SHANGHAI, China, May 21, 2012 (GLOBE NEWSWIRE) -- Tudou Holdings Limited (Nasdaq:TUDO) ("Tudou" or the "Company"), a leading Internet video company in China, today announced its unaudited financial results for the first quarter ended March 31, 2012.
First Quarter 2012 Revenue Highlights
- Net revenues increased to RMB140.3 million (US$22.3 million), up 76.7% year-over-year, exceeding management's prior guidance of 70% to 75% year-over-year growth.
- Online advertising service revenues increased to RMB114.6 million (US$18.2 million), up 63.3% year-over-year.
- Mobile video services revenues increased to RMB13.6 million (US$2.2 million), up 53.4% year-over-year.
- Other (sub-licensing) revenues increased to RMB12.1 million (US$1.9 million) compared to RMB0.3 million in the corresponding period in 2011.
First Quarter 2012 Financial Results
Revenues: Net revenues for the first quarter of 2012 increased by 76.7% to RMB140.3 million (US$22.3 million) from RMB79.4 million in the corresponding period in 2011.(1) Online advertising service revenues for the first quarter of 2012 increased by 63.3% to RMB114.6 million (US$18.2 million) from RMB70.2 million in the corresponding period in 2011. Mobile video service revenues for the first quarter of 2012 increased by 53.4% to RMB13.6 million (US$2.2 million) from RMB8.8 million in the corresponding period in 2011. Other (sub-licensing) revenues increased to RMB12.1 million (US$1.9 million) from RMB0.3 million in the corresponding period in 2011.
Cost of Revenues: Cost of revenues increased by 121.8% to RMB179.6 million (US$28.5 million) from RMB81.0 million in the corresponding period in 2011. The increase was primarily attributable to increased Internet bandwidth costs, content costs and mobile video services costs, partially offset by a decrease in share-based compensation expenses of RMB13.3 million. Internet bandwidth costs totaled RMB71.5 million (US$11.4 million), or 51.0% of net revenues, compared to RMB31.2 million, or 39.3% of net revenues, in the corresponding period in 2011. The increase in Internet bandwidth costs was primarily due to increased traffic on the Company's website and its continued focus on enhancing users' experience. Content costs totaled RMB90.5 million (US$14.4million), or 64.5% of net revenues, compared to RMB23.9 million, or 30.2% of net revenues, in the corresponding period in 2011. Content costs consist of amortization of premium licensed content, salaries and benefits for staff and production costs for content produced in-house. The increase in content costs was primarily due to the increase in amortization of premium licensed content and content produced in-house as a result of an increase in the amount of content purchased and produced. Mobile video services costs totaled RMB6.4 million (US$1.0 million), or 4.5% of net revenues, compared to RMB5.4 million, or 6.8% of net revenues, in the corresponding period in 2011. The increase in mobile video services costs was primarily attributable to the increase in mobile video services revenues.
Gross Loss: For the first quarter of 2012, gross loss totaled RMB39.4 million (US$6.2 million), compared to a gross loss of RMB1.6 million in the corresponding period in 2011.
Operating Expenses: Operating expenses for the first quarter of 2012 were RMB93.3 million (US$14.8 million), compared to RMB160.3 million in the corresponding period in 2011. The decrease was primarily due to a decrease in share-based compensation expenses and allowance for doubtful debt, partially offset by an increase in sales and marketing expenses.
Net Loss: Net loss for the first quarter of 2012 decreased to RMB134.5 million (US$21.4 million) from a net loss of RMB336.0 million in the corresponding period in 2011.
Adjusted Net Loss: Adjusted net loss for the first quarter of 2012, which excluded share-based compensation expenses, was RMB124.2 million (US$19.7 million), compared to an adjusted net loss of RMB59.0 million in the corresponding period in 2011, which excluded share-based compensation expenses and fair value changes in warrant liabilities. See "Non-GAAP Financial Measures" below.
Recent Developments
In April 2012, Tudou announced a joint collaboration with China Central Television Sports & Entertainment Ltd. ("CCTV"), China's state television broadcaster and the exclusive broadcaster for the London 2012 Olympic Games (the "Olympics") in China. Together, Tudou and CCTV will broadcast 361° London Action ("London Action"), CCTV's first theme-based program focused on the Olympics. In addition to providing exclusive access to London Action, Tudou will enhance its users' experience by allowing them to interact, comment and share content with other users.
