BEIJING, March 12, 2012 /PRNewswire-Asia/ -- Youku Inc. (NYSE: YOKU), China's leading Internet television company ("Youku" or the "Company"), today announced its unaudited financial results for the fourth quarter and fiscal year 2011.
Fourth Quarter Highlights(1)
Fiscal Year 2011 Highlights
(1) The reporting currency of the Company is Renminbi ("RMB"), but for the convenience of the reader, the amounts presented throughout the release are in US dollars ("US$"). Unless otherwise noted, all conversions from RMB to US$ are made at a rate of RMB6.2939 to US$1.00, the effective noon buying rate as of December 30, 2011 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate. | |
"Over the course of our first year as a U.S. publicly listed company, we have experienced strong growth in both revenue and traffic that further solidified our market position as China's leading Internet television company," said Victor Koo, Chairman and Chief Executive Officer of Youku. "With the growing opportunities ahead of us, our fundamental approach to this market is to continue to make long-term investments, as scalability is central to the success of our business model."
Dele Liu, Youku's Senior Vice President and Chief Financial Officer, commented, "We are glad that we continue to enjoy strong revenue growth in 2011 as a result of our solid execution and aggressive investment in content and technology. We expect that our investment will continue to increase our competitive advantages, which will position us for long-term profitable growth."
Fourth Quarter 2011 Results
Net revenues were RMB309.3 million (US$49.1 million) in the fourth quarter of 2011, representing a 103% increase from the corresponding period in 2010 and exceeding the high end of the revenue guidance previously announced by the Company by 2%. The growth was primarily attributable to the increased use by brand advertisers of our advertising services as evidenced by the increased average spend per advertiser from RMB0.7 million to RMB1.2 million and by an increase in the number of advertisers from 245 to 296, representing a 71% and 21% increase, respectively, from the corresponding period in 2010.
Bandwidth costs as a component of cost of revenues were RMB109.7 million (US$17.4 million) in the fourth quarter of 2011, representing 35% of net revenues, compared to 34% in the corresponding period in 2010. The increase of bandwidth costs in absolute dollars was primarily due to increased bandwidth capacity to support the growth of traffic to our website to further enhance our user experience.
Content costs as a component of cost of revenues were RMB90.7 million (US$14.4 million) in the fourth quarter of 2011 with our change in accounting estimate to accelerate amortization of content costs starting in fiscal year 2011. If the Company had continued using straight-line amortization for purchased content costs as in the corresponding period in 2010, the total content costs would have been RMB62.5 million (US$9.9 million), representing 20% of net revenues in the fourth quarter of 2011 as compared to 17% in the corresponding period in 2010.
Gross profit was RMB65.6 million (US$10.4 million) in the fourth quarter of 2011, an increase of 30% compared to gross profit of RMB50.4 million (US$8.0 million) in the corresponding period in 2010. Non-GAAP gross profit, which is herein defined as gross profit excluding share-based compensation expenses, was RMB66.9 million (US$10.6 million) in the fourth quarter of 2011, an increase of 32% compared to the non-GAAP gross profit of RMB50.7 million (US$8.1 million) in the corresponding period in 2010 due to strong operating leverage.
Operating expenses were RMB123.0 million (US$19.5 million) in the fourth quarter of 2011, an increase of 108% compared to operating expenses of RMB59.0 million (US$9.4 million) in the corresponding period in 2010. Non-GAAP operating expenses, which is herein defined as operating expenses excluding share-based compensation expenses, were RMB108.7 million (US$17.3 million) in the fourth quarter of 2011, compared to the non-GAAP operating expenses of RMB54.7 million (US$8.7 million) in the corresponding period in 2010. The increase was primarily due to increases in sales and marketing expenses, product development expenses and general and administrative expenses as a result of the substantial growth of our business. Detailed discussion of each component of operating expenses is as follows:
Sales and marketing expenses were RMB66.9 million (US$10.6 million) in the fourth quarter of 2011, an increase of 73% compared to sales and marketing expenses of RMB38.7 million (US$6.1 million) in the corresponding period in 2010. Non-GAAP sales and marketing expenses, which is herein defined as sales and marketing expenses excluding share-based compensation expenses, were RMB64.4million (US$10.2 million) in the fourth quarter of 2011, an increase of 77% compared to the non-GAAP sales and marketing expenses of RMB36.4 million (US$5.8 million) in the corresponding period in 2010. This increase was primarily due to increases in marketing expenses and commission expenses paid to our sales force in line with our revenue growth.
