BEIJING, March 1, 2013 /PRNewswire/ -- Youku Tudou Inc. (NYSE: YOKU, and formerly Youku Inc. or "Youku"), China's leading Internet television company ("Youku Tudou" or the "Company"), today announced its unaudited financial results for fourth quarter and fiscal year 2012.
Basis of Presentation
On August 23, 2012, the Company and Tudou Holdings Limited ("Tudou") announced the completion of the merger between Youku and Tudou. Following the completion of the merger, Tudou's financial results were consolidated into the Company from the date of the completion of the merger.
This press release includes the Company's selected unaudited pro forma combined financial information for the three months ended December 31, 2011 derived from the accompanying unaudited pro forma condensed combined statements of operations (the "Pro Forma Statement of Operations") for the three months ended December 31, 2011. The Pro Forma Statements of Operations combine the historical consolidated statements of operations of Youku and Tudou, giving effect to the Merger as if it had been completed on January 1, 2011.
The Pro Forma Statement of Operations have been derived from the audited historical consolidated statement of operations of Youku and Tudou. Certain financial statement line items included in Tudou's historical presentation have been disaggregated or condensed to conform to corresponding financial statement line items included in Youku's historical presentation. These include: business taxes, value-added tax, share based compensation expenses, selling and general administrative expenses relating to product development, professional licensed content, and intangible assets related to purchased software.
Additionally, based on Youku's review of Tudou's publicly disclosed summary of significant accounting policies prior to the merger with Tudou management, the nature and amount of any adjustments to the historical statement of operations to conform its accounting policies to those of Youku are not expected to be material.
Fourth Quarter 2012 Highlights[1]
Fiscal Year 2012 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 RMB6.2301 to US$1.00, the effective noon buying rate as of December 31, 2012 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate. |
"I am pleased with our financial and operational performance in the fourth quarter, which was the first full quarter for the merged Youku-Tudou company. We managed solid revenue growth and the net loss for the combined company has narrowed materially despite sales disruption brought on by the reorganization of our sales team after the merger," said Victor Koo, Chairman and Chief Executive Officer of Youku Tudou. "Even as the integration process is proceeding well, we expect temporary business impact from this large-scale merger but we are optimistic that the second half of 2013 will see more revenue growth momentum and cost synergies. In 2013, we also plan to start monetizing the significant growth in our mobile traffic as our daily mobile video views exceeded 100 million by the end of 2012."
Dele Liu, President of Youku Tudou, commented, "In terms of cost structure, the fourth quarter results reflect early synergies resulting from the merger, especially in bandwidth and personnel related expenses. We expect this trend to continue into 2013, supported by the overall improvement of our unit economics due to the ongoing growth in traffic, especially the significant growth from mobile devices. In addition, we are strengthening our in-house productions offering to reduce our reliance on professional licensed content as well as generate additional revenues through program sponsorship and product placements."
Fourth Quarter 2012 Results
Consolidated net revenues were RMB635.8 million (US$102.1 million) in the fourth quarter of 2012, a 30% increase from the pro forma combined net revenues for the corresponding period in 2011 and exceeding the high end of the consolidated net revenues guidance previously announced by the Company. Consolidated advertising net revenues were RMB574.9 million (US$92.3 million), meeting the consolidated advertising net revenues guidance previously announced by the Company. The growth was primarily attributable to the increased use by brand advertisers of our advertising services as evidenced by an increase in the number of advertisers and the rising average spend per advertiser.
Consolidated bandwidth costs as a component of consolidated cost of revenues were RMB163.0 million (US$26.2 million) in the fourth quarter of 2012, representing 26% of consolidated net revenues, as compared to pro forma combined bandwidth costs representing 37% of the pro forma combined net revenues for the corresponding period in 2011.
Consolidated content costs as a component of consolidated cost of revenues were RMB270.9 million (US$43.5 million) in the fourth quarter of 2012, representing 43% of consolidated net revenues. Consolidated non-GAAP content costs, which is herein defined as consolidated content costs excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content, were RMB258.2 million (US$41.4 million) in the fourth quarter of 2012, representing 41% of consolidated net revenues. During the fourth quarter of 2012, there was a one-time reclassification of advertising production expenses amounted to RMB31.5 million (US$5.1 million) from consolidated sales and marketing expenses into consolidated content costs.
