BEIJING, Nov. 14, 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 the third quarter
2013.
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. Based on Youku's review with Tudou management of Tudou's
publicly disclosed summary of significant accounting policies prior
to the merger, certain adjustments to the historical statement of
operations have been made to conform its accounting policies to
those of Youku's. Due to the fact that Tudou's historical
statements of operations for the third quarter of 2012 consist of
stand-alone historical financial information without these
adjustments for the period from July 1,
2012 to August 22, 2012, and
consolidated financial information with these adjustment for the
period from August 23, 2012 to
September 30, 2012, we do not believe
that comparison of the Company's financial results with the
corresponding period in 2012 can be provided on a consistent basis.
For ease of reference only, we present comparison of our financial
results for the third quarter of 2013 and those of the second
quarter of 2013 in this press release for this quarter. We would
like to draw your attention to the seasonal nature of our
operations and quarter-to-quarter fluctuations. Please refer to
Item 3.D Key Information—Risk Factors and Item 5 Operating and
Financial review and Prospects of the Company's 2012 annual report
on Form 20-F.
Third Quarter Highlights[1]
- Net revenues were RMB857.7
million (US$140.2 million), a
14% increase quarter over quarter.
- Our accumulated traffic data of TV serial dramas and movies
reflected a new consumption pattern and we have adjusted our
accounting estimates on content costs amortization
accordingly. This resulted in further acceleration of content
costs amortization starting from the third quarter of 2013. If we
had not adopted the newly adjusted amortization estimates, non-GAAP
content costs of RMB334.1 million (US$54.6 million), or 39% of net
revenues, would have been recorded in the third quarter of 2013,
which is RMB144.2 million
(US$23.6 million) lower than the
reported figures.
- Gross profit was RMB82.3 million
(US$13.4 million). Non-GAAP gross
profit, which is herein defined as gross profit excluding
share-based compensation expenses and amortization of intangible
assets from business combination in relation to user generated
content, was RMB100.4 million
(US$16.4 million). If we had not
adopted the newly adjusted amortization estimates, a non-GAAP gross
profit of RMB244.6 million
(US$40.0 million), a 20%
increase quarter over quarter, or 29% of net revenues, would
have been recorded in the third quarter of 2013, which is
RMB144.2 million (US$23.6 million) higher than the reported
figures.
- Net loss was RMB218.6 million
(US$35.7million). Non-GAAP net loss,
which is herein defined as consolidated net loss excluding
share-based compensation expenses, amortization of intangible
assets from business combination, and business combination related
expenses, was RMB159.6 million
(US$26.1 million). If we had not
adopted the newly adjusted amortization estimates, a non-GAAP net
loss of RMB15.4 million
(US$2.5 million), a decrease of
65% quarter over quarter, would have been recorded in the third
quarter of 2013, which is RMB144.2
million (US$23.6 million)
lower than the reported figures.
- Basic and diluted loss per ADS, each representing 18 Class A
ordinary shares, amounted to RMB1.31
(US$0.21) and RMB1.31 (US$0.21),
respectively.
- Cash, cash equivalents, restricted cash and short-term
investments totaled RMB3.2 billion
(US$523.5 million) as of September 30, 2013.
- Acquisition of property and equipment was RMB67.3 million (US$11.0
million).
- Acquisition of intangible assets was RMB171.6 million (US$28.0
million).
"We are happy that we grew the topline by a strong 14% quarter
over quarter and our mobile traffic surged to over 300 million
video views per day. We will continue to drive mobile monetization
and ramp up revenue from local advertising clients, content
marketing solutions and paid services," said Victor Koo, Chairman and Chief Executive Officer
of Youku Tudou. "We expect that Youku Tudou will be non-GAAP
profitable in the fourth quarter of 2013 after Youku on a
stand-alone basis reached the same financial milestone in third
quarter of 2012, demonstrating the success of the Youku Tudou
merger and solid execution by the team."
Dele Liu, President of Youku Tudou, added, "We achieved further
economies-of-scale for the group resulting in a significant
narrowing of our loss at the operational level. We were able to
control costs as we further leveraged the scale of our platform and
in-house production capabilities. Our earlier decision to build an
ecosystem for Original and User Generated Content (UGC) has
continued to pay off."
Third Quarter 2013 Results
Net revenues were RMB857.7
million (US$140.2 million) in
the third quarter of 2013, a 14% increase quarter over quarter and
meeting the net revenues guidance previously announced by the
Company. Advertising net revenues were RMB745.0 million (US$121.7
million), a 3% increase quarter over quarter and meeting the
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.
