BEIJING, Aug. 21 /PRNewswire-Asia/ -- China Finance Online Co. Limited (Nasdaq: JRJC), a leading Chinese online financial information and listed company data provider, today announced its financial results for the second quarter ended June 30, 2009:
Q2 2009 Highlights
Second Quarter
2009 2008
1) Financial Data: (in thousands of U.S. dollars,
except per ADS data)
Net revenues 12,280 14,679
GAAP net income (loss) attributable to
China Finance Online Co. Limited (2,396) 4,561
Non-GAAP net income (loss) attributable
to China Finance Online Co. Limited (761) 6,528
GAAP net income (loss) attributable to
China Finance Online Co. Limited per ADS
Basic (0.11) 0.23
Diluted (0.11) 0.20
Non-GAAP net income (loss) attributable to
China Finance Online Co. Limited per ADS
Basic (0.04) 0.33
Diluted (0.04) 0.28
2) Operating Data:
Registered users 12,400,000 10,500,000
Active paid individual subscribers 109,900 100,600
* Due to the growth in prepaid subscription service fees, deferred revenue
on the balance sheet at the end of Q2 2009 reached the Company's record
high of $41.79 million, up 20% year-over-year and up 29% quarter-over-
quarter. Deferred revenue represents upfront service fees made by
customers for subscription services that have not been rendered as at
June 30, 2009.
* Net revenues were $12.28 million for Q2 2009, up 4% quarter-over-quarter,
exceeded the high end of the Company's prior guidance of $10.8 to 11.8
million.
* Registered user accounts of jrj.com and stockstar.com grew to 12.40
million, an increase of 670,000 from the previous quarter. Active paid
individual subscribers, which refer to individual investors who
subscribe for a fee to our products through downloading, via web or by
mobile phones, were 109,900. As of June 30, 2009, our Hong Kong
brokerage operation Daily Growth had approximately 1,330 customer
accounts.
Explanation of the Company's non-GAAP financial measures and the related reconciliations to GAAP financial measures are included in the accompanying "Non-GAAP Measures" and "Reconciliations from net income attributable to China Finance Online Co. Limited to adjusted EBITDA".
Q2 2009 Financial Results
Net Revenues:
For the second quarter of 2009, China Finance Online reported net revenues of $12.28 million, compared to $14.68 million for the same period in 2008, and $11.76 million for the first quarter of 2009, down 16% year-over-year and up 4% quarter-over-quarter. Revenues from subscription service fees paid by individual customers were $10.71 million in the second quarter of 2009, representing 88% of net revenues for the quarter. Revenues from mobile value added services were $271,000, representing 2% of net revenues for the quarter. Revenues from subscription service fees paid by institutional customers were $279,000 in the second quarter of 2009, representing 2% of net revenues for the quarter. Revenues from advertising-related business for the quarter contributed $774,000, representing 6% of net revenues for the quarter. Revenues from brokerage-related services, provided by Daily Growth, were $206,000 in the second quarter of 2009, representing 2% of net revenue for the quarter. Other revenues were $41,000, less than 1% of net revenues for the quarter.
Revenues breakdown is summarized in the following table:
Three months ended
June 30, 2009 March 31, 2009 June 30, 2008
(In thousands of U.S. dollars)
1) Subscription service
fees paid by individual
customers 10,709 88% 10,701 91% 13,133 89%
2) Revenues from mobile
value added services 271 2% 195 2% 370 3%
3) Subscription service
fees paid by
institutional
customers 279 2% 282 2% 267 2%
4) Revenues from
advertising-related
business 774 6% 430 4% 758 5%
5) Revenues from
brokerage-related
services 206 2% 109 1% 121 1%
6) Revenues from others 41 <1% 38 <1% 30 <1%
Total net revenues 12,280 100% 11,755 100% 14,679 100%
Gross Profit:
Gross profit for the quarter was $10.25 million, compared to $12.58 million for the same period in 2008 and $10.22 million for the first quarter of 2009. Gross margin was 83% in the second quarter of 2009, compared to 86% in the same period of 2008 and 87% in the first quarter of 2009.
A large portion of costs of revenue are website maintenance expenses, which consist of bandwidth costs, personnel-related expenses, server depreciation expenses, and content expenses for our jrj.com and stockstar.com websites. Website maintenance expenses for the second quarter of 2009 were $1.51 million, compared to $1.12 million for the second quarter of 2008 and $1.19 million for the previous quarter. As a percentage of net revenue, website maintenance expenses for the second quarter of 2009 were 12%, compared to 8% for the second quarter of 2008 and 10% for the previous quarter.
