SHANGHAI, November 20, 2012 /PRNewswire/ -- Taomee Holdings Limited (NYSE: TAOM) ("Taomee" or the "Company"), a leading children's entertainment and media company in China, today reported its unaudited financial results for the third quarter ended September 30, 2012.
Third Quarter of 2012 Financial Highlights
(1) Each American Depositary Share ("ADS") represents twenty ordinary shares |
Mr. Benson Wang, co-founder and chief executive officer of Taomee, stated, "We are encouraged by our overall performance in the third quarter, which exceeded our expectations and reflected stable operational results in our core business. Our strategy to establish and grow our cross-media, core character franchise base is continuing to gain traction both online and offline. We grew our online web games active user base by 32% quarter-over-quarter, and in mobile, we recently surpassed 12 million total downloads. For our offline business, we successfully released two films based on our core franchises, Mole's World and Seer, which were broadcasted on over 2,000 screens throughout Mainland China and Taiwan, and achieved over 50 million RMB in combined box office receipts."
"Our strategy of increasing active user growth and engagement is proving effective as evidenced by the 32% increase in sequential user growth and stable ARPU during the quarter. We believe our offline expansion provides us with a unique opportunity to monetize our online virtual worlds, representing a significant long-term growth opportunity. Going forward, we remain committed to enhancing our high quality and unique content offering across mobile, online and offline, in attempt to further solidify our brand equity, diversify our revenue streams, and augment our competitive position," concluded Mr. Wang.
Operational Results for Third Quarter of 2012
Unaudited Financial Results for Third Quarter of 2012
Total Net Revenues
Total net revenues were US$11.8 million, compared with US$10.5 million in the second quarter of 2012 and US$12.7 million in the third quarter of 2011.
Net online business revenues were US$8.0 million, compared with US$8.6 million in the second quarter of 2012 and US$10.4 million in the third quarter of 2011.
Net offline business revenues were US$3.8 million, compared with US$1.9 million in the second quarter of 2012 and US$2.3 million in the third quarter of 2011. The sequential and year-over-year increases were mainly driven by film related revenues as well as merchandise licensing. During the summer vacation, Taomee launched two sequel films of Mole's World and Seer and recorded film box office revenues sharing of approximately US$1.5 million in the third quarter of 2012.
Total Cost of Services
Total cost of services was US$3.5 million, compared with US$2.3 million in the second quarter of 2012 and US$2.4 million in the third quarter of 2011.
Online business related costs were US$1.9 million, compared with US$1.7 million in the second quarter of 2012 and US$1.5 million in the third quarter of 2011. The slight sequential increase was primarily due to the increase of payroll expense and amortization costs of upfront game licensing fees, and to a lesser extent an increase in bandwidth and hosting costs, all of which were partially offset by the decrease in prepaid card production costs.
Offline business related costs were US$1.6 million, compared with US$0.6 million in the second quarter of 2012 and US$0.9 million in the third quarter of 2011. The sequential and year-over-year increases were mainly due to the increase in film production costs associated with the Company's successful launch of its two films during the quarter.
Gross Profit and Gross Margin
Gross profit was US$8.3 million, compared with US$8.1 million in the second quarter of 2012 and US$10.3 million in the third quarter of 2011.
Gross margin was 70.2%, compared with 77.7% in the second quarter of 2012 and 81.2% in the third quarter of 2011.
Gross margin for the online business was 76.4%, compared with 80.2% in the second quarter of 2012 and 85.3% in the third quarter of 2011.
Gross margin for the offline business was 57.2%, compared with 66.4% in the second quarter of 2012 and 63.0% in the third quarter of 2011.
Total Operating Expenses
Total operating expenses were US$7.6 million, compared with US$7.5 million in the second quarter of 2012 and US$6.2 million in the third quarter of 2011.
Share of Profit / Loss in Equity Method Investment
Share of profit in equity methods investments was US$0.4 million, compared with US$0.4 million in the second quarter of 2012 and US$0.2 million in the third quarter of 2011.
Profit from Operations
Profit from operations was US$0.7 million, compared with US$0.7 million in the second quarter of 2012 and US$4.1 million in the third quarter of 2011.
