omniture

SINA Reports Third Quarter 2010 Financial Results

2010-11-17 06:46 1062

 SHANGHAI, Nov. 17, 2010  /PRNewswire-Asia/ -- 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 September 30, 2010.

Starting in the fourth quarter of 2009, in addition to the disclosure of GAAP results below, SINA's historical revenues and certain non-GAAP measures (namely, gross profit, operating expenses, income from operations and advertising gross margin) have been revised to exclude results from China Online Housing Technology Corporation ("COHT"), adjusted for the impact of the amended and restated advertising agency agreement on a pro forma basis as if the agreement had been effective at the beginning of the periods presented.  These adjustments were made to reflect SINA injecting its online real estate advertising business into its majority-owned subsidiary COHT and exchanging its interest in COHT for approximately 33% interest in China Real Estate Information Corporation ("CRIC") upon the successful listing of CRIC on the NASDAQ Global Select Market in October 2009 ("Transaction").  Non-GAAP measures are described below and reconciled to the corresponding GAAP measures in the section below titled "Unaudited Reconciliation of Non-GAAP to GAAP Results."

Third Quarter 2010 Highlights

  • Net revenues grew 12% year over year to $108.2 million.
  • Non-GAAP net revenues grew 20% year over year to $103.6 million, reaching the high end of SINA's guidance between $101.0 million and $104.0 million.
  • Advertising revenues grew 27% year over year to $81.0 million.
  • Non-GAAP advertising revenues grew 50% year over year to $81.0 million, within SINA's guidance between $80.0 million and $82.0 million.
  • Non-advertising revenues decreased 16% year over year to $27.3 million.
  • Non-GAAP non-advertising revenues decreased 31% year over year to $22.6 million, but exceeded SINA's guidance between $21.0 million and $22.0 million.
    • Net income attributable to SINA increased 87% year over year to $31.3 million, or $0.48 diluted net income per share attributable to SINA.
    • Non-GAAP net income attributable to SINA increased 65% year over year to $33.2 million, or $0.50 non-GAAP diluted net income per share attributable to SINA.

"For the third quarter of 2010, SINA's online advertising business, which excludes the adjusted results of SINA real estate advertising, grew 50% year over year to reach a historical high.  The strength of SINA's online advertising business has accelerated our bottom line growth." said Charles Chao, CEO of SINA.  "On the operation side, we believe the continued momentum around our mini-blog SINA Weibo and the formation of strategic partnerships with MSN and NBA will further enhance our leadership position in China's online media space." 

Financial Results

For the third quarter of 2010, SINA reported net revenues of $108.2 million, compared to $96.4 million for the same period last year.   Non-GAAP net revenues for the third quarter of 2010 totaled $103.6 million, compared to $86.5 million for the same period last year.  Advertising revenues for the third quarter of 2010 were $81.0 million, compared to $63.8 million for the same period last year.  Non-GAAP advertising revenues for the third quarter of 2010 were $81.0 million, compared to $53.9 million for the same period last year.  The strong year over year growth of SINA's online advertising business was partially due to a successful coverage of the World Cup in the third quarter of 2010 and an improvement of the business climate in China.

Non-advertising revenues for the third quarter of 2010 totaled $27.3 million, compared to $32.6 million for the same period last year.  MVAS revenues for the third quarter of 2010 amounted to $20.7 million, compared to $30.9 million for the same period last year.  The year over year decline in MVAS revenues was primarily due to China Mobile implementing a series of measures in late 2009 and early 2010.  Other non-advertising revenues for the third quarter of 2010 included amortized deferred revenue of $4.7 million relating to the license agreements resulting from the Transaction. 

Gross margin for the third quarter of 2010 was 60%, up from 59% for the same period last year.  Advertising gross margin for the third quarter of 2010 was 63%, up from 61% for the same period last year.  Non-GAAP advertising gross margin for the third quarter of 2010 was 63%, compared to 59% for the same period last year.  The increase in non-GAAP advertising gross margin was mostly due to revenues growing faster than advertising cost of revenues.  MVAS gross margin for the third quarter of 2010 was 38%, compared to 54% for the same period last year.  The decline in MVAS gross margin was primarily due to product mix and increased revenue share with MVAS partners. 

