BEIJING, Aug. 17, 2011 (GLOBE NEWSWIRE) -- AutoNavi Holdings Limited ("AutoNavi" or the "Company") (Nasdaq:AMAP), a leading provider of digital map content and navigation and location-based solutions in China, today announced its unaudited financial results for the second quarter ended June 30, 2011.
Second Quarter 2011 Highlights
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Net revenues in the second quarter of 2011 were $32.9 million, an increase of 48.8% year-over-year.
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Gross profit in the second quarter of 2011 was $23.6 million, an increase of 61.2% year-over-year.
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Operating income in the second quarter of 2011 was $10.5 million, an increase of 44.7% year-over-year.
- Net income attributable to AutoNavi shareholders was $9.6 million in the second quarter of 2011, an increase of 53.8% year-over-year.
First Six Months of 2011 Highlights
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Net revenues in the first six months of 2011 were $58.4 million, an increase of 50.7% year-over-year.
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Gross profit in the first six months of 2011 was $41.6 million, an increase of 62.6% year-over-year.
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Operating income in the first six months of 2011 was $19.0 million, an increase of 112.2% year-over-year.
- Net income attributable to AutoNavi shareholders was $20.2 million in the first six months of 2011, an increase of 183.5% year-over-year.
AutoNavi's chief executive officer, Mr. Congwu Cheng, commented, "We saw growth across all of our three core businesses – automotive navigation, mobile and Internet location-based solutions as well as public sector and enterprise applications, in the second quarter. We expect this positive momentum to continue into the second half of the year, giving us confidence to raise our full year 2011 net revenue guidance to approximately $122 million to $125 million. Our solid foundation in each of our core businesses continues to fuel growth and expansion, and also provides a platform from which we can explore new strategic initiatives to foster additional future growth."
Mr. Cheng continued, "We are seeing tremendous opportunities today for AutoNavi in the mobile Internet space. While we are still in the early stages of our strategic initiatives, we believe that location-based services will drive the mobile Internet industry to new dimensions. By leveraging our core mapping competencies, AutoNavi is well positioned to build an ecosystem with our end-users and business partners on our location-based media and e-commerce platform. This platform will allow our business partners to target customers more efficiently using location-relevant information and services, leading to valuable sales transactions. As we continue to enhance our digital map database by integrating new online and offline information and further diversify our offerings and technologies, we envision AutoNavi enabled maps becoming more and more popular for everyday life, while creating commercial opportunities for businesses."
Revenues
Total net revenues in the second quarter of 2011 were $32.9 million, an increase of 48.8% year-over-year from $22.1 million in the second quarter of 2010, and an increase of 29.6% from $25.4 million in the first quarter of 2011.
Automotive Navigation
Net revenues from the automotive navigation business in the second quarter of 2011 were $22.9 million, an increase of 37.3% year-over-year and an increase of 19.5% sequentially. Such increases were largely due to increases in the number of copies of digital map data licensed for use in in-dash navigation systems, which is directly linked to the number of vehicles sold in China equipped with these systems.
Mobile and Internet Location-based Solutions
Net revenues from the mobile and Internet location-based solutions business in the second quarter of 2011 were $5.4 million, an increase of 112.6% year-over-year and 45.3% sequentially. The increases were primarily due to the growth in revenues derived from the pre-installation of the Company's navigation solutions on mobile phones.
Public Sector and Enterprise Applications
Net revenues from the public sector and enterprise applications market in the second quarter of 2011 were $4.2 million, an increase of 106.5% year-over-year and 74.8% sequentially. The increases were primarily due to progress made on government projects during the quarter.
Cost of Revenues
Cost of revenues in the second quarter of 2011 was $9.3 million, representing an increase of 24.5% year-over-year and 25.2% sequentially. The increases were attributable to a rise in direct production costs largely related to the Company's government projects, and an increase in salary and benefit expenses as a result of the expansion of the Company's data collection and processing work force as the Company continued to enhance the quality, coverage and depth of its digital map database. The increases were also due to the amortization of definite intangible assets acquired from PDAger which are relevant to revenue generated.
Gross Profit and Gross Margin
Gross profit in the second quarter of 2011 was $23.6 million, an increase of 61.2% year-over-year from $14.7 million in the second quarter of 2010, and an increase of 31.4% quarter-over-quarter from $18.0 million in the first quarter of 2011. Gross margin, or gross profit as a percentage of net revenues, was 71.7% in the second quarter of 2011, compared to 66.2% in the year-ago period and 70.8% in the first quarter of 2011.
