Tudou Reports First Quarter 2012 Financial Results

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  --  --  
CONTACT: Investor Relations Contact:
         
         Michael S. Fu
         Director, Investor Relations
         Tudou Holdings Limited
         Tel: (+86) 21-5170-2355
         Email:  
 This e-mail address is being protected from spambots. You need JavaScript enabled to view it.
 
         
         Jeremy Peruski
         ICR, Inc.
         Tel:  +1 (646) 405-4884
         Email:  
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         SOURCE: Tudou


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