Bandwidth costs as a component of cost of revenues were
RMB181.7 million (US$29.7 million) in the third quarter of 2013,
representing 21% of the net revenues, as compared to RMB164.1 million (US$26.8
million) in the second quarter in 2013, representing 22% of
net revenues of that quarter.
Content costs as a component of cost of revenues were
RMB496.5 million (US$81.1 million) in the third quarter of 2013.
Non-GAAP content costs, which is herein defined as content
costs excluding share-based compensation expenses and amortization
of intangible assets from business combination in relation to user
generated content, were RMB478.3
million (US$78.2 million) in
the third quarter of 2013, representing 56% of net
revenues. Our accumulated traffic data of TV serial dramas and
movies reflected a new consumption pattern and we have adjusted our
accounting estimates on content costs amortization
accordingly. This resulted in further acceleration of content
costs amortization starting from the third quarter of 2013. If we
had not adopted the newly adjusted amortization estimates, non-GAAP
content costs of RMB334.1 million (US$54.6 million), or 39% of net
revenues, would have been recorded in the third quarter of 2013,
which is RMB144.2 million
(US$23.6 million) lower than the
reported figures.
Gross profit was RMB82.3
million (US$13.4 million) in
the third quarter of 2013. Non-GAAP gross profit was
RMB100.4 million (US$16.4 million) in the third quarter of 2013. If
we had not adopted the newly adjusted amortization estimates, a
non-GAAP gross profit of RMB244.6 million (US$40.0 million), a 20% increase quarter
over quarter, or 29% of net revenues, would have been recorded
in the third quarter of 2013, which is RMB144.2 million (US$23.6
million) higher than the reported figures.
Operating expenses were RMB312.8
million (US$51.1 million) in
the third quarter of 2013, as compared to RMB306.8 million (US$50.1
million) in the second quarter of 2013. Non-GAAP
operating expenses, which is herein defined 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, were RMB271.9 million (US$44.4
million) in the third quarter of 2013, a 4% increase
compared to RMB260.6 million
(US$42.6 million) in the second
quarter of 2013. Detailed discussion of each component of operating
expenses is as follows:
Sales and marketing expenses were RMB171.8 million (US$28.1
million) in the third quarter of 2013, as compared to
RMB165.2 million (US$27.0 million) in the second quarter of 2013.
Non-GAAP sales and marketing expenses, which is herein
defined as sales and marketing expenses excluding share-based
compensation expenses and amortization of intangible assets from
business combination in relation to customer relationship, were
RMB157.3 million (US$25.7 million) in the third quarter of 2013, a
5% increase compared to RMB150.4
million (US$24.6 million) in
the second quarter of 2013.
Product development expenses were RMB78.6 million (US$12.8
million) in the third quarter of 2013, as compared to
RMB66.1 million (US$10.8 million) in the second quarter of 2013.
Non-GAAP product development expenses, which is herein
defined as product development expenses excluding share-based
compensation expenses and amortization of intangible assets from
business combination in relation to technology, were RMB67.5 million (US$11.0
million) in the third quarter of 2013, a 23% increase
compared to RMB54.8 million
(US$9.0 million) in the second
quarter of 2013. This increase was primarily due to higher
personnel related expenses for our product development in mobile,
search, social and paid-services.
General and administrative expenses were RMB62.5 million (US$10.2
million) in the third quarter of 2013, as compared to
RMB75.6 million (US$12.4 million) in the second quarter of 2013.
Non-GAAP general and administrative expenses, which is
herein defined as 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
RMB47.1 million (US$7.7 million) in the third quarter of 2013, a
15% decrease compared to RMB55.4
million (US$9.1 million) in
the second quarter of 2013.
Net loss was RMB218.6
million (US$35.7 million) in
the third quarter of 2013. Non-GAAP net loss was
RMB159.6 million (US$26.1 million) in the third quarter of 2013. If
we had not adopted the newly adjusted amortization estimates, a
non-GAAP net loss of RMB15.4 million (US$2.5 million), a decrease of 65% quarter
over quarter, would have been recorded in the third quarter of
2013, which is RMB144.2 million
(US$23.6 million) lower than the
reported figures.
