SINA Reports Third Quarter 2003 Financial Results - Company Reports
Revenue Growth of 208% to $31.9 million SHANGHAI, China, Oct. 27
/PRNewswire-FirstCall/ -- SINA Corporation , a leading online media
company and value-added information service provider for China and
for global Chinese communities, today announced its financial
results for the third quarter ended September 30, 2003: * Net
revenues for the quarter grew by 208% year-over-year and by 23%
quarter-over-quarter to a record $31.9 million * Advertising
revenues for the quarter grew by 76% year-over-year and by 20%
quarter-over-quarter to $11.4 million and accounted for 36% of
total revenues * Non-advertising revenues for the quarter grew by
431% year-over-year and by 24% quarter-over-quarter to $20.5
million and accounted for 64% of total revenues * Operating income
for the quarter grew by 71% quarter-over-quarter to $11.6 million
and compared to an operation loss of $0.8 million for the same
period in 2002 * US GAAP net income for the quarter grew to $11.7
million, or $0.21 diluted net income per share, compared to a net
loss of $0.6 million, or $0.01 diluted net loss per share for the
same period in 2002 "We're very pleased with our third quarter
results," said Yan Wang, CEO of SINA. "SINA maintained strong
growth momentum in all its major business lines. Our record
financial performance in the third quarter further demonstrated our
team's ability to execute well under increasing competition."
Business Results For the quarter ended September 30, 2003, SINA
reported record net revenues of $31.9 million, an increase of 23%
over the previous quarter and an increase of 208% over the same
period in 2002. Advertising revenues totaled $11.4 million for the
quarter, representing a 20% increase over $9.5 million reported in
the previous quarter and a 76% increase over $6.5 million reported
in the same period in 2002. The increase in advertising revenues
was primarily driven by an increase in the number of advertisers.
Non-advertising revenues totaled $20.5 million for the quarter, a
24% increase over $16.5 million reported in the previous quarter
and a 431% increase over $3.9 million reported in the same period
in 2002. Non-advertising revenues accounted for 64% of the total
net revenues for the quarter, compared to 63% for the previous
quarter and 37% for the same period in 2002. The increase in
non-advertising revenues was primarily driven by the growth in
mobile content value added services. The gross margin for the
quarter was a record high of 70%, up from 69% reported in the
previous quarter and 61% reported in the same period in 2002. "In
addition to achieving record revenues, we continued to focus on our
products and branding," said Hurst Lin, Chief Operating Officer of
SINA. "On the mobile content value added service side, we have
launched ring back tone service while continuing to bolster our
offerings in MMS and WAP services. On the content side, we
continued to invest significant resources in reporting on key news
or entertainment events such as the Women Soccer World Cup and Miss
World Contest. During China's recent historic man-space flight,
SINA provided in-depth and round-the-clock coverage that led to
record daily page views of 150 million for our news channel,
further cementing SINA's position in the minds of the users as the
leading online media in China." A recent survey conducted by the
Chinese Academy of Social Science ranked SINA as the number one
website of choice for Chinese Internet users by a margin 59% over
the second ranked website in China. Operating expenses for the
quarter totaled $10.8 million, a decrease of 3% from $11.1 million
reported in the previous quarter and an increase of 53% over $7.1
million reported in the same period in 2002. The higher operating
expenses for the previous quarter were largely due to one-time
charges relating to the write-off of $0.9 million intangible assets
and a $0.6 million severance benefit. Operating income for the
quarter totaled $11.6 million, an increase of 71% from $6.8 million
reported in the previous quarter. For the same period in 2002, the
Company incurred a loss of $0.8 million from operations. Net income
for the quarter totaled $11.7 million, representing an improvement
of 64% from a net income of $7.1 million for the previous quarter.
