BEIJING, June 8, 2015 /PRNewswire/ -- China Digital TV
Holding Co., Ltd. (NYSE: STV) ("China Digital TV" or the
"Company"), the leading provider of cloud-based application
platforms and conditional access ("CA") systems which enable
China's digital cable television
market to offer and secure diversified content services, today
announced its unaudited financial results for the first quarter
ended March 31, 2015.
"During the first quarter, we made further progress in our
evolution from being China's
leading access technology provider to the cable TV market, to being
a first-mover as a diversified digital TV service provider to cable
operators, increasing the prevalence of cable programming outside
the home and mobile applications inside the home," said Dr.
Zengxiang Lu, China Digital TV's
acting chief executive officer. "As was expected, revenue came in
soft due to the ongoing market decline of the conditional access
business and negative impact of seasonality in the first quarter.
Despite these headwinds, we maintain our market dominance in this
segment with a market share of over 50% and key relationships with
nearly all of China's cable
operators."
Dr. Lu continued, "We believe that our leading position in this
mature sector will pave the way for future success in the emerging
frontier of providing cloud-based content programming for cable
operators, helping them realize new streams of revenue. We
continued to expand our cloud cooperation with Beijing Gehua CATV
Network to 1,400 streams, and are happy to report that we currently
have 300,000 registered users for cloud services under this
partnership and expect to double that figure by year-end.
Furthermore, we inked an agreement with the city of Zibo in
Shandong province to deploy our
cloud platform, and continue to explore other municipal and
provincial partnerships to expand our cloud services into new
regions."
Ms. Yue Qian, China Digital TV's acting chief financial officer,
commented, "As our business continues to transform, it will take
several quarters before our investment in these new frontiers
achieves significant returns. Understandably revenues were soft due
to the market maturity in the traditional segment and the still
nascent state of our cloud platform segment. However, this
short-term volatility should not dilute the key message that in
front of us lays a tremendous market opportunity and we are
uniquely well-positioned to leverage our existing capabilities and
platform to take advantage of these new emerging growth
avenues."
First Quarter 2015
Results[1]
In the first quarter of 2015, China Digital TV's smart card
shipments decreased by 17.1% to approximately 2.95 million from
3.56 million in the prior year period.
In the first quarter of 2015, China Digital TV's net revenues
decreased by 22.7% to US$14.0 million
from US$18.2 million in the prior
year period. The decrease was primarily due to decreases in
revenues from the sales of smart cards and other products caused by
the general market decline of the mature CA business.
In the first quarter of 2015, revenues from the Company's top
five customers accounted for 28.4% of total revenues, as compared
to 25.0% in the prior year period.
Revenue Breakdown
|
|
For the
three months ended
|
|
|
March 31,
|
|
December
31,
|
|
March 31,
|
|
|
2015
|
|
2014
|
|
2014
|
|
|
(in U.S. dollars,
in thousands)
|
Products:
|
|
|
|
|
|
|
|
|
|
Smart
cards
|
|
$
|
12,839
|
|
$
|
22,145
|
|
$
|
15,591
|
Other
products
|
|
|
376
|
|
|
2,354
|
|
|
1,556
|
Subtotal
|
|
|
13,215
|
|
|
24,499
|
|
|
17,147
|
Services:
|
|
|
|
|
|
|
|
|
|
Head-end system
integration
|
|
|
596
|
|
|
3,210
|
|
|
413
|
Head-end system
development
|
|
|
318
|
|
|
737
|
|
|
271
|
Licensing
income
|
|
|
100
|
|
|
1,155
|
|
|
311
|
Royalty
income
|
|
|
123
|
|
|
152
|
|
|
303
|
Other
services
|
|
|
6
|
|
|
11
|
|
|
127
|
Subtotal
|
|
|
1,143
|
|
|
5,265
|
|
|
1,425
|
Total
revenues
|
|
$
|
14,358
|
|
$
|
29,764
|
|
$
|
18,572
|
Revenues from smart cards decreased by 17.7% to
US$12.8 million in the first quarter
of 2015 from US$15.6 million in the
prior year period. The decrease was mainly due to a decrease in
shipment volumes of smart cards. Sales of smart cards accounted for
89.4% of total revenues in the first quarter of 2015, as compared
to 83.9% in the prior year period.