Non-GAAP EBITDA Loss, 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 share-based compensation expenses,
amortization of intangible assets from business combination,
business combination related expenses and other non-operating
items, was RMB141.1 million
(US$23.1 million) in the third
quarter of 2013, as compared to a non-GAAP EBITDA loss of 28.7
million (US$4.7 million) in the
second quarter of 2013. If we had continued using the
accounting estimates adopted in the second quarter of
2013 for amortizing content costs, a non-GAAP EBITDA
profit of RMB3.1 million
(US$0.5 million) would have been
recorded in the third quarter of 2013 instead.
Business Outlook
For the fourth quarter of 2013, the Companyexpects net revenues
will be between RMB860 million and RMB900
million, which implies a 35% to 42% year over year increase,
with advertising net revenues contributing between RMB780 million and RMB820 million, which implies
a 36% to 43% year over year increase.
The Company is expected to reach non-GAAP profitability in the
fourth quarter of 2013.
These forecasts reflect 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
November 14, 2013 (9:00 a.m. Beijing/Hong Kong Time on November 15, 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: +65-6723-9381
Mainland China Dial In:
+86-400-620-8038 / +86-800-819-0121
Hong Kong Dial In: +852-2475-0994
A replay of the call will be available by dialing
+1-855-452-5696 and entering passcode 96753162#. The replay will be
available through November 22,
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 Youku and Tudou Internet television
platforms enable users to search, view and share high-quality video
content quickly and easily across multiple devices. Its Youku brand
and Tudou brand are among the most recognized online video brands
in China. Youku Tudou's American
depositary shares, each representing 18 of Youku Tudou'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 Tudou'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 Tudou'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 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: non-GAAP content costs, non-GAAP gross profit or
loss, non-GAAP operating expenses, non-GAAP sales and marketing
expenses, non-GAAP product development expenses, non-GAAP general
and administrative expenses, non-GAAP profit or loss from
operations, non-GAAP net profit or loss and non-GAAP
EBITDA profit or loss. We define non-GAAP content costs as content
costs excluding share-based compensation expenses and amortization
of intangible assets from business combination in relation to user
generated content. We define 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 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 non-GAAP sales and
marketing expenses as sales and marketing expenses excluding
share-based compensation expenses and amortization of intangible
assets from business combination in relation to customer
relationship. We define non-GAAP product development expense as
product development expenses excluding share-based compensation
expenses and amortization of intangible assets from business
combination in relation to technology. We define non-GAAP general
and administrative expenses as 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 non-GAAP profit or loss from operations as profit or loss
from operations excluding share-based compensation expenses,
amortization of intangible assets from business combination and
business combination related expenses. We define non-GAAP net
profit or loss as net loss excluding share-based compensation
expenses, amortization of intangible assets from business
combination and business combination related expenses. We define
non-GAAP EBITDA profit or loss as 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 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.