Product development expenses were RMB23.7 million (US$3.8 million) in the fourth quarter of 2011, an increase of 137% compared to product development expenses of RMB10.0 million (US$1.6 million) in the corresponding period in 2010. Non-GAAP product development expenses, which is herein defined as product development expenses excluding share-based compensation expenses, were RMB19.9 million (US$3.2 million) in the fourth quarter of 2011, an increase of 120% compared to the non-GAAP product development expenses of RMB9.0 million (US$1.4 million) in the corresponding period in 2010. This increase was primarily due to an increase in salaries and benefits for our product and development personnel primarily resulting from increased headcount.
General and administrative expenses were RMB32.4 million (US$5.1 million) in the fourth quarter of 2011, an increase of 216% compared to general and administrative expenses of RMB10.3 million (US$1.6 million) in the corresponding period in 2010. Non-GAAP general and administrative expenses, which is herein defined as general and administrative expenses excluding share-based compensation expenses, were RMB24.4 million (US$3.9 million) in the fourth quarter of 2011, an increase of 162% compared to the non-GAAP general and administrative expenses of RMB9.3 million (US$1.5 million) in the corresponding period in 2010. This increase was primarily due to an increase in personnel-related expenses, professional fees and tax charges.
Net loss was RMB49.6 million (US$7.9 million) in the fourth quarter of 2011, representing an increase of 32% from the corresponding period of 2010. Non-GAAP net loss, which is herein defined as net loss excluding share-based compensation expenses and change in fair value of warrant liability, was RMB34.1 million (US$5.4 million) in the fourth quarter of 2011, as compared to the non-GAAP net loss of RMB6.4 million(US$1.0 million) in the corresponding period in 2010. If we had continued using straight-line amortization for content costs as in the corresponding period in 2010, our non-GAAP net loss in the fourth quarter of 2011 would be RMB5.9 million (US$0.9 million), or a decrease of 7% relative to the corresponding period in 2010.
Non-GAAP EBITDA loss, which is herein defined as net loss before income taxes, interest expenses, interest income, depreciation and amortization (excluding amortization of acquired content), further adjusted for share-based compensation expenses and other non-operating items, was RMB28.6 million (US$4.5 million) in the fourth quarter of 2011.
Full-Year 2011 Results
Net revenues were RMB897.6 million (US$142.6 million) in 2011, representing a 132% increase from 2010. The significant increase of net revenues for 2011 was mainly due to the strong performance of brand advertising revenues, which grew 128% from 2010 to RMB851.3 million (US$135.3 million) in 2011. The growth was primarily attributable to the increased use by brand advertisers of our advertising services as evidenced by the increased average spend per advertiser from RMB1.1 million to RMB2.0 million and by an increase in the number of advertisers from 423 to 505, representing a 82% and 19% increase from 2010 respectively.
Bandwidth costs as a component of cost of revenues were RMB324.7 million (US$51.6 million) in 2011, representing 36% of net revenues, compared to 50% in the corresponding period in 2010 due to strong operating leverage.
Content costs as a component of cost of revenues were RMB243.4 million (US$38.7 million)with our change in accounting estimate to accelerate amortization of content costs starting in fiscal year 2011. If the Company had continued using straight-line amortization for content costs as in 2010, the total purchased content costs would have been RMB172.5 million (US$27.4 million) representing 19% of net revenues in 2011 as compared to 21% in 2010.
Gross profit was RMB200.3 million (US$31.8 million) in 2011, an increase of 452% compared to gross profit of RMB36.3 million (US$5.8 million) in 2010. Non-GAAP gross profit was RMB204.2 million (US$32.4 million) in 2011, an increase of 449% compared to the non-GAAP gross profit of RMB37.2 million (US$5.9 million) in 2010. The significant increase of non-GAAP gross profit was mainly due to increased revenues from brand advertising services and strong operating leverage.
