GMKT ~~~ August 1, 2007 - 3:00 PM EST
Gmarket Reports Second Quarter 2007 Financial Results
-- 2Q07 revenues increase 51% to $60.3 million from $40.0 million in 2Q06
-- Diluted EPS increases 178% to $0.18 from $0.07 in 2Q06
Gmarket Inc. (NASDAQ: GMKT) ("Gmarket") announced today its financial and operating results for the second quarter ended June 30, 2007.
Gmarket reported total revenues of $60.3 million (Won 55.6 billion) for the second quarter of 2007, representing a 51% increase from total revenues of $40.0 million (Won 36.9 billion) for the second quarter of 2006.
The Company's gross merchandise value ("GMV"), which represents the total value of all items sold on Gmarket's website, increased by 43% to $846.6 million (Won 780.0 billion) for the second quarter of 2007 compared to $590.2 million (Won 543.8 billion) for the same period in 2006. Transaction fee revenues for the second quarter of 2007 were $34.9 million (Won 32.1 billion), representing a 34% increase from $26.1 million (Won 24.0 billion) for the second quarter in 2006. Advertising and other non-transaction revenues for the second quarter of 2007 were $25.4 million (Won 23.4 billion), representing an 82% increase from $14.0 million (Won 12.9 billion) for the same period in 2006.
Operating income for the second quarter of 2007 was $8.2 million (Won 7.6 billion), representing a 214% increase from $2.6 million (Won 2.4 billion) for the same period in 2006.
Net income for the second quarter of 2007 was $9.1 million (Won 8.4 billion), representing a 215% increase from $2.9 million (Won 2.7 billion) for the same period in 2006. Earnings per diluted share for the second quarter of 2007 increased to $0.18 (Won 167), up from $0.07 (Won 60) for the same period in 2006.
"In the second quarter, we focused on increasing our market leadership in our core categories, developing and expanding our smaller categories and continuing to strengthen our brand image and user loyalty," said Young Bae Ku, Chief Executive Officer of Gmarket. "We are pleased with our second quarter financial performance, which included strong growth in our non-transaction revenue."
During the second quarter of 2007, the Company's registered user base grew to approximately 12.4 million from 11.8 million registered users at the end of the first quarter of 2007. In addition, the Company averaged 17.6 million monthly unique visitors in the second quarter of 2007, compared to 16.5 million unique visitors during the second quarter of 2006.
The Company reported $12.9 million (Won 11.9 billion) of cash provided by operating activities for the second quarter of 2007 and finished the quarter with $206.6 million (Won 190.4 billion) in cash, cash equivalents and short term deposits and no debt.
Gmarket maintains its expectation that GMV for full year 2007 will range from $3.4 billion (Won 3.1 trillion) to $3.8 billion (Won 3.5 trillion).
Investor Conference Call / Webcast Details
The Company's management will review detailed second quarter 2007 results on Wednesday, August 1, 2007 at 6:00 p.m. U.S. Eastern Time (7:00 a.m., August 2, 2007 in Seoul, South Korea). A live webcast of the conference call will be available on Gmarket's website at www.gmarket.co.kr/IR/.
Dial-in details for the conference call are as follows:
US: +1 617 614 3472
Hong Kong: +852 3002 1672
Singapore: +65 6823 2164
U.K.: +44 (0) 207 365 8426
Korea: +82 00 308 13 1153
Password for all regions: Gmarket
A replay of the call will be available on August 1, 2007 at 9:00 p.m. U.S. Eastern Time (10:00 a.m., August 2, 2007 in Seoul, South Korea) through midnight on August 8, 2007 U.S. Eastern Time (1:00 p.m, August 9, 2007 in Seoul, South Korea) at www.gmarket.co.kr/IR/ and by telephone at +1 617 801 6888, with passcode 32272868.
Notes: (1) The Dollar amounts provided in this release are based on an exchange rate of Won 921.30 to US$1.00, which is the noon buying rate in effect on June 30, 2007 as quoted by the Federal Reserve Bank of New York. (2) GMV should not be construed as an alternative to revenues or any other measure of performance determined in accordance with U.S. GAAP. Other companies may determine GMV in a different manner than Gmarket does.