Operating expenses for the third quarter of 2010 totaled $36.0 million, compared to $38.3 million for the same period last year.  Operating expenses for the third quarter of 2010 included $2.2 million in stock-based compensation expenses and $0.2 million in amortization expenses of intangible assets.  Non-GAAP operating expenses for the third quarter of 2010 were $33.5 million, compared to $32.9 million for the same period last year.    

Operating income for the third quarter of 2010 was $28.5 million, compared to $18.3 million for the same period last year.  Non-GAAP operating income for the third quarter of 2010 was $26.9 million, compared to $16.7 million for the same period last year.

Interest and other income, net for the third quarter of 2010 was $3.4 million, compared to $1.8 million for the same period last year.  Interest and other income, net for the third quarter of 2010 included a foreign exchange gain of $1.4 million resulting from a distribution of dividends from a subsidiary to its overseas parent company.

The Company accounts for its investment in CRIC using the equity method of accounting and reports its interest in CRIC one quarter in arrears.  Equity income from CRIC for the third quarter of 2010 was $1.7 million, which is based on the Company's share of net income attributable to CRIC for the second quarter of 2010 less its share of amortization of CRIC's intangibles not on CRIC's books.  On a non-GAAP basis, equity income from CRIC for the third quarter of 2010 was $5.3 million, which was calculated based on non-GAAP net income attributable to CRIC following the same non-GAAP financial measures as the Company. 

Provision for income taxes for the third quarter of 2010 was $2.2 million, compared to $3.3 million for the same period last year.

Net income attributable to SINA for the third quarter of 2010 was $31.3 million, compared to $16.7 million for the same period last year.  Diluted net income per share attributable to SINA for the third quarter of 2010 was $0.48, compared to $0.29 for the same period last year.  Non-GAAP net income attributable to SINA for the third quarter of 2010 was $33.2 million, compared to $20.1 million for the same period of last year.  Non-GAAP diluted net income per share attributable to SINA for the third quarter of 2010 was $0.50, compared to $0.34 for the same period last year.

As of September 30, 2010, SINA's cash, cash equivalents and short-term investments totaled $857.0 million, compared to $821.5 million as of December 31, 2009.  Cash flow from operating activities was $51.3 million for the third quarter of 2010, compared to $29.1 million for the same period last year.

Business Outlook

SINA estimates that its non-GAAP net revenues for the fourth quarter of 2010 to be between $103 million and $106 million, with non-GAAP advertising revenues to be between $81 million and $83 million and non-GAAP non-advertising revenues to be between $22 million and $23 million.  Non-GAAP net revenues and non-GAAP non-advertising revenues exclude the recognition of $4.7 million in deferred revenue, which is related to the license agreements resulting from the Transaction.

Non-GAAP Measures

This release contains non-GAAP financial measures.  These non-GAAP financial measures, which are used as measures of SINA'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 "Unaudited Reconciliation of Non-GAAP to GAAP Results."  These non-GAAP measures include non-GAAP revenues, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income attributable to SINA, non-GAAP diluted net income per share attributable to SINA, 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 items, including stock-based compensation, amortization of intangible assets, recognition of deferred revenues relating to the license agreements resulting from the Transaction and COHT's adjusted results (for certain non-GAAP measures) 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 comparing the Company's current financial results with the Company's past financial results in a consistent manner, and 2) in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose.  The Company's management further believes the non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses, gains/losses and other items (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 not an indicator used by management to measure the Company's core operating results and business outlook.

The Company's management believes excluding the amortization expense of intangible assets from its non-GAAP financial measures 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 and is not an indicator used by management to measure the Company's core operating results and business outlook.

The Company's management believes excluding the recognition of deferred revenues relating to the license agreements resulting from the Transaction from its non-GAAP financial measures is useful for itself and investors, because they enable a more meaningful comparison of the Company's revenue performance between reporting periods.  In addition, such revenues will not result in cash settlement in the future and is not an indicator used by management to measure the Company's core operating results and business outlook.

The Company's management believes excluding COHT's results, adjusting for the impact of the amended and restated advertising agency agreement on a pro forma basis as if the agreement had been effective at the beginning of the periods presented, from its non-GAAP financial measures to reflect the spin off of COHT is useful for itself and investors, because they enable management and investors to gain a better understanding of the Company's comparative operating performance (when comparing such results with the current period or forecasts) and future prospects.