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
[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 RMB6.12 to
US$1.00, the effective noon buying rate as of September 30, 2013 in
the City of New York for cable transfers of RMB as certified for
customs purposes by the Federal Reserve Bank of New York. No
representation is made that the RMB amounts could have been, or
could be, converted into US$ at such rate.
|
YOUKU TUDOU
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
(Amounts in
thousands, except for number of shares)
|
|
For the Three Months
Ended
|
|
December 31,
2012
|
|
September 30,
2013
|
|
September 30,
2013
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
ASSETS
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
1,655,857
|
|
797,502
|
|
130,311
|
|
Restricted
cash
|
|
9,003
|
|
1,550
|
|
253
|
|
Short-term
investments
|
|
2,110,073
|
|
2,404,909
|
|
392,959
|
|
Accounts
receivable, net
|
|
932,796
|
|
1,385,267
|
|
226,351
|
|
Intangible
assets, net
|
|
19,607
|
|
80,575
|
|
13,166
|
|
Deferred tax
assets
|
|
10,470
|
|
10,470
|
|
1,711
|
|
Prepayments and
other assets
|
|
64,909
|
|
53,500
|
|
8,740
|
Total current
assets
|
|
4,802,715
|
|
4,733,773
|
|
773,491
|
|
|
|
|
|
|
|
|
Non-current
assets:
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
200,681
|
|
237,828
|
|
38,861
|
|
Intangible
assets, net
|
|
1,304,923
|
|
1,205,823
|
|
197,030
|
|
Capitalized
content production costs
|
|
-
|
|
5,831
|
|
953
|
|
Prepayments and
other assets
|
|
229,185
|
|
192,046
|
|
31,380
|
|
Goodwill
|
|
4,255,570
|
|
4,255,570
|
|
695,355
|
Total
non-current assets
|
|
5,990,359
|
|
5,897,098
|
|
963,579
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
10,793,074
|
|
10,630,871
|
|
1,737,070
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
181,878
|
|
261,649
|
|
42,753
|
|
Advances from
customers
|
|
21,603
|
|
65,798
|
|
10,751
|
|
Accrued
expenses and other liabilities
|
|
981,353
|
|
1,100,224
|
|
179,776
|
|
Current portion
of long-term debt
|
|
7,441
|
|
-
|
|
-
|
Total current
liabilities
|
|
1,192,275
|
|
1,427,671
|
|
233,280
|
|
|
|
|
|
|
|
|
Non-current
liabilities:
|
|
|
|
|
|
|
|
Deferred tax
liability
|
|
224,374
|
|
224,374
|
|
36,662
|
|
Other
liabilities
|
|
19,552
|
|
70
|
|
11
|
Total non-current
liabilities
|
|
243,926
|
|
224,444
|
|
36,673
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
1,436,201
|
|
1,652,115
|
|
269,953
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
|
Class A Ordinary
Shares (US$0.00001 par value, 9,340,238,793 authorized,
2,286,643,502 and 2,348,384,077 issued and outstanding as of
December 31, 2012 and September 30, 2013, respectively)
|
|
149
|
|
153
|
|
25
|
|
Class B Ordinary
Shares (US$0.00001 par value, 659,761,207 authorized, 659,561,893
and 659,561,893 issued and outstanding as of December 31, 2012 and
September 30, 2013, respectively)
|
|
49
|
|
49
|
|
8
|
|
Additional
paid-in capital
|
|
10,768,204
|
|
10,996,216
|
|
1,796,767
|
|
Statutory
reserves
|
|
1,500
|
|
1,500
|
|
245
|
|
Accumulated
deficit
|
|
(1,297,147)
|
|
(1,853,310)
|
|
(302,828)
|
|
Accumulated
other comprehensive loss
|
|
(115,882)
|
|
(165,852)
|
|
(27,100)
|
Total
shareholders' equity
|
|
9,356,873
|
|
8,978,756
|
|
1,467,117
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
10,793,074
|
|
10,630,871
|
|
1,737,070
|
YOUKU TUDOU
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Nine Months
Ended
|
(Amounts in
thousands, except for number of shares and ADS and per share
and per ADS data)
|
|
|
|
|
|
|
|
|
|
June 30,
2013
|
|
September 30,
2013
|
|
September 30,
2013
|
|
September 30,
2012
|
|
September 30,
2013
|
|
September 30,
2013
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
|
753,457
|
|
857,743
|
|
140,154
|
|
1,159,744
|
|
2,127,197
|
|
347,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
