Advertising Service Revenues Grow 77.9% Quarter-over-Quarter and 312.0% Year-over-Year
Net Income Grows 112.8% Quarter-over-Quarter and 381.5% Year-over-Year
BEIJING, Oct. 31 /Xinhua-PRNewswire/ -- VisionChina Media Inc. (the "Company") (Nasdaq: VISN), one of China's largest out-of-home digital television advertising networks on mass transportation systems, today announced its financial results for the third quarter ended September 30, 2008.
Third Quarter 2008 Highlights
-- Total revenues in the third quarter of 2008 grew 77.0% quarter-over-
quarter and 285.7% year-over-year to $35.9 million. Advertising
services revenues, which made up nearly 100% of total revenues, grew
77.9% quarter-over-quarter and 312.0% year-over-
year. to $35.9 million.
-- Gross profit in the third quarter of 2008 was $24.2 million, an
increase of 102.7% from $11.9 million in the second quarter of 2008,
and a significant increase of 345.2% from $5.4 million in the third
quarter of 2007.
-- Operating profit in the third quarter of 2008 was $17.3 million, an
increase of 122.2% from $7.8 million in the second quarter of 2008, and
a significant increase of 361.6% from $3.7 million in the third quarter
of 2007.
-- Net income in the third quarter of 2008 was $18.1 million, an increase
of 112.8% from $8.5 million in the second quarter of 2008, and a
significant increase of 381.5% from $3.8 million in the third quarter
of 2007.
-- Basic and fully diluted net income per share in the third quarter of
2008 was $0.26 and $0.25, respectively (each ADS representing one
common share), compared to $0.12 for both in the second quarter of
2008.
-- The Company had cash and cash equivalents of $141.0 million as of
September 30, 2008, an increase of $16.8 million from $124.2 million as
of June 30, 2008. The increase was primarily due to the $17.6 million
in net proceeds net of underwriting commissions from the follow-on
offering of ADSs by the Company in August 2008. The Company had net
operating cash outflow totalingtotaling $3.8 million in the third
quarter of 2008 due to increasing accounts receivable as a result of
accelerated growth.
-- Network capacity, which is measured by total broadcasting hours,
reached 31,834 hours in the third quarter of 2008, compared to 29,523
hours in the second quarter of 2008 and 22,269 hours in the third
quarter of 2007.
-- As of September 30, 2008, the Company had installed a total of 62,250
digital displays on buses, subways trains and subway platforms,
compared with 60,160 as of June 30, 2008.
-- On average, the Company sold 9.33 advertising minutes per broadcasting
hour in the third quarter of 2008, compared to 8.14 advertising minutes
per broadcasting hour in the second quarter of 2008 and 8.37
advertising minutes per broadcasting hour in the third quarter of 2007.
-- Average advertising service revenues per broadcasting hour were $1,116,
an increase of 68.8% from $661 per broadcasting hour in the second
quarter of 2008, and $383 in the third quarter of 2007. The increase
in advertising service revenues per broadcasting hour from the second
quarter of 2008 to the third quarter of 2008 was primarily due to the
expansion of the Company's sales team, the strengthening of marketing
capabilities and the overall improvement of the Company's sales
network.
Third Quarter 2008 Results
VisionChina Media's total revenues were $35.9 million in the third quarter of 2008, an increase of 77.0% compared to $20.3 million in the second quarter of 2008 and an increase of 285.7% compared to $9.3 million in the third quarter of 2007.
Media cost, the most significant component of advertising service cost of revenues, was $8.5 million in the third quarter of 2008, representing 72.9% of total advertising service costs, compared to $6.2 million, or 75.0% of total advertising service costs, in the second quarter of 2008.
Gross profit in the third quarter of 2008 was $24.2 million, an increase of 102.7% compared to $11.9 million in the second quarter of 2008 and a significant increase of 345.2% compared to $5.4 million in the third quarter of 2007. Advertising service gross margin was 67.4% in the third quarter of 2008, compared to 59.1% in the second quarter of 2008.
Selling and marketing expenses were $5.3 million in the third quarter of 2008, an increase of 78.9% compared to $3.0 million in the second quarter of 2008, and a significant increase of 643.9% compared to $0.7 million in the third quarter of 2007. The quarter-over-quarter increase was primarily due to an increase in the sales and marketing team headcount, which grew to 303 employees as of September 30, 2008, up from 276 employees as of June 30, 2008. Selling and marketing expenses represented 14.9% of the Company's advertising service revenues in the third quarter of 2008 compared to 14.8% in the second quarter of 2008.
General and administrative expenses were $1.5 million in the third quarter of 2008, an increase of 53.2% compared to $1.0 million in the second quarter of 2008, and an increase of 123.3% compared to $0.7 million in the third quarter of 2007.