If excluding this one-time reclassification, consolidated non-GAAP content costs would have been 36% of consolidated net revenues, as compared to the pro forma combined non-GAAP content costs representing 35% of the pro forma combined net revenues for the corresponding period in 2011. The increase was primarily due to content price increase during 2011, which we amortize using an accelerated method, broadening of our content portfolio and increase in salaries and benefits for our content team. Consolidated in-house content production cost and investment in TV serial dramas production was RMB17.1 million (US$2.7 million) in the fourth quarter of 2012, as compared to RMB6.6 million (US$1.1 million) of the pro forma combined in-house content production cost for the corresponding period in 2011.
Consolidated gross profit was RMB116.3 million (US$18.7 million)in the fourth quarter of 2012, an increase of 62% compared to RMB71.9 million (US$11.5 million) of the pro forma combined gross profit for the corresponding period in 2011. Consolidated non-GAAP gross profit was RMB129.1 million (US$20.7 million) in the fourth quarter of 2012, an increase of 74% compared to RMB74.3 million (US$11.9 million) of the pro forma combined non-GAAP gross profit for the corresponding period in 2011 due to strong operating leverage.
If excluding the one-time reclassification of advertising production expenses from consolidated sales and marketing expenses into consolidated content costs, the consolidated non-GAAP gross profit would have been RMB160.6 million (US$25.8 million) in the fourth quarter of 2012, representing 25% of the consolidated net revenues, an increase of 116% as compared to pro forma combined non-GAAP gross profit which represented 15% of the pro forma combined net revenues for the corresponding period in 2011.
Consolidated operating expenses were RMB245.0 million (US$39.3 million) in the fourth quarter of 2012, a decrease of 10% as compared to RMB273.4 million (US$43.9 million) of the pro forma combined operating expenses for the corresponding period in 2011. Consolidated non-GAAP operating expenses, which is herein defined as consolidated operating expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to customer relationship, technology and non-compete provisions, were RMB206.4 million (US$33.1 million) in the fourth quarter of 2012, a decrease of 18% compared to RMB252.0 million (US$40.4 million) of the pro forma combined non-GAAP operating expenses for the corresponding period in 2011. The decrease was primarily due to the reduction of bad debt related expenses, reduction of traffic acquisition cost incurred by Tudou and the one-time reclassification of advertising production expenses from consolidated sales and marketing expenses to consolidated content costs. Detailed discussion of each component of consolidated operating expenses is as follows:
Consolidated sales and marketing expenses were RMB107.8 million (US$17.3 million) in the fourth quarter of 2012, a decrease of 29% compared to RMB151.4 million (US$24.3 million) of the pro forma combined sales and marketing expenses for the corresponding period in 2011. Consolidated non-GAAP sales and marketing expenses, which is herein defined as consolidated sales and marketing expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to customer relationship, were RMB95.1 million (US$15.3 million) in the fourth quarter of 2012, a decrease of 35% compared to RMB146.2 million (US$23.5 million) of the pro forma combined non-GAAP sales and marketing expenses for the corresponding period in 2011. This decrease was primarily due to reduction of traffic acquisition cost incurred by Tudou and the one-time reclassification of advertising production expenses from consolidated sales and marketing expenses to consolidated content costs.
Consolidated product development expenses were RMB64.1 million (US$10.3 million) in the fourth quarter of 2012, as compared to RMB44.6 million (US$7.2 million) of the pro forma combined product development expenses for the corresponding period in 2011. Consolidated non-GAAP product development expenses, which is herein defined as consolidated product development expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to technology, were RMB54.3 million (US$8.7 million) in the fourth quarter of 2012, an increase of 39% compared to RMB39.0 million (US$6.3 million) of the pro forma combined non-GAAP product development expenses for the corresponding period in 2011. This increase was primarily due to an increase in personnel related expenses for our product development in mobile, search, social and paid-services.
Consolidated general and administrative expenses were RMB73.1 million (US$11.7 million) in the fourth quarter of 2012, a decrease of 6% compared to RMB77.4 million (US$12.4 million) of the pro forma combined general and administrative expenses for the corresponding period in 2011. Consolidated non-GAAP general and administrative expenses, which is herein defined as consolidated general and administrative expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to non-compete provisions, were RMB57.0 million (US$9.2 million) in the fourth quarter of 2012, a decrease of 15% compared to RMB66.8 million (US$10.7 million) of the pro forma combined non-GAAP general and administrative expenses for the corresponding period in 2011. This decrease was primarily due to reduction of bad debt related expenses.
Consolidated net loss was RMB113.6 million (US$18.2 million) in the fourth quarter of 2012, a decrease of 43% compared to RMB198.5 million (US$31.9 million) of the pro forma combined net loss for the corresponding period in 2011. Consolidated non-GAAP net loss was RMB62.3 million (US$10.0 million) in the fourth quarter of 2012, a decrease of 64% compared to RMB174.6 million (US$28.0 million) of the pro forma combined non-GAAP net loss for the corresponding period in 2011.