Net Income
Net income attributable to holders of ordinary shares was US$1.8 million, compared with US$3.2 million in the second quarter of 2012 and US$4.4 million in the third quarter of 2011.
Non-GAAP net income attributable to shareholders was US$2.4 million, compared with US$3.8 million in the second quarter of 2012 and US$5.0 million in the third quarter of 2011.
Basic and diluted earnings per ADS were US$0.05 and US$0.05, respectively,, compared with US$0.09 and US$0.08, respectively, in the second quarter of 2012, and US$0.12 and US$0.12, respectively in the third quarter of 2011.
Non-GAAP basic and diluted earnings per ADS were US$0.07 and US$0.06, respectively, compared with US$0.10 and US$0.10, respectively, in the second quarter of 2012, and US$0.14 and US$0.13, respectively in the third quarter of 2011.
Cash and Cash Equivalents
As of September 30, 2012, the Company had US$119.3 million of cash and cash equivalents, compared with US$122.0 million as of June 30, 2012.
Investment in equity investees
In July 2012, Shanghai Taomee sold all its equity interest in Shenzhen Ruigao Information Technology Co., Ltd., or Ruigao, to a senior manager at Ruigao and other three third-party individuals for approximately US$1.0 million and recorded profit in equity investments of US$0.3 million
In September 2012, Taomee entered into an investment agreement to acquire 8.59% of Gamespedia Holdings Limited ("Gamespedia")'s shares for a consideration of US$6,205,000 in cash. Gamespedia operates the mini game portal website www.7k7k.com in China. Taomee paid US$3.0 million in September and the remaining consideration in October 2012.
Share Repurchase Program
During the third quarter of 2012, Taomee had repurchased approximately 193,191 ADSs. As of September 30, 2012 the Company has repurchased a total of 373,605 ADSs under the Company's share repurchase program at an average price of approximately US$4.2 per ADS.
Business Highlights
On June 28, 2012 and July 5, 2012, Taomee released two films nationwide, Seer II and Legend of The Moles: The Treasure of Scylla. The two films have each been shown on over 2,000 major screens across mainland China and Taiwan. As of the end of September 30, 2012, the two films had generated over RMB 55 million (US$8.7 million) in box office revenue.
In July and August 2012, Taomee commercially launched Mole's World, its flagship online virtual world, in South Korea and Thailand with local game operators.
On August 13, 2012, Taomee commercially launched Wizard 101, its first client server game, licensed from KingsIsle Entertainment, Inc.
On November 20, 2012, partnering with Cartoon Network, Taomee launched the official Chinese online portal, ben10.61.com for Cartoon Network's Ben 10 franchise.
In the second half of 2012, Taomee launched three new mobile applications: Seer animation, Mole Kart 2 Evolution and Seer on Apple's iOS platform.
Outlook for Fourth Quarter of 2012
The Company expects revenues for the fourth quarter to be between US$7.0~7.5 million. The sequential decline reflects seasonality associated with the Chinese school calendar as well as the lack of any films being released in the fourth quarter. These forecasts also reflect the Company's current and preliminary view on the market and operational conditions, which are subject to change.
Non-GAAP Financial Measures
To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States, or GAAP, this press release presents non-GAAP net income attributable to the Company's shareholders and non-GAAP earnings per ADS by excluding share-based compensation charge from net income attributable to the Company's shareholders and from the calculation of earnings per ADS. The Company believes these non-GAAP financial measures are important to help investors understand the Company's operating and financial performance compare business trends among different reporting periods on a consistent basis and assess the Company's core operating results. The use of the above non-GAAP financial measures has certain limitations. Share-based compensation charge has been and will continue to be incurred and is not reflected in the presentation of the non-GAAP financial measures; it should be considered in the overall evaluation of our results. None of the non-GAAP measures is a measure of net income attributable to the Company's shareholders, operating profit, operating performance or liquidity presented in accordance with GAAP. We compensate for these limitations by providing the relevant disclosure of our share-based compensation charge in our reconciliations to the most directly comparable GAAP financial measures, which should be considered when evaluating our performance. These non-GAAP financial measures should be considered in addition to financial measures prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP. Reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure is set forth at the end of this release.