Operating Expenses:
Operating expenses for the second quarter of 2009 totalled $13.62 million compared to $9.0 million for the same period in 2008 and $10.50 million for the previous quarter. Excluding stock-based compensation of $1.63 million, operating expenses was $11.99 million for the second quarter of 2009, compared to $7.03 million for the second quarter of 2008 and $8.75 million for the first quarter of 2009. As a percentage of net revenue for the quarter, operating expenses excluding stock-based compensation were 98%, compared to 48% for the second quarter of 2008 and 74% for the first quarter of 2009.
-- General and administrative expenses for the quarter were $4.03 million,
compared to $4.12 million for the same period of 2008 and $3.92 million
from the previous quarter. Excluding stock-based compensation of $1.60
million, general and administrative expenses were $2.43 million for the
second quarter, compared to $2.23 million in the second quarter of 2008
and $2.24 million in the previous quarter. As a percentage of net
revenue, general and administrative expenses excluding stock-based
compensation for the second quarter was 20%, and compared to 15% for
the second quarter of 2008 and 19% for the first quarter of 2009.
-- Sales and marketing expenses for the second quarter were $6.56 million,
compared to $3.64 million for the same period in 2008 and $4.63 million
for the previous quarter. The increase from previous quarter is
primarily due to the increase in commission, bonus and marketing
expenses. Excluding stock-based compensation of $22,000, sales and
marketing expenses was $6.54 million for the second quarter, compared
to $3.57 million in the second quarter of 2008 and $4.58 million in the
previous quarter. As a percentage of net revenue, sales and marketing
expenses excluding stock-based compensation for the second quarter was
53%, and increased from 24% for the same quarter of 2008, and 39% for
the first quarter of 2009.
-- Product development expenses for the second quarter were $3.03 million,
compared to $1.24 million for the same period in 2008 and $1.95 million
for the previous quarter. The increase from previous quarter is
primarily due to the increase in bonus and salary compensation.
Excluding stock-based compensation of $13,000, product development
expenses were $3.02 million, compared to $1.23 million in the second
quarter of 2008 and $1.93 million in the previous quarter. As a
percentage of net revenue, product development expenses excluding
stock-based compensation for the second quarter was 25%, increased from
8% for the same quarter of 2008, and 16% for the first quarter of 2009.
Income (Loss) from Operations:
Loss from operations for the second quarter of 2009 was $3.22 million, compared to income from operations of $3.58 million for the same quarter of 2008, and loss from operations of $207,000 for the first quarter of 2009. Adjusted loss from operations (non-GAAP), which is defined as loss from operations excluding stock-based compensation expenses of $1.63 million, was $1.59 million for the quarter, compared to adjusted income from operations (non-GAAP) of $5.54 million for the same quarter of 2008 and $1.54 million for the first quarter of 2009.
Net Income (Loss) Attributable to China Finance Online Co. Limited and Non-GAAP Net Income (Loss) Attributable to China Finance Online Co. Limited:
Net loss attributable to China Finance Online Co. Limited for the second quarter was $2.40 million, compared to net income attributable to China Finance Online Co. Limited of $4.56 million for the second quarter of 2008, and net loss attributable to China Finance Online Co. Limited of $128,000 for the first quarter of 2009. Net income margin was -20% for the second quarter of 2009, compared to 31% for the same period of 2008 and -1% for the first quarter of 2009.
Total income tax benefit for the quarter was $538,000, compared to $88,000 for the same period of 2008, and income tax provision of $190,000 for the previous quarter.
Non-GAAP net loss attributable to China Finance Online Co. Limited, which is defined as net loss attributable to China Finance Online Co. Limited excluding stock-based compensation expenses, was $761,000 for the second quarter of 2009, compared to non-GAAP net income attributable to China Finance Online Co. Limited of $6.53 million for the second quarter of 2008, and $1.62 million for the first quarter of 2009. Excluding stock-based compensation expenses, non-GAAP net income margin for the second quarter of 2009 was -6%, compared to non-GAAP net income margin of 44% for the same period of 2008 and 14% for the first quarter of 2009.
As part of the net loss attributable to China Finance Online Co. Limited for the second quarter of 2009, the Company recorded a foreign exchange loss of $16,000, compared with net foreign exchange gain of $559,000 for the second quarter of 2008 and foreign exchange gain of $16,000 for the previous quarter.
Deferred Revenue:
Deferred revenue at the end of the second quarter of 2009, which represents prepaid service fees made by customers for subscription services that have not been rendered as of June 30, 2009, was $41.79 million, with current deferred revenue of $28.27 million and non-current deferred revenue of $13.52 million.