Revenues from other products decreased by 75.8% to
US$0.4 million in the first quarter
of 2015 from US$1.6 million in the
prior year period. The decrease was mainly attributable to lower
sales of surface mounted chips. Sales of other products accounted
for 2.6% of total revenues in the first quarter of 2015, as
compared to 8.4% in the prior year period.
Revenues from services decreased by 19.8% to US$1.1 million in the first quarter of 2015 from
US$1.4 million in the prior year
period. The decrease was primarily due to the decline in licensing
and royalty income, which was partially offset by an increase in
head-end system integration. Revenues from services accounted for
8.0% of total revenues in the first quarter of 2015, as compared to
7.7% in the prior year period.
Cost of revenues from smart cards and other products
decreased by 22.3% to US$2.2 million
in the first quarter of 2015 from US$2.8
million in the prior year period. The decrease was mainly
due to a decline in cost of revenues from smart cards resulting
from decreased shipment volumes of smart cards. Cost of revenues
from smart cards and other products accounted for 65.0% and 3.4% of
total cost of revenues, as compared to 66.0% and 6.6% in the prior
year period.
Cost of revenues from services decreased by 5.1% to
US$1.0 million in the first quarter
of 2015 from US$1.1 million in the
prior year period. The decrease was mainly due to a decline in
revenues from services. Cost of revenues from services accounted
for 31.5% of total cost of revenues, as compared to 27.4% in the
prior year period.
Gross profit in the first quarter of 2015 decreased by
24.1% to US$10.8 million from
US$14.3 million in the prior year
period. Gross margin, which is equal to gross profit
divided by net revenues, was 77.1% in the first quarter of 2015, as
compared to 78.6% in the prior year period. The decline in gross
margin was primarily due to a decrease in revenues from other
products, such as surface mounted chips, which carry a relatively
high gross margin.
In the first quarter of 2015, the average selling price of smart
cards decreased by 1.1%, as compared to the prior year period. In
addition, the unit cost of smart cards decreased by 2.0%, as
compared to the prior year period.
Operating expenses in the first quarter of 2015 decreased
by 8.4% to US$9.6 million from
US$10.5 million in the prior year
period.
- Research and development expenses in the first quarter
of 2015 decreased by 3.8% to US$3.9
million from US$4.0 million in
the prior year period. The decrease was primarily due to decreases
in personnel related expenses resulting from lower
headcount.
- Selling and marketing expenses in the first quarter of
2015 decreased by 13.9% to US$3.5
million from US$4.1 million in
the prior year period. The decline was mainly due to a decrease in
marketing activities relating to the Company's CA business.
- General and administrative expenses in the first
quarter of 2015 decreased by 7.0% to US$2.2
million from US$2.4 million in
the prior year period. The decrease was mainly due to decreased
share-based compensation expenses.
Income from operations in the first quarter of 2015
decreased by 67.7% to US$1.2 million
from US$3.8 million in the prior year
period. Operating margin, which is equal to operating
income divided by net revenues, in the first quarter of 2015 was
8.7%, as compared to 20.8% in the prior year period.
Income tax expenses in the first quarter of 2015
increased by 56.7% to US$1.4 million
from US$0.9 million in income tax
expense in the prior year period. The increase was mainly due to
the increase in accrued income tax expenses resulting from Beijing
Super TV Co., Ltd., ("Super TV"), one of the Company's PRC
operating subsidiaries, being taxed at a higher tax rate of 15% in
the first quarter of 2015. Previously, Super TV was designated as a
"key software enterprise" for the tax years of 2013 and 2014 by the
relevant PRC government authorities and, as a result, was entitled
to a preferential income tax rate of 10% in each of those
years.
Net income attributable to holders of ordinary
shares in the first quarter of 2015 decreased by 91.1% to
US$0.4 million from US$4.1 million in the prior year period. Net
margin, which is equal to net income divided by net
revenues, in the first quarter of 2015 was 2.6%, as compared to
22.3% in the prior year period.
Non-GAAP net income attributable to holders of ordinary
shares[2] in
the first quarter of 2015 decreased by 89.7% to US$0.4 million from US$4.4
million in the prior year
period[3].
Balance Sheet and Cash Flow
As of March 31, 2015, China
Digital TV had cash and cash equivalents and restricted cash
totaling US$61.3 million. In the
first quarter of 2015, cash flow used in operations was
approximately US$3.5 million.