Conference Call
The Company will host a conference call and live webcast at 7:00 a.m. Eastern Standard Time (New York) on Tuesday, November 20, 2012 (which is 8:00 p.m. in China on Tuesday, November 20, 2012).
The dial-in details for the live conference call are:
U.S. toll-free: | +1-866-519-4004 |
Hong Kong toll-free: | 800-930-346 |
International: | +65-6723-9381 |
China Mainland: | 400-620-8038 |
Passcode: | Taomee |
A live webcast and archive of the conference call will be available on the Investor Relations section of Taomee's website at http://ir.taomee.com/phoenix.zhtml?p=irol-eventDetails&c=243417&eventID=4866124 A telephone replay of the call will be available through November 28, 2012 10:00p.m.Eastern Standard Time. The dial-in details for the telephone replay are:
Conference ID: | 69005679 |
International: | +612-8199-0299 |
China: | 400 1200 932 |
About Taomee Holdings Limited
Taomee Holdings Limited is one of the leading children's entertainment and media companies in China driven to deliver exceptional entertainment to children and families. Founded in 2007, Taomee is one of the first companies in Greater China to develop animated franchises for children through online virtual world that are both fun and educational. The Company's virtual worlds are widely trusted by millions of parents and caregivers across Asia. The Company's Mole's World and Seer franchises and characters have reached millions of children and families through virtual worlds, books, monthly print magazines, mobile applications, animated television series and movies. For more information, please visit: http://www.taomee.com/en_taomee.html
- Visit online virtual world communities at www.61.com
- Watch animations and films at http://v.61.com/
- Download mobile games and applications at http://m.61.com/
- Share with other parents and caregivers at http://mama.61.com/
Safe Harbor Statements
This press release contains statements that may constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. Among other things, the management's quotations and outlook information contain forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Potential risks and uncertainties include, but are not limited to: the Company's business strategies and initiatives as well as business plans; future business development, results of operations and financial condition; expected changes in revenues and certain cost or expense items; expectations with respect to increased revenue growth and the Company's ability to sustain profitability; the Company's services and products under development or planning; the Company's ability to attract users and further enhance the Company's brand recognition; and trends and competition in the children's entertainment and media market and industry, including those for online entertainment. Further information regarding these and other risks is included in Taomee's filings with the U.S. Securities and Exchange Commission, including its registration statement on its final prospectus dated June 10, 2011. All information provided in this press release is as of the date of the press release, and the Company undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as required under applicable law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, the Company cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
For further information, please contact
Na You
Taomee Holdings Limited
+86-21-61280056-8578
ir@taomee.com
Taomee Holdings Limited - Unaudited Consolidated Balance Sheets
| ||
In USD | In USD | |
September 30 | June 30 | |
2012 | 2012 | |
ASSETS | ||
Current assets: | ||
Cash and cash equivalents | $ 119,334,986 | $ 122,006,731 |
Restricted cash | 788,519 | - |
Accounts receivable | 3,238,480 | 526,524 |
Inventories | 54,350 | 44,430 |
Income tax recoverable | - | 149,812 |
Due from related parties | 265,787 | 239,383 |