Cash and Cash Equivalents:
Balance of cash and cash equivalents was approximately $100.63 million at the end of the second quarter of 2009, including cash denominated in RMB with an equivalent to $86.55 million and cash denominated in other foreign currencies with an equivalent to $14.08 million.
Cash Flow:
Cash inflow from subscription services provided to individual customers was $21.03 million, compared to $16.72 million for the second quarter of 2008 and $5.60 million for the previous quarter.
Adjusted EBITDA (Non-GAAP):
Adjusted EBITDA (non-GAAP), which is defined as earnings before interest, taxes, depreciation, amortization, other non-operating income, loss from impairment of cost method investment and stock-based compensation expenses, was -$899,000 for the second quarter of 2009, compared to $6.0 million in the second quarter of 2008 and $2.20 million in the previous quarter.
Other Operating Metrics
As of June 30, 2009, the Company has 12.40 million registered user accounts on its two websites jrj.com and stockstar.com, compared to 11.73 million in the previous quarter, an increase of 670,000 quarter-on-quarter.
Active paid individual subscribers were 109,900 at the end of the second quarter 2009.
As of June 30, 2009, our Hong Kong based brokerage service Daily Growth had approximately 1,330 customer accounts.
Outlook for Third Quarter 2009
The Company believes that Chinese economy is still in a slow rebound mode after bottoming from the crisis, and the path to a full recovery will be choppy, as such, the volatile domestic equity market will continue to influence the Company's operating results in the coming quarters.
The Company currently expects to generate net revenues in an amount ranging from $12.0 million to $13.0 million for the third quarter of 2009, compared to $15.23 million in the corresponding period in 2008, and $12.28 million in the prior quarter.
For 2009, the Company will focus effort and invest resources to upgrade key areas of its operations, such as people, data, products, customers, technologies and execution, thus build a solid foundation to sustain healthy long-term growth. At the same time, management understand challenges ahead and will be extremely prudent to manage balance sheet while deploying necessary resources in core areas. The Company intends to achieve free cash flow positive in 2009 on a full year basis, excluding potential M&A activities.
The above forecast reflects the Company's current and preliminary view, which is subject to change. A number of important factors including, but not limited to, fluctuation in the Chinese stock market, could cause the actual results to differ materially from those contained in the above guidance.
Conference Call
China Finance Online's management team will host a conference call at 8:00PM Eastern Daylight Time on August 20, 2009 (or 8:00AM August 21, 2009 in the Beijing/HK time zone) following the announcement to discuss detailed operating results.
The conference call will be available on webcast live and replay at: http://tinyurl.com/JRJCCall. The call will be archived for 12 months at this website.
The dial-in details for the live conference call: U.S. Toll Free Number +1-877-847-0047, Hong Kong Dial In Number +852-3006-8101, and France Toll Free Number 0800-910-584, Password for all regions: 4873.
A replay of the conference call will be available from approximately 11:00PM Eastern Daylight Time on August 20, 2009 (or 11:00AM August 21, 2009 in the Beijing/HK time zone) to 11:00PM Eastern Daylight Time on August 27, 2009 (or 11:00AM August 28, 2009 in the Beijing/HK time zone). The dial-in details for the replay: U.S. Toll Free Number +1-866-572-7808, Hong Kong Dial In Number +852-3012-8000, U.K. Toll Free Number 0808 101 1302, and Access code: 054791.
About China Finance Online Co. Limited
China Finance Online Co. Limited is the market leader in providing online financial and listed company data, information and analytics in China. Through its websites, http://www.jrj.com and http://www.stockstar.com , the Company provides individual users with subscription-based service packages that integrate financial and listed company data, information and analytics from multiple sources with features and functions such as data and information search, retrieval, delivery, storage and analysis. These features and functions are delivered through proprietary software available by download, through internet or through mobile handsets. Through its subsidiary, Shenzhen Genius Information Technology Co. Ltd, the Company provides financial information database and analytics to institutional customers including domestic securities and investment firms. Through its subsidiary, Daily Growth Investment Company Limited, the Company provides securities brokerage services for stocks listed on Hong Kong Stock Exchange.
Safe Harbor Statements
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995.
Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but not limited to, our historical and possible future losses, limited operating history, uncertain regulatory landscape in the People's Republic of China, fluctuations in quarterly operating results, our ability to successfully compete against new and existing competitors, our reliance on relationships with Chinese stock exchanges and raw data providers, changes in accounting policies, our ability to successful acquire and integrate businesses and the impact of our investments on our financial results. Further information regarding these and other risks is included in China Finance Online's annual report on Form 20-F for the year ended December 31, 2008, and other filings with the Securities and Exchange Commission. China Finance Online does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
Non-GAAP Measures
To supplement the unaudited condensed consolidated financial information presented in accordance with Accounting Principles Generally Accepted in the United States of America ("GAAP"), the Company uses non-GAAP measures of income from operations, net income attributable to China Finance Online Co. Limited, net income attributable to China Finance Online Co. Limited per share and net income attributable to China Finance Online Co. Limited per ADS, which are adjusted from results based on GAAP to exclude the stock-based compensation expenses. Adjusted EBITDA (non-GAAP) is defined as earnings before interest, taxes, depreciation, amortization, other non-operating income, loss from impairment of cost method investment and stock-based compensation expenses. The non-GAAP financial measures are provided to enhance the investors' overall understanding of the Company's current and past financial performance in on-going core operations as well as prospects for the future. These measures should be considered in addition to results prepared and presented in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and therefore deems it important to provide all of this information to investors.
China Finance Online Co. Limited
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
Jun. 30, 2009 Dec. 31, 2008
Assets
Current assets:
RMB account 86,547 80,308
Foreign currency account 14,081 17,236
Cash and cash equivalents 100,628 97,544
Trust bank balances held on behalf of
customers 3,343 2,010
Advance to employees -- 161
Accounts receivable, net 2,765 2,876
Advance to customers 2,482 --
Prepaid expenses and other current assets 7,851 8,582
Deferred tax assets, current 2,913 2,526
Total current assets 119,982 113,699
Cost method investment 1,480 1,480
Property and equipment, net 9,496 8,589
Acquired intangible assets, net 3,281 3,473
Rental deposits 758 592
Goodwill 12,564 12,019
Deferred tax assets, non-current 2,532 1,754
Other deposits 218 218
Total assets 150,311 141,824
Liabilities and shareholders' equity
Current liabilities:
Deferred revenue, current 28,268 28,202
Accrued expenses and other current
liabilities 5,577 4,897
Amount due to customers for trust bank
balances held on behalf of customers 3,343 2,010
Accounts payable 372 222
Deferred tax liability, current 562 --
Income taxes payable 148 142
Total current liabilities 38,270 35,473
Deferred tax liability, non-current 708 623
Deferred revenue, non-current 13,519 8,786
Total liabilities 52,497 44,882
Total shareholders' equity 97,814 96,942
Total liabilities and shareholders' equity 150,311 141,824
China Finance Online Co. Limited
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of U.S. dollars, except per share data)
Three months ended Six months ended
Jun. 30, Jun. 30, Mar. 31, Jun. 30, Jun. 30,
2009 2008 (As 2009 2009 2008 (As
(1) adjusted)(2) (1) (1) adjusted)(2)
Net revenues 12,280 14,679 11,755 24,035 25,734
Cost of
revenues (2,032) (2,101) (1,531) (3,563) (3,818)
Gross profit 10,248 12,578 10,224 20,472 21,916
Operating
expenses
General and
administrative
(includes
share-based
compensation
expense of
$1,600, $1,888,
$1,681, $3,281,
and $4,164,
respectively) (4,032) (4,121) (3,923) (7,955) (8,038)
Sales and
marketing
(includes
share-based
compensation
expense of
$22, $66, $46,
$68, and $133,
respectively) (6,560) (3,639) (4,625) (11,185) (6,091)
Product
development
(includes
share-based
compensation
expense of
$13, $13, $21,
$34, and $36,
respectively) (3,030) (1,241) (1,949) (4,979) (2,236)
Total operating
expenses (13,622) (9,001) (10,497) (24,119) (16,365)
Subsidy income 150 -- 66 216 --
Income
(loss) from
operations (3,224) 3,577 (207) (3,431) 5,551
Interest
income 302 345 298 600 689
Other income
(expenses), net 4 (11) (45) (41) (9)
Exchange gain
(loss), net (16) 559 16 -- 1,429
Income (loss)
before income
tax benefit
(provision) (2,934) 4,470 62 (2,872) 7,660
Income tax
benefit
(provision) 538 88 (190) 348 152
Purchased pre-
acquisition
earning -- -- -- -- 227
Net income
(loss) (2,396) 4,558 (128) (2,524) 8,039
Less: Net loss
attributable
to the non-
controlling
interest (2) -- 3 -- -- 31
Net income
(loss)
attributable
to China
Finance
Online Co.
