Youku.com Announces Unaudited First Quarter 2011 Financial Results
Thursday , May 05, 2011 16:57ET
BEIJING, May 5, 2011 /PRNewswire-Asia/ -- Youku.com Inc. (NYSE: YOKU), China's leading Internet television company ("Youku" or the "Company"), today announced its unaudited financial results for the first quarter ended March 31, 2011.
First Quarter 2011 Highlights(1)
-- Net revenues were RMB128.0 million (US$19.5 million), a 163% increase
from the corresponding period in 2010(2).
-- Gross profit was RMB14.0 million (US$2.1 million), compared to a gross
loss of RMB18.3 million (US$2.8 million) for the corresponding period in
2010.
-- Net loss was RMB46.9 million (US$7.1 million), an 8% decrease relative
to the corresponding period in 2010.
-- Adjusted EBITDA loss (non-GAAP financial measure) was RMB29.9 million
(US$4.6 million), compared to an adjusted EBITDA loss of RMB37.0 million
(US$5.6 million) for the corresponding period in 2010, or a 19%
improvement relative to the corresponding period in 2010.
"Our monthly unique visitors from homes and offices reached 231 million in March 2011, an increase of 22 million from December 2010, while our monthly unique visitors from Internet cafés exceeded 50 million in February 2011, according to iResearch. We continue to strengthen our leadership position in the Internet television space in China," said Victor Koo, Chairman and Chief Executive Officer.
"We are also excited to see growing user traffic coming from tablet and mobile phones, which reinforces our commitment to be the primary source of video content across all Internet-enabled devices. Our significant and timely investments in tablets and 3G applications continue to pay off. With respect to our content, we have achieved record viewership of television series and continue to increase the monetization of inventory associated with our in-house productions." Mr. Koo added.
Dele Liu, Senior Vice President and Chief Financial Officer commented, "I am pleased to report a solid quarter of top line growth. We continue to experience ongoing revenue momentum in our business as online video advertising becomes increasingly mainstream. For the rest of 2011, we will remain focused on improving our user experience and investing aggressively in content, technology, product innovation and brand to capitalize on the growing market opportunity in front of us."
(1) The reporting currency of the Company is Renminbi ("RMB"), but for the convenience of the reader, the amounts presented throughout the release are in US dollars ("US$"). Unless otherwise noted, all conversions from RMB to US$ are made at a rate of RMB6.5483 to US$1.00, the effective noon buying rate as of March 31, 2011 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.
(2) The Company's net revenues are presented net of commissions earned by third-party advertising agencies, which amounted to RMB24.7 million (US$3.8 million) in the first quarter of 2011 and RMB9.8 million (US$1.5 million) in the corresponding period in 2010.
First Quarter 2011 Results
Net revenues were RMB128.0 million (US$19.5 million) in the first quarter of 2011, representing a 163% increase from the corresponding period in 2010 and exceeding the high end of the Company's guidance by 22%. The significant increase in net revenues was mainly due to the strong performance of brand advertising revenues, which amounted to RMB119.8 million (US$18.3 million) in the first quarter of 2011, representing a 165% increase from the corresponding period in 2010. This growth was primarily attributable to the increased number of advertisers and increased average revenue per advertiser.
Bandwidth costs as a component of cost of revenues were RMB56.3 million (US$8.6 million) in the first quarter of 2011, representing 44% of net revenues, down from 90% in the corresponding period in 2010.
Content costs as a component of cost of revenues were RMB36.1 million (US$5.5 million), representing 28% of net revenues, compared to 17% in the corresponding period in 2010. We have changed our accounting estimate regarding the pattern of the benefits that we derive from our licensed content, resulting in amortization of costs on an accelerated basis. Of the RMB36.1 million (US$5.5 million) content costs, RMB28.2 million (US$4.3 million), or 22% of net revenues, was incurred in the first quarter of 2011 using the newly adopted accelerated method and RMB7.9 million (US$1.2 million), or 6% of net revenues, relates to the adjustment to the accumulated amortization of licensed content acquired prior to 2011 using the accelerated method instead of straight-line method. If the Company had continued using a straight-line amortization method for content costs, RMB24.6 million (US$3.8 million), or 19% of net revenues, would have been recorded in the first quarter of 2011. Prior to 2011, our licensed content was amortized using a straight-line method over the estimated useful life, which was generally the license period. The change of estimate was effective in the first quarter of 2011 and will be applied prospectively.
Gross profit was RMB14.0 million (US$2.1 million) in the first quarter of 2011, compared to a gross loss of RMB18.3 million (US$2.8 million) for the corresponding period in 2010. The significant increase in gross profit was mainly due to increased revenues from brand advertising services and partially offset by an increased cost of revenues as described in the preceding paragraphs pertaining to bandwidth and content costs.
Operating expenses were RMB59.8 million (US$9.1 million) in the first quarter of 2011, an increase of 93% compared to RMB31.0 million (US$ 4.7 million) in the corresponding period in 2010. The increase was primarily due to increases in all of the operating expense line items as a result of the substantial growth of our business.
Operating loss was RMB45.8 million (US$7.0 million) in the first quarter of 2011, representing a 7% decrease relative to the corresponding period in 2010. The improvement was mainly due to the significant increase in gross profit as noted above.
Net loss was RMB46.9 million (US$7.1 million) in the first quarter of 2011, representing an 8% decrease relative to the corresponding period in 2010. Basic and diluted loss per ADS, each ADS representing 18 of our Class A ordinary shares, for the first quarter of 2011 amounted to RMB0.45 (US$0.07) and RMB0.45 (US$0.07), respectively.
Adjusted net loss (non-GAAP financial measure), which is herein defined as net loss excluding share-based compensation expenses and change in fair value of warrant liability, was RMB41.5 million (US$6.3 million) in the first quarter of 2011, or a decrease of 15% relative to corresponding period in 2010.
Adjusted EBITDA loss (non-GAAP financial measure), 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 change in fair value of warrant liability, share-based compensation expenses and other non-operating items, was RMB29.9 million (US$4.6 million) for the first quarter of 2011, or a decrease of 19% relative to the corresponding period in 2010.
Business Outlook
For the second quarter of 2011, the Company expects year-on-year growth in net revenues of 125% to 135%. This forecast reflects Youku's current and preliminary view, which is subject to change.