About Gmarket
Gmarket Inc. is a leading retail e-commerce marketplace in Korea, offering buyers a wide selection of products at competitive prices and sellers a comprehensive and flexible sales solution. Gmarket's e-commerce marketplace is highly scalable and facilitates the sale of products in small or large quantities to a large number of potential buyers in a convenient, cost effective and secure manner. Gmarket's e-commerce marketplace is located at www.gmarket.co.kr.
Safe Harbor Under the Private Securities Litigation Reform Act of 1995
Certain statements in this filing on Form 6-K may include, in addition to historical information, "forward-looking statements" within the meaning of the "safe-harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can generally be identified by the use of forward-looking terminology, such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "project," or "continue" or the negative thereof or other similar words, although not all forward-looking statements will contain these words. These forward-looking statements are based on the Company's current assumptions, expectations and projections about future events. All forward-looking statements involve risks and uncertainties that may cause the Company's actual performance, financial condition or results of operations to be materially different from those suggested by the forward-looking statements, including, but not limited to, the Company's ability to diversify revenues; the Company's ability to compete effectively in a highly competitive industry; the Company's ability to anticipate and access technological developments in the Company's industry; the Company's ability to recruit and retain quality employees as the Company grows; the Company's ability to implement the Company's growth strategies; and economic and political conditions in and outside of Korea. Investors should consider the information contained in the Company's submissions and filings with the SEC, including the Company's registration statement on Form F-1, as amended, together with such other documents as the Company may submit to or file with the SEC from time to time, including on Form 6-K. The forward-looking statements speak only as of this filing on Form 6-K and the Company assumes no duty to update them to reflect new, changing or unanticipated events or circumstances.
GMARKET INC.
UNAUDITED BALANCE SHEETS
(in millions of Korean Won and in thousands of US dollars)
December 31, June 30, June 30,
2006 2007 2007
============ ============ ============
Assets
Current assets:
Cash and cash equivalents W34,930 W31,314 $ 33,989
Cash on deposit 134,398 159,051 172,638
Restricted cash 6,400 6,510 7,066
Accounts receivable, net 33,827 39,981 43,397
Current held-to-maturity
securities 4,000 4,000 4,342
Other current assets 5,119 9,114 9,892
============ ============ ============
Total current assets 218,674 249,970 271,324
Long-term financial instruments 5,000 5,000 5,427
Property and equipment, net 19,582 20,292 22,025
Other assets 4,846 4,900 5,317
============ ============ ============
Total assets W248,102 W280,162 $ 304,093
============ ============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Amounts payable to sellers W103,599 W116,174 $ 126,098
Accounts payable 19,242 19,616 21,292
Deferred revenue and advances 3,532 4,202 4,561
Loyalty program reserves 6,608 7,510 8,151
Withheld value added tax 1,995 3,307 3,589
Other current liabilities 4,859 4,474 4,856
============ ============ ============
Total current liabilities 139,835 155,283 168,547
Accrued severance benefits 1,397 2,006 2,177
Other liabilities - 375 408
============ ============ ============
Total liabilities 141,232 157,664 171,132
============ ============ ============
Shareholders' equity:
Common shares 4,951 4,971 5,395
Additional paid-in capital 86,445 87,191 94,639
Retained earnings 15,474 30,336 32,927
============ ============ ============
Total shareholders' equity 106,870 122,498 132,961
============ ============ ============
Total liabilities and shareholders'
equity W248,102 W280,162 $ 304,093
============ ============ ============
GMARKET INC.
