China Finance Online Reports 2012 Third Quarter and Nine Months
Unaudited Financial Results
BEIJING, Dec. 13, 2012 /PRNewswire/ -- China Finance
Online Co. Limited ("China Finance Online", or the "Company", "we",
"us" or "our") (NASDAQ GS: JRJC), a technology-driven,
user-focused market leader in China providing vertically integrated
financial information and services including news, data, analytics,
securities investment advisory and brokerage-related services,
today announced its unaudited financial results for the third
quarter and nine months ended September 30,
2012.
2012 Third Quarter Financial Summary
- Net revenues were $7.2 million
compared with $13.5 million for the
third quarter of 2011 due to the Company's strategic transition
amid a challenging business environment;
- Gross profit was $5.5 million
compared with $11.2 million for the
third quarter of 2011;
- Net loss attributable to China Finance Online was $3.2 million.
Nine Months Ended September 30,
2012 Financial Summary
- Net revenues were $24.4 million
compared with $42.2 million for the
first nine months of 2011;
- Gross profit was $18.1 million
compared with $35.5 million for the
first nine months of 2011;
- Net loss attributable to China Finance Online was $7.0 million.
Key Developments
- In November 2012, the Company
changed its independent registered public accounting firm from
Deloitte Touche Tohmatsu CPA Ltd. to Grant Thornton
China;
- In November 2012, the Company
entered into an agreement with Tsinghua University's PBC School of
Finance E-finance Lab for long-term strategic cooperation mainly on
research and project incubation related to internet-based financial
services.
2012 Third Quarter Results
Net revenues for the third quarter of 2012 were $7.2 million compared with $13.5 million for the third quarter of 2011. The
main sources of the Company's net revenues were subscription fees
from individual customers, subscription fees from institutional
customers, advertising revenues and revenues from brokerage-related
services, which contributed 55%, 11%, 24% and 10% to total revenues
respectively, compared with 75%, 6%, 13%, and 5%, respectively, for
the comparable period in 2011. Revenues from subscription fees paid
by individual customers decreased 61.0% year-over-year to
$4.0 million. The decrease is largely
the result of the Company's previously disclosed strategic
transition and the continued weakening of China's stock market. Institutional
subscription revenues decreased 4.1% year-over-year to $0.8 million. Revenues from advertising were
$1.7 million, in line with the third
quarter of 2011. Revenues from brokerage-related services decreased
slightly year-over-year to $0.7
million.
For the third quarter of 2012, gross profit was $5.5 million compared with $11.2 million for the third quarter in 2011.
Gross margin for the third quarter of 2012 was 75.5% compared with
83.0% for the third quarter of 2011. The year-over-year decrease in
gross margin was mainly due to lower revenues.
General and administrative ("G&A") expenses for the third
quarter of 2012 were $2.9 million, or
40.6% of net revenues, compared with $3.1
million, or 23.2% of net revenues for the comparable period
in 2011. The decrease in G&A expenses in absolute value was
mainly due to lower fees for professional services. The increase in
G&A expenses as a percentage of quarterly revenues was mainly
due to lower revenues.
Sales and marketing expenses for the third quarter of 2012 were
$3.1 million, or 42.4% of net
revenues compared with $5.3 million,
or 38.9% in the third quarter of 2011. The decrease in sales and
marketing expenses in absolute value was due to lower marketing
expenses and sales commissions.
Product development expenses for the third quarter of 2012 were
$2.6 million, or 36.4% of net
revenues, compared with $3.4 million,
or 25.3% of net revenues for the same quarter in 2011. The Company
continues to prioritize investment in its data, product and
technical capabilities while streamlining for higher
efficiency.
Total operating expenses for the third quarter of 2012 were
$8.6 million, down from $14.1 million in the third quarter of 2011.
Net loss attributable to China Finance Online for the third
quarter of 2012 was $3.2 million,
compared with a net loss of $3.5
million in the third quarter of 2011. Both basic and diluted
weighted average number of ordinary shares in the third quarter of
2012 was 109 million. Each ADS represents five ordinary shares of
the Company.