Consolidated non-GAAP adjusted EBITDA Loss, which is herein defined as consolidated or pro forma combined net loss before income taxes, interest expenses, interest income, depreciation and amortization (excluding amortization of acquired content), further adjusted for share-based compensation expenses, amortization of intangible assets from business combination, business combination related expenses and other non-operating items, was RMB46.1 million (US$7.4 million) in the fourth quarter of 2012, a decrease of 70% compared to RMB155.7 million (US$25.0 million) of the pro forma combined non-GAAP adjusted EBITDA loss for the corresponding period in 2011.
Fiscal Year 2012 Results
Consolidated net revenues were RMB1.8 billion (US$288.2 million) in 2012.
Consolidated bandwidth costs as a component of consolidated cost of revenues were RMB524.6 million (US$84.2 million) in 2012, representing 29% of consolidated net revenues.
Consolidated content costs as a component of consolidated cost of revenues were RMB737.1 million (US$118.3 million) in 2012, representing 41% of consolidated net revenues. If excluding the one-time reclassification of advertising production expenses amounted to RMB31.5 million (US$5.1 million) from consolidated sales and marketing expenses into consolidated content costs during the fourth quarter of 2012, consolidated content costs would have been 39% of consolidated net revenues in 2012.
Consolidated gross profit was RMB296.0 million (US$47.5 million). Consolidated non-GAAP gross profit was RMB335.3 million (US$53.8 million) in 2012.
Consolidated operating expenses were RMB774.7 million (US$124.3 million) in 2012. Consolidated non-GAAP operating expenses were RMB634.6 million (US$101.9 million) in 2012. Detailed discussion of each component of consolidated operating expenses is as follows:
Consolidated sales and marketing expenses were RMB363.7 million (US$58.4 million) in 2012. Consolidated non-GAAP sales and marketing expenses were RMB332.0 million (US$53.3 million) in 2012.
Consolidated product development expenses were RMB172.9 million (US$27.8 million) in 2012. Consolidated non-GAAP product development expenses were RMB144.8 million (US$23.2 million) in 2012.
Consolidated general and administrative expenses were RMB238.1 million (US$38.2 million) in 2012. Consolidated non-GAAP general and administrative expenses were RMB157.8 million (US$25.3 million) in 2012.
Consolidated net loss was RMB424.0 million (US$68.1 million) in 2012. Consolidated non-GAAP net loss was RMB244.7 million (US$39.3 million) in 2012.
Consolidated non-GAAP adjusted EBITDA loss was RMB217.7 million (US$34.9 million) in 2012.
Business Outlook
For the first quarter of 2013, the Company expects consolidated net revenues will be between RMB480 million and RMB520 million, with consolidated advertising net revenues contributing between RMB420 million and RMB450 million. This forecast reflects the Company's current and preliminary view, which is subject to change.
Conference Call Information
Youku Tudou's management will host an earnings conference call at 8:00 p.m. U.S. Eastern Time on February 28, 2013 (9:00 a.m. Beijing/Hong Kong Time on March 1, 2013).
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 +61 2 8199 0299 and entering passcode 14050024#. The replay will be available through March 8, 2013.
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 Tudou's corporate website at http://ir.youku.com.
About Youku Tudou Inc.
Youku Tudou Inc. (NYSE: YOKU) is China's leading Internet television company. Its 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 Youku's Class A ordinary shares, are traded on the 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 Tudou's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Youku Tudou uses the following measures defined as non-GAAP financial measures by the SEC in evaluating its business: consolidated non-GAAP content costs, consolidated non-GAAP gross profit or loss, consolidated non-GAAP operating expenses, consolidated non-GAAP sales and marketing expense, consolidated non-GAAP product development expenses, consolidated non-GAAP general and administrative expenses, consolidated non- GAAP profit or loss from operations, consolidated non-GAAP net profit or loss and consolidated non-GAAP adjusted EBITDA profit or loss. We define consolidated non-GAAP content costs as consolidated content costs excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content. We define consolidated non-GAAP gross profit or loss as the respective nearest comparable GAAP financial measure to exclude share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content. We define consolidated non-GAAP operating expenses as operating expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to customer relationship, technology and non-compete provisions. We define consolidated non-GAAP sales and marketing expenses as consolidated sales and marketing expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to customer relationship. We define consolidated non-GAAP product development expense as consolidated product development expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to technology. We define consolidated non-GAAP general and administrative expenses as consolidated general and administrative expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to non-compete provisions. We define consolidated non-GAAP profit or loss from operations as consolidated profit or loss from operations excluding share-based compensation expenses, amortization of intangible assets from business combination and business combination related expenses. We define consolidated non-GAAP net profit or loss as consolidated net loss excluding share-based compensation expenses, amortization of intangible assets from business combination and business combination related expenses. We define consolidated non-GAAP adjusted EBITDA profit or loss as consolidated net profit or loss before income taxes, interest expenses, interest income, depreciation and amortization (excluding amortization of acquired content), further adjusted for share-based compensation expenses, amortization of intangible assets from business combination, business combination related 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 Tudou's business for the foreseeable future. In addition, in this press release we also included unaudited pro forma combined non-GAAP measures for the three months ended December 31, 2011, after giving effect to the Merger between Youku and Tudou as if the Merger had been completed on January 1, 2011 to provide comparative reference of the corresponding consolidated non-GAAP measures of the Company for the three months ended December 31, 2012. The pro forma data is presented for informational purposes only and does not purport to be indicative of the results of future operations, or of the results that would have occurred had the Merger taken place at the beginning of 2011.
