Youku Tudou Announces Fourth Quarter and Fiscal Year 2012 Unaudited Financial Results
First Full Quarter Merger Integration on Track; Net Loss Narrowing
BEIJING, Feb. 28, 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]
-- Consolidated net revenues were RMB635.8 million (US$102.1 million),a 30%
increase from the pro forma combined net revenues for the corresponding
period in 2011.
-- Consolidated gross profit was RMB116.3 million (US$18.7 million), a 62%
increase from the pro forma combined gross profit for the corresponding
period in 2011. Consolidated or pro forma combined non-GAAP gross profit
is herein defined as consolidated or pro forma combined gross profit
excluding share-based compensation expenses and amortization of
intangible assets from business combination in relation to user
generated content. Consolidated non-GAAP gross profit was RMB129.1
million (US$20.7 million) in the fourth quarter of 2012, an increase of
74% from the pro forma combined non-GAAP gross profit for the
corresponding period in 2011.
-- Consolidated net loss was RMB113.6 million (US$18.2 million), a 43%
decrease from the pro forma combined net loss for the corresponding
period in 2011. Consolidated or pro forma combined non-GAAP net loss is
herein defined as consolidated or pro forma combined net loss excluding
share-based compensation expenses, amortization of intangible assets
from business combination and business combination related expenses.
Consolidated non-GAAP net loss was RMB62.3 million (US$10.0 million) in
the fourth quarter of 2012, a decrease of 64% from the pro forma
combined non-GAAP net loss for the corresponding period in 2011.
-- Consolidated basic and diluted loss per ADS, each representing 18 Class
A ordinary shares, for the fourth quarter of 2012 amounted to RMB0.69
(US$0.11) and RMB0.69 (US$0.11), respectively.
-- Consolidated cash, cash equivalents, restricted cash and short-term
investments totaled RMB3.8 billion (US$605.9 million) as of December 31,
2012.
-- Consolidated acquisition of property and equipment for the fourth
quarter of 2012 was RMB24.4 million (US$3.9 million).
-- Consolidated acquisition of intangible assets for the fourth quarter of
2012 was RMB111.1 million (US$17.8 million).
Fiscal Year 2012 Highlights
-- Consolidated net revenues were RMB1.8 billion (US$288.2 million).
-- Consolidated gross profit was RMB296.0 million (US$47.5million).
Consolidated non-GAAP gross profit was RMB335.3 million (US$53.8
million) in 2012.
-- Consolidated net loss was RMB424.0 million (US$68.1 million).
Consolidated non-GAAP net loss was RMB244.7 million (US$39.3 million) in
2012.
-- Consolidated basic and diluted loss per ADS, each representing 18 Class
A ordinary shares, for 2012 amounted to RMB3.20 (US$0.51) and RMB3.20
(US$0.51), respectively.
-- Consolidated acquisition of property and equipment in 2012 was RMB90.2
million (US$14.5 million).
-- Consolidated acquisition of intangible assets in 2012 was RMB362.0
million (US$58.1 million).
[1] The reporting currency of the
Company is Renminbi ("RMB"), but
for the convenience of the reader,
the amounts presented throughout
the release are in US dollars
("US$"). 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)
basic and diluted
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.
SOURCE Youku Tudou Inc.
Youku Tudou Inc.
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