SHANGHAI, China, May 15 /Xinhua-PRNewswire-FirstCall/ -- 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,
2007.
First Quarter 2007 Highlights
-- Net revenues increased 10% year over year to $51.3 million, exceeding
the Company's guidance of between $48.0 million and $50.0 million.
-- Advertising revenues increased 43% year over year to $31.8 million,
within the upper range of the Company's guidance of between $31.0
million and $32.0 million.
-- Non-advertising revenues decreased 20% year over year to $19.5
million, exceeding the Company's guidance of between $17.0 million and
$18.0 million.
-- GAAP net income was $8.6 million or $0.15 diluted net income per
share, compared to $7.0 million or $0.12 diluted net income per share
in the same period last year.
-- Non-GAAP net income* was $11.4 million or $0.19 diluted non-GAAP net
income per share, compared to $9.6 million or $0.16 diluted non-GAAP
net income per share in the same period last year.
*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 are very pleased with another quarter of solid financial and
operational performance. Our online advertising revenues in the first quarter
continue to be strong with our advertising revenues in China having grown 45%
or more year over year for the fourth consecutive quarter," said Charles Chao,
CEO of SINA. "On the operational front, we believe that we have made
measurable gains in transforming SINA into a multimedia content platform with
strong user participation and sticky interactive community."
Financial Results
For the first quarter of 2007, SINA reported total revenues of $51.3
million, compared to $46.7 million in the same period in fiscal 2006 and $56.4
million for the fourth quarter of 2006.
Advertising revenues for the first quarter of 2007 totaled $31.8 million,
representing a 43% increase from the same period last year and an 11% decrease
from last quarter. Advertising revenues in China grew 45% year over year to
$30.9 million for the first quarter of 2007. The quarter over quarter
decrease in advertising revenues was mainly due to seasonality, as the first
quarter historically has been the Company's weakest quarter for advertising
revenues. Advertising revenues in the first quarter of 2007 represented 62%
of total revenues, up from 47% in the same period last year.
Non-advertising revenues for the first quarter of 2007 totaled $19.5
million, a 20% decrease from the same period in 2006 and a 6% decrease from
the previous quarter.
MVAS revenues for the first quarter of 2007 were $18.2 million, declining
20% from the same period last year and declining 5% from last quarter.
Revenues from interactive voice response ("IVR") declined 32% quarter over
quarter to $3.5 million. During the first quarter of 2007, the Company began
placing less emphasis on promoting IVR due to an increase in operator costs
for IVR. As a result of switching from the Company's proprietary IVR platform
to China Mobile's IVR platform, operator costs for IVR increased from 15% to
30%. SMS revenues decreased 1% sequentially to $10.6 million, while revenues
from 2.5G products, including multimedia messaging service ("MMS"), wireless
application protocol ("WAP") and Kjava, increased 32% quarter over quarter to
$3.2 million.
Other non-advertising revenues, mainly search and other fee-based
revenues, were $1.3 million for the first quarter of 2007, representing a
decline of 31% from the same period last year and 7% from last quarter. The
decline in other non-advertising revenues was mainly due to the continued
phasing out of the prior search business.
Gross margin for the first quarter of 2007 was 59%, down from 61% in the
same period last year and 62% in the last quarter. Advertising gross margin
for the first quarter of 2007 was 58%, compared to 63% in the same period last
year and 65% in the previous quarter. Advertising gross margin in the first
quarter of 2007 included stock-based compensation, which was equivalent to 1%
of advertising revenues. Excluding this item, advertising gross margin in the
first quarter of 2007 was 59%, compared to 64% in the same period last year
and 66% in the previous quarter. The decrease in advertising gross margin was
mainly due to the increase in bandwidth cost to support the roll-out of SINA
Podcasting and other Web 2.0 products. Other factors contributing to the year
over year decline in advertising gross margin included increased content and
web production costs. On a sequential basis, a lower revenue base in the
first quarter of 2007 also contributed to the decline in advertising gross
margin. MVAS gross margin for the first quarter of 2007 was 60%, compared to
59% in the same period last year and 61% last quarter.
Operating expenses for the first quarter of 2007 totaled $22.9 million, an
increase of 4% from the same period last year and a decline of 7% from last
quarter. Non-GAAP operating expenses for the first quarter of 2007, which
exclude stock-based compensation and amortization expense of intangible
assets, was $20.8 million, representing a 2% increase from the same period
last year and a decline of 7% from last quarter. The year over year increase
in operating expenses primarily relates to the appreciation of RMB against the
dollar and higher bad debt expenses, partially offset by a decrease in
payroll-related costs and marketing expenses. The quarter over quarter
decrease in operating expenses was primarily due to lower commissions and
other payroll-related costs and lower travel and entertainment expenses,
partially offset by higher bad debt expenses.