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:
Ryan Cheung
Corporate Finance Director
Youku Tudou Inc.
Tel: (+8610) 5885-1881 x6090
Email: ryan.cheung@youku.com
Caroline Straathof
IR Inside
Tel: +31-6-5462-4301
Email: info@irinside.com
YOUKU TUDOU INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(Amounts in thousands, except for number of shares) | December 31, | |||||||
2011 | 2012 | |||||||
RMB | RMB | US$ | ||||||
ASSETS | (Unaudited) | (Unaudited) | ||||||
Current assets: | ||||||||
Cash and cash equivalents | 2,292,538 | 1,655,857 | 265,783 | |||||
Restricted cash | - | 9,003 | 1,445 | |||||
Short-term investments | 1,400,858 | 2,110,073 | 338,690 | |||||
Accounts receivable, net | 420,706 | 932,796 | 149,724 | |||||
Intangible assets, net | 16,078 | 19,607 | 3,147 | |||||
Amounts due from related party | 768 | - | - | |||||
Prepayments and other assets | 16,832 | 75,379 | 12,099 | |||||
Total current assets | 4,147,780 | 4,802,715 | 770,888 | |||||
Non-current assets: | ||||||||
Property and equipment, net | 96,567 | 200,681 | 32,212 | |||||
Long-term investment in related party | 1,707 | - | - | |||||
Intangible assets, net | 211,978 | 1,304,923 | 209,455 | |||||
Capitalized content production costs | 7,782 | - | - | |||||
Amounts due from related party | 65,352 | - | - | |||||
Prepayments and other assets | 144,392 | 229,185 | 36,787 | |||||
Goodwill | - | 4,255,570 | 683,066 | |||||
Total non-current assets | 527,778 | 5,990,359 | 961,520 | |||||
TOTAL ASSETS | 4,675,558 | 10,793,074 | 1,732,408 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | 57,276 | 181,878 | 29,193 | |||||
Advances from customers and deferred revenue | 3,140 | 21,603 | 3,468 | |||||
Amounts due to related party | 2,794 | - | - | |||||
Accrued expenses and other liabilities | 390,607 | 981,353 | 157,518 | |||||
Current portion of long-term debt | 9,182 | 7,441 | 1,194 | |||||
Total current liabilities | 462,999 | 1,192,275 | 191,373 | |||||
Non-current liabilities: | ||||||||
Deferred tax liability | - | 224,374 | 36,015 | |||||
Other liabilities | - | 19,552 | 3,138 | |||||
Long-term debt | 7,382 | - | - | |||||
Total non-current liabilities | 7,382 | 243,926 | 39,153 | |||||
Total liabilities | 470,381 | 1,436,201 | 230,526 | |||||
Commitments and contingencies | ||||||||
Shareholders' equity: | ||||||||
Class A Ordinary Shares (US$0.00001 par value, 9,340,238,793 authorized, 1,395,435,339 and 2,291,138,514 issued and outstanding as of December 31, 2011 and 2012, respectively) | 93 | 149 | 24 | |||||
Class B Ordinary Shares (US$0.00001 par value, 659,761,207 authorized, 659,561,893 and 659,561,893 issued and outstanding as of December 31, 2011 and 2012, respectively) | 49 | 49 | 8 | |||||
Additional paid-in capital | 5,185,257 | 10,768,204 | 1,728,416 | |||||
Accumulated deficit | (871,644) | (1,295,647) | (207,966) | |||||
Accumulated other comprehensive loss | (108,578) | (115,882) | (18,600) | |||||
Total shareholders' equity | 4,205,177 | 9,356,873 | 1,501,882 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 4,675,558 | 10,793,074 | 1,732,408 | |||||
YOUKU TUDOU INC. | |||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
For the Three Months Ended | For the Twelve Months Ended | ||||||||||||
(Amounts in thousands, except for number of shares and ADS and per share and per ADS data) | Pro Forma | ||||||||||||
December 31, 2011 | September 30, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | ||||||||
RMB | RMB | RMB | US$ | RMB | US$ | ||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||
Net revenues | 489,347 | 502,190 | 635,831 | 102,058 | 1,795,575 | 288,210 | |||||||
Cost of revenues (Note 1) | (417,427) | (376,793) | (519,544) | (83,393) | (1,499,536) | (240,692) | |||||||