UNAUDITED STATEMENTS OF INCOME
(in millions of Korean Won and thousands of US dollars, except per
share data)
Three Months Ended June 30,
==================================
2006 2007 2007
========== ========== ==========
Revenues:
Transaction fees W23,996 W32,129 $ 34,873
Advertising and others 12,865 23,438 25,441
========== ========== ==========
Total revenues 36,861 55,567 60,314
Costs and expenses:
Cost of revenues 1) 17,933 29,253 31,753
Sales and marketing 1) 13,211 13,111 14,231
General and administrative 3,301 5,612 6,092
========== ========== ==========
Total costs and expenses 34,445 47,976 52,076
========== ========== ==========
Operating Income 2,416 7,591 8,238
Other income (expense):
Interest income 794 2,066 2,243
Others, net - (99) (107)
========== ========== ==========
Income before income tax expenses 3,210 9,558 10,374
Income tax expenses (534) (1,141) (1,238)
========== ========== ==========
Net income W2,676 W8,417 $ 9,136
Earning per share - basic 2) W61 W169 $ 0.18
Earning per share - diluted 2) 60 167 0.18
Weighted average number of
shares - basic 32,419,429 49,657,529 49,657,529
Weighted average number of
shares - diluted 33,357,934 50,524,504 50,524,504
Six Months Ended June 30,
==================================
2006 2007 2007
========== ========== ==========
Revenues:
Transaction fees W44,013 W62,366 $ 67,693
Advertising and others 21,185 41,252 44,776
========== ========== ==========
Total revenues 65,198 103,618 112,469
Costs and expenses:
Cost of revenues 1) 33,684 54,849 59,534
Sales and marketing 1) 22,032 25,358 27,523
General and administrative 5,537 10,371 11,257
========== ========== ==========
Total costs and expenses 61,253 90,578 98,314
========== ========== ==========
Operating Income 3,945 13,040 14,155
Other income (expense):
Interest income 1,563 4,119 4,471
Others, net 19 (24) (28)
========== ========== ==========
Income before income tax expenses 5,527 17,135 18,598
Income tax expenses (922) (2,039) (2,213)
========== ========== ==========
Net income W4,605 W15,096 $ 16,385
Earning per share - basic 2) W106 W304 $ 0.33
Earning per share - diluted 2) 103 299 0.32
Weighted average number of
shares - basic 31,415,293 49,582,287 49,582,287
Weighted average number of
shares - diluted 32,360,836 50,484,722 50,484,722
1) Cost associated with our integrated delivery service of Won
818 million for the three months and Won 1,275 million for
the six months ended June 30, 2006 have been reclassified
from sales and marketing to cost of revenues to conform to
current period presentation.
2) The prior period earnings per share figures have been represented
to reflect application of the two class method and the dilutive
effect of the participating preferred shares. The participating
preferred shares were converted into common shares in June 2006.
GMARKET INC.
UNAUDITED STATEMENTS OF CASH FLOWS
(in millions of Korean Won and thousands of US dollars)
Three Months Ended June 30,
============================
2006 2007 2007
======== ======== ========
Cash flows from operating activities:
Net income W2,676 W8,417 $ 9,136
Adjustments
Depreciation and amortization 750 1,534 1,664
Stock-based compensation expense 238 400 434
Provision for bad debt - 95 103
Provision for severance benefits 175 353 383
Deferred tax assets (372) (573) (622)
Provision for loyalty program reserves 1,599 1,323 1,436
Others, net - 118 129
Changes in operating assets and liabilities
Accounts receivable (3,534) (5,577) (6,053)
Amounts payable to sellers 3,136 6,881 7,469
Accounts payable 2,370 2,999 3,255
Deferred revenue and advances 310 224 243
Other current assets (1,996) (2,393) (2,598)
Other assets (4) - -
Other current liabilities 1,468 (1,802) (1,956)
Payment of accrued severance benefits (7) (136) (147)
======== ======== ========
Net cash provided by (used in)
operating activities 6,809 11,863 12,876
======== ======== ========
Cash flows from investing activities:
Increase in cash on deposit, net (2,000) (17,233) (18,705)
Increase in restricted cash, net (3,600) - -
Increase in long-term financial
instruments, net (30) - -
Purchase of property and equipment (948) (1,260) (1,368)
Decrease in other current assets 47 5 5
Increase in other assets, net - (145) (156)
