Tudou Reports Fourth Quarter and Fiscal Year 2011 Unaudited Financial Results

SHANGHAI, March 1, 2012 /PRNewswire-Asia/ -- Tudou Holdings Limited (NASDAQ: TUDO) ("Tudou" or the "Company"), a leading Internet video company in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2011. The Company will hold a conference call at 7:30 am U.S. Eastern Time, or 8:30 pm Beijing / Hong Kong time, on March 1, 2012. Dial-in details are provided below.

Fourth Quarter 2011 Highlights

• Net revenues were RMB 166.5 million (US $26.5 million) up 69.7% year-over-year, exceeding management's prior guidance of 55% to 60% year-over year.
• Online advertising service revenues were RMB 144.6 million (US $23.0 million) up 60.1% year-over-year.
• Mobile video service revenues were RMB 21.7 million (US $3.5 million) up 183.4% year-over-year.

Fiscal Year 2011 Highlights

• Net revenues were RMB 512.2 million (US $81.4 million) up 78.9% year-over-year.
• Online advertising service revenues were RMB 443.5 million (US $70.5 million) up 67.2% year-over-year.
• Mobile video service revenues were RMB 57.8 million (US $9.2 million) up 203.4% year-over-year.

"We're very pleased to announce strong fourth quarter and full year 2011 results which came in ahead of our expectations," commented Gary Wang, Founder, Chairman and Chief Executive Officer. "After successfully completing our IPO in August 2011, the fourth quarter was the first full quarter for us to leverage our improved capital base. By expanding our content, infrastructure and marketing footprint, we have positioned our brand and platform for continued business growth over the coming quarters and years.

"We are focused on enhancing our user experience through further integrating our video platform with China's leading social networking platforms. As social media becomes more integrated and media consumption becomes more mobile, Tudou is well positioned to benefit directly from these major macro shifts," Mr. Wang added.

Bin Yu, Chief Financial Officer, commented, "We are pleased to have achieved another solid quarter of continued top-line growth in both advertising service revenues and mobile video service revenues. More specifically, we will continue to expand our mobile video reach, where we experienced triple-digit revenue growth in the fourth quarter of 2011. As we continue to focus on how to best serve our users and advertising clients, we will continue to explore new and innovative opportunities. We expect to continue taking advantage of growth opportunities to help ensure sustained growth over the long term."

Fourth Quarter 2011 Financial Results

Revenues: Net revenues for the fourth quarter of 2011 increased by 69.7 % to RMB 166.5 million (US $26.5 million) from RMB 98.1 million in the corresponding period in 2010(1). The increase was primarily attributable to the increase in net revenues from the Company's online advertising services. Online advertising service revenues for the fourth quarter of 2011 increased by 60.1% to RMB 144.6 million (US $23.0 million), from RMB 90.3 million in the corresponding period in 2010. Mobile video service revenues for the fourth quarter of 2011 increased by 183.4% to RMB 21.7 million (US $3.5 million), from RMB 7.7 million for the corresponding period in 2010.

Cost of Revenues: Cost of revenues increased by 118.5% to RMB 160.1 million (US $25.4 million) from RMB 73.3 million in the corresponding period in 2010. The increase was primarily attributable to increased Internet bandwidth costs, content costs and mobile video services costs. Internet bandwidth costs totaled RMB 70.4 million (US $11.2 million), or 42.3% of net revenues compared to RMB 27.4 million, or 27.9% of net revenues in the corresponding period in 2010. The increase in Internet bandwidth costs was primarily due to increased traffic to our website and our focus on enhancing our users' experience. Content costs totaled RMB 66.5 million (US $10.6 million), or 39.9% of net revenues, compared to RMB 22.7 million, or 23.2% of net revenues, in the corresponding period in 2010. Content costs consisted of amortization of the premium licensed content, salaries and benefits for staff, as well as the production cost for content produced in-house. The increase in content costs was primarily due to an increase in the amount of licensed content purchased. The mobile video services cost totaled RMB 13.2 million (US $2.1 million), or 7.9% of net revenues, compared to RMB 3.4 million, or 3.5% of net revenues, in the corresponding period in 2010. The increase in mobile video services cost was primarily attributable to the increase in mobile video services revenues.

Gross Profit: For the fourth quarter of 2011, gross profit totaled RMB 6.3 million (US $1.0 million), compared to RMB 24.8 million in the corresponding period in 2010. Gross margin was 3.8% compared to 25.3% in the corresponding period in 2010. The decline in gross margin was primarily due to the increase in Internet bandwidth costs and content costs.

