Ku6 Media Reports Unaudited Financial Results for the First Quarter of Fiscal Year 2012

BEIJING, June 6, 2012 /PRNewswire-Asia/ -- Ku6 Media Co., Ltd. ("Ku6 Media" or the "Company", NASDAQ: KUTV) , a leading internet video company in China, focusing on User Generated Content ("UGC"), today announced unaudited financial results for the first quarter of fiscal year 2012, ended March 31, 2012.

2012 Q1 Highlights(1)

• Total revenues were US$4.68 million (RMB29.47 million), a 5.9% increase from the fourth quarter of 2011; performance advertising revenue increased continuously and accounted for 80.9% of total revenues in the quarter.
• Gross profit increased continuously and was US$1.15 million (RMB7.24 million) and the gross profit margin was 24.6%, as compared to the gross profit of US$0.19 million and the gross profit margin of 4.3% in the fourth quarter of 2011. The increase was due to the further optimization of cost structure under UGC business model.
• Net loss narrowed and was US$1.79 million (RMB11.27 million), the lowest since Ku6 Media became public in 2010, as compared to a net loss of US$3.94 million in the fourth quarter of 2011. Non-GAAP net loss, which herein defined as net loss excluding share-based compensation expenses, was US$1.28 million (RMB8.06 million) in the first quarter of 2012, as compared to the non-GAAP net loss of US$4.46 million in the fourth quarter of 2011. The decrease was primarily attributable to the decrease in cost and operating expenses, which the Company optimizes the cost structure and improves the operating efficiency and the collection of accounts receivable previously written down.
• Basic and diluted loss per ADS was US$0.04 (RMB0.22) in the first quarter of 2012, as compared to US$0.08 in the fourth quarter of 2011.
• Cash and cash equivalents were US$21.79 million (RMB137.20 million) as of March 31, 2012.
• Net cash used in operating activities was US$1.07 million (RMB6.73 million) in the first quarter of 2012, as compared to US$8.30 million in the fourth quarter of 2011.
• Partnership with YouTube announced in January 2012, to allow Ku6 Media's international users to view original videos from China.
• Partnership with Channel [V] announced in March 2012, to host its official online channel on Ku6 Media's platform for Channel [V]'s current and upcoming music entertainment programs in mainland China.
• Partnership with SNS website Kaixin001 announced in May 2012, to supply technology support to all video uploading activities on Kaixin001 as the video hosting provider.
• Launched my.ku6.com, a new product that focuses on promoting value creating users on May 15, 2012.

Mr. Jeff Shi, Chief Executive Officer of Ku6 Media, commented, "I am pleased to announce another steady growing quarter after our strategy switch since the second quarter of 2011. In first quarter of 2012, we grew our revenue by 5.9% quarter over quarter, enlarged our gross profit from US$0.19 million in the fourth quarter of 2011 to US$1.15 million, and narrowed our net loss to US$1.79 million, which was the lowest since Ku6 Media became public in 2010, as compared to a net loss of US$3.94 million in the fourth quarter of 2011."

"Since the beginning of 2012, Ku6 Media has brought in reputable partners including YouTube, Channel [V] and Kaixin001. We have seen great results from the partnerships in enlarging our user base and promoting our company brand. On May 15, 2012, we officially launched my.ku6.com, a new product that focuses on promoting value creating users, as an enhancement to our original website. Different from traditional online video websites that focus on promoting contents, my.ku6.com is offering a new platform to our value creating users to communicate and common users to follow their favorite value creating users. As we've always believed that UGC business model is healthy and promising, we are devoted to be the most popular UGC video website by continuously providing our users the best services."

First Quarter 2012 Financial Results

Total revenues, representing advertising revenue from online video portal operation, were US$4.68 million (RMB29.47 million) in the first quarter of 2012, representing an increase of 5.9% from US$4.42 million in the fourth quarter of 2011 and a decrease of 28.7% from US$6.56 million in the first quarter of 2011.

In the second quarter of 2011, the Company started to generate revenues from performance advertising using a system called Application Advertisement ("AA"). The performance advertising revenue was realized through an affiliated advertising agent. 80.9% of total revenues in the first quarter of 2012 were from this source, as compared to 79.2% of total revenues in the fourth quarter of 2011.