In March 2012, Youku Inc. (NYSE:YOKU) ("Youku") and the Company announced that they had signed a definitive agreement for Tudou to combine with Youku in a 100% stock-for-stock transaction. Under the agreement, each Class A ordinary share and each Class B ordinary share of Tudou issued and outstanding immediately prior to the effective time of the merger will be cancelled in exchange for the right to receive 7.177 Class A ordinary shares of Youku, and each American depositary share of Tudou ("Tudou ADSs"), each of which represents four Tudou Class B ordinary shares, will be cancelled in exchange for the right to receive 1.595 American depositary shares of Youku ("Youku ADSs"), each of which represents 18 Youku Class A ordinary shares. The combination will result in Youku and Tudou shareholders and ADS holders owning approximately 71.5% and 28.5% of the combined entity, respectively, immediately upon completion of the transaction. Upon completion, the combined entity will be named Youku Tudou Inc. Youku's ADSs will continue to be listed on the NYSE under the symbol "YOKU".
The combination has been approved by both companies' boards of directors and is subject to customary closing conditions, including approvals by Youku and Tudou shareholders. Shareholders of Youku and Tudou with representatives serving on the companies' respective boards of directors have committed to vote in favor of the combination. The combination is expected to close in the third quarter of 2012.
Conference Call
Due to the pending merger with Youku, Tudou will not hold a conference call to discuss its financial results.
About Tudou
Tudou Holdings Limited (Nasdaq:TUDO) is a leading Internet video company in China providing premium licensed content, user generated content ("UGC") and original in-house produced content. Founded in 2005, Tudou was the first UGC video sharing website launched in China. The "Tudou" brand is one of the most recognized Internet brands in China, and the annual Tudou Video Festival has become a signature event in the online video industry. For more information, please visit http://ir.tudou.com.
Safe Harbor Statement
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 "may," "will," "expects," "anticipates," "future," "intends," "plans," "believes," "aims," "estimates," "confident," "likely to" and similar 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: the Company's ability to execute its business strategies, plans and initiatives; the Company's future business development, results of operations and financial condition; changes in the Company's revenues and certain cost or expense items; the Company's expectations with respect to increased revenue growth and its ability to sustain profitability; the Company's ability to develop new services; the Company's ability to attract users and advertisers and enhance its brand recognition; and the ability of the online video and advertising industry in China to grow at rates projected by market data. Any of the foregoing risks may have a material adverse effect on the Company's business and the market price of its ADSs. Further information regarding these and other risks is included in the Company's 20-F filed with the Securities and Exchange Commission on March 30, 2012. All information provided in this press release is current as of the date of the press release, and the Company undertakes no duty to update such information, except as required under applicable law.
Non-GAAP Financial Measures
We define adjusted net income (loss), a non-GAAP financial measure, as net income (loss) excluding share-based compensation expenses and fair value changes in warrant liabilities. We review adjusted net income (loss) together with net income (loss) to obtain a better understanding of our operating performance. We also believe it is useful supplemental information for investors and other interested persons to assess our operating performance without the effect of non-cash fair value changes in warrant liabilities, which will not likely be recurring factors in our business in the future, and share-based compensation expenses, which have been and will continue to be a significant recurring factor in our business.
We present this non-GAAP financial measure because this is used by our management to evaluate our operating performance. We believe this non-GAAP financial measure provides useful information to investors and other interested persons because by having access to such information they will have the same data we use to assess our operating performance, and because such information allows them to understand and evaluate our consolidated results of operations in the same manner as our management and to make period-over-period comparisons of our financial results. However, the use of adjusted net income (loss) has material limitations as an analytical tool. One of the limitations of using non-GAAP adjusted net income (loss) is that it does not include all items that impact our net income (loss) for the period. In addition, because adjusted net income (loss) may not be calculated in the same manner by all companies, it may not be comparable to similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider adjusted net income (loss) in isolation from or as an alternative to net income (loss) prepared in accordance with U.S. GAAP. We encourage investors and other interested persons to review our financial information in its entirety and not rely on a single financial measure.
Exchange Rate
This press release contains translations of certain Renminbi amounts into US dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to US dollars for the quarter ended March 31, 2012 were made at a rate of RMB6.2975 to US$1.00, the noon buying rate in effect on March 30, 2012 as set forth in the weekly H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at such rate.