Gross profit | 71,920 | 125,397 | 116,287 | 18,665 | 296,039 | 47,518 | |||||||
Operating expenses: | |||||||||||||
Product development | (44,625) | (44,907) | (64,099) | (10,289) | (172,885) | (27,750) | |||||||
Sales and marketing | (151,351) | (109,259) | (107,787) | (17,301) | (363,707) | (58,378) | |||||||
General and administrative | (77,418) | (73,425) | (73,084) | (11,731) | (238,112) | (38,220) | |||||||
Total operating expenses | (273,394) | (227,591) | (244,970) | (39,321) | (774,704) | (124,348) | |||||||
Loss from operations | (201,474) | (102,194) | (128,683) | (20,656) | (478,665) | (76,830) | |||||||
Interest income | 10,993 | 11,512 | 9,988 | 1,603 | 45,478 | 7,299 | |||||||
Interest expenses | (2,787) | (1,026) | (830) | (133) | (3,989) | (640) | |||||||
Other, net | (5,203) | 559 | 1,043 | 167 | 9,757 | 1,566 | |||||||
Total other income, net | 3,003 | 11,045 | 10,201 | 1,637 | 51,246 | 8,225 | |||||||
Loss before income taxes | (198,471) | (91,149) | (118,482) | (19,019) | (427,419) | (68,605) | |||||||
Income taxes | - | (311) | 4,912 | 788 | 3,416 | 548 | |||||||
Net loss | (198,471) | (91,460) | (113,570) | (18,231) | (424,003) | (68,057) | |||||||
Net loss per share, basic and diluted | (0.07) | (0.04) | (0.04) | (0.01) | (0.18) | (0.03) | |||||||
Net loss per ADS (each ADS represents 18 class A ordinary shares), | (1.23) | (0.67) | (0.69) | (0.11) | (3.20) | (0.51) | |||||||
Shares used in computation, basic and diluted | 2,892,903,144 | 2,454,198,684 | 2,944,902,156 | 2,944,902,156 | 2,388,083,058 | 2,388,083,058 | |||||||
ADSs used in computation, basic and diluted | 160,716,841 | 136,344,371 | 163,605,675 | 163,605,675 | 132,671,281 | 132,671,281 | |||||||
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 | |||||||||||
Pro Forma | |||||||||||||
December 31, 2011 | September 30, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | ||||||||
RMB | RMB | RMB | US$ | RMB | US$ | ||||||||
(Amounts in thousands) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||
Cost of revenues: | |||||||||||||
Value added, business taxes and surcharges | 45,711 | 40,274 | 59,337 | 9,524 | 169,283 | 27,172 | |||||||
Bandwidth costs | 180,083 | 136,636 | 162,959 | 26,157 | 524,623 | 84,208 | |||||||
Depreciation of servers and other equipment | 18,395 | 17,846 | 26,303 | 4,222 | 68,569 | 11,006 | |||||||
Content costs | 173,238 | 182,037 | 270,945 | 43,490 | 737,061 | 118,306 | |||||||
Total Cost of Revenues | 417,427 | 376,793 | 519,544 | 83,393 | 1,499,536 | 240,692 | |||||||
YOUKU TUDOU INC. | |||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
For the Three Months Ended | For the Twelve Months Ended | ||||||||||||||
(Amounts in thousands) | |||||||||||||||
December 31, 2011 | September 30, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | ||||||||||
RMB | RMB | RMB | US$ | RMB | US$ | ||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
Cash flows from operating activities: | |||||||||||||||
Net loss | (49,614) | (91,460) | (113,570) | (18,231) | (424,003) | (68,057) | |||||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||||||
Depreciation | 13,230 | 21,617 | 31,249 | 5,016 | 81,609 | 13,099 | |||||||||
Bad debt expense | (10) | 9,388 | (1,828) | (293) | 9,887 | 1,587 | |||||||||
Amortization of intangible assets and capitalized content production costs | 61,552 | 112,367 | 135,508 | 21,751 | 416,396 | 66,836 | |||||||||
Amortization of long-term debt discounts | 717 | 441 | 336 | 54 | 1,928 | 309 | |||||||||
Gain on disposal of property and equipment | (11) | 52 | - | - | 52 | 8 | |||||||||
Foreign exchange loss | 2,009 | (172) | 826 | 133 | 469 | 75 | |||||||||
Share-based compensation | 15,547 | 30,175 | 38,779 | 6,224 | 118,218 | 18,975 | |||||||||