Net income for the first quarter of 2007 was $8.6 million or $0.15 diluted
net income per share, compared to $7.0 million or $0.12 diluted net income per
share for the same period last year. Non-GAAP net income for the first
quarter of 2007 was $11.4 million or $0.19 diluted non-GAAP net income per
share, compared to $9.6 million or $0.16 diluted non-GAAP net income per share
for the same period last year.
As of March 31, 2007, SINA's cash, cash equivalents and investments in
marketable securities totaled $382.7 million, compared to $304.4 million and
$362.8 million as of March 31, 2006 and December 31, 2006, respectively. Cash
flow from operating activities for the first quarter of 2007 was $16.6
million, compared to $12.5 million for the same period last year and $14.9
million last quarter.
Business Outlook
The Company estimates its total revenues for the second quarter of 2007 to
be between $58.0 million and $60.0 million, with advertising revenues to be
between $40.0 million and $41.0 million and non-advertising revenues to be
between $18.0 million and $19.0 million. Stock-based compensation for the
second quarter of 2007 is expected to be approximately $2.0 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 charges, write off of prepaid
license fees, amortization of intangible assets, amortization of convertible
debt issuance cost, gain and loss on the sale of business and investments, and
gain and loss on investments, 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 write off of
prepaid license fees from its non-GAAP financial measures is useful for itself
and investors as such expense does not impact cash earnings and is not
indicative of the Company's core operating results and business outlook.
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 and excluding the non-cash amortization expense of intangible
assets resulting from equity-method investments from its non-GAAP financial
measure of net income are 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 Company's management believes excluding gains and losses on the sale
of a business and investments from its non-GAAP financial measure of net
income is useful for itself and investors because such gains and losses are
not indicative of the Company's core operating results.
The Company's management believes excluding gains and losses on investment
from its non-GAAP financial measure of net income is useful for itself and
investors because the Company does not typically invest in common stock of
other companies. Therefore, these charges are otherwise unrelated to the
Company's ongoing business operations.
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 2007. The dial-in number for the call is
+1-617-801-9702. The pass code is 83904692. A live Webcast of the call will
be available from 9:00 p.m. - 10:00 p.m. ET on Monday, May 14, 2007 (9:00 a.m.
- 10:00 a.m. Beijing Time on May 15, 2007). 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, 2007 at midnight
eastern time. The dial-in number is +1-617-801-6888. The pass code for the
replay is 90143641.
About SINA
SINA Corporation (Nasdaq: SINA) is a leading online media company and
value-added information service (VAS) provider for China and for global
Chinese communities. With a branded network of localized web sites targeting
Greater China and overseas Chinese, SINA provides services through five major
business lines including SINA.com (online news and content), SINA Mobile
(mobile value-added services), SINA Community (community-based services and
games), SINA.net (search and enterprise services) and SINA E-Commerce (online
shopping). Together these provide an array of services including region-
focused online portals, mobile value-added services, search and directory,
interest-based and community-building channels, free and premium email, online
games, virtual ISP, 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, 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.
