China Finance Online Reports Second Quarter 2007 Unaudited Financial Results

Net Income Up 102% Quarter-on-Quarter and 253% Year-on-Year

Beijing, Aug. 15 /Xinhua-PRNewswire/ -- China Finance Online Co. Limited (Nasdaq: JRJC), a leading Chinese online financial information and listed company data provider, today announced its unaudited financial results for the second quarter ended June 30, 2007:

Second Quarter 2007 Highlights

-- Net revenues of $5.72 million for Q2 2007, exceeding the high end of

our guidance, increased 43% as compared to Q1 2007 and 290% as compared

to the same quarter last year.

-- Net income of $1.56 million for Q2 2007, compared to net income of

$775,000 for Q1 2007, a 102% increase, and net income of $442,000 for

Q2 2006, a 253% increase. Excluding stock-based compensation expenses

of $597,000, non-GAAP net income for Q2 2007 was $2.16 million, an

increase of 85% compared to the previous quarter.

-- Both basic and diluted net income per share were US$0.02, and both

basic and diluted net income per ADS were US$0.08 for Q2 2007.

Excluding stock-based compensation expenses, both non-GAAP basic and

diluted net income per share were US$0.02, and both non-GAAP basic and

diluted net income per ADS were US$ 0.11 for Q2 2007.

-- Registered user accounts of jrj.com and stockstar.com grew to 7.3

million, an increase of 11% from the previous quarter. Fee-based active

individual subscribers grew to 37,400, an increase of 18% from the

previous quarter.

Explanation of the Company's non-GAAP financial measures and the related reconciliations to GAAP financial measures are included in the accompanying "Reconciliation to Unaudited Condensed Consolidated Statements of Operations," "Non-GAAP Measures" and " Reconciliations from operating profit to EBITDA and adjusted EBITDA."

Financial Results

During the second quarter of 2007, China Finance Online reported net revenues of $5.72 million, compared to $1.47 million for the same period in 2006, and $4.0 million for the first quarter of 2007. The increase is primarily due to the growth in subscription service fees from individual customers. Revenues from subscription service fees paid by individual customers were $4.66 million in the second quarter of 2007, representing 81% of net revenues for the quarter. Revenues from wireless related services, provided by Stockstar which was acquired in October 2006, were $334,000, representing 6% of net revenues for the quarter. Revenues from subscription service fees paid by institutional customers, a service line provided by Genius which was acquired in September 2006, were $258,000 in the second quarter of 2007, representing 5% of net revenues for the quarter. Revenues from advertising-related business for the quarter contributed $396,000, representing 7% of net revenues for the quarter. Other revenues were $68,000, representing 1% of net revenues for the quarter.

Gross profit for the quarter was $4.64 million, compared to $1.16 million for the same period in 2006 and $3.16 million for the first quarter of 2007. Gross margin was 81% in the second quarter, compared to 79% for both the same period in 2006 and the first quarter of 2007. Cost of revenues for the second quarter of 2007 included website maintenance and development expenses of $730,000, which consists of bandwidth costs, personnel-related expenses, server depreciation expenses, and content expenses for our jrj.com and stockstar.com websites. Since advertising-related services, which represent 7% of net revenues of the second quarter of 2007, are not a sizable business of the Company, website maintenance and development expenses do not have direct relationship with net revenues recognized in the second quarter of 2007. Excluding website maintenance and development expenses of $730,000, the gross margin for the second quarter of 2007 would have been 94%.

Operating expenses for the second quarter totalled $3.59 million, an increase of 220% from $1.12 million reported for the same period in 2006, and an increase of 29% from $2.79 million from the previous quarter. The increase from the same quarter in 2006 is primarily due to expansion in operating scale, including headcount, number of operation locations, etc., associated with the acquisitions of Stockstar.com and Shenzhen Genius. The increase from Q1 2007 is primarily due to an increase in compensation expenses of the sales team as a result of increased headcount and improved performance, professional fees associated with SOX 404 compliance, as well as the increase in stock-based compensation expenses in the second quarter of 2007. Operating expenses for the second quarter of 2007 included $597,000 of stock-based compensation.