For the same period in 2002, the Company recorded a net loss of
$0.6 million. Diluted net income per share was $0.21 for the
quarter, compared to diluted net income per share of $0.14 for the
previous quarter and diluted net loss per share of $0.01 for the
same period in 2002. The Company has included 3.9 million of common
stock equivalents for our outstanding convertible bonds in the
shares used in calculating the diluted net income per share for the
quarter ended September 30, 2003, as the bonds met the criteria for
contingent conversion during the quarter. Excluding the
amortization of intangible assets, non-cash charges for stock based
compensation, and one-time charges relating to intangible assets
write-offs and severance benefit, on a pro forma basis, net income
for the quarter totaled $12.3 million, compared to a net income of
$9.2 million for the previous quarter and a net loss of $0.1
million for the same period in 2002. Diluted net income per share,
on a pro forma basis, was $0.21 for the quarter, compared to
diluted net income per share of $0.18 for the previous quarter and
diluted net loss per share of $0.002 for the same period in 2002.
As of September 30, 2003, the Company has recorded an accumulated
unrealized loss of $4.7 million from its investment in Sun Media
Group, a Hong Kong listed company. The Company is closely
monitoring the developments of Sun Media Group and if the Company
determines that the decline in value of the Sun Media Group
investment is other than temporary in the future periods, the
Company will have to record such loss as realized in the statements
of operations. However, such loss, if realized in the statements of
operations, will not have any impact on the Company's cash flow in
future periods. As of September 30, 2003, SINA's cash, cash
equivalents and investments in marketable securities totaled $208.2
million, an increase of $111.3 million from three months ago. Cash
flow from operating activities for the quarter was $13.7 million,
compared to $9.0 million for the previous quarter. Capital
equipment expenditure for the quarter was about $1.3 million. The
Company received $97.3 million net proceeds from its convertible
bond offering and approximately $2.5 million in cash from the
exercise of employee stock options during the quarter. "We finished
this quarter with record high numbers of advertisers and paid
users. With much improved financial metrics, we have built up a
strong and diverse foundation for our long-term growth," said
Charles Chao, Chief Financial Officer of SINA. Business Outlook The
Company estimates that its total revenues for Q4 2003 to be between
$35.2 million and $36.2 million, with advertising revenues between
$12.2 million and $12.7 million and non-advertising revenues
between $23.0 million and $23.5 million. Excluding the effect of
any potential realized loss from the investment in Sun Media Group,
US GAAP diluted net income per share is expected to be $0.24 to
$0.25 for Q4 2003. The Company expects that its effective income
tax rate will be approximately 5% for Q4 2003. NON-GAAP Measures To
supplement our consolidated financial statements presented in
accordance with GAAP, SINA uses non-GAAP measures of gross profit,
operating income, net income and earnings per share, which are
adjusted from results based on GAAP to exclude certain expenses,
gains and losses. These non-GAAP measures are provided to enhance
the user's overall understanding of our current financial
performance and our prospects for the future. Specifically, we
believe the non-GAAP results provide useful information to both
management and investors by excluding certain expenses that are not
expected to result in future cash payments, gains and losses that
are non-recurring in nature or may not be indicative of our core
operating results. In addition, because we have historically
reported certain non-GAAP results to investors, we believe the
inclusion of non-GAAP measures provides consistency in our
financial reporting. These measures should be considered in
addition to results prepared in accordance with generally accepted
accounting principles, but should not be considered a substitute
for or superior to GAAP results. Consistent with our historical
practice, the non-GAAP measures included in this press release have
been reconciled to the nearest GAAP measure. Conference Call SINA
will host a conference call at 8:30 p.m. Eastern Time today to
present an overview of the Company's financial performance and
business operations for the third quarter. The dial-in number for
the call is 617/847-8708. The pass code is 40888952. A live Webcast
of the call will be available from 8:30 p.m. - 9:30 p.m. ET on
Monday, October 27, 2003 (9:30 a.m. - 10:30 a.m. Hong Kong Time on
October 28, 2003). The call can be accessed through the Company's
corporate web site at http://corp.sina.com/. The call will be
archived for 12 months on SINA's corporate website at
http://corp.sina.com/. A replay of the conference call will be
available for forty-eight hours after the conclusion of the
conference call. The dial-in number is 617/801-6888. The pass code
for the replay is 13891558. About SINA SINA Corporation (FKA:
SINA.com) (NASDAQ:SINA) is a leading online media company and
value-added information service ("VAS") provider for China and for
global Chinese communities. With a branded network of localized web
sites targeting Greater China and overseas Chinese, SINA operates
three major business lines including SINA.com (online media and
entertainment service), SINA Online (consumer fee-based online and
wireless VAS) and SINA.net (small and medium-sized enterprises
VAS), providing an array of services including online portals,
premium email, wireless short messaging, virtual ISP, search,
classified information, online games, e-commerce, e-learning and
enterprise e-solutions. Safe Harbor Statement This announcement
contains forward-looking statements concerning SINA's expected
financial performance (as described without limitation in the
Business Outlook section and quotations from management in this
press release regarding the Company's foundation for long-term
growth), as well as SINA's strategic and operational plans. SINA
may also make written or oral forward-looking statements in our
periodic reports to the Securities and Exchange commission on forms
10-K, 10-Q, 8-K, etc., in its annual report to shareholders, in its
proxy statements, in its offering circulars and prospectuses, 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 our beliefs and expectations, are forward-looking statements.