As of September 30, 2012, total
cash, cash equivalents and restricted cash were $72.4 million and short-term investments were
$2.7 million. Accounts receivable in
non-margin related business were $4.6
million while Daily Growth had margin-related accounts
receivables of $18.7 million. Daily
Growth continues to implement strict margin account screening and
ongoing monitoring to ensure the safe return of capital.
Total China Finance Online Co. Limited's shareholders' equity
was $84.1 million as of September 30, 2012.
The combined current and non-current deferred revenues at the
end of the third quarter of 2012, which represented prepaid service
fees made by customers for subscription services that have not been
rendered as of September 30, 2012,
were $13.1 million.
Nine Months Ended September 30,
2012 Results
Total net revenues for the nine months ended September 30, 2012 were $24.4 million, compared with $42.2 million in the first nine months last year.
Gross profit for the first nine months of 2012 was $18.1 million, compared with $35.5 million in the same period in 2011. Gross
margin was 74.2% for the first nine months of 2012. Net loss
attributable to China Finance Online for the first nine months of
2012 was $7.0 million, compared with
a net loss of $3.9 million in the
same period in 2011.
Change of Auditor
In November, the Company changed its independent registered
public accounting firm Deloitte Touche Tohmatsu CPA Ltd.
to Grant Thornton China ("GT"). The change was driven by fee
considerations as part of the Company's recent cost control
measures, recommended by the Company's audit committee and approved
by the Company's Board of Directors.
The Company believes that GT is one of the top-ranked
independent accounting firms with the highest level of service,
global expertise and impeccable track records in both
China and the United
States. The Company does not believe that such auditor
change will affect the timely filing of its annual report on Form
20-F for the year ending December 31, 2012.
Recent Development
In November, the Company entered into an agreement with Tsinghua
University's PBC School of Finance E-finance Lab for a long-term
strategic cooperation mainly on financial research and project
incubation. Leveraging on China Finance Online's expertise in
financial services and internet capabilities and Tsinghua
University's PBC School of Finance's strength in in-depth financial
research, the collaboration aims to explore new opportunities in
the field of internet-based financial services.
Established in 1981, the PBC School of Finance was previously
the Graduate School of People's Bank of China (PBC). The School has graduated two
thousand alumni over the last thirty years, many of who currently
hold key leadership positions at strategically important financial
institutions and government agencies. With its top-tier education
and elite alumni network, the School enjoys the highest reputation
for graduate and post-graduate programs in finance, and was
integrated into Tsinghua University, one of the most renowned
universities in China, in early
2012.
"We are honored to be selected as a long-term strategic partner
for Tsinghua's PBC School of Finance. We look forward to launching
collaboration on a variety of fields including research and project
incubation related to internet finance, providing internship and
employment opportunities, co-education of post-doctor students, as
well as co-hosting high-end commerce and finance themed forums and
conferences. The agreement serves as a solid acknowledgement of our
industry-leading competency and future prospect," said Mr.
Zhiwei Zhao, Chairman and CEO of
China Finance Online.
"Business environment remains considerably challenging as the
Chinese economy grows at its slowest pace in three years and the
Chinese stock market continues its slide to new multi-year lows.
Facing difficulties, we have streamlined our operations to become a
leaner and more efficient Company. We also have plans to initiate
additional cost-cutting measures going forward," commented Mr.
Zhao. "We are starting to see early signs of stabilization in cash
attrition and anticipate our financial position to improve further
in 2013. With significant number of high net worth households and
the rising middle-class, the market prospect for securities
investment advisory and wealth management in China remains exciting in the long run. We
continue to lay the foundation for future growth through attracting
customers through our flagship financial portal sites, enhancing
our financial data and product capabilities, developing technology
and human infrastructure, and resource consolidation."
Conference Call Information
The Company will host a conference call and a simultaneous
webcast, on December 13, 2012 at
8:00 p.m. Eastern Time/December 14, 2012 9:00
a.m. Beijing Time. Interested parties may participate in the
conference call by dialing approximately five minutes before the
call start time at U.S. +1-877-847-0047, Hong Kong +852-3006-8101, Singapore 8008-523-396, or China 800-876-5011, and the pass code for all
regions is 686390.