Operating Expenses: Total operating expenses for the fourth quarter of 2011 were RMB 150.4 million (US $23.9 million) compared to RMB 142.0 million in the corresponding period in 2010. The increase was primarily due to an increase in sales and marketing expenses, partially offset by a decrease in share-based compensation expenses. The increase in sales and marketing expenses was primarily the result of increased promotion and marketing efforts and hiring of additional sales and marketing staff.

Net Loss: Net loss for the fourth quarter of 2011 decreased to RMB 148.9 million (US $23.7 million) from a net loss of RMB 263.7 million in corresponding period in 2010.

Adjusted Net Loss: Adjusted net loss for the fourth quarter of 2011, which excludes share-based compensation expenses, was RMB 140.6 million (US $22.3 million) compared to adjusted net loss of RMB 15.0 million in the corresponding period in 2010. See "Non-GAAP Financial Measures" below.

Fiscal Year 2011 Financial Results

Revenues: For fiscal year 2011, net revenues increased by 78.9% to RMB 512.2 million (US $81.4 million) from RMB 286.3 million for fiscal year 2010(2). The increase was primarily attributable to the increase in net revenues from the Company's online advertising services. Online advertising service revenues increased by 67.2% to RMB 443.4 million (US $70.5 million) from RMB 265.2 million for fiscal year 2010. Revenues from mobile video services increased 203.4% to RMB 57.8 million (US $9.2 million) from RMB 19.1 million for fiscal year 2010.

Cost of Revenues: For fiscal year 2011, cost of revenues increased by 89.0% to RMB 427.8 million (US $68.0 million) from RMB 226.4 million for fiscal year 2010. The increase was primarily attributable to the increase in Internet bandwidth costs, content costs and mobile video services costs. Internet bandwidth costs totaled RMB 180.2 million (US $28.6 million), or 35.2% of net revenues, compared to RMB 103.6 million, or 36.2% of net revenues for fiscal year 2010. Content costs totaled RMB 168.6 million (US $26.8 million), or 32.9% of net revenues, compared to RMB 79.6 million, or 27.8% of net revenues for fiscal year 2010. Content costs consisted of amortization and write-down of the premium licensed content, salaries and benefits for staff, as well as the production cost for content produced in-house. The mobile video services cost totaled RMB 34.7 million (US $5.5 million), or 6.8% of net revenues, compared to RMB 9.5 million, or 3.3% of net revenues in 2010. The increase in mobile video services cost was primarily attributable to the increase in mobile video services revenues.

Gross Profit: For fiscal year 2011, gross profit totaled RMB 84.4 million (US $13.4 million) representing a 16.5% gross margin, compared to RMB 59.9 million representing a 20.9% gross margin for fiscal year 2010. The decline in gross margin was primarily due to increases in Internet bandwidth costs and content costs.

Operating Expenses: Total operating expenses for fiscal year 2011 were RMB 461.8 million (US $73.4 million) compared to RMB 248.1 million for fiscal year 2010. The increase was primarily due to an increase in sales and marketing expenses, mainly as a result of the Company's hiring of additional sales professionals and enhanced promotion and marketing efforts.

Net Loss: Net loss for fiscal year 2011 increased to RMB 511.2 million (US $81.2 million) from a net loss of RMB 347.4 million for fiscal year 2010.

Adjusted Net Loss: Adjusted net loss for fiscal year 2011, which excludes RMB 105.0 million in share-based compensation expenses and RMB 113.7 million of fair value changes in warrant liabilities, was RMB 292.4 million (US $46.5 million) compared to adjusted net loss of RMB 107.2 million for fiscal year 2010.

As of December 31, 2011, the Company had approximately 113.4 million ordinary shares outstanding. The Company's American Depositary Shares are listed on the Nasdaq Global Market. Each American Depositary Share represents four ordinary shares.

Business Outlook

For the first quarter of 2012, the Company expects year-over-year growth in net revenues of 70% to 75%. This forecast reflects the Company's current and preliminary view, which is subject to change.

Recent Developments

In February 2012, the Company announced the following statistics for December 2011: 227 million monthly unique visitors according to iResearch Consulting Group, 300 million monthly unique visitors and 5.2 billion monthly video views according to the Company's internal data. In addition, among all video views on Sina Weibo (NASDAQ: SINA) in December 2011, approximately 41%, or 180 million video views for the month, were from Tudou, according to comScore, Inc.