-- General and administrative expenses for the quarter were $1.79 million,

an increase of 207% from $583,000 for the same period in 2006 and an

increase of 50% from $1.20 million from the previous quarter. The

increase from Q2 2006 is primarily due to expansion in operating scale

associated with the acquisitions of Stockstar.com and Shenzhen Genius;

the increase from Q1 2007 is primarily due to professional fees

associated with SOX compliance, and increase in stock compensation

expenses. General and administrative expenses for the second quarter

included $540,000 in stock-based compensation, compared to $326,000 in

the previous quarter.

-- Sales and marketing expenses for the second quarter increased by 267%

from $371,000 for the same period in 2006 to $1.36 million and also 9%

compared to the previous quarter of $1.25 million. This increase is

largely due to compensation expenses as a result of increased sales

force, including those with the recently acquired companies. Sales and

marketing expenses for the second quarter of 2007 also included $32,000

in stock-based compensation, compared to $25,000 in the first quarter.

-- Product development expenses for the quarter were $443,000, an increase

of 161% from $170,000 for the same period in 2006, and an increase of

28% from $347,000 from the previous quarter, which is primarily due to

increases in employee compensation as a result of increased headcounts,

including those with the recently acquired companies. Product

development expenses for the quarter also included stock-based

compensation of $25,000, compared to $26,000 in the previous quarter.

As a result of the foregoing, income from operations for the second quarter of 2007 was $1.05 million, compared to $39,000 for the same quarter in 2006 and $374,000 for the first quarter of 2007. Adjusted income from operations (non-GAAP), which is defined as income from operations excluding stock-based compensation expenses of $597,000, was $1.65 million for the quarter, compared to $264,000 for the same quarter in 2006 and $767,000 for the first quarter of 2007.

Net income for the second quarter of 2007 was $1.56 million, compared to net income of $442,000 for the same quarter in 2006 and net income of $775,000 for the previous quarter. Non-GAAP net income, which excludes the stock-based compensation expenses of $597,000, was $2.16 million for the quarter.

As part of the net income for the second quarter, the Company recorded a net exchange gain of $101,000 due to the recent change in the exchange rates between U.S. dollar and RMB.

Net income margin for the second quarter of 2007 was 27%, compared to 30% for the same period in 2006 and 19% for the first quarter of 2007. Excluding the stock-based compensation expenses of $597,000, non-GAAP net income margin for the second quarter of 2007 would have been 38%. Total income tax benefit for the quarter was $150,000, compared to income tax provision of $7,000 for the same period in 2006 and income tax benefit of $85,000 for the previous quarter.

Balance of cash and cash equivalents was approximately $56.15 million at the end of the second quarter of 2007.

Balance of deferred revenue, including current and non-current, as of June 30, 2007 totalled $14.38 million. The Company started to provide subscription services for a service period longer than one year in 2007, and therefore the Company had non-current deferred revenue at June 30, 2007.

Operating cash inflow during the second quarter of 2007 was $10.67 million, among which, cash inflow from subscription services provided to individual customers was $8.18 million. Net operating cash flows for the second quarter of 2007 were $6.19 million.

Adjusted EBITDA (non-GAAP), which is defined as earnings before interest, taxes, depreciation, amortization, other non-operating income and stock-based compensation expenses, were $1.87 million for the second quarter of 2007.

Operating Results

As of June 30, 2007, the Company has 7.3 million registered user accounts of jrj.com and stockstar.com, compared to 6.57 million in the previous quarter, an increase of 11% quarter-on-quarter.

Fee-based active individual subscribers as of June 30, 2007 grew to 37,400, compared to 31,700 in the previous quarter, an increase of 18% from the previous quarter.

Outlook for Third Quarter 2007

The Company currently expects to generate net revenues in an amount ranging from $6.7 million to $7.1 million for the third quarter of 2007, representing a 287% to 310% increase from the corresponding period in 2006. This forecast reflects the Company's current and preliminary view, which is subject to change.

Conference Call

China Finance Online's management team will host a conference call at 9:00PM Eastern Time on August 14, 2007 (or 9:00AM August 15, 2007 in the Beijing/HK time zone) following the announcement.

The conference call will be available on Webcast live and replay at: http://www.chinafinanceonline.com/investor/earning_releases.asp . 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: 8168.