A replay of the conference call will be available shortly after
the conclusion of the event through 11:00
p.m. Eastern Time on December 20,
2012 (or 12:00 p.m. Beijing
Time on December 21, 2012). The
dial-in details for the replay: U.S. +1-866-572-7808, Hong Kong +852-3012-8000, Singapore 800-101-2157, China 800-876-5013. Access code: 686390.
The conference call will be available as a live webcast and
replay at: http://www.media-server.com/m/p/mt8s64hm
About China Finance Online
China Finance Online Co. Limited is a technology-driven,
user-focused market leader in China in providing vertically integrated
financial information and services including news, data, analytics,
securities investment advisory and brokerage-related services.
Through its flagship portal sites, www.jrj.com and
www.stockstar.com, the Company offers basic software and
information services to individual investors which integrate
financial and listed-company data, information and analytics from
multiple sources. Leveraging on its robust internet capabilities
and registered user base, China Finance Online is developing
securities investment advisory and over time wealth management
services. Through its subsidiary, Genius, the Company provides
financial database and analytics to institutional customers
including domestic brokerages and investment firms. Through its
subsidiary, Daily Growth, the Company provides securities brokerage
services in Hong Kong.
Safe Harbor Statement
This press release contains forward-looking statements. These
statements constitute "forward-looking" statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and as defined in 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, this release contains the following
forward-looking statements regarding:
- our product upgrade and strategic transformation
initiative;
- our plans to streamline our corporate structure;
- our strategic collaboration with Tsinghua University's PBC
School of Finance E-finance Lab;
- our prospect on stabilization in cash attrition and improvement
of our financial position;
- our ability to timely file annual report on Form 20-F for the
year ending December 31, 2012;
and
- the market prospect of the business of securities investment
advisory and wealth management.
Such statements involve certain risks and uncertainties that
could cause actual results to differ materially from those in the
forward-looking statements, which risks and uncertainties include,
among others, the following:
- the changing customer needs, regulatory environment and market
condition that we are subject to;
- the uneven condition of the world and Chinese economy that
could lead to volatility in the equity markets and affect our
operating results in the coming quarters;
- the impact of a poor performing Chinese stock market on our
future performance;
- the unpredictability of our strategic transformation and
upgrade;
- the degree to which our strategic collaborations with partners
will yield successful outcome;
- the prospect for China's
high-net-worth and middle-class households;
- the competition we are facing in the new business of securities
investment advisory and wealth management;
- global macroeconomic uncertainties;
- wavering investor confidence that could impact our business;
and
- possible non-cash goodwill, intangible assets and investment
impairment may adversely affect our net income.
Further information regarding these and other risks is included
in the Company's filings with the U.S. Securities and Exchange
Commission, including its annual report on Form 20-F under
"Forward-Looking Information" and "Risk Factors". The Company does
not undertake any obligation to update any forward-looking
statement as a result of new information, future events or
otherwise, except as required under applicable law.
Contact:
Julie Zhu
China Finance Online Co. Limited
+86-10-5832-5288
ir@jrj.com
Shiwei Yin
Grayling
646-284-9474
shiwei.yin@grayling.com
China Finance Online Co.
Limited
|
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In thousands of U.S.
dollars)
|
|
|
Sep. 30, 2012
|
Dec. 31, 2011
|
Assets
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
43,710
|
64,641
|
Restricted cash
|
28,690
|
29,861
|
Trust bank balances held on
behalf of customers
|
8,490
|
18,664
|
Accounts receivable, net -
others
|
4,608
|
1,468
|
Accounts receivable, net -
margin clients
|
18,718
|
12,889
|
Loan receivable
|
1,605
|
9,566
|
Short-term
investments
|
2,685
|
10,701
|
Prepaid expenses and other
current assets
|
3,399
|
3,577
|
Deferred tax assets,
current
|
492
|
634
|
Total current
assets
|
112,397
|
152,001
|
Property and equipment,
net
|
5,402
|
6,530
|
Acquired intangible assets,
net
|
4,718
|
-
|
Rental deposits
|
746
|
738
|
Goodwill
|
3,023
|
-
|
Deferred tax assets,
non-current
|
257
|
484
|
Other deposits
|
230
|
224
|
Total assets
|
126,773
|
159,977
|
|
|
|
Liabilities and
equity
|
|
|
Current
liabilities:
|
|
|
Deferred revenue, current
(including deferred revenue, current of the consolidated variable
interest entities without recourse to China Finance Online Co.