Operating Expenses
Total operating expenses in the second quarter of 2011 were $13.2 million, an increase of 77.2% year-over-year and 39.2% sequentially. Non-GAAP operating expenses, which exclude share-based compensation expenses, were $12.3 million, an increase of 88.5% year-over-year and 33.9% sequentially.
Research and development expenses increased 108.3% year-over-year and 50.8% sequentially to $5.9 million. The increases were primarily due to higher salary and benefit expenses, a result of an increase in the number of R&D staff, and increased direct development expenses and professional service expenses incurred to maintain the Company's new technology platform. The sequential increase was also attributable to higher share-based compensation expenses in the second quarter of 2011. Non-GAAP research and development expenses, which exclude share-based compensation expenses, increased 134.2% year-over-year and 43.7% sequentially to $5.4 million.
Selling and marketing expenses increased 59.4% year-over-year and 28.9% sequentially to $3.4 million. The increases were primarily due to higher salary and benefit expenses, a result of increased sales headcount in the second quarter of 2011, increased marketing expenses associated with branding activities and increased business travel expenses. Non-GAAP selling and marketing expenses, which exclude share-based compensation expenses, increased 70.6% year-over-year and 22.8% sequentially to $3.2 million.
General and administrative expenses increased 57.5% year-over-year and 33.3% sequentially to $3.9 million. The increases were primarily due to higher salary and benefit expenses, a result of an increase in the number of general and administrative personnel in the second quarter of 2011. Non-GAAP general and administrative expenses, which exclude share-based compensation expenses, increased 57.9% year-over-year and increased 31.0% sequentially to $3.7 million.
Operating Income and Operating Margin
Operating income in the second quarter of 2011 was $10.5 million, an increase of 44.7% year-over-year from $7.2 million in the second quarter of 2010, and an increase of 22.7% quarter-over-quarter from $8.5 million in the first quarter of 2011. Operating margin, or operating income as a percentage of net revenues, was 31.7% in the second quarter of 2011, compared to 32.6% in the year-ago period and 33.5% in the first quarter of 2011.
Non-GAAP operating income, which excludes share-based compensation expenses, was $11.4 million in the second quarter of 2011, an increase of 37.9% year-over-year and an increase of 28.9% sequentially. Non-GAAP operating margin, or non-GAAP operating income as a percentage of net revenues, was 34.7% in the second quarter of 2011, compared to 37.5% in the year-ago period and 34.9% in the first quarter of 2011.
Change in Fair Value of Forward Contract
In the third quarter of 2010, the Company engaged a bank to convert a certain amount of U.S. dollars into Japanese Yen and made a one-year fixed interest rate Japanese Yen deposit with the bank. The Company also entered into a forward contract with the bank to convert the Japanese Yen deposit back into U.S. dollars upon the expiration of the one-year term at a pre-determined exchange rate. The forward contract was accounted for under derivative accounting. The Company carries the forward contract at fair value on its balance sheet, and the change in fair value of the forward contract at each period end is recorded in the statement of operations. In the second quarter of 2011, the Company recorded a loss of $1.3 million in the change in fair value of the forward contract. Additionally, the company recorded a foreign exchange gain of $1.1 million and interest income of $0.5 million related to the arrangement.
Net Income Attributable to AutoNavi Shareholders
Net income attributable to AutoNavi shareholders was $9.6 million in the second quarter of 2011, an increase of 53.8% year-over-year from $6.2 million in the second quarter of 2010, and a decrease of 9.8% quarter-over-quarter from $10.6 million in the first quarter of 2011. Diluted net income per American depositary share ("ADS") attributable to AutoNavi shareholders for the second quarter of 2011 was $0.19. One ADS represents four ordinary shares.
Non-GAAP net income attributable to AutoNavi shareholders, which excludes share-based compensation expenses, was $10.6 million in the second quarter of 2011, an increase of 44.8% year-over-year and an increase of 5.8% sequentially. Diluted non-GAAP net income per ADS attributable to AutoNavi shareholders for the second quarter of 2011 was $0.21.
Cash Flow
Net cash provided by operating activities was $5.6 million in the second quarter of 2011. As of June 30, 2011, the Company had $167.5 million in cash and term deposits.
Recent Business Updates
Relocation of Corporate Headquarters
Due to AutoNavi's business expansion, the Company has moved its corporate office in Beijing to a new location. AutoNavi's corporate headquarters are now located at 16F, Section A, Focus Square, No. 6 Futong East Avenue, Wangjing, Chaoyang District, Beijing. The Company's previous headquarters will now be used as AutoNavi's R&D center.