Business Outlook
Based on information available as of June
8, 2015, China Digital TV expects smart card shipment
volumes in the second quarter of 2015 to be in the range of 2.1
million to 2.4 million. Net revenues in the second quarter of 2015
are expected to be in the range of US$8.77
million to US$9.93 million.
Conference Call Information
The Company will hold an earnings conference call at
8:00 p.m. on Monday, June 8, 2015, U.S. Eastern Time
(8:00 a.m. on Tuesday, June 9, 2015, Beijing/Hong Kong Time).
Conference Call Dial-in Information
United States Toll
Free:
|
+
1-888-346-8982
|
International:
|
+
1-412-902-4272
|
Hong
Kong:
|
800-905945
|
China Toll
Free:
|
4001-201203
|
Passcode:
|
China Digital TV
Holding Co. Ltd. call.
|
Please dial-in 10 minutes before the call is scheduled to begin
and provide the passcode to join the call.
A replay of the call will be available for one week between
10:00 p.m. on June 8, 2015 and 10:00
a.m. on June 15, 2015 U.S.
Eastern Time.
Replay Information
United
States:
|
+1-877-344-7529
|
International:
|
+
1-412-317-0088
|
|
|
Passcode:
|
10066779
|
In addition, a live and archived webcast of this conference call
will be accessible through the Investor Relations section of China
Digital TV's website at http://ir.chinadtv.cn .
Safe Harbor Statement
This announcement contains forward-looking statements within the
meaning of Section 27A of the United States Securities Act of 1933,
as amended, and Section 21E of the United States Securities
Exchange Act of 1934, as amended. Such forward-looking
statements are made under the "safe harbor" provisions of the
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," "may," "should" and
similar expressions. Such forward-looking statements include,
without limitation, statements regarding the outlook for the second
quarter of 2015 and comments by management in this announcement
about trends in the CA systems, digital television, cable
television and related industries in the PRC and China Digital TV's
strategic and operational plans and future market positions. China
Digital TV may also make forward-looking statements in its periodic
reports filed with the Securities and Exchange Commission, 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 China Digital TV'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
projections contained or implied in any forward-looking statement,
including but not limited to the following: competition in the CA
systems, digital television, cable television and related
industries in the PRC and the impact of such competition on prices,
our ability to implement our business strategies, changes in
technology, the progress of the television digitalization in the
PRC, the structure of the cable television industry or television
viewer preferences, changes in PRC laws, regulations or policies
with respect to the CA systems, digital television, cable
television and related industries, including the extent of non-PRC
companies' participation in such industries, and changes in
political, economic, legal and social conditions in the PRC,
including the government's policies with respect to economic
growth, foreign exchange and foreign investment.
Further information regarding these and other risks and
uncertainties is included in our annual report on Form 20-F and
other documents filed with the Securities and Exchange Commission.
China Digital TV does not assume any obligation to update any
forward-looking statements, which apply only as of the date of this
press release.
About China Digital TV
Founded in 2004, China Digital TV enables television network
operators to manage, extend and diversify content services across
households and public areas in China. China Digital TV is the leading
provider of cloud-based application platforms and network
broadcasting platform ("NBP") services to Chinese cable operators,
helping them to effectively bring mobile gaming apps and other
entertainment options to household television sets, and extend
cable programming outside the home to any mobile device. China
Digital TV is also the leading provider of Conditional Access
("CA") systems in China's digital
television market. CA systems enable television network operators
to secure the delivery of content to their subscribers. The Company
has existing cooperation with nearly all of China's cable television operators.
For more information please visit the Investor Relations section
of China Digital TV's website at http://ir.chinadtv.cn.
For investor and media inquiries, please contact:
China Digital TV Holding Co., Ltd.
Nan Hao
Investor Relations Manager
Tel: +86-10-6297-1199 x 9780
Email: ir@chinadtv.cn
ICR, Inc.