A replay of the conference call will be available from approximately 10:00PM Eastern Time on August 14, 2007 (or 10:00AM August 15, 2007 in the Beijing/HK time zone) to 10:00PM Eastern Time on August 21, 2007 (or 10:00AM August 22, 2007 in the Beijing/HK time zone). The dial-in details for the replay: 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, Access code for all regions: 563290.

About China Finance Online Co. Limited

China Finance Online Co. Limited specializes 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 and information 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 the 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.

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 are 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, 2006, 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, net income per share, and EBITDA, which are adjusted from results based on GAAP to exclude the compensation cost of share-based awards granted to employees primarily due to the adoption of SFAS 123R, which became effective on January 1, 2006. 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.

Reconciliations of the Company's non-GAAP financial measures to unaudited Condensed Consolidated Statements of Operations are set forth after the "Condensed Consolidated Statements of Operations" included in this release.

China Finance Online Co. Limited

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars)

Dec. 31 ,2006 Jun. 30 ,2007

Assets

Current assets:

Cash and cash equivalents $44,955 $56,152

Accounts receivable 478 1,207

Prepaid expenses and other current

assets 928 1,234

Deferred tax assets, current 170 477

Total current assets $46,531 $59,070

Property and equipment, net 1,698 3,173

Rental deposits 86 86

Cost method investment 12,607 12,607

Acquired intangible assets, net 2,045 1,951

Goodwill 8,152 8,152

Deferred tax assets, non-current -- 53

Total assets $71,119 $85,092

Liabilities and shareholders’ equity

Current liabilities:

Deferred revenue, current $6,419 $13,175

Accrued expenses and other current

liabilities 2,096 3,183

Deferred tax liability, current -- 15

Income tax payable 5 21

Total current liabilities $8,520 $16,394

Deferred tax liability, non-current 146 237

Deferred revenue, non-current -- 1,202

Total liabilities $8,666 $17,833

Shareholders’ equity

Ordinary shares $13 $14

Additional paid in capital 65,757 67,422

Treasury shares (13,200) (13,200)

Retained earnings 8,249 10,586

Accumulated other comprehensive income 1,634 2,437

Total shareholders’ equity $62,453 $67,259

Total liabilities and shareholders’ equity $71,119 $85,092

China Finance Online Co. Limited

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of U.S. dollars, except per share data)

Three months ended

Jun. 30,2007 Jun. 30,2006 Mar 31,2007

Net revenues 5,723 1,467 3,996

Cost of revenues (includes share-

based compensation expenses of

$0,$24,$16,$16 and $64,

respectively) (1,079) (304) (833)

Gross profit 4,644 1,163 3,163

Operating expenses

General and administrative

(includes share-based compensation

expenses of $540,$150,$326,$866

and $462, respectively) (1,789) (583) (1,195)

Sales and marketing (includes

share-based compensation expenses

of $32,$23,$25,$57 and $62,

respectively) (1,360) (371) (1,247)

Product development (includes

share-based compensation expenses

of $25,$28,$26,$51 and $76,

respectively) (443) (170) (347)

Total operating expenses (3,592) (1,124) (2,789)

Income(loss) from operations 1,052 39 374

Interest income 253 258 254

Other income, net 6 115 62

Exchange gain (net) 101 37 --

Income before income tax

benefit(provision) 1,412 449 690

Income tax benefit (provision) 150 (7) 85

Net income $1,562 $442 $775

Net income per share

Basic and diluted $0.02 $0.00 $0.01

Net income per ADS

Basic and diluted $0.08 $0.02 $0.04

Weighted average ordinary shares

Basic 95,676,903 93,636,903 94,950,703

Diluted 101,914,801 104,580,684 102,074,032

Weighed average ADSs

Basic 19,135,381 18,727,381 18,990,141

Diluted 20,382,960 20,916,137 20,414,806

China Finance Online Co. Limited

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of U.S. dollars, except per share data)

Six months ended Jun.30

2007 2006

Net revenues 9,719 2,873

Cost of revenues (includes share-

based compensation expenses of

$0,$24,$16,$16 and $64,

respectively) (1,912) (518)

Gross profit 7,807 2,355

Operating expenses

General and administrative (includes

share-based compensation expenses of

$540,$150,$326,$866 and $462,

respectively) (2,984) (1,212)