The Company's non-GAAP equity income from its interest in net income attributable to CRIC exclude stock-based compensation, amortization expense of intangible assets and gains from the purchase of a business, which are consistent with the Company's adjusted items to calculate non-GAAP measures.

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 8:00 p.m. Eastern Time to present an overview of the Company's financial performance and business operations. A live webcast of the call will be available from 8:00 p.m. – 9:00 p.m. Eastern Time on Tuesday, November 16, 2010 (9:00 a.m. – 10:00 a.m. Beijing Time on November 17, 2010). The webcast can be accessed through the Company's corporate website at http://corp.sina.com. A dial-in to the conference is also available. Dial-in details are as follows:

US:
+1 857 350 1586
UK:
+44 207 365 8426
Hong Kong:
+852 3002 1672
Password for all regions:
73304515

A replay of the conference call will be available through midnight Eastern Time, November 23, 2010. The dial-in number is + 1 617 801 6888 (International). The pass code for the replay is 29517329.

About SINA

SINA Corporation (NASDAQ GS: SINA) is a leading online media company and mobile value-added service provider for China and for the global Chinese communities.  With a branded network of localized websites targeting Greater China and overseas Chinese, the Company provides services through five major business lines including SINA.com (online news and content), SINA Mobile (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, social networking service (SNS), blog, audio and video streaming, album, online games, email, search, classified listings, fee-based services, e-commerce and enterprise e-solutions.  The Company generates the majority of its revenues from online advertising and MVAS offerings, and, to a lesser extent, from search and other fee-based services.

Safe Harbor Statement

This announcement contains forward-looking statements that relate to, among other things, SINA's expected financial performance and SINA's strategic and operational plans (as described without limitation in the "Business Outlook" section and in quotations from management in this press release).  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 current global financial and credit market crisis and its impact on the Chinese economy, the recent slower growth of the Chinese economy, the uncertain regulatory landscape in the People's Republic of China, fluctuations in the Company's 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, changes by mobile operators in China to their policies for MVAS, any failure to successfully develop and introduce new products, including MVAS products, any failure to successfully integrate acquired businesses, and risks associated with CRIC, including the merger of SINA online real estate business with CRIC.  Further information regarding these and other risks is included in SINA's Annual Report on Form 20-F for the year ended December 31, 2009 and its other filings with the Securities and Exchange Commission.

Contact:
Cathy Peng
SINA Corporation
Phone: 8610-82628888 x 3112
Email: ir@staff.sina.com.cn

SINA CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. Dollar in thousands, except per share data)
   
Three months ended Nine months ended
September 30,   June 30, September 30,
2010   2009   2010 2010 2009
Net revenues:    
Advertising $ 80,994   $ 63,782   $ 73,090 $ 208,363 $ 164,708
Non-advertising 27,252   32,576   26,326 84,300 95,673
108,246   96,358   99,416 292,663 260,381
Cost of revenues:
Advertising (a) 30,269 25,104 29,053 83,324 70,978
Non-advertising 13,465 14,627 12,303 38,637 43,873
43,734 39,731 41,356 121,961 114,851
Gross profit 64,512 56,627 58,060 170,702 145,530
Operating expenses:
Sales and marketing (a) 21,132 21,757 19,584 57,766 58,704
Product development (a) 8,684 7,851 7,983 24,352 23,170
General and administrative (a) 5,914 8,324 4,169 16,289 21,804
Amortization of intangibles 240 412 246 3,086 1,234
35,970 38,344 31,982 101,493 104,912
Income from operations 28,542 18,283 26,078 69,209 40,618
Non-operating income:
Interest and other income, net 3,355 1,848 1,601 6,549 6,904
Income (loss) from investments, net 1,570 - (84) 11,477 -
4,925 1,848 1,517 18,026 6,904
Income before income taxes 33,467 20,131 27,595 87,235 47,522
Provision for income taxes (2,226) (3,268) (2,391) (6,515) (7,311)
Net income 31,241 16,863 25,204 80,720 40,211
Less: Net income (loss) attributable to the noncontrolling interest (69) 160 (25) (172) 421
Net income attributable to SINA $ 31,310 $ 16,703 $ 25,229 $ 80,892 $ 39,790
Basic net income per share attributable to SINA $ 0.51 $ 0.31 $ 0.41 $ 1.32 $ 0.74
Diluted net income per share attributable to SINA $ 0.48 $ 0.29 $ 0.38 $ 1.23 $ 0.68
Shares used in computing basic
net income per share attributable to SINA 61,249 53,884 61,066 61,080 54,025
Shares used in computing diluted
net income per share attributable to SINA 65,825 58,504 65,562 65,653 58,347
(a) Stock-based compensation included was as follows:
Cost of revenues - advertising $ 566 $ 622 $ 812 $ 2,399 $ 1,883
Sales and marketing 479 558 615 1,847 1,638
Product development 333 435 444 1,429 1,285
General and administrative 1,377 1,305 1,531 4,640 4,714