Enhanced Location-based Business Intelligence Services
On August 3, 2011, AutoNavi began providing commercial enterprise customers with newly enhanced location-based business intelligence (LBI) services, which offer a series of integrated tools that allow for improved selection assistance for evaluating new store locations, asset tracking, investigating potential locations for sales promotion, identifying new market opportunities and analyzing consumer behavior as well as a variety of other location-relevant services for commercial enterprises. These tools include solutions that assist in corporate image display, new store expansion, operations management and sales promotion, among others. The services integrate AutoNavi's core mapping competencies and location-based service expertise with software provided by Kokusai Kogyo Co., Ltd ("KKC"), a leading Japanese engineering and spatial information consultancy.
Business Outlook
The Company raised its full year 2011 net revenue guidance to approximately $122 million to $125 million, representing an increase of approximately 42% to 46% over fiscal year 2010 net revenues.
Conference Call Information
AutoNavi's management will hold an earnings conference call at 8:00 a.m. U.S. eastern daylight time on August 17, 2011 (8:00 p.m. Beijing/Hong Kong time on August 17, 2011).
| U.S. Toll Free: | +1-866-700-7477 |
| U.S./International: | +1-617-213-8840 |
| Hong Kong: | + 852-3002-1672 |
| United Kingdom: | + 44-207-365-8426 |
| Passcode: | AutoNavi |
A replay of the conference call may be accessed by phone at the following number until August 24, 2011:
| U.S. Toll Free: | +1-888-286-8010 |
| U.S./International: | +1-617-801-6888 |
| Passcode: | 59317625 |
Additionally, an archived web-cast of this call will be available on the Investor Relations section of AutoNavi's website at http://ir.autonavi.com.
About AutoNavi Holdings Limited
AutoNavi Holdings Limited (Nasdaq:AMAP) is a leading provider of digital map content and navigation and location-based solutions in China. At the core of its business is a comprehensive nationwide digital map database that covers approximately 3.1 million kilometers of roadway and over 17 million points of interest across China. Through its digital map database and proprietary technology platform, AutoNavi provides comprehensive, integrated navigation and location-based solutions optimized for the Chinese market and users, including automotive navigation solutions, public sector and enterprise applications, mobile location-based solutions and Internet location-based solutions. For more information on AutoNavi, please visit http://www.autonavi.com.
The AutoNavi Holdings Limited logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=8262
Forward Looking Statements
This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the quotations from management in this press release, as well as AutoNavi's strategic and operational plans, contain forward-looking statements. AutoNavi may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. 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 AutoNavi'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: AutoNavi's ability to adequately maintain and update its digital map database and minimize errors in its solutions; its current reliance on the automotive navigation market and a small number of customers for a substantial portion of its revenues; the project-based nature of its public sector and enterprise applications business; its limited operating history in the mobile/Internet location-based solutions markets; compliance with a complex set of laws, rules and regulations governing its surveying and mapping and other businesses in China; competition in the navigation and location-based solutions businesses in China; and its ability to manage its growth effectively and efficiently. Further information regarding these and other risks is included in AutoNavi's annual report on Form 20-F as well as in its other filings with the Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release, and AutoNavi undertakes no duty to update such information, except as required under applicable law.
About Non-GAAP Financial Measures
To supplement AutoNavi's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), AutoNavi uses in this press release the following non-GAAP financial measures: (1) non-GAAP operating expenses, (2) non-GAAP R&D expenses, (3) non-GAAP selling and marketing expenses, (4) non-GAAP general and administrative expenses, (5) non-GAAP operating income, (6) non-GAAP operating margin, (7) non-GAAP net income attributable to AutoNavi shareholders, and (8) non-GAAP diluted net income per ADS attributable to AutoNavi shareholders, each of which excludes share-based compensation expenses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.
AutoNavi believes that these non-GAAP financial measures facilitate investors' and management's comparisons to AutoNavi's historical performance and assist management's financial and operational decision making. A limitation of using these non-GAAP financial measures is that share-based compensation expenses are recurring expenses that will continue to exist in AutoNavi's business for the foreseeable future. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying table has more details on the reconciliation between non-GAAP financial measures and their most directly comparable GAAP financial measures.