Cost of revenues was US$3.53 million (RMB22.24 million) in the first quarter of 2012, representing a decrease of 16.5% from US$4.23 million in the fourth quarter of 2011 and a decrease of 60.5% from US$8.93 million in the first quarter of 2011. The change of content strategy since the second quarter of 2011 fromlong-form professional content to UGC is the main reason for the decrease in cost of revenues. As a result, gross profit was US$1.15 million (RMB7.24 million) in the first quarter of 2012, as compared to a gross profit of US$0.19 million in the fourth quarter of 2011 and a gross loss of US$2.37 million in the first quarter of 2011. Non-GAAP gross profit, which is herein defined as a gross profit excluding share-based compensation expenses, was US$1.24 million (RMB7.83 million) in the first quarter 2012, as compared to a non-GAAP gross loss of US$23 thousand in the fourth quarter of 2011 and a non-GAAP gross loss of US$2.00 million in the first quarter of 2011. This increase in gross profit was resulted from the cost saving in content procurement and in the meantime, maintaining a steady growth in revenue.

Operating expenses were US$2.82 million (RMB17.78 million) in the first quarter of 2012, representing a decrease of 35.6% from US$4.38 million in the fourth quarter of 2011 and a decrease of 68.9% from US$9.07 million in the first quarter of 2011. Non-GAAP operating expenses, which is herein defined as operating expenses excluding share-based compensation expenses, were US$2.41 million (RMB15.17 million) in the first quarter of 2012, as compared to the non-GAAP operating expenses of US$4.69 million in the fourth quarter of 2011 and US$8.59 million in the first quarter of 2011. The decrease as compared to the fourth quarter of 2011 was attributable to a US$1.36 million (RMB8.56 million) collection of accounts receivable previously written down and a net decrease in other miscellaneous expenses due to improvement in operating efficiency.

Operating loss was US$1.68 million (RMB10.55 million) in the first quarter of 2012, representing a decrease of 59.9% from US$4.19 million in the fourth quarter of 2011 and a decrease of 85.3% from US$11.44 million in the first quarter of 2011. Non-GAAP operating loss was US$1.17 million (RMB7.34 million) in the first quarter of 2012, as compared to the non-GAAP operating loss of US$4.71 million in the fourth quarter of 2011 and US$10.59 million in the first quarter of 2011.

Net loss was US$1.79 million (RMB11.27 million) in the first quarter of 2012, representing a decrease of 54.6% from the loss of US$3.94 million in the fourth quarter of 2011 and a decrease of 83.5% from the loss of US$10.88 million in the first quarter of 2011. Non-GAAP net loss was US$1.28 million (RMB8.06 million) in the first quarter of 2012, as compared to the non-GAAP net loss of US$4.46 million in the fourth quarter of 2011 and US$10.02 million in the first quarter of 2011. The decrease was primarily attributable to the decrease in cost and operating expenses, which the Company optimizes the cost structure and improves the operating efficiency and the collection of accounts receivable previously written down.

Net loss attributable to Ku6 Media was US$1.79 million (RMB11.27 million) in the first quarter of 2012, as compared to US$3.94 million in the fourth quarter of 2011 and US$10.85 million in the first quarter of 2011. Non-GAAP net loss attributable to Ku6 Media was US$1.28 million (RMB8.06 million) in the first quarter of 2012, as compared to the non-GAAP net loss attributable to Ku6 Media of US$4.46 million in the fourth quarter of 2011 and US$10.00 million in the first quarter of 2011.

Net loss attributable to Ku6 Media per basic and diluted ADS was US$0.04 (RMB0.22) in the first quarter of 2012, as compared to US$0.08 in the fourth quarter of 2011 and US$0.31 in the first quarter of 2011. Weighted average ADSs used to calculate basic and diluted net loss per ADS were 50.2 million in the first quarter of 2012, 50.2 million in the fourth quarter of 2011 and 34.8 million in the first quarter of 2011.

Adjusted EBITDA loss, which is herein defined as net loss attributable to Ku6 Media before interest income, interest expenses, income taxes, depreciation and amortization (excluding amortization and write-down of licensed video copyrights), further adjusted for share-based compensation expenses, equity in loss of affiliates and other non-operating items, was US$0.34 million (RMB2.14 million) in the first quarter of 2012, as compared to the adjusted EBITDA loss of US$3.86 million in the fourth quarter of 2011 and US$9.12 million in the first quarter of 2011. The decrease was primarily due to a non-GAAP gross profit and a decrease in non-GAAP operating expenses.

As of March 31, 2012, the Company had US$21.79 million (RMB137.20 million) in cash and cash equivalents, compared to US$26.75 million as of December 31, 2011. The decrease was primarily because of repayment of an entrusted loan of US$3.14 million to a related party in the first quarter of 2012.

Recent Business Developments

Partnership with YouTube

On January 17, 2012, the Company announced that it has entered into an agreement with YouTube, a renowned international video-sharing website owned by Google, which would allow Ku6 Media's international users to view original videos from China through a new channel operated by YouTube.