Limited $3,799 and $7,037 as of September 30,2012 and December
31,2011, respectively)
|
9,240
|
17,287
|
Accrued expenses and other
current liabilities (including accrued expenses and other current
liabilities of the consolidated variable interest entities without
recourse to China Finance Online Co. Limited $1,891 and $3,127 as
of September 30,2012 and December 31, 2011,
respectively)
|
4,299
|
6,458
|
Short-term loan(including
short-term loan of the consolidated variable interest entities
without recourse to China Finance Online Co. Limited nil and nil as
of September 30,2012 and December 31, 2011,
respectively)
|
13,542
|
19,171
|
Amount due to customers for
trust bank balances held on behalf of customers(including amount
due to customers for trust bank balances held on behalf of
customers of the consolidated variable interest entities without
recourse to China Finance Online Co. Limited nil and nil as of
September 30,2012 and December 31, 2011, respectively)
|
8,490
|
18,664
|
Accounts payable
(including accounts payable of the consolidated variable interest
entities without recourse to China Finance Online Co. Limited $234
and $115 as of September 30, 2012 and December 31, 2011,
respectively)
|
489
|
144
|
Deferred tax liabilities,
current(including deferred tax liability, current of the
consolidated variable interest entities without recourse to China
Finance Online Co. Limited $319 and $3 as of September 30, 2012 and
December 31, 2011, respectively)
|
320
|
45
|
Income taxes payable
(including income taxes payable of the consolidated variable
interest entities without recourse to China Finance Online Co.
Limited nil and $25 as of September 30,2012 and December 31,2011,
respectively)
|
436
|
135
|
Total current
liabilities
|
36,816
|
61,904
|
Deferred tax liabilities,
non-current (including deferred tax liabilities, non-current of the
consolidated variable interest entities without recourse to China
Finance Online Co. Limited $1,179 and nil as of September 30, 2012
and December 31, 2011, respectively)
|
1,179
|
-
|
Deferred revenue, non-current
(including deferred revenue, non-current of the consolidated
variable interest entities without recourse to China Finance Online
Co. Limited $1,277 and $3,033 as of September 30,2012 and December
31,2011, respectively)
|
3,850
|
7,237
|
Total
liabilities
|
41,845
|
69,141
|
Noncontrolling
interests
|
817
|
(105)
|
Total China Finance
Online Co. Limited Shareholders' equity
|
84,111
|
90,941
|
Total liabilities and
equity
|
126,773
|
159,977
|
China Finance Online Co.
Limited
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(in thousands of U.S.
dollars, except share and ADS related data)
|
|
|
Three months
ended
|
Nine months
ended
|
|
Sep. 30, 2012
|
Sep. 30, 2011
|
Jun. 30, 2012
|
Sep. 30, 2012
|
Sep. 30, 2011
|
Net revenues
|
7,228
|
13,515
|
8,100
|
24,437
|
42,248
|
Cost of
revenues
|
(1,771)
|
(2,303)
|
(2,552)
|
(6,311)
|
(6,704)
|
Gross profit
|
5,457
|
11,212
|
5,548
|
18,126
|
35,544
|
Operating
expenses
|
|
|
|
|
|
General and