SINA CORPORATION
UNAUDITED RECONCILIATION OF NON-GAAP TO GAAP RESULTS
(U.S. Dollar in thousands, except per share data)
Three months ended Three months ended Three months ended
September 30, 2010 September 30, 2009 June 30, 2010
Non-GAAP Non-GAAP Non-GAAP
Actual Adjustments Results Actual Adjustments Results Actual Adjustments Results
Advertising revenues $ 80,994 $ 80,994 $ 63,782 (9,875) (d) $ 53,907 $ 73,090 $ 73,090
Non-advertising revenues 27,252 (4,687) (c) 22,565 32,576 32,576 26,326 (4,686) (c) 21,640
Revenues $ 108,246 $ (4,687) $ 103,559 $ 96,358 $ (9,875) $ 86,483 $ 99,416 $ (4,686) $ 94,730
622 (a)
566 (a) 88 (b) 812 (a)
(4,687) (c) (7,797) (d) (4,686) (c)
Gross profit $ 64,512 $ (4,121) $ 60,391 $ 56,627 $ (7,087) $ 49,540 $ 58,060 $ (3,874) $ 54,186
(2,298) (a)
(2,189) (a) (412) (b) (2,590) (a)
(240) (b) (2,757) (d) (246) (b)
Operating expenses $ 35,970 $ (2,429) $ 33,541 $ 38,344 $ (5,467) $ 32,877 $ 31,982 $ (2,836) $ 29,146
2,755 (a) 2,920 (a) 3,402 (a)
240 (b) 500 (b) 246 (b)
(4,687) (c) (5,040) (d) (4,686) (c)
Income from operations $ 28,542 $ (1,692) $ 26,850 $ 18,283 $ (1,620) $ 16,663 $ 26,078 $ (1,038) $ 25,040
2,755 (a) 3,402 (a)
240 (b) 246 (b)
3,569 (e) 2,903 (a) 3,558 (e)
(4,687) (c) 470 (b) (4,686) (c)
Net income attributable to SINA $ 31,310 $ 1,877 $ 33,187 $ 16,703 $ 3,373 $ 20,076 $ 25,229 $ 2,520 $ 27,749
Diluted net income per share attributable to SINA $ 0.48 $ 0.50 $ 0.29 $ 0.34 $ 0.38 $ 0.42
Shares used in computing diluted
net income per share attributable to SINA 65,825 65,825 58,504 58,504 65,562 65,562
Gross margin - advertising 63% 0% 63% 61% -2% 59% 60% 1% 61%