(1) The Company records revenues on a net basis and net revenues are presented net of third party ad agency fees and sales tax as a reduction of revenues. For the first quarter of 2012, third party advertisement agency fees were RMB25.1 million (US$4.0 million) and sales tax was RMB5.6 million (US$0.9million), compared to third party advertisement agency fees of RMB15.3 million and sales tax of RMB12.0 million in the corresponding period in 2011.
| Tudou Holdings Limited | ||||
| Consolidated Balance Sheet Information | ||||
| (Amounts expressed in RMB, unless otherwise stated) | ||||
| Mar 31, 2011 | Dec 31, 2011 | Mar 31, 2012 | Mar 31, 2012 | |
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| RMB | RMB | RMB | US$ | |
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | 208,969,448 | 872,000,453 | 695,746,338 | 110,479,768 |
| Restricted cash | 65,564,000 | 96,786,719 | 96,685,338 | 15,352,971 |
| Accounts receivable, net | 254,135,465 | 239,804,186 | 256,602,540 | 40,746,731 |
| Prepayments and other current assets | 25,174,620 | 17,888,737 | 15,347,958 | 2,437,151 |
| Premium content licensed | 9,368,362 | 64,461,085 | 47,551,257 | 7,550,815 |
| Content produced | 3,497,227 | 8,214,506 | 695,922 | 110,508 |
| Total current assets | 566,709,122 | 1,299,155,686 | 1,112,629,353 | 176,677,944 |
| Equipment | 46,711,980 | 88,787,903 | 93,393,641 | 14,830,272 |
| Intangible assets | 4,282,842 | 6,183,164 | 5,973,504 | 948,552 |
| Other assets | 4,318,269 | 4,211,498 | 4,175,908 | 663,106 |
| Other long-term receivables | -- | 10,000,000 | 10,000,000 | 1,587,932 |
| Prepayment for premium content licensed | -- | 142,750,301 | 166,091,005 | 26,374,118 |
| Premium content licensed | 49,531,347 | 141,403,738 | 200,466,206 | 31,832,665 |
| Total assets | 671,553,560 | 1,692,492,290 | 1,592,729,617 | 252,914,589 |
| Liabilities and shareholders' equity | ||||
| Current liabilities: | ||||
| Accounts payable | 77,800,676 | 126,643,349 | 163,179,211 | 25,911,745 |
| Taxes payable | 22,450,667 | 37,640,665 | 28,491,533 | 4,524,261 |
| Accrued liabilities and other payables | 154,501,083 | 230,764,509 | 225,563,977 | 35,818,019 |
| Short-term loan | 61,243,510 | 83,343,510 | 83,343,510 | 13,234,380 |
| Share-based compensation liability | 240,769,592 | -- | -- | -- |
| Total current liabilities | 556,765,528 | 478,392,033 | 500,578,231 | 79,488,405 |
| Warrant liabilities | 324,424,702 | -- | -- | -- |
| Total liabilities | 881,190,230 | 478,392,033 | 500,578,231 | 79,488,405 |
| Series A redeemable convertible preferred shares | 7,512,241 | -- | -- | -- |
| Series B redeemable convertible preferred shares | 55,729,302 | -- | -- | -- |
| Series C redeemable convertible preferred shares | 124,571,600 | -- | -- | -- |
| Series D redeemable convertible preferred shares | 372,403,520 | -- | -- | -- |
| Series E redeemable convertible preferred shares | 361,558,129 | -- | -- | -- |
| Shareholders' equity | ||||
| Ordinary shares | 9,700 | 74,608 | 74,907 | 11,895 |
| Additional paid-in capital | 11,054,330 | 2,541,869,642 | 2,554,379,616 | 405,618,041 |
| Accumulated deficit | (1,142,475,492) | (1,327,843,993) | (1,462,303,137) | (232,203,752) |
| Total shareholders' equity | (1,131,411,462) | 1,214,100,257 | 1,092,151,386 | 173,426,184 |
| Total liabilities and shareholders' equity | 671,553,560 | 1,692,492,290 | 1,592,729,617 | 252,914,589 |
| Tudou Holdings Limited | |||||||
| Consolidated Statement of Operations Information | |||||||
| (Amounts expressed in RMB, unless otherwise stated) | |||||||
| For the Three Months Ended | |||||||
| Mar 31, 2011 | Dec 31, 2011 | Mar 31, 2012 | Mar 31, 2012 | ||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||
