Latest update December 15th, 2015 10:12 PM
Youku Tudou Announces Q3 Unaudited Financial Results
Consumer Revenues Grew 473% Year-on-Year; Share Repurchase Totaling US$300 Million Completed
BEIJING, Nov. 13 - Youku Tudou Inc. (NYSE: YOKU), China’s leading Internet television company announced its unaudited financial results for third quarter 2014. Reported by Xu Jia.
Highlights
- Net revenues were RMB1.11 billion (US$180.3 million), a 29% increase from the corresponding period in 2013.
- Gross profit was RMB246.9 million (US$40.2 million), a 200% increase from the corresponding period in 2013. Non-GAAP gross profit was RMB260.5 million (US$42.4 million) in the third quarter of 2014, an increase of 159% from the corresponding period in 2013.
- Net loss was RMB181.4 million (US$29.6 million), a 17% decrease from the corresponding period in 2013. Non-GAAP net loss was RMB102.7 million (US$16.7 million) in the third quarter of 2014, as compared to RMB159.6 million (US$26.0 million) from the corresponding period in 2013.
- Basic and diluted loss per ADS, each representing 18 Class A ordinary shares of the Company, for the third quarter of 2014 amounted to RMB0.88 (US$0.14) and RMB0.88 (US$0.14), respectively. Non-GAAP basic and diluted loss per ADS for the third quarter of 2014 amounted to RMB0.50 (US$0.08) and RMB0.50 (US$0.08), respectively.
- Cash, cash equivalents, restricted cash and short-term investments totaled RMB8.7 billion (US$1.4 billion) as of September 30, 2014.
- Acquisition of property and equipment for the third quarter of 2014 was RMB41.3 million (US$6.7 million).
- Acquisition of intangible assets for the third quarter of 2014 was RMB344.1 million (US$56.1 million).
- Share repurchases totaling US$300 million completed the share repurchase program authorized by the Board in August 2014.
Victor Koo, Chairman and Chief Executive Officer of Youku Tudou said: “We made positive progress in the third quarter in improving the effectiveness of multi-screen advertising solutions and growing our new consumer revenue streams, which drove the top line growth momentum of 29% increase year-on-year versus 27% growth in the second quarter. The new marketing solutions we announced with Alibaba through our strategic cooperation on big data places us uniquely at the forefront of new trends in digital advertising. Our new consumer businesses enjoyed rapid growth and may help spur further top line growth in future quarters. Meanwhile, our Youku mobile video app is now ranked the second most popular mobile app in terms of user time spent after WeChat.” He further commented: “At the same time, we will continue to invest decisively in the future growth of advertising and consumer business, our content eco-system and continued leadership in multi-screen product development. We believe these investments, such as in headcount increase and marketing for new consumer businesses and our original content productions, will help us further capitalize on the opportunities ahead of us in the multi-screen Internet era, and structurally step up the monetization of our mass user base and brand leadership.”
Dele Liu, President of Youku Tudou, added, “With regards to our content strategy, we continued to book further success in establishing a comprehensive content production and distribution eco-system. One of the key highlights for the quarter was the establishment of Heyi Pictures, our movie production and investment division, which is China’s first online and offline film company to incubate content IP, scale up content from micro-movies to silver screen movies and to grow fan communities that can support films and new consumer monetization model. Our most recent deals on the production of Internet-based adaptations to television blockbusters Big Brother and The Voice Kids in 2015 are testament to the growing convergence in online and offline media and entertainment.”
2014 Q3 Results
Net revenues were RMB1.11 billion (US$180.3 million) in the third quarter of 2014, a 29% increase from the corresponding period in 2013, meeting net revenues guidance previously announced by the Company.
Advertising net revenues were RMB985.2 million (US$160.5 million) in the third quarter of 2014, a 32% increase from the corresponding period in 2013, meeting the 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.
Consumer revenues, which are mainly derived from our subscription-based and pay-per-view services, were RMB41.8 million (US$6.8 million) in the third quarter of 2014, a 473% increase from the corresponding period in 2013. The growth was primarily attributable to the expansion of our subscriber base and pay-per-view orders.
Bandwidth costs as a component of cost of revenues were RMB229.7 million (US$37.4 million)in the third quarter of 2014, representing 21% of net revenues, as compared to 21% of net revenues for the corresponding period in 2013.
Content costs as a component of cost of revenues were RMB501.8 million (US$81.8 million) in the third quarter of 2014, representing 45% of net revenues as compared to 58% of net revenues for the corresponding period in 2013. Non-GAAP content costs were RMB488.2 million (US$79.5 million) in the third quarter of 2014, representing 44% of net revenues, as compared to 56% of net revenues for the corresponding period in 2013.
Gross profit was RMB246.9 million (US$40.2 million)in the third quarter of 2014, an increase of 200% from the corresponding period in 2013. Non-GAAP gross profit was RMB260.5 million (US$42.4 million) in the third quarter of 2014, an increase of 159% from the corresponding period in 2013 due to strong operating leverage.
Operating expenses were RMB452.5 million (US$73.7 million) in the third quarter of 2014, as compared to RMB312.8 million (US$51.0million) for the corresponding period in 2013. Non-GAAP operating expenses were RMB387.4 million (US$63.1 million) in the third quarter of 2014, as compared to RMB271.9 million (US$44.3 million) for the corresponding period in 2013. Detailed discussion of each component of operating expenses is as follows:
Sales and marketing expenses were RMB287.0 million (US$46.8 million) in the third quarter of 2014, as compared to RMB171.8 million (US$28.0 million) for the corresponding period in 2013. Non-GAAP sales and marketing expenses were RMB262.9 million (US$42.8 million) in the third quarter of 2014, as compared to RMB157.3 million (US$25.6 million) for the corresponding period in 2013. 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 RMB112.4 million (US$18.3 million) in the third quarter of 2014, as compared to RMB78.6 million (US$12.8 million) for the corresponding period in 2013. Non-GAAP product development expenses were RMB93.6 million (US$15.2 million) in the third quarter of 2014, as compared to RMB67.5 million (US$11.0 million) for the corresponding period in 2013. This increase was primarily due to an increase in personnel related expenses for our product development in mobile, search, social, paid and live broadcasting services.
General and administrative expenses were RMB53.0 million (US$8.6 million) in the third quarter of 2014, as compared to RMB62.5 million (US$10.2 million) for the corresponding period in 2013. Non-GAAP general and administrative expenses were RMB31.0 million (US$5.0 million) in the third quarter of 2014, a decrease of 34% from the corresponding period in 2013.
Net loss was RMB181.4 million (US$29.6 million)in the third quarter of 2014, as compared to RMB218.6 million (US$35.6 million) for the corresponding period in 2013. Non-GAAP net loss was RMB102.7 million (US$16.7 million) in the third quarter of 2014, as compared to RMB159.6 million (US$26.0 million) from the corresponding period in 2013.
Non-GAAP adjusted EBITDA loss was RMB88.9 million (US$14.5 million) in the third quarter of 2014, as compared to RMB141.1 million (US$23.0 million) from the corresponding period in 2013.
Business Outlook
For the Q4 of 2014, Youku Tudou expects net revenues will be between RMB1.15 billion and RMB1.22 billion, with advertising net revenues contributing between RMB1.01 billion and RMB1.07 billion. This forecast reflects the Company’s current and preliminary view, which is subject to change.
Recent Development
As of November 13, 2014, Youku Tudou has purchased approximately 16.1 million ADSs in the open market for a total consideration of approximately US$300.0 million under its share repurchase program approved by the Company’s board of directors in August 2014, which has hereby been completed.
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