Prepayments and other current assets | 2,863,098 | 2,154,226 |
Deferred tax assets, current | 3,226,868 | 3,235,082 |
Total current assets | 129,772,088 | 128,356,188 |
Investments in equity investees | 8,150,388 | 2,515,446 |
Property and equipment, net | 1,497,173 | 1,709,818 |
Acquired intangible assets | 1,302,776 | 1,373,921 |
Other assets | 1,759,647 | 2,738,741 |
TOTAL ASSETS | $ 142,482,072 | $ 136,694,114 |
LIABILITIES AND EQUITY | ||
Current liabilities: | ||
Accounts payable | $ 534,052 | $ 211,843 |
Income tax payable | 140,222 | - |
Advance from customers | 8,695,446 | 8,621,406 |
Due to related parties | 100,553 | 107,365 |
Deferred revenue | 12,701,827 | 13,119,482 |
Deferred tax liabilities, current | 10,841 | 10,869 |
Accrued expenses and other current liabilities | 9,550,659 | 5,704,377 |
Total current liabilities | 31,733,600 | 27,775,342 |
Equity | ||
Ordinary shares ($0.00002 par value; 875,000,000 shares |
14,775 |
14,698 |
Treasury stock | (752,078) | (255,354) |
Additional paid-in capital | 72,161,487 | 71,540,018 |
Retained earnings | 37,159,850 | 35,359,414 |
Accumulated other comprehensive income | 2,085,459 | 2,181,017 |
Total equity | $ 110,669,493 | $ 108,839,793 |
Non-controlling interests | 78,979 | 78,979 |
TOTAL LIABILITIES AND EQUITY | $ 142,482,072 | $ 136,694,114 |
Taomee Holdings Limited - Unaudited Consolidated Statements of Operations
| ||||||
In USD, except for share data For three months ended | ||||||
September 30, | June 30, | September 30, | ||||
2012 | 2012 | 2011 | ||||
Revenues: | ||||||
Online business, net | $ 8,000,663 | $ 8,568,740 | $ 10,382,615 | |||
Offline business, net | 3,833,942 | 1,904,624 | 2,296,950 | |||
Total net revenues | 11,834,605 | 10,473,364 | 12,679,565 | |||
Cost of services | ||||||
Online business | (1,886,967) | (1,695,167) | (1,529,614) | |||
Offline business | (1,640,020) | (640,451) | (850,275) | |||
Total cost of services | (3,526,987) | (2,335,618) | (2,379,889) | |||
Gross profit | 8,307,618 | 8,137,746 | 10,299,676 | |||
Operating income (expenses): | ||||||
Product development | (3,374,238) | (2,983,713) | (2,929,040) | |||
Sales and marketing | (2,859,256) | (2,835,240) | (1,901,633) | |||
General and administrative | (2,435,483) | (2,711,214) | (2,278,333) | |||
Other operating income | 1,021,371 | 1,063,284 | 907,625 | |||
Total operating expenses | (7,647,606) | (7,466,883) | (6,201,381) | |||
Profit from operations | 660,012 | 670,863 | 4,098,295 | |||
Interest income, net | 683,697 | 666,848 | 482,981 | |||
Other income (expenses), net | 324,484 | (282,010) | (65,966) | |||
Income before income taxes and |
1,668,193 |
1,055,701 |
4,515,310 | |||
Income tax benefit (expense) | (304,726) | 1,778,930 | (284,753) | |||
Share of profit (loss) in equity investments | 436,969 | 373,994 | 178,657 | |||
Net income | 1,800,436 | 3,208,625 | 4,409,214 | |||
Net income attributable to holders of | $ 1,800,436 | $ 3,208,625 | $ 4,409,214 | |||
Earnings per ADS | ||||||
-Basic | $ 0.05 | $ 0.09 | $ 0.12 | |||
-Diluted | $ 0.05 | $ 0.08 | $ 0.12 | |||
Weighted average number of shares | ||||||
- Basic | 733,158,958 | 730,769,890 | 728,341,047 | |||
- Diluted | 752,966,298 | 756,963,311 | 764,675,988 | |||
Taomee Holdings Limited - Reconciliation of Non-GAAP and GAAP Results
| ||||||
In USD, except for share data For three months ended | ||||||
September 30, | June 30, | September 30, | ||||
2012 | 2012 | 2011 | ||||
Reconciliation from Non-GAAP measures to GAAP measures | ||||||
Non-GAAP net income attributable to holders | $ 2,394,409 | $ 3,776,689 | $ 5,039,182 | |||
Share-based compensation | (593,973) | (568,064) | (629,968) | |||
GAAP net income attributable to holders of | $ 1,800,436 | $ 3,208,625 | $ 4,409,214 | |||
Non-GAAP diluted earnings per ADS | ||||||
-Basic | $ 0.07 | $ 0.10 | $ 0.14 | |||
-Diluted | $ 0.06 | $ 0.10 | $ 0.13 | |||