(Note 1)
|
|
(563,281)
|
|
(775,436)
|
|
(126,705)
|
|
(979,992)
|
|
(1,840,483)
|
|
(300,732)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
190,176
|
|
82,307
|
|
13,449
|
|
179,752
|
|
286,714
|
|
46,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
development
|
|
(66,051)
|
|
(78,622)
|
|
(12,847)
|
|
(108,786)
|
|
(201,501)
|
|
(32,925)
|
Sales and
marketing
|
|
(165,201)
|
|
(171,763)
|
|
(28,066)
|
|
(255,920)
|
|
(464,564)
|
|
(75,908)
|
General and
administrative
|
|
(75,569)
|
|
(62,458)
|
|
(10,206)
|
|
(165,028)
|
|
(221,377)
|
|
(36,173)
|
Total operating
expenses
|
|
(306,821)
|
|
(312,843)
|
|
(51,119)
|
|
(529,734)
|
|
(887,442)
|
|
(145,006)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
(116,645)
|
|
(230,536)
|
|
(37,670)
|
|
(349,982)
|
|
(600,728)
|
|
(98,156)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
7,090
|
|
7,284
|
|
1,190
|
|
35,490
|
|
21,553
|
|
3,521
|
Interest
expenses
|
|
(158)
|
|
-
|
|
-
|
|
(3,159)
|
|
(545)
|
|
(89)
|
Other, net
|
|
4,720
|
|
4,694
|
|
767
|
|
8,714
|
|
23,695
|
|
3,872
|
Total other
income, net
|
|
11,652
|
|
11,978
|
|
1,957
|
|
41,045
|
|
44,703
|
|
7,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(104,993)
|
|
(218,558)
|
|
(35,713)
|
|
(308,937)
|
|
(556,025)
|
|
(90,852)
|
Income
taxes
|
|
(58)
|
|
(80)
|
|
(13)
|
|
(1,496)
|
|
(138)
|
|
(24)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
(105,051)
|
|
(218,638)
|
|
(35,726)
|
|
(310,433)
|
|
(556,163)
|
|
(90,876)
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
Net loss per share,
basic and diluted
|
|
(0.04)
|
|
(0.07)
|
|
(0.01)
|
|
(0.14)
|
|
(0.19)
|
|
(0.03)
|
Net loss per ADS
(each ADS represents 18 class A ordinary shares),
basic and
diluted
|
|
(0.63)
|
|
(1.31)
|
|
(0.21)
|
|
(2.54)
|
|
(3.36)
|
|
(0.55)
|
Shares used in
computation, basic and diluted
|
|
2,980,162,122
|
|
2,995,701,280
|
|
2,995,701,280
|
|
2,201,121,902
|
|
2,977,998,887
|
|
2,977,998,887
|
ADSs used in
computation, basic and diluted
|
|
165,564,562
|
|
166,427,848
|
|
166,427,848
|
|
122,284,550
|
|
165,444,382
|
|
165,444,382
|
The accompanying
notes are an integral part of the press release.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 1. Cost of
Revenues
|
|
For the Three
Months Ended
|
|
For the Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2013
|
|
September 30,
2013
|
|
September 30,
2013
|
|
September 30,
2012
|
|
September 30,
2013
|
|
September 30,
2013
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
(Amounts in
thousands)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Value added,
business taxes and surcharges
|
|
74,334
|
|
75,480
|
|
12,333
|
|
109,946
|
|
198,739
|
|
32,474
|
Bandwidth
costs
|
|
164,111
|
|
181,670
|
|
29,685
|
|
361,664
|
|
506,826
|
|
82,815
|
Depreciation of
servers and other equipment
|
|
21,384
|
|
21,827
|
|
3,566
|
|
42,266
|
|
65,681
|
|
10,731
|
Content
costs
|
|
303,452
|
|
496,459
|
|
81,121
|
|
466,116
|
|
1,069,237
|
|
174,712
|
Total Cost
of Revenues
|
|
563,281
|
|
775,436
|
|
126,705
|
|
979,992
|
|
1,840,483
|
|
300,732
|
YOUKU TUDOU
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Nine
Months Ended
|
(Amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
June 30,
2013
|
|
September 30,
2013
|
|
September 30,
2013
|
|
September 30,
2012
|
|
September 30,
2013
|
|
September 30,
2013
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(105,051)
|
|
(218,638)
|
|
(35,726)
|
|
(310,433)
|
|
(556,163)
|
|
(90,876)
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
27,502
|
|
30,342
|
|
4,958
|
|
50,360
|
|
84,639
|
|
13,830
|
|
Bad debt
expense
|
|
10,035
|
|
19,945
|
|
3,259
|
|
11,715
|
|
37,056
|
|
6,055
|
|
Amortization of
intangible assets and capitalized content production
costs
|
|
176,523
|
|
327,334
|
|
53,486
|
|
280,888
|
|
642,848
|
|
105,041