| RMB | RMB | RMB | US$ | ||||
| Revenues | 91,418,768 | 180,038,169 | 145,856,999 | 23,161,095 | |||
| Less: Sales taxes | (12,041,797) | (13,549,101) | (5,575,694) | (885,382) | |||
| Net revenues | 79,376,971 | 166,489,068 | 140,281,305 | 22,275,713 | |||
| Cost of revenues | (80,995,830) | (160,143,362) | (179,632,865) | (28,524,472) | |||
| Gross profit / (loss) | (1,618,859) | 6,345,706 | (39,351,560) | (6,248,759) | |||
| Operating expenses: | |||||||
| Sales and marketing expenses | (76,383,930) | (105,373,197) | (68,808,006) | (10,926,242) | |||
| General and administrative expenses | (83,887,554) | (45,066,299) | (24,527,517) | (3,894,802) | |||
| Total operating expenses | (160,271,484) | (150,439,496) | (93,335,523) | (14,821,044) | |||
| Loss from operations | (161,890,343) | (144,093,790) | (132,687,083) | (21,069,803) | |||
| Finance income | 76,657 | 223,034 | 639,483 | 101,546 | |||
| Finance expense | (867,162) | (1,459,818) | (1,517,576) | (240,981) | |||
| Other expense, net | -- | (13,363) | -- | -- | |||
| Foreign exchange loss | (2,914,383) | (3,513,029) | (893,968) | (141,956) | |||
| Fair value change in warrant liabilities | (170,385,091) | -- | -- | -- | |||
| Loss before income taxes | (335,980,322) | (148,856,966) | (134,459,144) | (21,351,194) | |||
| Income taxes | -- | -- | -- | -- | |||
| Net loss | (335,980,322) | (148,856,966) | (134,459,144) | (21,351,194) | |||
|
Accretion and effect of foreign exchange movement on Series A Preferred Shares |
(130,985) | -- | -- | -- | |||
| Effect of foreign exchange movement on Series B Preferred Shares | 563,549 | -- | -- | -- | |||
| Effect of foreign exchange movement on Series C Preferred Shares | 1,259,700 | -- | -- | -- | |||
| Effect of foreign exchange movement on Series D Preferred Shares | 3,765,840 | -- | -- | -- | |||
|
Accretion and effect of foreign exchange movement on Series E Preferred Shares |
(10,156,000) | -- | -- | -- | |||
| Net loss attributable to ordinary shareholders | (340,678,218) | (148,856,966) | (134,459,144) | (21,351,194) | |||
| Loss per ordinary share | |||||||
| - Basic and diluted | (28.39) | (1.31) | (1.19) | (0.19) | |||
| Loss per ADS | |||||||
| - Basic and diluted | (113.56) | (5.25) | (4.74) | (0.75) | |||
| Weighted average number of ordinary shares used in computing loss per share | |||||||
| - Basic and diluted | 12,000,000 | 113,425,562 | 113,431,544 | 113,431,544 | |||
| Share-based compensation was allocated in operating expenses as follows: | |||||||
| Cost of revenues | 14,718,004 | 1,110,057 | 1,379,365 | 219,033 | |||
| Sales and marketing expenses | 35,048,658 | 4,531,878 | 5,404,764 | 858,240 | |||
| General and administrative expenses | 56,849,582 | 2,646,953 | 3,430,954 | 544,812 | |||
| Tudou Holdings Limited | |||||
|
Adjusted Net Loss — Non-GAAP Reconciliation |
|||||
| (Amounts expressed in RMB, unless otherwise stated) | |||||
| For the Three Months Ended | |||||
| Mar 31, 2011 | Dec 31, 2011 | Mar 31, 2012 | Mar 31, 2012 | ||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||
| RMB | RMB | RMB | US$ | ||
| Net loss | (335,980,322) | (148,856,966) | (134,459,144) | (21,351,194) | |
| Add back: | Share-based compensation expenses | 106,616,244 | 8,288,888 | 10,215,083 | 1,622,085 |
| Fair value changes in warrant liabilities | 170,385,091 | -- | -- | -- | |
| Adjusted net loss | (58,978,987) | (140,568,079) | (124,244,061) | (19,729,109) | |
| Tudou Holdings Limited | ||||
| Consolidated Statement of Cash Flows | ||||
| (Amounts expressed in RMB, unless otherwise stated) | ||||
| For the Three Months Ended | ||||
| Mar 31, 2011 | Dec 31, 2011 | Mar 31, 2012 | Mar 31, 2012 | |
