SHANGHAI, China, May 15 /Xinhua-PRNewswire/ -- SINA Corporation (Nasdaq: SINA), a leading online media company and mobile value-added service (MVAS) provider for China and for the global Chinese communities, today announced its unaudited financial results for the quarter ended March 31, 2008.
First Quarter 2008 Highlights
-- Net revenues increased 39% year over year to $71.3 million, exceeding
the Company's guidance of between $66.0 million and $68.0 million.
-- Advertising revenues increased 51% year over year to $47.8 million,
exceeding the Company's guidance of between $45.0 million and $46.0
million.
-- Non-advertising revenues increased 20% year over year to $23.5 million,
exceeding the Company's guidance of between $21.0 million and $22.0
million.
-- GAAP net income increased 87% year over year to $16.1 million or $0.27
diluted net income per share.
-- Non-GAAP net income* increased 73% year over year to $19.6 million, or
$0.33 diluted non-GAAP net income per share.
* Non-GAAP measures are described below and reconciled to the
corresponding GAAP measures in the section below entitled
"Reconciliation of Non-GAAP to GAAP Results."
"We had an excellent first quarter to start the year 2008," said Charles Chao, CEO of SINA. "The growth of our advertising revenues has been accelerating and our mobile business has continued its rebound. Our outstanding performance in the advertising business is a strong indication that SINA's position as the leading online media and branded advertising platform in China has been further enhanced. We are equally pleased with our continued success in building our Web 2.0 product lines with the launch of SINA Space and SINA TV."
Financial Results
For the first quarter of 2008, SINA reported total revenues of $71.3 million, compared to $51.3 million in the same period in 2007 and $70.7 million for the fourth quarter of 2007.
Advertising revenues for the first quarter of 2008 totaled $47.8 million, representing a 51% increase from the same period last year and a 5% decrease from last quarter. Advertising revenues in China totaled $47.0 million for the first quarter of 2008, representing an increase of 52% from same period last year and a decrease of 4% from last quarter. The quarter over quarter decrease in advertising revenues was mainly due to seasonality, as the first quarter has historically been the Company's weakest quarter for advertising revenues. Advertising revenues in the first quarter of 2008 represented 67% of total revenues, up from 62% in the same period last year.
For the first quarter of 2008, MVAS revenues, which accounted for 92% of non-advertising revenues during the quarter, reached $21.7 million, representing an increase of 19% from the same period last year and 16% from last quarter.
Gross margin for the first quarter of 2008 was 59%, flat over the same period last year and down from 62% last quarter. Advertising gross margin for the first quarter of 2008 was 60%, compared to 58% in the same period last year and 64% in the previous quarter. Excluding stock-based compensation, non-GAAP advertising gross margin for the first quarter of 2008 was 62%, compared to 59% in the same period last year and 65% in the previous quarter. The year over year increase in advertising gross margin was mainly due to advertising revenue growing faster than advertising cost of sales. On a sequential basis, advertising gross margin declined due to lower advertising revenues while bandwidth and content costs increased.
MVAS gross margin for the first quarter of 2008 was 56%, compared to 60% in the same period last year and flat over last quarter. The year over year decrease in MVAS gross margin was mainly related to increased content and channel costs.
Operating expenses for the first quarter of 2008 totaled $28.7 million, an increase of 25% from the same period last year and an increase of 1% from last quarter. Non-GAAP operating expenses for the first quarter of 2008, which exclude stock-based compensation and amortization expense of intangible assets, was $25.8 million, representing a 24% increase from the same period last year and flat over last quarter. The year over year increase in operating expenses primarily relates to higher marketing spending and higher engineering-related payroll and other personnel costs.
Interest and other income for the first quarter of 2008 was $6.2 million, an increase of 134% from the same period last year and an increase of 66% from last quarter. Other income includes net foreign exchange gains of $2.7 million in the first quarter of 2008, compared to $0.1 million from the same period last year and $0.6 million from last quarter.
Provision for income taxes for the first quarter of 2008 was $3.6 million, an increase of 159% from the same period last year and an increase of 87% from last quarter. The Company made a provision for income taxes for the first quarter of 2008 assuming an effective tax rate of 18%. On January 1, 2008, a new Enterprise Income Tax ("EIT") Law came into effect in China. As of March 31, 2008, the criteria for which the Company must meet to renew its new or high technology status under the new EIT Law were undefined. Consequently, the Company made an income tax provision for the first quarter of 2008, without considering the tax benefits as a qualified new or high technology enterprise in China. Should the Company receive the new or high technology status under the new EIT Law, its effective income tax rate may decrease to within the range of 13-14 %, retroactive to January 1, 2008, and any excess accrual made to date would be reversed.