administrative(includes share-based compensation expenses of $198,
$347, $197, $569 and $1,110, respectively)
|
(2,933)
|
(3,137)
|
(2,602)
|
(8,301)
|
(8,481)
|
Sales and marketing (includes
share-based compensation expenses of $6, $33, $6,$20 and $103,
respectively)
|
(3,063)
|
(5,251)
|
(3,281)
|
(9,893)
|
(16,884)
|
Product development (includes
share-based compensation expenses of $3, $23, $3, $9 and $73,
respectively)
|
(2,633)
|
(3,415)
|
(2,696)
|
(8,534)
|
(9,898)
|
Loss from impairment of
intangible assets
|
-
|
(641)
|
-
|
-
|
(641)
|
Loss from impairment of
goodwill
|
-
|
(1,667)
|
-
|
-
|
(1,667)
|
|
|
|
|
|
|
Total operating
expenses
|
(8,629)
|
(14,111)
|
(8,579)
|
(26,728)
|
(37,571)
|
Government
subsidies
|
54
|
14
|
-
|
73
|
251
|
Loss from
operations
|
(3,118)
|
(2,885)
|
(3,031)
|
(8,529)
|
(1,776)
|
Interest
income
|
687
|
565
|
885
|
2,660
|
2,005
|
Interest
expense
|
(100)
|
(64)
|
(206)
|
(430)
|
(190)
|
Investment gain,
net
|
47
|
497
|
184
|
409
|
854
|
Other income (loss),
net
|
(41)
|
15
|
(21)
|
17
|
69
|
Exchange gain (loss),
net
|
(69)
|
481
|
(131)
|
(175)
|
1,104
|
Loss from impairment of
cost method investment
|
-
|
-
|
-
|
-
|
(1,480)
|
|
|
|
|
|
|
Income (loss) before
income tax expenses
|
(2,594)
|
(1,391)
|
(2,320)
|
(6,048)
|
586
|
Income tax
expenses
|
(629)
|
(2,359)
|
(276)
|
(961)
|
(4,646)
|
|
|
|
|
|
|
Net loss
|
(3,223)
|
(3,750)
|
(2,596)
|
(7,009)
|
(4,060)
|
Less: Net loss attributable to
the noncontrolling interest
|
(65)
|
(232)
|
(14)
|
(16)
|
(139)
|
Net loss attributable to
China Finance Online Co. Limited
|
(3,158)
|
(3,518)
|
(2,582)
|
(6,993)
|
(3,921)
|
|
|
|
|
|
|
Net loss
|
(3,223)
|
(3,750)
|
(2,596)
|
(7,009)
|
(4,060)
|
Changes in foreign currency
translation adjustment
|
(263)
|
1,109
|
(200)
|
(403)
|
2,520
|
Net unrealized gain loss on
available-for-sale securities, net of tax effects of $9, nil, ($3),
$6 and nil, respectively
|
-
|
-
|
47
|
32
|
-
|
Other comprehensive
income, net of tax
|
(263)
|
1,109
|
(153)
|
(371)
|
2,520
|
Comprehensive
loss
|
(3,486)
|
(2,641)
|
(2,749)
|
(7,380)
|
(1,540)
|
Less: comprehensive loss
attributable to noncontrolling interest
|
(65)
|
(232)
|
(14)
|
(16)
|
(139)
|
Comprehensive loss
attributable to China Finance Online Co. Limited
|
(3,421)
|
(2,409)
|
(2,735)
|
(7,364)
|
(1,401)
|
|
|
|
|
|
|
Net loss per share
attributable to China Finance Online Co. Limited
|
|
|
|
|
|
Basic
|
(0.03)
|
(0.03)
|
(0.02)
|
(0.06)
|
(0.04)
|
Diluted
|
(0.03)
|
(0.03)
|
(0.02)
|
(0.06)
|
(0.04)
|
Loss per ADS
|
|
|
|
|
|
Basic
|
(0.14)
|
(0.16)
|
(0.12)
|
(0.32)
|
(0.18)
|
Diluted
|
(0.14)
|
(0.16)
|
(0.12)
|
(0.32)
|
(0.18)
|
Weighted average
ordinary shares
|
|
|
|
|
|
Basic
|
108,982,101
|
108,967,101
|
108,982,101
|
108,982,101
|
108,956,762
|
Diluted
|
108,982,101
|
108,967,101
|
108,982,101
|
108,982,101
|
108,956,762
|
Weighted average
ADSs
|
|
|
|
|
|
Basic
|
21,796,420
|
21,793,420
|
21,796,420
|
21,796,420
|
21,791,352
|
Diluted
|
21,796,420
|
21,793,420
|
21,796,420
|
21,796,420
|
21,791,352
|
SOURCE China Finance Online Co., Ltd.