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| RMB | RMB | RMB | US$ | |
| Cash flows from operating activities: | ||||
| Net loss | (335,980,322) | (148,856,966) | (134,459,144) | (21,351,194) |
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||
| Depreciation of equipment | 6,133,281 | 8,724,857 | 9,637,685 | 1,530,399 |
| Amortization of intangible assets | 7,850 | 182,619 | 209,660 | 33,293 |
| Amortization of other assets | 35,590 | 35,591 | 35,590 | 5,651 |
| Provision for doubtful accounts | 12,283,075 | 17,390,053 | 2,643,383 | 419,751 |
| Amortization of the premium content licensed | 10,015,907 | 45,833,577 | 50,863,964 | 8,076,850 |
| Amortization of the content produced | 3,065,273 | 750,000 | 12,728,947 | 2,021,270 |
| Share-based compensation | 106,616,244 | 8,288,888 | 10,215,083 | 1,622,085 |
| Fair value changes in warrant liabilities | 170,385,091 | -- | -- | -- |
| Foreign exchange loss | 2,914,383 | 3,513,029 | 893,968 | 141,956 |
| Changes in operating assets and liabilities: | ||||
| Accounts receivables | (23,385,191) | 36,729,124 | (19,441,737) | (3,087,215) |
| Prepayments and other current assets | 5,143,118 | (6,003,888) | 4,835,969 | 767,919 |
| Content produced | -- | (4,996,183) | (5,210,362) | (827,370) |
| Accounts payable | 828,310 | 22,092,776 | 6,636,811 | 1,053,880 |
| Tax payable | 1,291,995 | 5,799,140 | (9,149,132) | (1,452,820) |
| Other payables and accruals | 18,005,320 | 43,924,185 | (5,200,532) | (825,809) |
| Net cash provided by/(used in) operating activities | (22,640,076) | 33,406,802 | (74,759,847) | (11,871,354) |
| Cash flows from investing activities: | ||||
| Purchase of equipment | (3,379,407) | (22,986,538) | (12,263,333) | (1,947,334) |
| Purchase of intangible assets | (2,364,278) | (1,266,785) | -- | -- |
| Advance payment for premium content licensed | -- | (61,966,030) | (23,340,704) | (3,706,344) |
| Cash paid for premium content licensed | (28,570,237) | (137,227,357) | (65,097,644) | (10,337,061) |
| Cash received from maturity of short-term investment | 5,837,246 | -- | -- | -- |
| Net decrease/(increase) in restricted cash | 663,000 | (2,347,968) | 101,381 | 16,099 |
| Net cash used in investing activities | (27,813,676) | (225,794,678) | (100,600,300) | (15,974,640) |
| Cash flows from financing activities: | ||||
| Cash received from short-term loan | -- | 20,543,510 | -- | -- |
| Cash paid for the repayment of short-term loan | -- | (20,543,510) | -- | -- |
| Cash paid for initial public offering cost | (813,192) | (6,420,652) | -- | -- |
| Net cash used in financing activities | (813,192) | (6,420,652) | -- | -- |
| Net decrease in cash and cash equivalents | (51,266,944) | (198,808,528) | (175,360,147) | (27,845,994) |
| Cash and cash equivalents at beginning of period | 263,150,775 | 1,074,322,010 | 872,000,453 | 138,467,718 |
| Effect of foreign exchange rate change on cash | (2,914,383) | (3,513,029) | (893,968) | (141,956) |
| Cash and cash equivalents at end of period | 208,969,448 | 872,000,453 | 695,746,338 | 110,479,768 |
| Supplementary Disclosure of Cash Flow Information | ||||
| Cash paid for interest | 821,295 | 1,492,948 | 1,519,720 | 241,321 |
| Supplementary Disclosure of Non-cash Investing and Financial Activities | ||||
| Unpaid deferred expenses/Payables related to the initial public offering | 11,027,546 | -- | -- | -- |
| Payables related to purchase of equipment | 11,199,060 | 11,743,300 | 13,723,390 | 2,179,181 |
| Payables related to premium content licensed | 17,730,286 | 26,377,055 | 54,296,015 | 8,621,836 |
| Payables related to purchase of PRC advertising license qualification right | 300,124 | -- | -- | |