Partnership with Channel [V]

On March 30, 2012, the Company announced it has entered into an agreement with Star China to cooperate with its well-known international music television channel Channel [V]. Pursuant to the agreement, Channel [V] will launch its official online channel on Ku6 Media's platform for its current and upcoming music entertainment programs in mainland China.

Partnership with Kaixin001

On May 24, 2012, the Company announced it has entered into an agreement with famous Chinese SNS website Kaixin001. Pursuant to the agreement, Ku6 Media, as the video hosting provider, is assisting Kaixin001 to add a brand new video sharing function by supplying technology support to all video uploading activities on Kaixin001.

Launch of New Product my.ku6.com

On May 15, 2012, the Company officially launched new product my.ku6.com, which is a brand new video platform that focuses on promoting value creating users instead of content. Users can search and follow their favorite value creating users to get the fastest update on the content.

Change of Chief Financial Officer

On May 16, 2012, the Company announced the resignation of Chief Financial Officer ("CFO") Tony Shen and appointment of Acting CFO Frank Feng, both effective on May 16, 2012. Mr. Shen will continue to serve as a consultant of the Company in the next six months.

Conference Call Information

Ku6 Media's management team will host a corresponding conference call on Tuesday, June 5, 2012 at 9:00pm EDT (9:00am Beijing time on Wednesday, June 6, 2012), to present an overview of the company's financial performance and business operations.

Dial-in numbers:

A replay will be available from 00:00 June 6, 2012 EDT for 7 days.

A live and archived webcast of the conference call will also be available at http://www.media-server.com/m/p/a67p67a4

About Ku6 Media Co., Ltd.

Ku6 Media Co., Ltd. (NASDAQ: KUTV) is a leading internet video company in China, focusing on User Generated Content ("UGC"). Through its premier online brand and online video website, www.ku6.com, Ku6 Media provides online video upload and sharing service, video reports, information and entertainment in China. For more information about Ku6 Media, please visit http://ir.ku6.com.

Forward-looking Statements

This news release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "believes," "could," "expects," "may," "might," "should," "will," or "would," and by similar statements. Forward-looking statements are not historical facts, but instead represent only the Company's beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of its control. It is possible that the Company's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Some of the risks and important factors that could affect the Company's future results and financial condition include: continued competitive pressures in China's internet video portal market; changes in technology and consumer demand in this market; the risk that Ku6 Media may not be able to control its expenses in the future; regulatory changes in China with respect to the operations of internet video portal websites; the success of Ku6 Media's ability to sell advertising and other services on its websites; and other risks outlined in the Company's filings with the Securities and Exchange Commission,including the Company's annual report on Form 20-F. Ku6 Media does not undertake any obligation to update this forward-looking information, except as required under law.

About Non-GAAP Financial Measures

To supplement Ku6 Media's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Ku6 Media uses the following measures defined as non-GAAP financial measures by the SEC in evaluating its business: non-GAAP gross profit or loss, non-GAAP operating expenses, non-GAAP product development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP operating loss, non-GAAP net loss, non-GAAP net loss attributable to Ku6 Media and adjusted EBITDA loss. We define non-GAAP gross profit or loss, non-GAAP operating expenses, non-GAAP product development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP operating loss, non-GAAP net loss and non-GAAP net loss attributable to Ku6 Media as the respective nearest comparable GAAP financial measure to exclude share-based compensation expenses. We define adjusted EBITDA loss as net loss attributable to Ku6 Media before interest income, interest expenses, income taxes, depreciation and amortization (excluding amortization and write-down of licensed video copyrights), further adjusted for share-based compensation expenses, equity in loss of affiliates and other non-operating items. We present non-GAAP financial measures because they are used by our management to evaluate our operating performance. We also believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies. A limitation of using non-GAAP financial measures is that non-GAAP measures exclude share-based compensation charges that have been and will continue to be significant recurring expenses in Ku6 Media's business for the foreseeable future.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP financial measures" at the end of this release.

Reconciliations of Non-GAAP results of operations measures to the nearest comparable GAAP financial measures (*)

(Amounts in thousands of Renminbi ("RMB") and United States dollar ("U.S. dollar"), unaudited)

1. Non-GAAP Gross Profit (Loss)

2. Non-GAAP Operating Expenses

3. Non-GAAP Product Development Expenses

4. Non-GAAP Sales and Marketing Expenses

5. Non-GAAP General and Administrative Expenses

6. Non-GAAP Operating Loss

7. Non-GAAP Net Loss

8. Non-GAAP Net Loss Attributable to Ku6 Media Co., Ltd.

9. Adjusted EBITDA Loss

* For more information on the Non-GAAP financial measures, please see the section captioned "About Non-GAAP Financial Measures" in the earnings release.