Limited (2,396) 4,561 (128) (2,524) 8,070
Income (loss)
per share
Basic (0.02) 0.05 0.00 (0.02) 0.08
Diluted (0.02) 0.04 0.00 (0.02) 0.07
Income (loss)
per ADS
Basic (0.11) 0.23 (0.01) (0.12) 0.41
Diluted (0.11) 0.20 (0.01) (0.12) 0.35
Weighted
average
ordinary
shares
Basic 104,810,265 98,829,766 103,992,162 104,403,473 98,738,024
Diluted 104,810,265 114,810,694 103,992,162 104,403,473 114,292,220
Weighted
average
ADSs
Basic 20,962,053 19,765,953 20,798,432 20,880,695 19,747,605
Diluted 20,962,053 22,962,139 20,798,432 20,880,695 22,858,444
China Finance Online Co. Limited
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
Three months ended
Jun. 30, Jun. 30, Mar. 31,
2009 2008 2009
Cash flows from operating activities:
Net income (loss) (2,396) 4,558 (128)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Stock-based compensation 1,635 1,967 1,748
Depreciation and amortization 690 455 656
Deferred taxes (684) (94) 151
Loss on disposal of property and equipment -- 11 34
Changes in assets and liabilities:
Accounts receivable (533) (2,643) 641
Advance to customers (2,482) -- --
Prepaid expenses and other current assets 117 (3,777) 1,142
Advance to employees -- (1,013) 161
Trust bank balances held on behalf of
customers (869) (1,585) (463)
Rental deposits (179) (34) 12
Deferred revenue 9,270 4,214 (4,416)
Accounts payable 223 29 (89)
Amount due to customers for trust bank
balances held on behalf of customers 869 1,585 463
Accrued expenses and other current
liabilities 1,321 669 (564)
Income taxes payable 104 (76) (97)
Net cash provided by (used in)
operating activities 7,086 4,266 (749)
Cash flows from investing activities:
Acquisition of businesses (293) (628) (556)
Purchase of property and equipment (2,116) (2,269) (191)
Net cash used in investing activities (2,409) (2,897) (747)
Cash flows from financing activities:
Proceeds from stock options exercised by
employees 24 312 24
Proceeds from capital injection -- 1,006 --
Net cash provided by financing activities 24 1,318 24
Effect of exchange rate changes 28 843 (173)
Net increase in cash and cash equivalents 4,729 3,530 (1,645)
Cash and cash equivalents, beginning of
period 95,899 82,398 97,544
Cash and cash equivalents, end of period 100,628 85,928 95,899
Non-GAAP Measures
Three months ended Jun. 30, 2009
(U.S. Dollar in thousands)
GAAP Result Adjustment Non-GAAP
(a) Results
Income (loss) from operations (3,224) 1,635 (1,589)
Three months ended Jun. 30, 2008
(U.S. Dollar in thousands)
GAAP Result Adjustment Non-GAAP
(a) Results
Income (loss) from operations 3,577 1,967 5,544
Three months ended Mar. 31, 2009
(U.S. Dollar in thousands)
GAAP Result Adjustment Non-GAAP
(a) Results
Income (loss) from operations (207) 1,748 1,541
Three months ended Jun. 30, 2009
(U.S. Dollar in thousands)
GAAP Result Adjustment Non-GAAP
(a) Results
Net income (loss) attributable
to China Finance Online Co.
Limited (2,396) 1,635 (761)
Three months ended Jun. 30, 2008
(U.S. Dollar in thousands)
GAAP Result Adjustment Non-GAAP
(a) Results
Net income (loss) attributable
to China Finance Online Co.
Limited 4,561 1,967 6,528
Three months ended Mar. 31, 2009
(U.S. Dollar in thousands)
GAAP Result Adjustment Non-GAAP
(a) Results
Net income (loss) attributable
to China Finance Online Co.
Limited (128) 1,748 1,620
(a) The adjustment is for share-based compensation expenses.
Reconciliations from net income (loss) attributable to China Finance
Online Co. Limited to adjusted EBITDA
Three months Three months Three months
ended Jun. 30, ended Jun. 30, ended Mar. 31,
2009 2008 2009
(U.S. Dollar in thousands)
Net income (loss) attributable
to China Finance Online Co.
Limited (2,396) 4,561 (128)
Adjustment
Interest income (302) (345) (298)
Income tax benefit
(provision) (538) (88) 190
Other income and expenses 12 (551) 29
Depreciation 579 375 545
Amortization of intangibles
and others 111 80 111
Share-based compensation 1,635 1,967 1,748
Adjusted EBITDA (899) 5,999 2,197
(1) Effective January 1, 2009, the Company adopted SFAS 160. SFAS 160,
which was
retrospectively applied.
(2) Income statements for three months and six months ended June 30, 2008
were extracted from the form 6-K for the quarter ended June 30, 2008,
as adjusted resulting from the adoption of Statement of Financial
Accounting Standards No. 160.