Contact:
Cathy Peng
SINA Corporation
Phone: 8610-82628888 x 3112
E-mail: ir@staff.sina.com.cn
Denise Roche
The Ruth Group
Phone: (646) 536-7008
Email: droche@theruthgroup.com
SINA CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. Dollar in thousands, except per share data)
Three months ended
March 31, December 31,
2007 2006 2006
Net revenues:
Advertising $31,767 $22,181 $35,735
Non-advertising 19,513 24,531 20,670
51,280 46,712 56,405
Cost of revenues:
Advertising (a) 13,342 8,298 12,581
Non-advertising 7,514 9,747 9,076
20,856 18,045 21,657
Gross profit 30,424 28,667 34,748
Operating expenses:
Sales and marketing (a) 11,064 11,805 12,460
Product development (a) 4,799 4,610 4,888
General and administrative (a) 6,657 5,157 6,756
Amortization of intangibles 403 468 415
22,923 22,040 24,519
Income from operations 7,501 6,627 10,229
Non-operating income:
Interest and other income, net 2,660 1,940 2,441
Gain (loss) on sale of
business and investments, net - (212) 373
Gain on investment in Tidetime
Sun, net - - 123
Loss on equity investments - (343) -
Amortization of convertible
debt issuance cost (171) (171) (171)
2,489 1,214 2,766
Income before income taxes 9,990 7,841 12,995
Provision for income taxes (1,382) (805) (1,273)
Net income $8,608 $7,036 $11,722
Basic net income per share $0.16 $0.13 $0.22
Diluted net income per share $0.15 $0.12 $0.20
Shares used in computing basic
net income per share 54,488 53,438 54,103
Shares used in computing diluted
net income per share 59,264 58,617 58,780
Net income used for diluted net
income per share calculation:
Net income $8,608 $7,036 $11,722
Amortization of convertible debt
issuance cost 171 171 171
$8,779 $7,207 $11,893
(a) Stock-based compensation included under SFAS 123R was as follows:
Cost of revenues - advertising $463 $350 $475
Sales and marketing 392 261 366
Product development 485 334 491
General and administrative 836 571 897
SINA CORPORATION RECONCILIATION OF NON-GAAP TO GAAP RESULTS
(U.S. Dollar in thousands, except per share data)
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 %
Three months ended
March 31, 2006
Non-GAAP
Actual Adjustments Results
350 (a)
Gross profit $28,667 $350 $29,017
(1,166)(a)
(468)(b)
Operating expenses $22,040 $(1,634) $20,406
1,516 (a)
468 (b)
Income from operations $6,627 $1,984 $8,611
1,516 (a)
468 (b)
171 (c)
212 (d)
177 (b)
Net income $7,036 $2,544 $9,580
Diluted net income per share $0.12 $0.16
Shares used in computing diluted
net income per share 58,617 58,617
Net income used in computing
diluted net income per share:
Net income $7,036 $9,580
Amortization of convertible debt
issuance costs 171 -
$7,207 $9,580
Gross margin - advertising 63 % 1 % 64 %
Three months ended
December 31, 2006
Non-GAAP
Actual Adjustments Results
475(a)
1,113(f)
Gross profit $34,748 $1,588 $36,336
(1,754)(a)
(415)(b)
Operating expenses $24,519 $(2,169) $22,350
2,229 (a)
1,113 (f)
415 (b)
Income from operations $10,229 $3,757 $13,986
2,229 (a)
1,113 (f)
415 (b)
171 (c)
(373)(d)
(123)(e)
Net income $11,722 $3,432 $15,154
Diluted net income per share $0.20 $0.26
Shares used in computing diluted
net income per share 58,780 58,780
Net income used in computing
diluted net income per share:
Net income $11,722 $15,154
Amortization of convertible debt
issuance costs 171 -
$11,893 $15,154
Gross margin - advertising 65 % 1 % 66 %
(a) To adjust stock-based compensation charges
(b) To adjust amortization of intangible assets
(c) To adjust amortization of convertible debt issuance cost
(d) To adjust (gain) loss on the sale of business and investments
(e) To adjust gain on investment in Tidetime Sun
(f) To adjust a write-off of game license
SINA CORPORATION
UNAUDITED SEGMENT INFORMATION
(U.S. Dollar in thousands)
Three months ended
March 31, December 31,
2007 2006 2006
Net revenues
Advertising $31,767 $22,181 $35,735
Mobile related 18,246 22,694 19,304
Others 1,267 1,837 1,366
$51,280 $46,712 $56,405
Cost of revenues
Advertising $13,342 $8,298 $12,581
Mobile related 7,287 9,400 7,617
Others 227 347 1,459
$20,856 $18,045 $21,657
SINA CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollar in thousands)
March 31, December 31,
2007 2006
Assets
Current assets:
Cash and cash equivalents $181,043 $163,177
Investments in marketable
securities 201,624 199,574
Accounts receivable, net 41,544 45,031
Other current assets 7,893 10,330
Total current assets 432,104 418,112
Property and equipment, net 28,893 27,101
Long-term investments 1,170 1,170
Goodwill and intangible assets, net 90,131 90,534
Other assets 1,545 1,892
Total assets $553,843 $538,809
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $2,516 $1,614
Accrued liabilities 40,280 41,993
Income taxes payable 3,913 7,389
Convertible debt 100,000 100,000
Total current liabilities 146,709 150,996
Other long-term liabilities 1,141 -
Total liabilities 147,850 150,996
Shareholders' equity 405,993 387,813
Total liabilities and shareholders' equity $553,843 $538,809