|
|
Amortization of
long-term debt discounts
|
|
92
|
|
-
|
|
-
|
|
1,592
|
|
313
|
|
51
|
|
Gain on disposal
of property and equipment
|
|
(645)
|
|
788
|
|
129
|
|
52
|
|
838
|
|
137
|
|
Foreign exchange
loss
|
|
(847)
|
|
2,540
|
|
415
|
|
(357)
|
|
2,018
|
|
330
|
|
Share-based
compensation
|
|
48,529
|
|
48,918
|
|
7,994
|
|
79,439
|
|
135,297
|
|
22,106
|
|
Gain form
remeasurement of previously held investment in acquired
subsidiary
|
|
-
|
|
-
|
|
-
|
|
(3,344)
|
|
-
|
|
-
|
|
Deferred income tax
benefits
|
|
-
|
|
-
|
|
-
|
|
(2,278)
|
|
-
|
|
-
|
|
Change in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash
|
|
704
|
|
6,759
|
|
1,104
|
|
-
|
|
7,453
|
|
1,218
|
|
Accounts
receivable
|
|
(294,698)
|
|
(161,184)
|
|
(26,337)
|
|
(296,921)
|
|
(489,526)
|
|
(79,988)
|
|
Prepayments and other assets
|
|
21,794
|
|
37,051
|
|
6,054
|
|
42,609
|
|
60,192
|
|
9,835
|
|
Capitalized content production costs
|
|
(42,382)
|
|
(3,004)
|
|
(491)
|
|
(15,652)
|
|
(29,425)
|
|
(4,808)
|
|
Accounts
payable
|
|
11,179
|
|
702
|
|
115
|
|
(16,517)
|
|
2,017
|
|
330
|
|
Advances
from customers
|
|
(4,180)
|
|
9,918
|
|
1,621
|
|
3,568
|
|
44,195
|
|
7,222
|
|
Accrued
expenses and other liabilities
|
|
88,046
|
|
20,027
|
|
3,271
|
|
154,026
|
|
120,541
|
|
19,696
|
Net cash (used in)
provided by operating activities
|
|
(63,399)
|
|
121,498
|
|
19,852
|
|
(21,253)
|
|
62,293
|
|
10,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of
property and equipment
|
|
(34,549)
|
|
(67,252)
|
|
(10,989)
|
|
(65,840)
|
|
(129,165)
|
|
(21,105)
|
|
Proceeds received
from maturity of short-term investments
|
|
621,948
|
|
1,358,761
|
|
222,020
|
|
1,655,504
|
|
2,017,412
|
|
329,642
|
|
Short-term
investments placed with financial institutions
|
|
(739,059)
|
|
(1,405,173)
|
|
(229,603)
|
|
(1,423,247)
|
|
(2,329,822)
|
|
(380,690)
|
|
Proceeds from
disposal of property and equipment
|
|
1,282
|
|
-
|
|
-
|
|
8
|
|
1,282
|
|
209
|
|
Cash acquired, net of
cash paid for acquired subsidiaries
|
|
-
|
|
-
|
|
-
|
|
378,666
|
|
-
|
|
-
|
|
Acquisition of
intangible assets from related party
|
|
-
|
|
-
|
|
-
|
|
(7,200)
|
|
-
|
|
-
|
|
Acquisition of
intangible assets
|
|
(102,500)
|
|
(171,620)
|
|
(28,042)
|
|
(243,720)
|
|
(513,041)
|
|
(83,830)
|
Net cash (used in)
provided by investing activities
|
|
(252,878)
|
|
(285,284)
|
|
(46,614)
|
|
294,171
|
|
(953,334)
|
|
(155,774)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of employee
stock options
|
|
35,935
|
|
27,676
|
|
4,522
|
|
18,924
|
|
92,351
|
|
15,090
|
|
Proceeds from
restricted cash
|
|
-
|
|
-
|
|
-
|
|
12,705
|
|
-
|
|
-
|
|
Principal repayments
on long-term debt
|
|
(3,330)
|
|
(1,111)
|
|
(182)
|
|
(19,004)
|
|
(7,677)
|
|
(1,254)
|
Net cash
provided by financing activities
|
|
32,605
|
|
26,565
|
|
4,340
|
|
12,625
|
|
84,674
|
|
13,836
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(32,608)
|
|
(13,087)
|
|
(2,138)
|
|
13,701
|
|
(51,988)
|
|
(8,495)
|
Net (decrease)
increase in cash and cash equivalents
|
|
(316,280)
|
|
(150,308)
|
|
(24,560)
|
|
299,244
|
|
(858,355)
|
|
(140,254)
|
Cash and cash
equivalents at the beginning of the period
|
|
1,264,090
|
|
947,810
|
|
154,871
|
|
2,292,538
|
|
1,655,857
|
|
270,565
|
Cash and cash
equivalents at the end of the period
|
|
947,810
|
|
797,502
|
|
130,311
|
|
2,591,782
|
|
797,502
|
|
130,311
|
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$"), unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Non-GAAP
Content Costs
|
For the Three
Months Ended
|
|
For the Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2013
|
|
September 30,
2013
|
|
September 30,
2013
|
|
September 30,
2012
|
|
September 30,
2013
|
|
September 30,
2013
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
Content
costs
|
|
303,452
|
|
496,459
|
|
81,121
|
|
466,116
|
|
1,069,237