In February 2012, the Company announced its enhanced video sharing platform for SinaWeibo users to upload and share videos seamlessly to Tudou's video site. Sina Weibo users who are not registered with Tudou, but wish to share their videos with Tudou's users, will automatically become a registered Tudou user. Their user account names at Tudou will be identical to their Sina Weibo account names. Sharing functionalities enable users to sync comments on both platforms.

In December 2011, the Company's Board of Directors appointed Ms. Bin Yu, the Company's Vice President of Finance, to serve as Chief Financial Officer effective January 1, 2012. Previously, she had spent over 11 years in KPMG's audit practice in both China and the United States.

In November 2011, the Company entered into a program license agreement for the exclusive license of Japanese anime produced by TV Tokyo Corporation and TY Tokyo Medianet, Inc. Tudou has the rights to initially simulcast over 60 Japanese anime series in Mainland China, marking the first time that Japanese anime will be simulcast through an online video website in Mainland China.

Conference Call

The Company will hold a conference call on Thursday, March 1, 2012 at 7:30 am U.S. Eastern Time, or 8:30 pm Beijing / Hong Kong time, to discuss the financial results. Listeners may access the call by dialing the following numbers:

The replay will be accessible through March 8, 2012 by dialing the following numbers:

A webcast of the conference call will be available through the Company's investor relations website at http://ir.tudou.com.

About Tudou

Tudou Holdings Limited (NASDAQ: TUDO) is a leading Internet video company in China providing premium licensed content, user generated content ("UGC"), and original in-house production. Founded in 2005, Tudou was the first UGC video sharing website launched in China. The "Tudou" brand is one of the most recognized Internet brands in China, and the annual Tudou Video Festival has become a signature event in the online video industry. For more information, please visit http://ir.tudou.com.

Safe Harbor Statement

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by terminology such as "may," "will," "expects," "anticipates," "future," "intends," "plans," "believes," "aims," "estimates," "confident," "likely to" and similar statements. Among other things, the Company's business outlook and revenue guidance for the first quarter of 2012, as well as Tudou's strategic and operational plans, contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company's business strategies, plans and initiatives; the Company's future business development, results of operations and financial condition; changes in the Company's revenues and certain cost or expense items; the Company's expectations with respect to increased revenue growth and its ability to sustain profitability; the Company's services under development or planning; the Company's ability to attract users and advertisers and enhance its brand recognition; and the ability of the online video and advertising industry in China to grow at rates projected by market data, or at all. Any of the foregoing risks may have a material adverse effect on the Company's business and the market price of its ADSs. Further information regarding these and other risks is included in the Company's registration statement on Form F-1, as amended, filed with the Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release, and the Company undertakes no duty to update such information, except as required under applicable law.

Non-GAAP Financial Measures

We define adjusted net income (loss), a non-GAAP financial measure, as net income (loss) excluding share-based compensation expenses, a beneficial conversion charge on convertible loans and fair value changes in warrant liabilities. We review adjusted net income (loss) together with net income (loss) to obtain a better understanding of our operating performance. We also believe it is useful supplemental information for investors and other interested persons to assess our operating performance without the effect of the non-cash beneficial conversion charge on convertible loans and fair value changes in warrant liabilities, which will not likely be recurring factors in our business in the future, and share-based compensation expenses, which have been and will continue to be a significant recurring factor in our business.

We present this non-GAAP financial measure because this is used by our management to evaluate our operating performance. We believe that the non-GAAP financial measure provides useful information to investors and other interested persons because by having access to such information they will have the same data we use to assess our operating performance, and because such information allows them to understand and evaluate our consolidated results of operations in the same manner as our management and to make period over period comparisons of our financial results. However, the use of adjusted net income (loss) has material limitations as an analytical tool. One of the limitations of using non-GAAP adjusted net income (loss) is that it does not include all items that impact our net income (loss) for the period. In addition, because adjusted net income (loss) may not be calculated in the same manner by all companies, it may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider adjusted net income (loss) in isolation from or as an alternative to net income (loss) prepared in accordance with U.S. GAAP. We encourage investors and other interested persons to review our financial information in its entirety and not rely on a single financial measure.

Exchange Rate

This press release contains translations of certain Renminbi amounts into US dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to US dollars for the quarter and the year ended December 31, 2011, were made at a rate of RMB 6.2939 to US$1.00, the noon buying rate in effect on December 30, 2011 in the City of New York for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at such rate.