Sales and marketing (includes share-

based compensation expenses of

$32,$23,$25,$57 and $62,

respectively) (2,607) (1,088)

Product development (includes share-

based compensation expenses of

$25,$28,$26,$51 and $76,

respectively) (790) (265)

Total operating expenses (6,381) (2,565)

Income(loss) from operations 1,426 (210)

Interest income 507 522

Other income, net 68 115

Exchange gain (net) 101 130

Income before income tax

benefit(provision) 2,102 557

Income tax benefit (provision) 235 (18)

Net income $2,337 $539

Net income per share

Basic and diluted $0.02 $0.01

Net income per ADS

Basic and diluted $0.12 $0.03

Weighted average ordinary shares

Basic 95,205,935 93,629,403

Diluted 101,443,833 104,573,184

Weighed average ADSs

Basic 19,041,187 18,725,881

Diluted 20,288,767 20,914,637

China Finance Online Co. Limited

RECONCILIATIONS TO UNAUDITED CONDENSED CONSOLIDATED

STATEMENT OF OPERATIONS

(U.S. Dollar in thousands, except share data)

Three months ended Jun. 30, 2007

Reported Adjustment Adjusted

US GAAP Non-GAAP

Net revenues $5,723 -- $5,723

Cost of revenues (1,079) -- (1,079)

Gross profit 4,644 4,644

Operating expenses

General and

administrative (1,789) 540 (a) (1,249)

Sales and marketing (1,360) 32 (a) (1,328)

Product development (443) 25 (a) (418)

Total operating expenses (3,592) 597 (2,995)

Income from operations 1,052 597 1,649

Interest income 253 -- 253

Other income, net 6 -- 6

Exchange gain, net 101 -- 101

Income before income tax

benefit 1,412 597 2,009

Income tax benefit 150 -- 150

Net income $1,562 $597 $2,159

Net income per share

Basic and diluted 0.02 -- 0.02

Net income per ADS

Basic and diluted 0.08 -- 0.11

Weighted average

ordinary shares

Basic 95,676,903 -- 95,676,903

Diluted 101,914,801 -- 101,914,801

Weighed average ADSs

Basic 19,135,381 -- 19,135,381

Diluted 20,382,960 -- 20,382,960

(a) Exclude share-based compensation expense of $597,000 recorded under

SFAS 123R.

Non-GAAP Measures

Three months ended Jun. 30, 2007

(U.S. Dollar in thousands)

GAAP Non-GAAP

Result Adjustment Results

(a)

Operating profit 1,052 597 1,649

Three months ended Jun. 30, 2007

(U.S. Dollar in thousands)

GAAP Non-GAAP

Result Adjustment Results

(a)

Net income 1,562 597 2,159

Three months ended Jun. 30, 2006

(U.S. Dollar in thousands)

GAAP Non-GAAP

Result Adjustment Results

(a)

Operating profit 39 225 264

Three months ended Jun. 30, 2006

(U.S. Dollar in thousands)

GAAP Non-GAAP

Result Adjustment Results

(a)

Net income 442 225 667

Three months ended Mar. 31, 2007

(U.S. Dollar in thousands)

GAAP Non-GAAP

Result Adjustment Results

(a)

Operating profit 374 393 767

Three months ended Mar. 31, 2007

(U.S. Dollar in thousands)

GAAP Non-GAAP

Result Adjustment Results

(a)

Net income 775 393 1,168

(a) The adjustment is for share-based compensation expense primarily

under SFAS 123R.

Reconciliations from operating profit to EBITDA and adjusted EBITDA

Three months Three months Three months

ended Jun. ended Jun. ended Mar.

30, 2007 30, 2006 31, 2007

(U.S. Dollar (U.S. Dollar (U.S. Dollar

in in in

thousands) thousands) thousands)

Operating

profit 1,052 39 374

Add back:

Depreciation 146 36 102

Amortization of

intangibles and

others 73 -- 75

EBITDA 1,271 75 551

Add back:

share-based

compensation 597 225 393

Adjusted EBITDA 1,868 300 944

For more information, please contact:

Melissa Zhang

Investor Relations

China Finance Online Co. Limited

Tel: +86-10-5832-5288

Email: ir@jrj.com