|
|
174,712
|
Deduct:
share-based compensation
|
|
6,465
|
|
12,136
|
|
1,983
|
|
8,215
|
|
24,264
|
|
3,964
|
Deduct:
amortization of intangible assets from business
combination
|
|
7,741
|
|
5,984
|
|
978
|
|
18,237
|
|
22,056
|
|
3,604
|
Non-GAAP content
costs
|
|
289,246
|
|
478,339
|
|
78,160
|
|
439,664
|
|
1,022,917
|
|
167,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2. Non-GAAP Gross
Profit
|
For the Three
Months Ended
|
|
For the Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2013
|
|
September 30,
2013
|
|
September 30,
2013
|
|
September 30,
2012
|
|
September 30,
2013
|
|
September 30,
2013
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
Gross
profit
|
|
190,176
|
|
82,307
|
|
13,449
|
|
179,752
|
|
286,714
|
|
46,850
|
Add back:
share-based compensation
|
|
6,465
|
|
12,136
|
|
1,983
|
|
8,215
|
|
24,264
|
|
3,964
|
Add back:
amortization of intangible assets from business
combination
|
|
7,741
|
|
5,984
|
|
978
|
|
18,237
|
|
22,056
|
|
3,604
|
Non-GAAP gross
profit
|
|
204,382
|
|
100,427
|
|
16,410
|
|
206,204
|
|
333,034
|
|
54,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. Non-GAAP
Operating Expenses
|
For the Three
Months Ended
|
|
For the Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2013
|
|
September 30,
2013
|
|
September 30,
2013
|
|
September 30,
2012
|
|
September 30,
2013
|
|
September 30,
2013
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
Operating
expenses
|
|
306,821
|
|
312,843
|
|
51,119
|
|
529,734
|
|
887,442
|
|
145,006
|
Deduct:
share-based compensation
|
|
42,064
|
|
36,782
|
|
6,011
|
|
71,224
|
|
111,033
|
|
18,142
|
Deduct:
business combination related expenses
|
|
-
|
|
-
|
|
-
|
|
28,627
|
|
-
|
|
-
|
Deduct:
amortization of intangible assets from business
combination
|
|
4,155
|
|
4,155
|
|
679
|
|
1,709
|
|
12,465
|
|
2,036
|
Non-GAAP
operating expenses
|
|
260,602
|
|
271,906
|
|
44,429
|
|
428,174
|
|
763,944
|
|
124,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4. Non-GAAP Sales
and Marketing Expenses
|
For the Three
Months Ended
|
|
For the Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2013
|
|
September 30,
2013
|
|
September 30,
2013
|
|
September 30,
2012
|
|
September 30,
2013
|
|
September 30,
2013
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
Sales and marketing
expenses
|
|
165,201
|
|
171,763
|
|
28,066
|
|
255,920
|
|
464,564
|
|
75,908
|
Deduct:
share-based compensation
|
|
12,708
|
|
12,366
|
|
2,021
|
|
18,135
|
|
35,135
|
|
5,741
|
Deduct:
amortization of intangible assets from business
combination
|
|
2,077
|
|
2,077
|
|
339
|
|
854
|
|
6,231
|
|
1,017
|
Non-GAAP
sales and marketing expenses
|
|
150,416
|
|
157,320
|
|
25,706
|
|
236,931
|
|
423,198
|
|
69,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5. Non-GAAP
Product Development Expenses
|
For the Three
Months Ended
|
|
For the Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2013
|
|
September 30,
2013
|
|
September 30,
2013
|
|
September 30,
2012
|
|
September 30,
2013
|
|
September 30,
2013
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
Product development
expenses
|
|
66,051
|
|
78,622
|
|
12,847
|
|
108,786
|
|
201,501
|
|
32,925
|
Deduct:
share-based compensation
|
|
9,890
|
|
9,748
|
|
1,593
|
|
17,749
|
|
26,605
|
|
4,347
|
Deduct:
amortization of intangible assets from business
combination
|
|
1,395
|
|
1,395
|
|
228
|
|
574
|
|
4,185
|
|
684
|
Non-GAAP
product development expenses
|
|
54,766
|
|
67,479
|
|
11,026
|
|
90,463
|
|
170,711
|
|
27,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6. Non-GAAP
General and Administrative Expenses
|
For the Three
Months Ended
|
|
For the Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2013
|
|
September 30,
2013
|
|
September 30,
2013
|
|
September 30,
2012
|
|
September 30,
2013
|
|
September 30,
2013