Forward-looking statements involve inherent risks and
uncertainties. A number of important factors could cause actual
results to differ materially from those contained in any
forward-looking statement. Potential risks and uncertainties
include, but are not limited to, SINA's historical losses, its
limited operating history, the uncertain regulatory landscape in
the People's Republic of China, fluctuations in quarterly operating
results, the Company's reliance on its mobile content value added
services and online advertising sales for a majority of its
revenues, the Company's reliance on mobile operators in China to
provide wireless short messaging service, any failure to
successfully develop and introduce new products and any failure to
successfully integrate acquired businesses. Further information
regarding these and other risks is included in SINA's Annual Report
on Form 10-K for the period ended December 31, 2002 and its recent
reports on Form 10-Q as well as in its other filings with the
Securities and Exchange Commission. SINA CORPORATION UNAUDITED
CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except per
share data) Three months ended Nine months ended September 30, June
30, September 30, 2003 2002 2003 2003 2002 Net revenues Advertising
$11,441 $6,491 $9,495 $28,234 $17,325 Non-Advertising 20,473 3,855
16,492 47,781 8,699 31,914 10,346 25,987 76,015 26,024 Cost of
revenues Advertising 3,767 2,977 3,239 9,832 8,420 Non-Advertising
5,790 1,076 4,855 13,912 2,540 Stock-based compensation 5 28 12 31
88 9,562 4,081 8,106 23,775 11,048 Gross profit 22,352 6,265 17,881
52,240 14,976 Operating expenses Sales and marketing 5,613 3,076
5,086 15,153 9,038 Product development 1,733 1,437 1,407 4,561
4,598 General and administrative 2,923 2,091 3,091 8,130 6,507
Stock-based compensation 88 461 198 516 1,454 Amortization of
intangibles 415 -- 414 1,334 1,687 Write-off of intangibles -- --
903 903 -- 10,772 7,065 11,099 30,597 23,284 Income (loss) from
operations 11,580 (800) 6,782 21,643 (8,308) Other income, net 675
552 655 1,731 2,337 Loss on equity investment (175) (311) (316)
(797) (453) Income (loss) before income taxes 12,080 (559) 7,121
22,577 (6,424) Provision for income taxes (423) -- -- (423) -- Net
income (loss) $11,657 $(559) $7,121 $22,154 $(6,424) Shares used in
computing basic 48,279 45,671 47,661 47,571 45,579 net income
(loss) per share Basic net income (loss) per share 0.24 (0.01) 0.15
0.47 (0.14) Shares used in computing diluted net income (loss) per
share 57,622 45,671 51,971 53,675 45,579 Diluted net income (loss)
per share * $0.21 $(0.01) $0.14 $0.42 $(0.14) * Diluted net income
(loss) per share calculation Net income (loss) $11,657 $(559)
$7,121 $22,154 $(6,424) Amortization of convertible bond issuance
cost 170 -- -- 170 -- Net income (loss) used for diluted net income
(loss) per share calculation $11,827 $(559) $7,121 $22,324 $(6,424)
SINA CORPORATION UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF
OPERATIONS (in thousands, except per share data) Three months ended
Nine months ended September 30, June 30, September 30, 2003 2002