Net income for the first quarter of 2008 was $16.1 million, or $0.27 diluted net income per share, compared to $8.6 million, or $0.15 diluted net income per share, for the same period last year. Non-GAAP net income for the first quarter of 2008 was $19.6 million, or $0.33 diluted non-GAAP net income per share, compared to $11.4 million, or $0.19 diluted non-GAAP net income per share, for the same period last year.
As of March 31, 2008, SINA's cash, cash equivalents and short-term investments totaled $511.6 million, compared to $382.7 million and $478.0 million as of March 31, 2007 and December 31, 2007, respectively. Cash flow from operating activities for the first quarter of 2008 was $23.3 million, compared to $16.6 million for the same period last year and $31.9 million last quarter.
Announcements
The Company announced that Herman Yu, Chief Financial Officer, is scheduled to present at the Oppenheimer Dragon Call Conference in New York City on Tuesday, May 20, 2008.
Date: Tuesday, May 20, 2008
Time: 9:55 am Local Time
Place: Oppenheimer & Co. Executive Conference Center, 300 Madison Avenue,
NYC
The Company also announced that Charles Chao, Chief Executive Officer, is scheduled to present at the Goldman Sachs 9th Annual Internet Conference in Las Vegas on Wednesday, May 21, 2008.
Date: Wednesday, May 21, 2008
Time: 2:35 pm Local Time
Place: The Bellagio, Las Vegas
In addition, the Company announced that its Board of Directors has approved the promotion of Yan Wang from Vice Chairman and Acting Chairman to Chairman of the Board as of May 13, 2008.
Business Outlook
The Company estimates its total revenues for the second quarter of 2008 to be between $88.0 million and $90.0 million, with advertising revenues to be between $64.0 million and $65.0 million and non-advertising revenues to be between $24.0 million and $25.0 million. Stock-based compensation for the second quarter of 2008 is expected to be approximately $4.0 million, which excludes any new shares that may be granted.
Non-GAAP Measures
This release contains non-GAAP financial measures. These non-GAAP financial measures, which are used as measures of the Company's performance, should be considered in addition to, not as a substitute for, measures of the Company's financial performance prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP"). The Company's non-GAAP financial measures may be defined differently than similar terms used by other companies. Accordingly, care should be exercised in understanding how the Company defines its non-GAAP financial measures.
Reconciliations of the Company's non-GAAP measures to the nearest GAAP measures are set forth in the section below titled "Reconciliation of Non-GAAP to GAAP Results." These non-GAAP measures include non-GAAP gross profit, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income, non-GAAP diluted net income per share and non-GAAP advertising gross margin.
The Company's management uses non-GAAP financial measures to gain an understanding of the Company's comparative operating performance (when comparing such results with previous periods or forecasts) and future prospects. The Company's non-GAAP financial measures exclude certain special items, including stock-based compensation charge, amortization of intangible assets and amortization of convertible debt issuance costs from its internal financial statements for purposes of its internal budgets. Non-GAAP financial measures are used by the Company's management in their financial and operating decision-making, because management believes they reflect the Company's ongoing business in a manner that allows meaningful period-to-period comparisons. The Company's management believes that these non-GAAP financial measures provide useful information to investors and others in the following ways: 1) in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose, and 2) in comparing in a consistent manner the Company's current financial results with the Company's past financial results. The Company's management further believes the non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses, gains and losses (i) that are not expected to result in future cash payments or (ii) that are non-recurring in nature or may not be indicative of its core operating results and business outlook.
The Company's management believes excluding stock-based compensation from its non-GAAP financial measures is useful for itself and investors as such expense will not result in future cash payment and is otherwise unrelated to the Company's core operating results.
The Company's management believes excluding the non-cash amortization expense of intangible assets resulting from business acquisitions from its non-GAAP financial measures of operating expenses, income from operations and net income is useful for itself and investors because they enable a more meaningful comparison of the Company's cash performance between reporting periods. In addition, such charges will not result in cash settlement in the future.