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
General and
administrative expenses
|
|
75,569
|
|
62,458
|
|
10,206
|
|
165,028
|
|
221,377
|
|
36,173
|
Deduct:
share-based compensation
|
|
19,466
|
|
14,668
|
|
2,397
|
|
35,340
|
|
49,293
|
|
8,054
|
Deduct:
business combination related expenses
|
|
-
|
|
-
|
|
-
|
|
28,627
|
|
-
|
|
-
|
Deduct:
amortization of intangible assets from business
combination
|
|
683
|
|
683
|
|
112
|
|
281
|
|
2,049
|
|
335
|
Non-GAAP
general and administrative expenses
|
|
55,420
|
|
47,107
|
|
7,697
|
|
100,780
|
|
170,035
|
|
27,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7. Non-GAAP Loss
from Operations
|
For the Three
Months Ended
|
|
For the Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2013
|
|
September 30,
2013
|
|
September 30,
2013
|
|
September 30,
2012
|
|
September 30,
2013
|
|
September 30,
2013
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
Loss from
operations
|
|
(116,645)
|
|
(230,536)
|
|
(37,670)
|
|
(349,982)
|
|
(600,728)
|
|
(98,156)
|
Add back:
share-based compensation
|
|
48,529
|
|
48,918
|
|
7,994
|
|
79,439
|
|
135,297
|
|
22,106
|
Add back:
business combination related expenses
|
|
-
|
|
-
|
|
-
|
|
28,627
|
|
-
|
|
-
|
Add back:
amortization of intangible assets from business
combination
|
|
11,896
|
|
10,139
|
|
1,657
|
|
19,946
|
|
34,521
|
|
5,640
|
Non-GAAP
loss from operations
|
|
(56,220)
|
|
(171,479)
|
|
(28,019)
|
|
(221,970)
|
|
(430,910)
|
|
(70,410)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8. Non-GAAP
Net Loss
|
For the Three
Months Ended
|
|
For the Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2013
|
|
September 30,
2013
|
|
September 30,
2013
|
|
September 30,
2012
|
|
September 30,
2013
|
|
September 30,
2013
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
Net
loss
|
|
(105,051)
|
|
(218,638)
|
|
(35,726)
|
|
(310,433)
|
|
(556,163)
|
|
(90,876)
|
Add back:
share-based compensation
|
|
48,529
|
|
48,918
|
|
7,994
|
|
79,439
|
|
135,297
|
|
22,106
|
Add back:
business combination related expenses
|
|
-
|
|
-
|
|
-
|
|
28,627
|
|
-
|
|
-
|
Add back:
amortization of intangible assets from business
combination
|
|
11,896
|
|
10,139
|
|
1,657
|
|
19,946
|
|
34,521
|
|
5,640
|
Non-GAAP net
loss
|
|
(44,626)
|
|
(159,581)
|
|
(26,075)
|
|
(182,421)
|
|
(386,345)
|
|
(63,130)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9. Non-GAAP
EBITDA Loss
|
For the Three
Months Ended
|
|
For the Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2013
|
|
September 30,
2013
|
|
September 30,
2013
|
|
September 30,
2012
|
|
September 30,
2013
|
|
September 30,
2013
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
Net
loss
|
|
(105,051)
|
|
(218,638)
|
|
(35,726)
|
|
(310,433)
|
|
(556,163)
|
|
(90,876)
|
Add
back:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization (excluding amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
of acquired content )
(2)
|
|
27,516
|
|
30,356
|
|
4,960
|
|
50,404
|
|
84,682
|
|
13,837
|
Interest
income
|
|
(7,090)
|
|
(7,284)
|
|
(1,190)
|
|
(35,490)
|
|
(21,553)
|
|
(3,521)
|
Interest
expenses
|
|
158
|
|
-
|
|
-
|
|
3,159
|
|
545
|
|
89
|
Income
taxes
|
|
58
|
|
80
|
|
13
|
|
1,496
|
|
138
|
|
24
|
EBITDA
loss
|
|
(84,409)
|
|
(195,486)
|
|
(31,943)
|
|
(290,864)
|
|
(492,351)
|
|
(80,447)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
48,529
|
|
48,918
|
|
7,994
|
|
79,439
|
|
135,297
|
|
22,106
|
Business
combination related expenses
|
|
-
|
|
-
|
|
-
|
|
28,627
|
|
-
|
|
-
|
Amortization of
intangible assets from business combination
|
|
11,896
|
|
10,139
|
|
1,657
|
|
19,946
|
|
34,521
|
|
5,640
|
Others,
net
|
|
(4,720)
|
|
(4,694)
|
|
(767)
|
|
(8,714)
|
|
(23,695)
|
|
(3,872)
|
Non-GAAP EBITDA
loss
|
|
(28,704)
|
|
(141,123)
|
|
(23,059)
|
|
(171,566)
|
|
(346,228)
|
|
(56,573)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.