2003 2003 2002 Net revenues Advertising $11,441 $6,491 $9,495
$28,234 $17,325 Non-Advertising 20,473 3,855 16,492 47,781 8,699
31,914 10,346 25,987 76,015 26,024 Cost of revenues Advertising
3,767 2,977 3,239 9,832 8,420 Non-Advertising 5,790 1,076 4,855
13,912 2,540 9,557 4,053 8,094 23,744 10,960 Gross profit 22,357
6,293 17,893 52,271 15,064 Operating expenses Sales and marketing
5,613 3,076 5,086 15,153 9,038 Product development 1,733 1,437
1,407 4,561 4,598 General and administrative 2,923 2,091 2,516
7,555 6,507 10,269 6,604 9,009 27,269 20,143 Income (loss) from
operations 12,088 (311) 8,884 25,002 (5,079) Other income, net 845
552 655 1,901 2,337 Loss on equity investment (175) (311) (316)
(797) (453) Pro forma net income (loss) before income taxes 12,758
(70) 9,223 26,106 (3,195) Provision for income taxes (423) -- --
(423) -- Pro forma net income (loss) 12,335 (70) 9,223 25,683
(3,195) Shares used in computing pro forma basic net income (loss)
per share 48,279 45,671 47,661 47,571 45,579 Pro forma basic net
income (loss) per share 0.26 (0.00) 0.19 0.54 (0.07) Shares used in
computing pro forma diluted net income (loss) per share 57,622
45,671 51,971 53,675 45,579 Pro forma diluted net income (loss) per
share $0.21 $(0.00) $0.18 $0.48 $(0.07) Reconciliation from GAAP
results to pro forma results: GAAP net income (loss) $11,657 $(559)
$7,121 $22,154 $(6,424) Stock based compensation Cost of revenues 5
28 12 31 88 Operating expenses 88 461 198 516 1,454 Amortization of
intangibles 415 -- 414 1,334 1,687 Amortization of convertible bond
issuance cost 170 170 Write-off of intangibles -- -- 903 903 --
Severance benefit -- 575 575 Pro forma net income (loss) $12,335
$(70) $9,223 $25,683 $(3,195) SINA CORPORATION UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEET (in thousands U.S. dollar) September 30
December 31 2003 2002 Assets Cash, cash equivalents and investments
in marketable securities $208,228 $96,736 Accounts receivable, net
16,610 5,847 Property and equipment, net 8,412 7,599 Long-term
investment 10,327 16,637 Goodwill/intangible assets, net 19,075 993
Other assets 7,475 2,667 Total assets $270,127 $130,479 Liabilities
and Shareholders' Equity Liabilities $25,856 $13,092 Convertible
Debt 100,000 -- Shareholders' equity 144,271 117,387 Total
liabilities and shareholders' equity $270,127 $130,479 SINA
CORPORATION UNAUDITED SEGMENT INFORMATION (in thousands) Three
months ended Nine months ended September 30, June 30, September 30,
2003 2002 2003 2003 2002 Net revenues Advertising $11,441 $6,491
$9,495 $28,234 $17,325 Mobile related 18,144 2,574 14,177 41,518
5,606 Others 2,329 1,281 2,315 6,263 3,093 $31,914 $10,346 $25,987
$76,015 $26,024 Cost of revenues Advertising $3,767 $2,977 $3,239
$9,832 $8,420 Mobile related 4,872 811 3,950 11,429 1,820 Others
918 265 905 2,483 720 $9,557 $4,053 $8,094 $23,744 $10,960
DATASOURCE: SINA Corporation CONTACT: Chen Fu, Investor Relations
of SINA Corporation, +8621-62895678, ext. 6089, ; or Denise Roche
of The Ruth Group, +1-646-536-7008, , for SINA Corporation Web
site: http://www.sina.com/ http://corp.sina.com/
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