======== ======== ========
Net cash used in investing activities (6,531) (18,633) (20,224)
======== ======== ========
Cash flows from financing activities:
Issuance of common shares, net 57 130 141
Decrease in loan to employees for stock
purchase 194 - -
======== ======== ========
Net cash provided by financing
activities 251 130 141
======== ======== ========
Net increase (decrease) in cash and
cash equivalents 529 (6,640) (7,207)
======== ======== ========
Cash and cash equivalents
Beginning of year 19,150 37,954 41,196
======== ======== ========
End of period W19,679 W31,314 $ 33,989
======== ======== ========
Six Months Ended June 30,
============================
2006 2007 2007
======== ======== ========
Cash flows from operating activities:
Net income W4,605 W15,096 $ 16,385
Adjustments
Depreciation and amortization 1,366 3,005 3,261
Stock-based compensation expense 377 637 691
Provision for bad debt - 146 159
Provision for severance benefits 419 771 837
Deferred tax assets (605) (1,028) (1,115)
Provision for loyalty program reserves 3,178 2,167 2,352
Others, net (19) 114 124
Changes in operating assets and liabilities
Accounts receivable (4,144) (6,167) (6,693)
Amounts payable to sellers (14,656) 12,575 13,649
Accounts payable 3,223 374 406
Deferred revenue and advances 917 670 727
Other current assets (1,769) (3,128) (3,396)
Other assets 18 9 10
Other current liabilities 1,352 (338) (368)
Payment of accrued severance benefits (19) (162) (175)
======== ======== ========
Net cash provided by (used in)
operating activities (5,757) 24,741 26,854
======== ======== ========
Cash flows from investing activities:
Increase in cash on deposit, net (3,300) (24,653) (26,759)
Increase in restricted cash, net (3,700) (110) (119)
Increase in long-term financial
instruments, net (60) - -
Purchase of property and equipment (3,966) (3,693) (4,009)
Decrease in other current assets 47 5 5
Increase in other assets, net (756) (36) (38)
======== ======== ========
Net cash used in investing activities (11,735) (28,487) (30,920)
======== ======== ========
Cash flows from financing activities:
Issuance of common shares, net 57 130 141
Decrease in loan to employees for stock
purchase 216 - -
======== ======== ========
Net cash provided by financing activities 273 130 141
======== ======== ========
Net increase (decrease) in cash and
cash equivalents (17,219) (3,616) (3,925)
======== ======== ========
Cash and cash equivalents
Beginning of year 36,898 34,930 37,914
======== ======== ========
End of period W19,679 W31,314 $ 33,989
======== ======== ========
GMARKET INC.
UNAUDITED SUPPLEMENTAL OPERATING DATA
----------------------------------------------------------------
1Q 2006 2Q 2006 3Q 2006 4Q 2006 1Q 2007 2Q 2007
========== ========= ========== ========== ========== ==========
GMV
(in billions
of Won)(1) 469.2 543.8 573.0 682.4 723.0 780.0
---------- --------- ---------- ---------- ---------- ----------
Registered
Users(2) 8,310,737 9,238,701 10,110,874 10,967,445 11,753,910 12,407,622
========== ========= ========== ========== ========== ==========
Average
Monthly
Unique
Visitors(3)
(000) 15,179 16,543 17,051 17,130 16,931 17,581
---------- --------- ---------- ---------- ---------- ----------
1. Represents the aggregate value of all products sold on the Company's
website for the period. GMV is commonly used in the e-commerce industry
to measure a company's operating performance as transaction fees depend
in part on GMV. GMV should not be construed as an alternative to any
measure of performance determined in accordance with U.S. GAAP. Other
companies may determine GMV in a different manner to Gmarket.
2. Registered Users include both buyers and sellers who have registered
with the Company as of the end of the period.
3. Average monthly unique visitors represents the average number of
monthly unique visitors to the Company's website during the period,
measured and announced by Metrix Corporation, a Korean
Internet research company. Other research companies' results may differ.
Contacts:
Paul J. Lee
Gmarket Inc.
+82-2-3016-4372
Email Contact
In the U.S.
David Pasquale
The Ruth Group
+1-646-536-7006
Email Contact
Source: Market Wire (August 1, 2007 - 3:00 PM EST)