The Company's management believes excluding non-cash amortization expense of issuance cost relating to convertible bonds from its non-GAAP financial measure of net income is useful for itself and investors as such expense does not have any impact on cash earnings.
The non-GAAP financial measures have limitations. They do not include all items of income and expense that affect the Company's operations. Specifically, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and, with respect to the non-GAAP financial measures that exclude certain items under GAAP, do not reflect any benefit that such items may confer to the Company. Management compensates for these limitations by also considering the Company's financial results as determined in accordance with GAAP.
Conference Call
SINA will host a conference call at 9:00 p.m. Eastern Time today to present an overview of the Company's financial performance and business operations for the first quarter of 2008. The dial-in number for the call is +1-617-614-4070. The pass code is 47329371. A live Webcast of the call will be available from 9:00 p.m. - 10:00 p.m. ET on Wednesday, May 14, 2008 (9:00 a.m. - 10:00 a.m. Beijing Time on May 15, 2008). The call can be accessed through SINA's corporate web site at http://corp.sina.com . The call will be archived for 12 months on SINA's corporate web site at http://corp.sina.com . A replay of the conference call will be available through May 21, 2008 at midnight eastern time. The dial-in number is +1-617-801-6888. The pass code for the replay is 13389883.
About SINA
SINA Corporation (Nasdaq GS: SINA) is a leading online media company and mobile value-added service provider for China and for global Chinese communities. With a branded network of localized web sites targeting Greater China and overseas Chinese, the Company provides services through five major business lines including SINA.com (online news and content), SINA Mobile (mobile value-added services or "MVAS"), SINA Community (Web 2.0-based services and games), SINA.net (search and enterprise services) and SINA
E-Commerce (online shopping). Together these business lines provide an array of services including region-focused online portals, MVAS, search and directory, interest-based and community-building channels, free and premium email, blog services, audio and video streaming, online games, classified listings, fee-based services, e-commerce and enterprise e-solutions.
Safe Harbor Statement
This announcement contains forward-looking statements that relate to, among other things, SINA's expected financial performance (as described without limitation in the "Business Outlook" section and in quotations from management in this press release) and SINA's strategic and operational plans. SINA may also make forward-looking statements in the Company's periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in its proxy statements, in its offering circulars and prospectuses, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. SINA assumes no obligation to update the forward-looking statements in this release and elsewhere. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. 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 are not limited to, SINA's limited operating history, the uncertain regulatory landscape in the People's Republic of China, including how the new EIT will be implemented, the changes by mobile operators in China to their policies for MVAS, the Company's ability to develop and market other MVAS products, fluctuations in quarterly operating results, the Company's reliance on online advertising sales and MVAS for a majority of its revenues, the Company's reliance on mobile operators in China to provide MVAS, any failure to successfully develop and introduce new products and any failure to successfully integrate acquired businesses. Further information regarding these and other risks is included in SINA's Annual Report on Form 10-K for the year ended December 31, 2006 and its other filings with the Securities and Exchange Commission.
SINA CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. Dollar in thousands, except per share data)
Three months ended
March 31, December 31,
2008 2007 2007
Net revenues:
Advertising $47,836 $31,767 $50,130
Non-advertising 23,479 19,513 20,559
71,315 51,280 70,689
Cost of revenues:
Advertising (a) 19,032 13,342 18,017
Non-advertising 10,178 7,514 8,735
29,210 20,856 26,752
Gross profit 42,105 30,424 43,937
Operating expenses:
Sales and marketing (a) 14,997 11,064 15,198
Product development (a) 6,014 4,799 5,905
General and administrative (a) 7,411 6,657 6,903