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Nine months ended Nine months ended
September 30, 2010 September 30, 2009
Non-GAAP Non-GAAP
Actual Adjustments Results Actual Adjustments Results
Advertising revenues $ 208,363 $ 208,363 $ 164,708 (25,702) (d) $ 139,006
Non-advertising revenues 84,300 (14,059) (c) 70,241 95,673 95,673
Revenues $ 292,663 $ (14,059) $ 278,604 $ 260,381 $ (25,702) $ 234,679
1,883 (a)
2,399 (a) 265 (b)
(14,059) (c) (20,409) (d)
Gross profit $ 170,702 $ (11,660) $ 159,042 $ 145,530 $ (18,261) $ 127,269
(7,637) (a)
(7,916) (a) (1,234) (b)
(3,086) (b) (8,117) (d)
Operating expenses $ 101,493 $ (11,002) $ 90,491 $ 104,912 $ (16,988) $ 87,924
10,315 (a) 9,520 (a)
3,086 (b) 1,499 (b)
(14,059) (c) (12,292) (d)
Income from operations $ 69,209 $ (658) $ 68,551 $ 40,618 $ (1,273) $ 39,345
10,315 (a)
3,086 (b)
3,033 (e) 9,479 (a)
(14,059) (c) 1,409 (b)
Net income attributable to SINA $ 80,892 $ 2,375 $ 83,267 $ 39,790 $ 10,888 $ 50,678
Diluted net income per share attributable to SINA $ 1.23 $ 1.27 $ 0.68 $ 0.87
Shares used in computing diluted
net income per share attributable to SINA 65,653 65,653 58,347 58,347
Gross margin - advertising 60% 1% 61% 57% -3% 54%
(a) To adjust stock-based compensation related to employee incentives.
(b) To adjust amortization of intangible assets.
(c) To adjust the recognition of deferred revenue related to the license agreements resulting from the transaction with CRIC.
(d) To exclude COHT’s results, adjusting for the impact of the amended and restated advertising agency agreement on a pro forma basis as if the agreement had been effective at the beginning of the period presented.
(e) To adjust share of CRIC's GAAP to Non-GAAP reconciling items, net of share of amortization of CRIC's intangibles not on CRIC's books.

Three months ended Three months ended Nine months ended
September 30, 2010 June 30, 2010 September 30, 2010
Actual Adjustments Non-GAAP Results Actual Adjustments Non-GAAP Results Actual Adjustments Non-GAAP Results
To adjust stock-based compensation $ 1,311 $ 1,311 $ 3,912
To adjust amortization expenses of intangible
assets resulting from business acquisitions 1,485 1,474 4,658
To adjust gains from the purchase of a business:
Income from investment in affiliates* - - (7,155)
Gain from settlement of pre-existing
relationship with COHT - - (701)
Equity income from CRIC $ 2,491 $ 2,796 $ 5,287 $ 650 $ 2,785 $ 3,435 $ 13,947 $ 714 $ 14,661
Share of amortization of CRIC's intangibles not
on CRIC's books $ (773) $ 773 $ - $ (773) $ 773 $ - $ (2,319) $ 2,319 $ -
$ 1,718 $ 3,569 $ 5,287 $ (123) $ 3,558 $ 3,435 $ 11,628 $ 3,033 $ 14,661
* Represents the excess of fair value over the carrying amount recognized as a result of acquisition of COHT.

SINA CORPORATION
UNAUDITED SEGMENT INFORMATION
(U.S. Dollar in thousands)
Three months ended Nine months ended
September 30, June 30, September 30,
2010 2009 2010 2010 2009
Net revenues
Advertising $ 80,994 $ 63,782 $ 73,090 $ 208,363 $ 164,708
Mobile related 20,658 30,881 19,964 65,176 90,745
Others 6,594 1,695 6,362 19,124 4,928
$ 108,246 $ 96,358 $ 99,416 $ 292,663 $ 260,381
Cost of revenues
Advertising $ 30,269 $ 25,104 $ 29,053 $ 83,324 $ 70,978
Mobile related 12,741 14,223 11,660 36,825 42,644
Others 724 404 643 1,812 1,229
$ 43,734 $ 39,731 $ 41,356 $ 121,961 $ 114,851

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SINA CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollar in thousands)
September 30, December 31,
2010 2009
Assets
Current assets:
Cash and cash equivalents $ 620,777 $ 746,423
Short-term investments 236,236 75,095
Accounts receivable, net 86,158 74,999
Other current assets 30,415 22,381
Total current assets 973,586 918,898
Property and equipment, net 29,043 23,022
Goodwill and intangible assets, net 85,367 87,740
Investments 628,228 580,606
Other assets 4,060 3,576
Total assets $ 1,720,284 $ 1,613,842
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 4,864 $ 1,918
Accrued liabilities 118,766 108,970
Income taxes payable 14,251 14,526
Convertible debt 99,000 99,000
Total current liabilities 236,881 224,414
Long-term deferred revenue 150,190 164,019
Other long-term liabilities 3,548 2,710
Total liabilities 390,619 391,143
Shareholders' equity
SINA shareholders' equity 1,328,389 1,221,727
Noncontrolling interest 1,276 972
Total shareholders' equity 1,329,665 1,222,699
Total liabilities and shareholders' equity $ 1,720,284 $ 1,613,842
Source: SINA Corporation
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