Operating expenses were RMB383.6 million (US$60.9 million) in 2011, an increase of 101% compared to operating expenses of RMB190.6 million (US$30.3 million) in 2010. Non-GAAP operating expenses were RMB340.0 million (US$54.0 million) in 2011, compared to the non-GAAP operating expenses of RMB179.4 million (US$28.5 million) in 2010. The increase was primarily due to increases in sales and marketing expenses, product development expenses and general and administrative expenses as a result of the substantial growth of our business during 2011. Detailed discussion of each component of operating expenses is as follows:
Sales and marketing expenses were RMB230.5 million (US$36.6 million) in 2011, an increase of 77% compared to sales and marketing expenses of RMB130.2 million (US$20.7 million) in 2010. Non-GAAP sales and marketing expenses were RMB216.3 million (US$34.4 million) in 2011, an increase of 74% compared to the non-GAAP sales and marketing expenses of RMB124.3 million (US$19.7 million) in 2010. This increase was primarily due to increases in marketing expenses and commission expenses paid to our sales force in line with our revenue growth.
Product development expenses were RMB72.6 million (US$11.5 million) in 2011, an increase of 132% compared to product development expenses of RMB31.3 million (US$5.0 million) in 2010. Non-GAAP product development expenses were RMB60.3 million (US$9.6 million) in 2011, an increase of 114% compared to the non-GAAP product development expenses of RMB28.2 million (US$4.5 million) in 2010. This increase was primarily due to an increase in salaries and benefits for product and development personnel resulting from increased headcount.
General and administrative expenses were RMB80.5 million (US$12.8 million) in 2011, an increase of 178% compared to general and administrative expenses of RMB29.0 million (US$4.6 million) in 2010. Non-GAAP general and administrative expenses were RMB63.4 million (US$10.1 million) in 2011, an increase of 136% compared to the non-GAAP general and administrative expenses of RMB26.9 million (US$4.3 million) in 2010.
Net loss was RMB172.1 million ($27.3 million), a 16% decrease from 2010. Non-GAAP net loss was RMB124.6 million (US$19.8 million) in 2011, or a decrease of 16% relative to the non-GAAP net loss in 2010. If we had continued using straight-line amortization for content costs as in the corresponding period in 2010, our non-GAAP net loss in 2011 would be RMB53.7 million (US$8.5 million), or a decrease of 64% relative to 2010.
Non-GAAP EBITDA loss was RMB90.1 million (US$14.3 million) in 2011, or a decrease of 9% relative to the non-GAAP EBITDA loss in 2010.
Business Outlook
For the first quarter of 2012, the Company expects year-on-year growth of 95% to 105% in net revenues. This forecast reflects the Company's current and preliminary view, which is subject to change.
Supplementary Information
The number of monthly unique visitors from homes and offices in December 2011 was approximately 263 million, an increase of 26% compared to the corresponding period in 2010 according to iResearch.
Total user time spent for the fourth quarter in 2011 was approximately 2.2 billion hours, an increase of 78% compared to the corresponding period in 2010 according to iResearch.
Youku and Tudou Holdings Limited (NASDAQ: TUDO) ("Tudou") today announced that they have signed a definitive agreement for Tudou to combine with Youku in a 100% stock for stock transaction that will result in Youku and Tudou shareholders and ADS holders owning approximately 71.5% and 28.5% of the combined entity, respectively, immediately upon closing of the transaction. For more details, please see the joint press release issued by Youku and Tudou on March 12, 2012.
Conference Call Information
Youku's management will host an earnings conference call at 8:00 a.m. U.S. Eastern Time on March 12, 2012 (8:00 p.m. Beijing/Hong Kong Time on March 12, 2012).
Interested parties may participate in the conference call by dialing one of the following numbers below and entering passcode Youku# (i.e., 96858#) starting 10-15 minutes prior to the beginning of the call.
US Toll Free Dial In: 1-866-519-4004
International Dial In: 1-718-354-1231
Mainland China Toll Free Dial In: 86-4006208038 / 86-8008190121
Hong Kong Dial In: 852-2475-0994
A replay of the call will be available by dialing 1-866-214-5335 (international 1-718-354-1232), and entering passcode 56671639#. The replay will be available through March 19, 2012.
This call will be webcast live and the replay will be available for 12 months. Both will be available on the Investor Relations section of Youku's corporate website at http://ir.youku.com.
About Youku
Youku Inc. is China's leading Internet television company. Our Internet television platform enables users to search, view and share high-quality video content quickly and easily across multiple devices. Youku, which stands for "what's best and what's cool" in Chinese, is the most recognized online video brand in China. Youku's American depositary shares, each representing 18 of our Class A ordinary shares, are traded on NYSE under the symbol "YOKU."