Amortization of intangibles 257 403 258
28,679 22,923 28,264
Income from operations 13,426 7,501 15,673
Non-operating income:
Interest and other income, net 6,220 2,660 3,748
Amortization of convertible debt
issuance cost -- (171) --
6,220 2,489 3,748
Income before income taxes 19,646 9,990 19,421
Provision for income taxes (3,580) (1,382) (1,910)
Net income $16,066 $8,608 $17,511
Basic net income per share $0.29 $0.16 $0.32
Diluted net income per share $0.27 $0.15 $0.29
Shares used in computing basic
net income per share 55,547 54,488 55,477
Shares used in computing diluted
net income per share 60,239 59,264 60,545
Net income used for diluted net
income per share calculation:
Net income $16,066 $8,608 $17,511
Amortization of convertible debt
issuance cost -- 171 --
$16,066 $8,779 $17,511
(a) Stock-based compensation included
under SFAS 123R was as follows:
Cost of revenues - advertising $724 $463 $543
Sales and marketing 499 392 350
Product development 460 485 352
General and administrative 1,619 836 1,515
SINA CORPORATION
RECONCILIATION OF NON-GAAP TO GAAP RESULTS
(U.S. Dollar in thousands, except per share data)
Three months ended
March 31, 2008
Non-GAAP
Actual Adjustments Results
724 (a)
Gross profit $42,105 $724 $42,829
(2,578) (a)
(257) (b)
Operating expenses $28,679 $(2,835) $25,844
3,302 (a)
257 (b)
Income from operations $13,426 $3,559 $16,985
3,302 (a)
257 (b)
Net income $16,066 $3,559 $19,625
Diluted net income per share $0.27 $0.33
Shares used in computing diluted
net income per share 60,239 60,239
Net income used in computing diluted
net income per share:
Net income $16,066 $19,625
Amortization of convertible debt
issuance costs -- --
$16,066 $19,625
Gross margin - advertising 60% 2% 62%
(a) To adjust stock-based compensation charges
(b) To adjust amortization of intangible assets
(c) To adjust amortization of convertible debt issuance cost
Three months ended
March 31, 2007
Non-GAAP
Actual Adjustments Results
463 (a)
Gross profit $30,424 $463 $30,887
(1,713) (a)
(403) (b)
Operating expenses $22,923 $(2,116) $20,807
2,176 (a)
403 (b)
Income from operations $7,501 $2,579 $10,080
2,176 (a)
403 (b)
171 (c)
Net income $8,608 $2,750 $11,358
Diluted net income per share $0.15 $0.19
Shares used in computing diluted
net income per share 59,264 59,264
Net income used in computing diluted
net income per share:
Net income $8,608 $11,358
Amortization of convertible debt
issuance costs 171 --
$8,779 $11,358
Gross margin - advertising 58% 1% 59%
(a) To adjust stock-based compensation charges
(b) To adjust amortization of intangible assets
(c) To adjust amortization of convertible debt issuance cost
Three months ended
December 31, 2007
Non-GAAP
Actual Adjustments Results
543 (a)
Gross profit $43,937 $543 $44,480
(2,217) (a)
(258) (b)
Operating expenses $28,264 $(2,475) $25,789
2,760 (a)
258 (b)
Income from operations $15,673 $3,018 $18,691
2,760 (a)
258 (b)
Net income $17,511 $3,018 $20,529
Diluted net income per share $0.29 $0.34
Shares used in computing diluted
net income per share 60,545 60,545
Net income used in computing diluted
net income per share:
Net income $17,511 $20,529
Amortization of convertible debt
issuance costs -- --
$17,511 $20,529
Gross margin - advertising 64% 1% 65%
(a) To adjust stock-based compensation charges
(b) To adjust amortization of intangible assets
(c) To adjust amortization of convertible debt issuance cost
SINA CORPORATION
UNAUDITED SEGMENT INFORMATION
(U.S. Dollar in thousands)
Three months ended
March 31, December 31,
2008 2007 2007
Net revenues
Advertising $47,836 $31,767 $50,130
Mobile related 21,691 18,246 18,635
Others 1,788 1,267 1,924
$71,315 $51,280 $70,689
Cost of revenues
Advertising $19,032 $13,342 $18,017
Mobile related 9,524 7,287 8,111
Others 654 227 624
$29,210 $20,856 $26,752
SINA CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollar in thousands)
March 31, December 31,
2008 2007
Assets
Current assets:
Cash and cash equivalents $363,358 $271,666
Short -term investments 148,201 206,333
Accounts receivable, net 57,175 56,719
Other current assets 11,724 8,840
Total current assets 580,458 543,558
Property and equipment, net 29,018 26,846
Goodwill and intangible assets, net 89,101 89,358
Other assets 2,668 2,501
Total assets $701,245 $662,263
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable $1,622 $940
Accrued liabilities 59,880 56,931
Income taxes payable 12,961 9,079
Convertible debt 99,000 99,000
Total current liabilities 173,463 165,950
Other long-term liabilities 1,392 1,337
Total liabilities 174,855 167,287
Shareholders' equity 526,390 494,976
Total liabilities and shareholders'
equity $701,245 $662,263