Losses from equity method investments amounted to $0.04 million in the third quarter of 2008, compared to a $0.2 million loss in the second quarter of 2008, and a $0.3 million loss in the third quarter of 2007.
Operating profit was $17.3 million in the third quarter of 2008, an increase of 122.2% from $7.8 million in the second quarter of 2008, and a significant increase of 361.6% from $3.7 million in the third quarter of 2007.
In the third quarter of 2008, the Company recorded a deferred tax expense of $0.03 million. The Company is a certified "Cultural Enterprise" and therefore benefits from full tax exemption from 2005 through 2008. The Company expects that it will be subject to an effective PRC tax rate of 15% starting in 2009.
Net income was $18.1 million in the third quarter of 2008, an increase of 112.8% from $8.5 million in the second quarter of 2008, and a significant increase of 381.5% from $3.8 million in the third quarter of 2007. Fully diluted net income per share for the third quarter of 2008 was $0.25. The Company's third quarter net income, excluding share-based compensation expenses (non-GAAP) was $18.5 million. Strong revenues and well implemented cost control measures allowed the Company to beat the top-end of (non-GAAP) net income guidance by $1.5 million.
As of September 30, 2008, the Company had 62,250 digital television displays in its network, compared to 60,160 as of June 30, 2008.
As of September 30, 2008, the Company had 455 employees, compared to 437 employees as of June 30, 2008.
The Company had cash and cash equivalents of $141.0 million as of September 30, 2008, an increase of $16.8 million from $124.2 million as of June 30, 2008. The increase was mainly due to the $17.6 million in proceeds net of underwriting commissions net proceeds from the follow-on offering of ADSs by the Company in August 2008. In the third quarter of 2008, depreciation and amortization was $1.1 million and capital expenditures were $0.7 million. The Company had net operating cash outflow totaling $3.8 million in the third quarter 2008, due to increasing accounts receivable as a result of accelerated growth.
Other Recent Company and Industry Developments
In September, CTR Market Research released a report commissioned by VisionChina Media that provided the first ratings for mass transit based digital mobile television. The results showed that, for very low costs, mass transit mobile TV ratings are extremely high with advertisements, reaching more than 90% of the population in the cities in which VisionChina Media operates. The creation of third-party evaluation standards provides criteria to compare mass transit mobile TV with traditional TV, which is expected to help further raise the status of the emergent mass transit mobile TV industry.
In October, VisionChina Media signed an exclusive contract with Shanghai Shentong Metro Asset Operation and Management Corporation, the asset management arm of Shanghai Metro, to act as the exclusive advertising agent for Shanghai Metro Line 6. With the addition of this line, VisionChina Media now has the exclusive right to provide planning, production, sales and placement services to Shanghai Metro's 556 digital screens installed on the platforms of three of Shanghai's 11 subway lines. This new contract with Shanghai Metro enables VisionChina Media to expand its presence in Shanghai, where, according to the Shanghai municipal government, over 12 million people use public transportation daily.
A recent independent mass media access survey, also carried out by CTR, for the Olympic period determined that 24.9% of Chinese citizens said they mainly watched the Olympic Games on mass transit mobile TV during the Olympics, indicating that the mass transit mobile TV media has for the first time ranked among the top three media formats and is becoming more popular with the general public. In Beijing, this positioned mobile television as the second most popular method for audiences to view the Olympics, exceeded only by traditional in-home television.
Business Outlook
The Company estimates its advertising service revenues for the fourth quarter of 2008 will range from $34.0 million to $36.0 million. The fourth quarter thus maintains the very high level of revenue achieved in the third quarter even without the contribution of the Olympic Games. Fourth quarter 2008 net income excluding share-based compensation expenses (non-GAAP) is expected to be between $15.0 million and $17.0 million.
The Company bases these estimates on a foreign exchange rate of RMB6.8375 per US$1.00.
Dial-in details for the earnings conference call are as follows:
US Toll Free: + 1-800-901-5231
Hong Kong: + 852-3002-1672
International: + 1-617-786-2961
Passcode for all regions: Vision China Earnings Call
A replay of the conference call may be accessed by phone at the following numbers until November 6, 2008.
US Toll Free: + 1-888-286-8010
International: + 1-617-801-6888
Passcode: 43450934
Additionally, a live and archived webcast of this conference call will be available on the Investor Relations section of VisionChina's website at http://www.visionchina.cn .
About VisionChina Media, Inc.
VisionChina Media (Nasdaq: VISN) operates an out-of-home advertising network on mass transportation systems, including buses and subways that reach over 26 million viewers each day in China, according to CTR Market Research. As of September 30, 2008, VisionChina Media's advertising network included over 62,250 digital television displays on mass transportation systems in 17 of China's economically prosperous cities, including Beijing, Shanghai, Guangzhou and Shenzhen. VisionChina Media has the ability to deliver real-time, location-specific broadcasting, including news, stock quotes, weather and traffic reports and other entertainment programming. For more information, please visit http://www.visionchina.cn .