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Youku's strategic and operational plans, contain forward-looking statements. Youku may also make written or oral forward-looking statements in its filings with the U.S. Securities and Exchange Commission ("SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Youku's beliefs and expectations, are 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: our goals and strategies; our future business development, financial condition and results of operations; the expected growth of the online video market in China; our expectations regarding demand for and market acceptance of our services; our expectations regarding the retention and strengthening of our relationships with key advertisers and customers; our plans to enhance user experience, infrastructure and service offerings; competition in our industry in China; and relevant government policies and regulations relating to our industry. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Youku does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
About Non-GAAP Financial Measures
To supplement Youku's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Youku uses the following measures defined as non-GAAP financial measures by the SEC in evaluating its business: non-GAAP gross profit, non-GAAP operating expenses, non-GAAP sales and marketing expense, non-GAAP product development expenses, non-GAAP general and administrative expenses, non-GAAP loss from operations, non-GAAP net loss and non-GAAP EBITDA loss. We define non-GAAP gross profit, non-GAAP operating expenses, non-GAAP sales and marketing expense, non-GAAP product development expenses, non-GAAP general and administrative expenses, and non-GAAP loss from operations as the respective nearest comparable GAAP financial measure to exclude share-based compensation expenses. We define non-GAAP net loss as net loss excluding share-based compensation expenses and change in fair value of warrant liability. We define non-GAAP EBITDA loss as net income or loss before income taxes, interest expenses, interest income, depreciation and amortization (excluding amortization of acquired content), further adjusted for share-based compensation expenses and other non-operating items. We present non-GAAP financial measures because they are used by our management to evaluate our operating performance. We also believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies. A limitation of using non-GAAP financial measures is that non-GAAP measures exclude share-based compensation charges that have been and will continue to be significant recurring expenses in Youku's business for the foreseeable future.
The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP financial measures" at the end of this release.
For more information, please contact:
Investor Relations:
Ryan Cheung
Corporate Finance Director
Youku Inc.
Tel: (+8610) 5885-1881 x6090
Email: ryan.cheung@youku.com
YOUKU INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(Amounts in thousands, except for number of shares) | December 31, | December 31 | December 31 | |||||
2010 | 2011 | 2011 | ||||||
RMB | RMB | US$ | ||||||
ASSETS | (Unaudited) | (Unaudited) | ||||||
Current assets: | ||||||||
Cash and cash equivalents | 1,811,423 | 2,292,538 | 364,248 | |||||
Short-term investments | - | 1,400,858 | 222,574 | |||||
Accounts receivable, net | 216,245 | 421,474 | 66,966 | |||||
Intangible assets | 10,230 | 16,078 | 2,555 | |||||
Prepayments and other assets | 25,187 | 16,832 | 2,674 | |||||
Total current assets | 2,063,085 | 4,147,780 | 659,017 | |||||
Non-current assets: | ||||||||
Property and equipment, net | 64,177 | 96,567 | 15,343 | |||||
Long-term investment | - | 1,707 | 271 | |||||
Intangible assets | 57,550 | 211,978 | 33,680 | |||||
Capitalized content production costs | - | 7,782 | 1,236 | |||||