Charles Eveslage
Tel: +1 (646) 328-1950
Email: stv@icrinc.com
[1]
Unless otherwise stated, all financial statement measures stated in
this press release are based on generally accepted accounting
principles in the United States ("U.S. GAAP").
|
[2]
Non-GAAP net income attributable to holders of ordinary shares is
defined as net income excluding certain non-cash expenses, such as
share-based compensation expenses, amortization of acquired
intangible assets from business acquisitions and equity method
investments.
|
[3] For
more information on these non-GAAP financial measures, please see
the tables captioned "Reconciliations of non-GAAP measures" set
forth at the end of this release.
|
China Digital TV
Holding Co., Ltd.
|
Unaudited
Condensed Consolidated Statements of Comprehensive
Income
|
(in thousands of
U.S. dollars, except share and per share data )
|
|
|
|
For the three months ended
|
|
|
March 31,
|
|
December
31,
|
|
March
31,
|
|
2015
|
|
2014
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Products
|
|
$
|
13,215
|
|
$
|
24,499
|
|
$
|
17,147
|
Services
|
|
|
1,143
|
|
|
5,265
|
|
|
1,425
|
Total
revenues
|
|
|
14,358
|
|
|
29,764
|
|
|
18,572
|
Business and
sales related taxes
|
|
|
(309)
|
|
|
(537)
|
|
|
(389)
|
Net
revenues
|
|
|
14,049
|
|
|
29,227
|
|
|
18,183
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
|
Products
|
|
|
(2,198)
|
|
|
(4,083)
|
|
|
(2,830)
|
Services
|
|
|
(1,013)
|
|
|
(1,507)
|
|
|
(1,067)
|
Total cost of
revenues
|
|
|
(3,211)
|
|
|
(5,590)
|
|
|
(3,897)
|
Gross
profit
|
|
|
10,838
|
|
|
23,637
|
|
|
14,286
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Research and
development expenses
|
|
|
(3,893)
|
|
|
(4,430)
|
|
|
(4,048)
|
Selling and
marketing expenses
|
|
|
(3,506)
|
|
|
(3,188)
|
|
|
(4,071)
|
General and
administrative expenses
|
|
|
(2,218)
|
|
|
(4,169)
|
|
|
(2,385)
|
Total operating
expenses
|
|
|
(9,617)
|
|
|
(11,787)
|
|
|
(10,504)
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
1,221
|
|
|
11,850
|
|
|
3,782
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
251
|
|
|
151
|
|
|
706
|
Other
income
|
|
|
64
|
|
|
1,930
|
|
|
268
|
Income before
income taxes
|
|
|
1,536
|
|
|
13,931
|
|
|
4,756
|
Income tax
expenses
|
|
|
|
|
|
|
|
|
|
Income
tax-current
|
|
|
(1,049)
|
|
|
(1,545)
|
|
|
(590)
|
Income
tax-deferred
|
|
|
(393)
|
|
|
(2,054)
|
|
|
(330)
|
Net income before
net income from equity
method investments
|
|
|
|
|
|
|
|
|
|
94
|
10,332
|
3,836
|
Net loss from equity
method investments,
net of income taxes
|
|
|
(18)
|
|
|
(70)
|
|
|
(22)
|
Net
income
|
|
|
76
|
|
|
10,262
|
|
|
3,814
|
Net loss attributable
to noncontrolling interest
|
|
287
|
|
|
675
|
|
|
242
|
Net income
attributable to holders of ordinary shares
|
|
$
|
|
|
$
|
|
|
$
|
|
363
|
10,937
|
4,056
|
|
|
|
|
|
|
|
|
|
|
Net income per
share attributable to holders of ordinary shares
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.01
|
|
$
|
0.18
|
|
$
|
0.07
|
Diluted
|
|
$
|
0.01
|
|
$
|
0.18
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
76
|
|
$
|
10,262
|
|
$
|
3,814
|
Other comprehensive
(loss)/income, net of tax
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
258
|
(1,050)
|
(3,053)
|
Comprehensive
income
|
|
|
334
|
|
|
9,212
|
|
|
761
|
Comprehensive loss
attributable to
noncontrolling interest
|
|
|
289
|
|
|
684
|
|
|
263
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income attributable to holders
of ordinary shares
|
|
$
|
623
|
|
$
|
9,896
|
|
$
|
1,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used in calculating net income per ordinary
share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
59,724,925
|
|
|
59,592,861
|
|
|
59,178,936
|
Diluted
|
|
|
62,111,962
|
|
|
62,221,519
|
|
|
60,390,688
|
China Digital TV
Holding Co., Ltd.