| For investor and media inquiries please contact: |
| In China: |
| Serena Shi |
| AutoNavi Holdings Limited |
| Tel: +86-10-8410-7883 |
| E-mail: serena.shi@autonavi.com |
| Derek Mitchell |
| Ogilvy Financial, Beijing |
| Tel: +86-10-8520-6284 |
| E-mail: amap@ogilvy.com |
| In the U.S.: |
| Jessica Barist Cohen |
| Ogilvy Financial, New York |
| Tel: +1-646-460-9989 |
| E-mail: amap@ogilvy.com |
| AUTONAVI HOLDINGS LIMITED | ||
| Unaudited Consolidated Balance Sheet | ||
| (In thousands of U.S. dollars) | ||
| December 31, 2010 | June 30, 2011 | |
| Assets | ||
| Current assets | ||
| Cash | 103,105 | 123,894 |
| Restricted cash | 485 | -- |
| Term deposit | 62,716 | 43,603 |
| Accounts receivable, net of allowance for doubtful accounts of $419 and $730 as of December 31, 2010 and June 30, 2011, respectively | 23,752 | 35,029 |
| Loans to related parties | 1,212 | 623 |
| Prepaid expense and other current assets | 5,415 | 11,608 |
| Deferred tax assets-current | 378 | 954 |
| Total current assets | 197,063 | 215,711 |
| Properties and equipment, net | 41,571 | 46,390 |
| Equity method investments | 5,102 | 4,562 |
| Acquired intangible assets, net | 996 | 7,828 |
| Goodwill | 3,242 | 8,518 |
| Deferred tax assets-non-current | 292 | 151 |
| Other long term assets | 357 | 315 |
| TOTAL ASSETS | 248,623 | 283,475 |
| Liabilities | ||
| Current liabilities | ||
| Accounts payable (including accounts payable of the consolidated variable interest entities without recourse to AutoNavi Holdings Limited $1,523 and $2,256 as of December 31, 2010 and June 30, 2011, respectively) | 1,523 | 2,259 |
| Deferred revenue (including deferred revenue of the consolidated variable interest entities without recourse to AutoNavi Holdings Limited $3,730 and $4,968 as of December 31, 2010 and June 30, 2011, respectively) | 5,895 | 6,752 |
| Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated variable interest entities without recourse to AutoNavi Holdings Limited $13,907 and $19,606 as of December 31, 2010 and June 30, 2011, respectively) | 14,690 | 20,951 |
| Income tax payable (including income tax payable of the consolidated variable interest entities without recourse to AutoNavi Holdings Limited $5,168 and $5,183 as of December 31, 2010 and June 30, 2011, respectively) | 5,215 | 5,114 |
| Forward contract (including forward contract of the consolidated variable interest entities without recourse to AutoNavi Holdings Limited nil and nil as of December 31, 2010 and June 30, 2011, respectively) | 2,465 | 2,753 |
| Total current liabilities | 29,788 | 37,829 |
| Non-current liabilities | ||
| Deferred tax liability-non-current (including deferred tax liability of the consolidated variable interest entities without recourse to AutoNavi Holdings Limited $473 and $1,282 as of December 31, 2010 and June 30, 2011, respectively) | 473 | 1,534 |
| Total liabilities | 30,261 | 39,363 |
| Equity | ||
| Ordinary shares | 19 | 19 |
| Additional paid-in capital | 169,132 | 171,117 |
| Statutory reserve | 6,322 | 6,322 |
| Retained earnings | 28,023 | 48,219 |
| Accumulated other comprehensive income | 11,449 | 14,196 |
| Total AutoNavi Holdings Limited shareholders' equity | 214,945 | 239,873 |
| Non-controlling interest | 3,417 | 4,239 |
| Total equity | 218,362 | 244,112 |
| TOTAL LIABILITIES AND EQUITY | 248,623 | 283,475 |
| AUTONAVI HOLDINGS LIMITED | |||||
| Unaudited Consolidated Statements of Operations | |||||
| (In thousands of U.S. dollars, except per share data) | |||||
| For the three months ended | For the six months ended | ||||
|
June 30,2011 |
June 30,2010 |
March 31,2011 |
June 30,2011 |
June 30,2010 |
|
| Revenue | 33,628 | 22,647 | 25,965 | 59,593 | 39,648 |
| Business tax | (681) | (507) | (539) | (1,220) | (909) |
| Net revenues | 32,947 | 22,140 | 25,426 | 58,373 | 38,739 |
| Cost of revenues | (9,309) | (7,475) | (7,433) | (16,742) | (13,143) |
| Gross profit | 23,638 | 14,665 | 17,993 | 41,631 | 25,596 |
| Operating expenses | |||||