Capital gain from step business combination | - | - | - | - | (3,344) | (537) | |||||||||
Change in deferred tax expenses | - | (2,278) | (7,675) | (1,232) | (9,953) | (1,598) | |||||||||
Write-off of prepayment | - | - | 8,510 | 1,366 | 8,510 | 1,366 | |||||||||
Change in operating assets and liabilities: | |||||||||||||||
Accounts receivable | (9,809) | (62,026) | 73,149 | 11,741 | (223,772) | (35,918) | |||||||||
Amounts due from related party | 1,232 | - | - | - | - | - | |||||||||
Prepayments and other assets | (1,223) | 12,277 | (20,831) | (3,344) | 21,779 | 3,496 | |||||||||
Capitalized content production costs | (4,163) | (7,755) | 5,761 | 925 | (9,891) | (1,588) | |||||||||
Accounts payable | - | (14,026) | (22,506) | (3,612) | (39,023) | (6,264) | |||||||||
Advances from customers | (2,028) | (13,026) | (23,022) | (3,695) | (19,454) | (3,123) | |||||||||
Accrued expenses and other liabilities | 54,122 | 61,651 | 53,987 | 8,665 | 208,012 | 33,392 | |||||||||
Net cash (used in) provided by operating activities | 81,551 | 57,225 | 158,673 | 25,468 | 137,420 | 22,058 | |||||||||
Cash flows from investing activities: | |||||||||||||||
Acquisition of property and equipment | (40,706) | (33,168) | (24,364) | (3,911) | (90,204) | (14,479) | |||||||||
Proceeds from short-term investments | 1,134,162 | 255,923 | 1,170,519 | 187,881 | 2,826,023 | 453,608 | |||||||||
Purchase of short-term investments | (1,133,901) | (1,168,773) | (2,113,464) | (339,234) | (3,536,711) | (567,681) | |||||||||
Proceeds from disposal of property and equipment | 16 | 8 | 1 | - | 9 | 1 | |||||||||
Cash acquired, net of cash paid for acquired subsidiaries | - | 404,444 | - | - | 378,666 | 60,780 | |||||||||
Acquisition of intangible assets from related party | (114,511) | (7,200) | 7,200 | 1,156 | - | - | |||||||||
Acquisition of intangible assets | (538) | (141,675) | (118,256) | (18,981) | (361,976) | (58,101) | |||||||||
Net cash (used in) provided by investing activities | (155,478) | (690,441) | (1,078,364) | (173,089) | (784,193) | (125,872) | |||||||||
Cash flows from financing activities: | |||||||||||||||
Exercise of employee stock options | 1,232 | 4,597 | 3,561 | 572 | 22,485 | 3,609 | |||||||||
Proceeds from issuance of Series F Preferred Shares | - | - | - | - | |||||||||||
Proceeds from restricted cash | - | 12,705 | 25,364 | 4,071 | 38,069 | 6,110 | |||||||||
Principal repayments on long-term debt | (4,741) | (14,061) | (23,685) | (3,802) | (42,689) | (6,852) | |||||||||
Debt commitment fee (paid) received | - | - | - | - | |||||||||||
Proceeds from IPO and secondary offering, net of issuance costs | (247) | - | - | - | - | - | |||||||||
Net cash (used in) provided by financing activities | (3,756) | 3,241 | 5,240 | 841 | 17,865 | 2,867 | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (17,626) | 6,651 | (21,474) | (3,447) | (7,773) | (1,248) | |||||||||
Net (decrease) increase in cash and cash equivalents | (95,309) | (623,324) | (935,925) | (150,227) | (636,681) | (102,195) | |||||||||
Cash and cash equivalents at the beginning of the period | 2,387,847 | 3,215,106 | 2,591,782 | 416,010 | 2,292,538 | 367,978 | |||||||||
Cash and cash equivalents at the end of the period | 2,292,538 | 2,591,782 | 1,655,857 | 265,783 | 1,655,857 | 265,783 | |||||||||
Reconciliations of Non-GAAP results of operations measures to the nearest comparable GAAP financial measures (1)(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"), unaudited) | |||||||||||||
1. Non-GAAP Content Cost | For the Three Months Ended | For the Twelve Months Ended | |||||||||||
Pro Forma | |||||||||||||
December 31, 2011 | September 30, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | ||||||||