|
Unaudited
Condensed Consolidated Balance Sheets
|
(in thousands of
U.S. dollars)
|
|
ASSETS
|
March
31,
|
|
December
31,
|
2015
|
2014
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
61,198
|
|
$
|
62,042
|
|
Restricted
cash
|
|
67
|
|
|
78
|
|
Notes
receivable
|
|
4,598
|
|
|
5,417
|
|
Accounts receivable,
net
|
|
47,660
|
|
|
47,977
|
|
Inventories,
net
|
|
5,240
|
|
|
4,966
|
|
Prepaid expenses and
other current assets
|
|
5,384
|
|
|
8,964
|
|
Deferred
costs-current
|
|
812
|
|
|
710
|
|
Deferred tax assets -
current
|
|
2,676
|
|
|
2,387
|
Total current
assets
|
|
127,635
|
|
|
132,541
|
|
Long-term
receivable
|
|
45
|
|
|
45
|
|
Property and
equipment, net
|
|
757
|
|
|
880
|
|
Intangible assets,
net
|
|
421
|
|
|
440
|
|
Goodwill
|
|
1,403
|
|
|
1,402
|
|
Equity method
investments
|
|
2,486
|
|
|
2,502
|
|
Deferred costs -
non-current
|
|
636
|
|
|
516
|
|
Deferred tax assets -
non-current
|
|
786
|
|
|
785
|
Total
assets
|
|
134,169
|
|
|
139,111
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
1,542
|
|
|
2,298
|
|
Notes
payable
|
|
32
|
|
|
86
|
|
Accrued expenses and
other current liabilities
|
|
13,975
|
|
|
17,652
|
|
Deferred revenue -
current
|
|
5,112
|
|
|
4,572
|
|
Income tax
payable
|
|
1,041
|
|
|
3,465
|
|
Deferred tax
liabilities - current
|
|
4,411
|
|
|
3,727
|
|
Government subsidies
- current
|
|
168
|
|
|
167
|
Total current
liabilities
|
|
26,281
|
|
|
31,967
|
|
Deferred revenue -
non-current
|
|
911
|
|
|
617
|
|
Government subsidies
- non-current
|
|
4,410
|
|
|
4,390
|
|
Deferred income
taxes-non-current
|
|
105
|
|
|
110
|
Total
liabilities
|
|
31,707
|
|
|
37,084
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
China Digital TV
Holding Co., Ltd. shareholders'
|
|
|
|
|
|
equity:
|
|
|
|
|
|
|
|
|
Ordinary
shares
|
|
30
|
|
|
30
|
|
Additional paid-in
capital
|
|
35,739
|
|
|
35,639
|
|
Statutory
reserve
|
|
17,977
|
|
|
17,977
|
|
Retained
earnings
|
|
22,670
|
|
|
22,307
|
|
Accumulated other
comprehensive income
|
|
25,769
|
|
|
25,509
|
Total China
Digital TV Holding Co., Ltd.
|
|
102,185
|
|
|
101,462
|
shareholders'
equity
|
|
Noncontrolling
interest
|
|
277
|
|
|
565
|
Total
equity
|
|
102,462
|
|
|
102,027
|
TOTAL LIABILITIES
AND EQUITY
|
$
|
134,169
|
|
$
|
139,111
|
Reconciliation of Non-GAAP Measures
Non-GAAP net income attributable to holders of ordinary shares
excludes certain non-cash expenses, such as share-based
compensation expenses, amortization of intangible assets acquired
from business acquisitions and equity method investments. The
Company believes that the non-GAAP net income provides meaningful
supplemental information regarding the Company's performance by
excluding certain non-cash expenses that may not be indicative of
its operating performance from a cash flow perspective. The Company
believes that both management and investors benefit from referring
to this additional information in assessing the Company's
performance and when planning and forecasting future periods.
|
|
For the three
months ended
|
|
|
March 31,
|
|
December
31
|
|
March 31,
|
2015
|
2014
|
2014
|
|
|
(in U.S. dollars,
in thousands)
|
Net income
attributable to China Digital TV
Holding Co., Ltd shareholders - GAAP
|
|
$
|
363
|
|
$
|
10,937
|
|
$
|
4,056
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expenses
|
|
|
34
|
|
|
78
|
|
|
278
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets from business
acquisitions and equity method investments
|
|
|
52
|
|
|
52
|
|
|
43
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to China Digital TV
Holding Co., Ltd shareholders - Non-GAAP
|
|
$
|
449
|
|
$
|
11,067
|
|
$
|
4,377
|
|
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/china-digital-tv-announces-unaudited-first-quarter-2015-results-300095458.html
SOURCE China Digital TV Holding Co., Ltd.