Prepayments and other assets | 5,356 | 209,744 | 33,325 | |||||
Total non-current assets | 127,083 | 527,778 | 83,855 | |||||
TOTAL ASSETS | 2,190,168 | 4,675,558 | 742,872 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | 35,641 | 60,070 | 9,544 | |||||
Advances from customers | 1,304 | 3,140 | 499 | |||||
Accrued expenses and other liabilities | 201,100 | 390,607 | 62,061 | |||||
Current portion of long-term debt | 22,180 | 9,182 | 1,459 | |||||
Total current liabilities | 260,225 | 462,999 | 73,563 | |||||
Non-current liabilities: | ||||||||
Long-term debt | 18,455 | 7,382 | 1,173 | |||||
Total non-current liabilities | 18,455 | 7,382 | 1,173 | |||||
Total liabilities | 278,680 | 470,381 | 74,736 | |||||
Commitments and contingencies | ||||||||
Shareholders' equity: | ||||||||
Class A Ordinary Shares (US$0.00001 par value, 9,340,238,793 authorized, 1,235,761,996 and 1,395,435,339 issued and outstanding as of December 31, 2010 and 2011, respectively) | 82 | 93 | 15 | |||||
Class B Ordinary Shares (US$0.00001 par value, 659,761,207 authorized, 659,761,207 and 659,561,893 issued and outstanding as of December 31, 2010 and 2011, respectively) | 49 | 49 | 8 | |||||
Additional paid-in capital | 2,625,250 | 5,185,257 | 823,854 | |||||
Accumulated deficit | -699,540 | -871,644 | -138,490 | |||||
Accumulated other comprehensive loss | -14,353 | -108,578 | -17,251 | |||||
Total shareholders' equity | 1,911,488 | 4,205,177 | 668,136 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 2,190,168 | 4,675,558 | 742,872 | |||||
YOUKU INC. | ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
For the Three Months Ended, | For the Twelve Months Ended, | |||||||||||||||
(Amounts in thousands, except for number of shares and ADS and per share and per ADS data) | December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||
2010 | 2011 | 2011 | 2011 | 2010 | 2011 | 2011 | ||||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||
Net revenues | 152,474 | 262,471 | 309,309 | 49,144 | 387,097 | 897,624 | 142,619 | |||||||||
Cost of revenues (Note 1) | (102,111) | (194,686) | (243,735) | (38,726) | (350,830) | (697,337) | (110,796) | |||||||||
Gross profit (loss) | 50,363 | 67,785 | 65,574 | 10,418 | 36,267 | 200,287 | 31,823 | |||||||||
Operating expenses: | ||||||||||||||||
Product development | (10,027) | (24,053) | (23,734) | (3,771) | (31,287) | (72,573) | (11,531) | |||||||||
Sales and marketing | (38,711) | (74,205) | (66,869) | (10,624) | (130,238) | (230,475) | (36,619) | |||||||||
General and administrative | (10,241) | (21,845) | (32,351) | (5,140) | (28,957) | (80,529) | (12,795) | |||||||||
Total operating expenses | (58,979) | (120,103) | (122,954) | (19,535) | (190,482) | (383,577) | (60,945) | |||||||||
(Loss) profit from operations | (8,616) | (52,318) | (57,380) | (9,117) | (154,215) | (183,290) | (29,122) | |||||||||
Interest income | 102 | 8,677 | 10,770 | 1,711 | 1,170 | 23,693 | 3,764 | |||||||||
Interest expenses | (2,477) | (1,542) | (1,327) | (211) | (7,440) | (6,825) | (1,084) | |||||||||
Change in fair value of warrant liability | (26,736) | - | - | - | (44,268) | - | - | |||||||||
Other, net | 4 | (2,291) | (1,677) | (266) | 69 | (5,682) | (903) | |||||||||
Total other income (expenses), net | (29,107) | 4,844 | 7,766 | 1,234 | (50,469) | 11,186 | 1,777 | |||||||||
(Loss) profit before income taxes | (37,723) | (47,474) | (49,614) | (7,883) | (204,684) | (172,104) | (27,345) | |||||||||
Income taxes | - | - | - | - | - | - | - | |||||||||
Net (loss) profit | (37,723) | (47,474) | (49,614) | (7,883) | (204,684) | (172,104) | (27,345) | |||||||||
Net loss per share, basic and diluted | (0.05) | (0.02) | (0.02) | * | (0.44) | (0.09) | (0.01) | |||||||||
Net loss per ADS, basic and diluted | (0.89) | (0.42) | (0.43) | (0.07) | (7.90) | (1.55) | (0.25) | |||||||||