| Research and development | (5,854) | (2,811) | (3,882) | (9,736) | (5,282) |
| Selling and marketing | (3,405) | (2,136) | (2,642) | (6,047) | (4,412) |
| General and administrative | (3,930) | (2,496) | (2,948) | (6,878) | (7,018) |
| Total Operating expenses | (13,189) | (7,443) | (9,472) | (22,661) | (16,712) |
| Government subsidies | 11 | 5 | -- | 11 | 62 |
| Operating income | 10,460 | 7,227 | 8,521 | 18,981 | 8,946 |
| Gain on re-measurement of fair value of the equity method investment | -- | -- | 995 | 995 | -- |
| Interest income | 1,466 | 126 | 1,149 | 2,615 | 198 |
| Change of fair value of forward contract | (1,298) | -- | 1,010 | (288) | -- |
| Foreign exchange gains/(loss) | 1,103 | -- | (551) | 552 | -- |
| Other Income | 47 | -- | 47 | 94 | -- |
| Income before income taxes and share of net income of equity accounted investment | 11,778 | 7,353 | 11,171 | 22,949 | 9,144 |
| Income tax expense | (1,698) | (1,008) | (363) | (2,061) | (1,645) |
| Share of net income of equity method investment | 40 | 88 | 12 | 52 | 101 |
| Net income | 10,120 | 6,433 | 10,820 | 20,940 | 7,600 |
| Less: Net income attributable to noncontrolling interest | 543 | 207 | 201 | 744 | 477 |
| Net income attributable to AutoNavi Holdings Limited shareholders | 9,577 | 6,226 | 10,619 | 20,196 | 7,123 |
| Net income per share | |||||
| Net income attributable to AutoNavi Holdings Limited shareholders | |||||
| Basic | 0.05 | 0.04 | 0.06 | 0.11 | 0.05 |
| Diluted | 0.05 | 0.04 | 0.05 | 0.10 | 0.04 |
| Weighted average number of shares used in calculating net income per ordinary share | |||||
| Basic | 189,886,340 | 112,298,000 | 188,974,897 | 189,433,136 | 110,306,072 |
| Diluted | 201,317,855 | 162,757,988 | 201,199,136 | 201,256,323 | 161,622,602 |
| AUTONAVI HOLDINGS LIMITED | |||
| Reconciliation of non-GAAP measures to most directly comparable GAAP measures | |||
| (In thousands of U.S. dollars, except percentage and per ADS data) | |||
| For the three months ended | |||
| June 30, | June 30, | March 31, | |
| 2011 | 2010 | 2011 | |
| Total operating expenses | 13,189 | 7,443 | 9,472 |
| Share-based compensation | (928) | (940) | (317) |
| Non-GAAP total operating expenses | 12,261 | 6,503 | 9,155 |
| R&D expenses | 5,854 | 2,811 | 3,882 |
| Share-based compensation | (460) | (508) | (129) |
| Non-GAAP R&D expenses | 5,394 | 2,303 | 3,753 |
| Selling and marketing expenses | 3,405 | 2,136 | 2,642 |
| Share-based compensation | (255) | (290) | (78) |
| Non-GAAP selling and marketing expenses | 3,150 | 1,846 | 2,564 |
| General and administrative expenses | 3,930 | 2,496 | 2,948 |
| Share-based compensation | (213) | (142) | (110) |
| Non-GAAP general and administrative expenses | 3,717 | 2,354 | 2,838 |
| Operating income | 10,460 | 7,227 | 8,521 |
| Share-based compensation | 981 | 1,066 | 352 |
| Non-GAAP operating income | 11,441 | 8,293 | 8,873 |
| Operating margin | 31.7% | 32.6% | 33.5% |
| Share-based compensation | 3.0% | 4.9% | 1.4% |
| Non-GAAP operating margin | 34.7% | 37.5% | 34.9% |
| Net income attributable to AutoNavi Holdings Limited shareholders | 9,577 | 6,226 | 10,619 |
| Gain on re-measurement of the fair value of equity method investment | -- | -- | (995) |
| Share-based compensation | 981 | 1,066 | 352 |
| Non-GAAP net income attributable to AutoNavi Holdings Limited shareholders | 10,558 | 7,292 | 9,976 |
| For the three months ended June 30, 2011 | |||
| GAAP | Adjustments | Non-GAAP(a) | |
|
Diluted net income per ADS attributable to AutoNavi Holdings Limited shareholders |
0.19 | 0.02 | 0.21 |
| (a) Non-GAAP diluted net income per ADS attributable to AutoNavi Holdings Limited shareholders is computed by dividing non-GAAP net income attributable to AutoNavi Holdings Limited shareholders by the weighted average number of diluted ordinary shares outstanding used in computing the GAAP diluted net income per ordinary share attributable to AutoNavi Holdings Limited shareholders for the respective periods (after adjusting for the ADS to ordinary share ratio). |