada-based digital technology company specializing in acoustic high-tech and 5G AI multimodal digital innovation, has reported strong financial results for the second fiscal quarter ended December 31, 2024. The company's revenue reached $20.5 million, up 81.4% year-over-year from $11.3 million, driven by the expansion of its 5G+AI multimodal digital business in China and the commercialization of acoustic high-tech products (Datasea, 2025).

The company's gross profit improved to $0.4 million, with a 2.0% margin, up from $0.1 million and a 0.9% margin in the previous year. Intangible assets increased significantly by 647% to $4.08 million, while inventory grew by 108.31% to $319,932 (Datasea, 2025).

Datasea secured new contracts worth approximately $30 million and was selected as a prospective strategic partner by China Mobile Internet. The company plans to expand globally, particularly in the U.S. market, through partnerships and M&A opportunities, focusing on scaling high-margin acoustic products and improving profitability (Datasea, 2025).



A deep dive into Datasea's Q2 FY2025 results reveals a complex financial picture that requires careful analysis. While the headline 81.4% revenue growth to $20.5 million appears impressive, the underlying financial metrics raise significant concerns about the business model's sustainability. The most pressing issue is the extremely low gross margin of 2.0%, which is unsustainable for a technology company operating in high-value segments like 5G+AI and acoustic technologies (Datasea, 2025).



The 647% increase in intangible assets to $4.08 million represents significant investment in intellectual property and patents. While this could create future competitive advantages, it also indicates substantial cash deployment that needs to generate returns in a market where technology rapidly becomes obsolete (Datasea, 2025).

The company's strategic pivot towards acoustic high-tech products and services appears promising for margin improvement, but execution risks remain substantial. The projected sale of 260,000 acoustic devices for $19 million in revenue implies an average selling price of $73 per unit, which seems aggressive for consumer health devices (Datasea, 2025).

The planned U.S. and European expansion will require significant capital investment and face intense competition from established players. The 108.31% inventory increase, while modest in absolute terms at $319,932, needs careful management to avoid obsolescence risks (Datasea, 2025).

The new contracts worth $30 million and partnership with China Mobile Internet demonstrate market validation, but the path to profitability remains unclear without substantial improvement in gross margins. The company's focus on scaling high-margin acoustic products is crucial, as the current margins in the 5G+AI business appear insufficient to support sustainable operations and growth (Datasea, 2025).

Datasea's Top Line Growth Fueled by the Expansion of its State-of-the-Art 5G+AI Multimodal Digital Segment in China
Datasea Inc. (NASDAQ: DTSS) ("Datasea", the "Company", "we", "us", or "our"), a Nevada−based technology company specializing in 5G+AI multimodal digital solutions and acoustic high−tech innovations, today announced its financial results for its second fiscal quarter ended December 31, 2024. The Company reported revenue of approximately $20.5 million, an increase of approximately 81.4% compared to revenue of approximately $11.3 million for the same period in the prior year. The increase was driven by the accelerated adoption of its 5G+AI multimodal digital business services in China due to the Company's continued commercialization of acoustic high-tech products. Ms. Zhixin Liu, CEO of Datasea, commented, "Our strong performance in the second fiscal quarter reflects the successful expansion of our 5G+AI multimodal digital business customer base, where we continue to be an industry leader. We believe the expanding footprint of our 5G+AI customer base and the initial market penetration of our high-margin acoustic products underscore our ability to innovate and capture emerging opportunities. We remain committed to advancing our technological innovation while driving sustainable growth." (Datasea, 2025)

Financial Highlights
Revenue: Revenue for the Company's second fiscal quarter of 2025 was approximately $20.5 million, an increase of approximately 81.4% compared to revenue of approximately $11.3 million for the second fiscal quarter of 2024. This increase was primarily driven by the growth of the Company's 5G+AI multimodal digital business in China, especially the continuous enhancement of the effectiveness and efficiency of 5G multimodal digital products and services through AI technology. (Datasea, 2025)

Gross Profit: Gross profit for the Company's second fiscal quarter of 2025 was approximately $0.4 million, and our gross margin for the second fiscal quarter was approximately 2.0%. This marks an improvement from the same period in the prior year when the Company recorded gross profit of approximately $0.1 million and a gross margin of approximately 0.9%. (Datasea, 2025)

Intangible Assets: As of December 31, 2024, and June 30, 2024, the Company's net value of intangible assets was $4,081,544 and $546,001, respectively, reflecting an increase of $3,535,543, or 647%. The increase in intangible assets is crucial to the Company's growth and success. The enhancement of intangible assets, including patents, has simultaneously increased the overall value of the business, promoted sustainable development, and contributed to the Company's long-term success. (Datasea, 2025)

Inventory: As of December 31, 2024, the Company's inventory was $319,932, an increase of $166,349 from $153,583 on June 30, 2024, marking an increase of 108.31%. The increase in inventory primarily reflects the continued rise in customer orders within the acoustic high-tech business. Maintaining an appropriate inventory level helps the Company address sudden surges in demand or price hikes, secure discounts through bulk purchases, reduce procurement costs, and ensure timely capture of sales opportunities during promotions or peak seasons. The inventory growth reflects the healthy expansion of the Company's business and strategic preparations for future growth. (Datasea, 2025)

Business Highlights – 5G+AI Multimodal Digital Business
Technological Leadership: The Company's AI multimodal models have made breakthroughs in areas such as sentiment analysis, machine translation, and natural language processing, expanding the boundaries of intelligent system applications. Currently, the Company is integrating DeepSeek's distributed training methods and mixed-precision training techniques, utilizing half-precision (FP16) and single-precision (FP32) floating-point numbers. After fusing multiple sensory inputs, the models are able to enhance data understanding, analysis accuracy, and decision-making reliability. In line with the Company's business needs, a self-designed Transformer model architecture has been developed, which is capable of processing inputs from multiple modalities in parallel. Datasea's 5G+AI platform incorporates this architecture, utilizing the self-attention mechanism to deeply learn the complex interactions between modalities. This approach excels in applications such as image-text correlation analysis and audio-video synchronization. After integrating DeepSeek's training methods, the platform will further advance in areas such as natural language generation, multilingual processing, code optimization, and logical reasoning, providing more comprehensive and accurate responses. (Datasea, 2025)

Key Contracts: The Company's subsidiaries have signed new contracts worth up to an aggregate of approximately $30 million with Qingdao Ruizhi Yixing, Wuhan Xiaoming Technology, and other clients since last quarter, further reinforcing market penetration. (Datasea, 2025)

Strategic Collaboration: We were selected as a prospective strategic partner by China Mobile Internet. (Datasea, 2025)

With the New Agreements, Products to be Placed in a Total of 463 New Stores with Total Projected Sales of 260,000 Units and Revenue of $19 Million Expected by Year End 2025
BEIJING, Jan. 23, 2025 /PRNewswire/ -- Datasea Inc. (Nasdaq: DTSS), a Nevada-based digital technology company specializing in acoustic high-tech and 5G AI multimodal digital innovation ("Datasea" or "the Company"), today announced a major update