Shares used in computation, basic and diluted | 765,083,372 | 2,051,993,011 | 2,054,298,858 | 2,054,298,858 | 466,340,541 | 1,992,923,515 | 1,992,923,515 | |||||||||
ADS used in computation, basic and diluted | 42,504,632 | 113,999,611 | 114,127,714 | 114,127,714 | 25,907,808 | 110,717,973 | 110,717,973 | |||||||||
* represents per share amount which is less than (0.01) | ||||||||||||||||
The accompanying notes are an integral part of the press release | |||||||||||||||
Note 1. Cost of Revenues | For the Three Months Ended, | For the Twelve Months Ended, | |||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||
2010 | 2011 | 2011 | 2011 | 2010 | 2011 | 2011 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||
(Amounts in thousands) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||
Cost of revenues: | |||||||||||||||
Business tax and surcharges | 15,231 | 25,420 | 32,162 | 5,110 | 38,472 | 90,215 | 14,334 | ||||||||
Bandwidth costs | 51,685 | 92,388 | 109,718 | 17,432 | 191,679 | 324,682 | 51,587 | ||||||||
Depreciation of servers and other equipment | 8,950 | 9,855 | 11,166 | 1,775 | 37,958 | 39,052 | 6,205 | ||||||||
Content costs | 26,245 | 67,023 | 90,689 | 14,409 | 82,721 | 243,388 | 38,670 | ||||||||
Total Cost of Revenues | 102,111 | 194,686 | 243,735 | 38,726 | 350,830 | 697,337 | 110,796 | ||||||||
YOUKU INC. | |||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||
For the Three Months Ended, | For the Twelve Months Ended, | ||||||||||||||||
(Amounts in thousands) | Dec 31, | Sep 30, | Dec 31, | Dec 31, | December 31, | December 31, | December 31, | ||||||||||
2010 | 2011 | 2011 | 2011 | 2010 | 2011 | 2011 | |||||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
Cash flows from operating activities: | |||||||||||||||||
Net loss | (37,723) | (47,474) | (49,614) | (7,883) | (204,684) | (172,104) | (27,345) | ||||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||||||||
Depreciation | 10,408 | 11,557 | 13,230 | 2,102 | 42,691 | 45,670 | 7,256 | ||||||||||
Bad debt expense | 330 | 1,066 | (10) | (2) | 994 | 1,509 | 240 | ||||||||||
Amortization of intangible assets and self produced contents | 12,595 | 43,111 | 61,552 | 9,780 | 44,530 | 166,576 | 26,466 | ||||||||||
Accretion of long-term debt discounts | 1,053 | 839 | 717 | 114 | 2,504 | 3,496 | 555 | ||||||||||
Gain on disposal of property and equipment | (4) | - | (11) | (2) | 19 | (18) | (3) | ||||||||||
Foreign exchange loss | - | 1,971 | 2,009 | 319 | - | 5,624 | 894 | ||||||||||
Share-based compensation | 4,615 | 19,295 | 15,547 | 2,470 | 11,990 | 47,494 | 7,546 | ||||||||||
Change in fair value of warrant liability | 26,736 | - | - | - | 44,268 | - | - | ||||||||||
Change in operating assets and liabilities: | |||||||||||||||||
Accounts receivable | (46,703) | (135,309) | (8,577) | (1,363) | (142,279) | (206,738) | (32,847) | ||||||||||
Prepayments and other assets | 469 | (6,911) | (806) | (128) | (1,457) | (15,458) | (2,455) | ||||||||||
Capitalized content production costs | 1,554 | (5,384) | (4,055) | (644) | (196) | (11,307) | (1,797) | ||||||||||
Accounts payable | 71 | - | - | - | (39) | (252) | (40) | ||||||||||
Advances from customers | (219) | 4,444 | (2,028) | (322) | (1,906) | 1,836 | 292 | ||||||||||
Accrued expenses and other liabilities | 37,446 | 111,676 | 53,597 | 8,515 | 97,541 | 197,542 | 31,386 | ||||||||||
Net cash provided by (used in) operating activities | 10,628 | (1,119) | 81,551 | 12,956 | (106,024) | 63,870 | 10,148 | ||||||||||
Cash flows from investing activities: | |||||||||||||||||
Acquisition of property and equipment | (17,364) | (11,797) | (40,706) | (6,468) | (45,987) | (84,855) | (13,482) | ||||||||||
Deposit for acquisition of equity interest | - | - | - | - | (1,707) | - | - | ||||||||||
Proceeds from (purchase of) short-term investments | - | (168,131) | 261 | 41 | - | (1,397,817) | (222,091) | ||||||||||
Proceeds from disposal of property and equipment | 4 | - | 16 | 3 | 4 | 24 | 4 | ||||||||||