RMB | RMB | RMB | US$ | RMB | US$ | ||||||||
Content cost | 173,238 | 182,037 | 270,945 | 43,490 | 737,061 | 118,306 | |||||||
Deduct: share-based compensation | 2,412 | 3,602 | 4,536 | 728 | 12,751 | 2,047 | |||||||
Deduct: amortization of intangible assets from business combination | - | 18,237 | 8,235 | 1,322 | 26,472 | 4,249 | |||||||
Non-GAAP content cost | 170,826 | 160,198 | 258,174 | 41,440 | 697,838 | 112,010 | |||||||
2. Non-GAAP Gross Profit | For the Three Months Ended | For the Twelve Months Ended | |||||||||||
Pro Forma | |||||||||||||
December 31, 2011 | September 30, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | ||||||||
RMB | RMB | RMB | US$ | RMB | US$ | ||||||||
Gross profit | 71,920 | 125,397 | 116,287 | 18,665 | 296,039 | 47,518 | |||||||
Add back: share-based compensation | 2,412 | 3,602 | 4,536 | 728 | 12,751 | 2,047 | |||||||
Add back: amortization of intangible assets from business combination | - | 18,237 | 8,235 | 1,322 | 26,472 | 4,249 | |||||||
Non-GAAP gross profit | 74,332 | 147,236 | 129,058 | 20,715 | 335,262 | 53,814 | |||||||
3. Non-GAAP Operating Expenses | For the Three Months Ended | For the Twelve Months Ended | |||||||||||
Pro Forma | |||||||||||||
December 31, 2011 | September 30, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | ||||||||
RMB | RMB | RMB | US$ | RMB | US$ | ||||||||
Operating expenses | 273,394 | 227,591 | 244,970 | 39,321 | 774,704 | 124,348 | |||||||
Deduct: share-based compensation | 21,424 | 26,573 | 34,243 | 5,496 | 105,467 | 16,928 | |||||||
Deduct: business combination related expenses | - | 3,622 | 127 | 20 | 28,754 | 4,615 | |||||||
Deduct: amortization of intangible assets from business combination | - | 1,709 | 4,176 | 670 | 5,885 | 945 | |||||||
Non-GAAP operating expenses | 251,970 | 195,687 | 206,424 | 33,135 | 634,598 | 101,860 | |||||||
4. Non-GAAP Sales and Marketing Expenses | For the Three Months Ended | For the Twelve Months Ended | |||||||||||
Pro Forma | |||||||||||||
December 31, 2011 | September 30, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | ||||||||
RMB | RMB | RMB | US$ | RMB | US$ | ||||||||
Sales and marketing expenses | 151,351 | 109,259 | 107,787 | 17,301 | 363,707 | 58,378 | |||||||
Deduct: share-based compensation | 5,171 | 7,289 | 10,606 | 1,702 | 28,741 | 4,613 | |||||||
Deduct: amortization of intangible assets from business combination | - | 854 | 2,087 | 335 | 2,941 | 473 | |||||||
Non-GAAP sales and marketing expenses | 146,180 | 101,116 | 95,094 | 15,264 | 332,025 | 53,292 | |||||||
5. Non-GAAP Product Development Expenses | For the Three Months Ended | For the Twelve Months Ended | |||||||||||
Pro Forma | |||||||||||||
December 31, 2011 | September 30, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | ||||||||
RMB | RMB | RMB | US$ | RMB | US$ | ||||||||
Product development expenses | 44,625 | 44,907 | 64,099 | 10,289 | 172,885 | 27,750 | |||||||
Deduct: share-based compensation | 5,673 | 6,221 | 8,408 | 1,350 | 26,157 | 4,198 | |||||||
Deduct: amortization of intangible assets from business combination | - | 574 | 1,402 | 225 | 1,976 | 317 | |||||||
Non-GAAP product development expenses | 38,952 | 38,112 | 54,289 | 8,714 | 144,752 | 23,235 | |||||||
6. Non-GAAP General and Administrative Expenses | For the Three Months Ended | For the Twelve Months Ended | |||||||||||
Pro Forma | |||||||||||||
December 31, 2011 | September 30, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | ||||||||
RMB | RMB | RMB | US$ | RMB | US$ | ||||||||
General and administrative expenses | 77,418 | 73,425 | 73,084 | 11,731 | 238,112 | 38,220 | |||||||
Deduct: share-based compensation | 10,580 | 13,063 | 15,229 | 2,444 | 50,569 | 8,117 | |||||||