Use of Non-GAAP Financial Measures
Safe Harbor Statement
VISIONCHINA MEDIA INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Amounts in U.S. dollars ("$"), except number of shares and per share data)
September June December
ASSETS 30,2008 30,2008 31,2007
(Unaudited) (Unaudited) (Note 1)
Current Assets:
Cash and cash equivalents 141,018,871 124,168,704 131,139,659
Accounts receivable, net 43,663,731 19,832,753 13,256,450
Amounts due from related parties 4,223,949 4,213,491 3,632,864
Prepaid expenses and other current
assets 15,184,861 14,763,519 9,683,059
Deferred tax assets 252,975 279,285 332,386
Total current assets 204,344,387 163,257,752 158,044,418
Non-current Assets:
Fixed assets, net 10,046,944 9,771,198 7,709,204
Investments under equity method 6,826,319 6,684,371 6,714,853
Other investments 2,286,962 2,263,890 2,128,732
Long-term prepaid expenses 703,397 705,485 703,069
Long-term prepayments and deposits 19,340,985 16,537,272 --
Intangible assets 14,814,638 10,568,461 --
Total non-current assets 54,019,245 46,530,677 17,255,858
TOTAL ASSETS 258,363,632 209,788,429 175,300,276
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable 2,025,147 3,771,974 4,236,695
Amounts due to related parties 947,782 410,242 327,532
Accrued expenses and other current
liabilities 6,383,296 5,848,321 6,054,552
Total current liabilities 9,356,225 10,030,537 10,618,779
Non-current Liabilities:
Contingent consideration 12,511,658 8,677,700 --
Deferred tax liabilities 3,275,762 2,218,766 --
Total non-current liabilities 15,787,420 10,896,466 --
Total liabilities 25,143,645 20,927,003 10,618,779
Minority interest 587,197 612,009 652,678
Shareholders' equity
Common shares 7,206 6,920 6,839
Additional paid-in capital 192,365,003 167,604,519 163,820,443
Accumulated profit/(deficit) 28,689,575 10,615,387 -3,300,654
Accumulated other comprehensive
income 11,571,006 10,022,591 3,502,191
Total shareholders' equity 232,632,790 188,249,417 164,028,819
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 258,363,632 209,788,429 175,300,276
Note1: Information extracted from the audited financial statements
included in the 2007 Form 20-F of the Company filed on April 3,
2008.
VISIONCHINA MEDIA INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Amounts in USD thousand, except number of shares and per share data
For three months ended
September 30, June 30, September 30,
2008 2008 2007
(Unaudited) (Unaudited) (Unaudited)
Revenues:
Advertising revenue 35,871 20,165 8,707
Equipment revenue 38 124 604
Total revenues 35,909 20,289 9,311
Cost of revenues
Advertising cost -11,703 -8,257 -3,365
Equipment cost -34 -108 -516
Total costs of revenues -11,737 -8,365 -3,881
Gross profit 24,172 11,924 5,430
Operating expenses:
Selling and marketing -5,345 -2,987 -718
General and administrative -1,517 -991 -680
Total operating expenses -6,862 -3,978 -1,398
Loss from equity method investees -38 -173 -290
Operating profit 17,272 7,773 3,742
Interest income 826 733 39
Other expenses -20 -2 -27
Net income before income taxes 18,078 8,504 3,754
Income taxes -29 -32 --
Net income after income taxes 18,049 8,472 3,754
Minority interest 25 22 --
Net income 18,074 8,494 3,754
Deemed dividend on convertible
redeemable preferred shares -- -- -2,509
Net income attributable to holders of
common shares 18,074 8,494 1,245
Net income per share:
Basic 0.26 0.12 0.06
Diluted 0.25 0.12 0.05
Shares used in computation of net
income per share:
Basic 70,873,656 68,888,659 22,000,000
Diluted 73,292,630 72,115,604 23,281,758
Share-based compensation expenses
during the related periods included in:
Cost of revenues -10 -9 -8
Selling and marketing expenses -337 -347 -23
General and administrative expenses -67 -37 -14
For investor inquiries, please contact:
In China:
Investor Relations Department, VisionChina Media, Inc.
Tel: +86-755-8831-8683
Email: ir@visionchina.cn
Mrs. Helen F. Plummer
Ogilvy Financial, Beijing
Tel: +86-10-8520-3090
Email: helen.plummer@ogilvy.com
In the United States:
Ms. Jessica Barist Cohen
Ogilvy Financial, New York
Tel: +1-646-460-9989
Email: jessica.cohen@ogilvy.com
For media inquiries, please contact:
Ms. Ceren Wende
Ogilvy Financial, Beijing
Tel: +86-10-8520-6514
Email: ceren.wende@ogilvy.com