Acquisition of intangible assets | (26,673) | (189,884) | (115,049) | (18,279) | (89,150) | (490,767) | (77,975) | ||||||||||
Net cash used in investing activities | (44,033) | (369,812) | (155,478) | (24,703) | (136,840) | (1,973,415) | (313,544) | ||||||||||
Cash flows from financing activities: | |||||||||||||||||
Exercise of employee stock options | 62 | 2,390 | 1,232 | 196 | 165 | 4,647 | 738 | ||||||||||
Proceeds from issuance of Series F Preferred Shares | - | - | - | - | 334,985 | - | - | ||||||||||
Drawdown of long-term debt | - | - | - | - | 33,875 | - | - | ||||||||||
Principal repayments on long-term debt | (7,677) | (5,594) | (4,741) | (753) | (26,620) | (27,107) | (4,307) | ||||||||||
Debt commitment fee received | - | - | - | - | (136) | - | - | ||||||||||
Proceeds from follow-on offering & IPO activity, net of issuance costs | 1,435,329 | (539) | (247) | (39) | 1,434,763 | 2,512,969 | 399,271 | ||||||||||
Payment of convertible redeemable preferred shares issuance costs | (12,611) | - | - | - | (13,259) | - | - | ||||||||||
Net cash provided by (used in) financing activities | 1,415,103 | (3,743) | (3,756) | (596) | 1,763,773 | 2,490,509 | 395,702 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | (10,829) | (44,041) | (17,626) | (2,800) | (11,094) | (99,849) | (15,864) | ||||||||||
Net (decrease) increase in cash and cash equivalents | 1,370,869 | (418,715) | (95,309) | (15,143) | 1,509,815 | 481,115 | 76,442 | ||||||||||
Cash and cash equivalents at the beginning of the period | 440,554 | 2,806,562 | 2,387,847 | 379,391 | 301,608 | 1,811,423 | 287,806 | ||||||||||
Cash and cash equivalents at the end of the period | 1,811,423 | 2,387,847 | 2,292,538 | 364,248 | 1,811,423 | 2,292,538 | 364,248 | ||||||||||
Reconciliations of Non-GAAP results of operations measures to the nearest comparable GAAP financial measures (*) (Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"),unaudited) | |||||||||||||||
1. Non-GAAP Gross Profit (Loss) | For the Three Months Ended, | For the Twelve Months Ended, | |||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||
2010 | 2011 | 2011 | 2011 | 2010 | 2011 | 2011 | |||||||||
Gross profit (loss) | 50,363 | 67,785 | 65,574 | 10,418 | 36,267 | 200,287 | 31,823 | ||||||||
Add back: share-based compensation | 368 | 1,459 | 1,302 | 207 | 918 | 3,894 | 619 | ||||||||
Non-GAAP gross profit (loss) | 50,731 | 69,244 | 66,876 | 10,625 | 37,185 | 204,181 | 32,442 | ||||||||
2. Non-GAAP Operating Expenses | For the Three Months Ended, | For the Twelve Months Ended, | |||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||
2010 | 2011 | 2011 | 2011 | 2010 | 2011 | 2011 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||
Operating expenses | 58,979 | 120,103 | 122,954 | 19,535 | 190,482 | 383,577 | 60,945 | ||||||||
Deduct: share-based compensation | 4,247 | 17,836 | 14,245 | 2,263 | 11,072 | 43,600 | 6,927 | ||||||||
Non-GAAP operating expenses | 54,732 | 102,267 | 108,709 | 17,272 | 179,410 | 339,977 | 54,018 | ||||||||
3. Non-GAAP Sales and Marketing Expenses | For the Three Months Ended, | For the Twelve Months Ended, | |||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||
2010 | 2011 | 2011 | 2011 | 2010 | 2011 | 2011 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||
Sales and marketing expenses | 38,711 | 74,205 | 66,869 | 10,624 | 130,238 | 230,475 | 36,619 | ||||||||
Deduct: share-based compensation | 2,309 | 6,047 | 2,440 | 388 | 5,954 | 14,196 | 2,255 | ||||||||
Non-GAAP sales and marketing expenses | 36,402 | 68,158 | 64,429 | 10,236 | 124,284 | 216,279 | 34,364 | ||||||||
4. Non-GAAP Product Development Expenses | For the Three Months Ended, | For the Twelve Months Ended, | |||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||
2010 | 2011 | 2011 | 2011 | 2010 | 2011 | 2011 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||