Deduct: business combination related expenses | - | 3,622 | 127 | 20 | 28,754 | 4,615 | |||||||
Deduct: amortization of intangible assets from business combination | - | 281 | 687 | 110 | 968 | 155 | |||||||
Non-GAAP general and administrative expenses | 66,838 | 56,459 | 57,041 | 9,157 | 157,821 | 25,333 | |||||||
7. Non-GAAP Loss from Operations | For the Three Months Ended | For the Twelve Months Ended | |||||||||||
Pro Forma | |||||||||||||
December 31, 2011 | September 30, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | ||||||||
RMB | RMB | RMB | US$ | RMB | US$ | ||||||||
Loss from operations | (201,474) | (102,194) | (128,683) | (20,656) | (478,665) | (76,830) | |||||||
Add back: share-based compensation | 23,836 | 30,175 | 38,779 | 6,224 | 118,218 | 18,975 | |||||||
Add back: business combination related expenses | - | 3,622 | 127 | 20 | 28,754 | 4,615 | |||||||
Add back: amortization of intangible assets from business combination | - | 19,946 | 12,411 | 1,992 | 32,357 | 5,194 | |||||||
Non-GAAP loss from operations | (177,638) | (48,451) | (77,366) | (12,420) | (299,336) | (48,046) | |||||||
8. Non-GAAP Net Loss | For the Three Months Ended | For the Twelve Months Ended | |||||||||||
Pro Forma | |||||||||||||
December 31, 2011 | September 30, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | ||||||||
RMB | RMB | RMB | US$ | RMB | US$ | ||||||||
Net loss | (198,471) | (91,460) | (113,570) | (18,231) | (424,003) | (68,057) | |||||||
Add back: share-based compensation | 23,836 | 30,175 | 38,779 | 6,224 | 118,218 | 18,975 | |||||||
Add back: business combination related expenses | - | 3,622 | 127 | 20 | 28,754 | 4,615 | |||||||
Add back: amortization of intangible assets from business combination | - | 19,946 | 12,411 | 1,992 | 32,357 | 5,194 | |||||||
Add back: investment loss | - | - | - | - | - | ||||||||
Non-GAAP net loss | (174,635) | (37,717) | (62,253) | (9,995) | (244,674) | (39,273) | |||||||
9. Non-GAAP EBITDA Loss | For the Three Months Ended | For the Twelve Months Ended | |||||||||||
Pro Forma | |||||||||||||
December 31, 2011 | September 30, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | ||||||||
RMB | RMB | RMB | US$ | RMB | US$ | ||||||||
Net loss | (198,471) | (91,460) | (113,570) | (18,231) | (424,003) | (68,057) | |||||||
Add back: | |||||||||||||
Depreciation and amortization (excluding amortization | |||||||||||||
of acquired content ) (2) | 21,969 | 21,631 | 31,263 | 5,018 | 81,667 | 13,108 | |||||||
Interest income | (10,993) | (11,512) | (9,988) | (1,603) | (45,478) | (7,299) | |||||||
Interest expenses | 2,787 | 1,026 | 830 | 133 | 3,989 | 640 | |||||||
Change in fair value of warrant liability | |||||||||||||
Income taxes | - | 311 | (4,912) | (788) | (3,416) | (548) | |||||||
EBITDA loss | (184,708) | (80,004) | (96,377) | (15,471) | (387,241) | (62,156) | |||||||
Adjustments: | |||||||||||||
Share-based compensation | 23,836 | 30,175 | 38,779 | 6,224 | 118,218 | 18,975 | |||||||
Business combination related expenses | - | 3,622 | 127 | 20 | 28,754 | 4,615 | |||||||
Amortization of intangible assets from business combination | - | 19,946 | 12,411 | 1,992 | 32,357 | 5,194 | |||||||
Investment loss | - | - | - | - | - | ||||||||
Others, net | 5,203 | (559) | (1,043) | (167) | (9,757) | (1,566) | |||||||
Non-GAAP EBITDA loss | (155,669) | (26,820) | (46,103) | (7,402) | (217,669) | (34,938) | |||||||
(1) For more information on the Non-GAAP financial measures, please see the section captioned "About Non-GAAP Financial Measures" in this earnings release. | |||||||||||||
(2) The amortization expense was related to an advertising license acquired in April 2010. The amortization of acquired content was not treated as a Non-GAAP adjustment. | |||||||||||||