Product development expenses | 10,027 | 24,053 | 23,734 | 3,771 | 31,287 | 72,573 | 11,531 | ||||||||
Deduct: share-based compensation | 1,011 | 5,534 | 3,872 | 615 | 3,049 | 12,233 | 1,944 | ||||||||
Non-GAAP product development expenses | 9,016 | 18,519 | 19,862 | 3,156 | 28,238 | 60,340 | 9,587 | ||||||||
5. Non-GAAP General and Administrative Expenses | For the Three Months Ended, | For the Twelve Months Ended, | |||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||
2010 | 2011 | 2011 | 2011 | 2010 | 2011 | 2011 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||
General and administrative expenses | 10,241 | 21,845 | 32,351 | 5,140 | 28,957 | 80,529 | 12,795 | ||||||||
Deduct: share-based compensation | 927 | 6,255 | 7,933 | 1,260 | 2,069 | 17,171 | 2,728 | ||||||||
Non-GAAP general and administrative expenses | 9,314 | 15,590 | 24,418 | 3,880 | 26,888 | 63,358 | 10,067 | ||||||||
6. Non-GAAP (Loss) Profit from Operations | For the Three Months Ended, | For the Twelve Months Ended, | |||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||
2010 | 2011 | 2011 | 2011 | 2010 | 2011 | 2011 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||
(Loss) profit from operations | (8,616) | (52,318) | (57,380) | (9,117) | (154,215) | (183,290) | (29,122) | ||||||||
Add back: share-based compensation | 4,615 | 19,295 | 15,547 | 2,470 | 11,990 | 47,494 | 7,546 | ||||||||
Non-GAAP (loss) profit from operations | (4,001) | (33,023) | (41,833) | (6,647) | (142,225) | (135,796) | (21,576) | ||||||||
7. Non-GAAP Net (Loss) Profit | For the Three Months Ended, | For the Twelve Months Ended, | |||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||
2010 | 2011 | 2011 | 2011 | 2010 | 2011 | 2011 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||
Net (loss) profit | (37,723) | (47,474) | (49,614) | (7,883) | (204,684) | (172,104) | (27,345) | ||||||||
Add back: share-based compensation | 4,615 | 19,295 | 15,547 | 2,470 | 11,990 | 47,494 | 7,546 | ||||||||
Add back: change in fair value of warrant liability | 26,736 | - | - | - | 44,268 | - | - | ||||||||
Non-GAAP net (loss) profit | (6,372) | (28,179) | (34,067) | (5,413) | (148,426) | (124,610) | (19,799) | ||||||||
8. Non-GAAP EBITDA (Loss) Profit | For the Three Months Ended, | For the Twelve Months Ended, | |||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||
2010 | 2011 | 2011 | 2011 | 2010 | 2011 | 2011 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||
Net (loss) profit | (37,723) | (47,474) | (49,614) | (7,883) | (204,684) | (172,104) | (27,345) | ||||||||
Add back: | |||||||||||||||
Depreciation and amortization (excluding amortization | |||||||||||||||
of acquired content)** | 10,423 | 11,571 | 13,244 | 2,104 | 42,711 | 45,728 | 7,265 | ||||||||
Interest income | (102) | (8,677) | (10,770) | (1,711) | (1,170) | (23,693) | (3,764) | ||||||||
Interest expenses | 2,477 | 1,542 | 1,327 | 211 | 7,440 | 6,825 | 1,084 | ||||||||
Income taxes | - | - | - | - | - | - | - | ||||||||
EBITDA (Loss) Profit | (24,925) | (43,038) | (45,813) | (7,279) | (155,703) | (143,244) | (22,760) | ||||||||
Adjustments: | |||||||||||||||
Share-based compensation | 4,615 | 19,295 | 15,547 | 2,470 | 11,990 | 47,494 | 7,546 | ||||||||
Change in fair value of warrant liability | 26,736 | - | - | - | 44,268 | - | - | ||||||||
Others, net | (4) | 2,291 | 1,677 | 266 | (69) | 5,682 | 903 | ||||||||
Non-GAAP EBITDA (Loss) Profit | 6,422 | (21,452) | (28,589) | (4,543) | (99,514) | (90,068) | (14,311) | ||||||||
* For more information on the Non-GAAP financial measures, please see the section captioned "About Non-GAAP Financial Measures" in this earnings release. | |||||||||||||||
**The amortization expense was related to advertising license acquired in April 2010. The amortization of acquired content was not treated as a Non-GAAP adjustment. | |||||||||||||||
