Solid Growth in Core Business and Subscriber Base
Q4 2007: Deferred Revenue up 33% Q-o-Q
Q4 2007: Net Revenues up 22% Q-o-Q
Q4 2007: Non-GAAP Net Income up 22% Q-o-Q
Full Year 2008 Guidance Highlights
-- The Company raises its projected net revenues for 2008 to be
between $54 million and $61 million, compared to the previous
guidance of $50 million to $60 million.
-- The Company also raises its projected adjusted earnings (non-GAAP),
defined as net income excluding share-based compensation expenses, for
2008 from the previous guidance of $22 million to $28 million to the
range of $24 million to $29 million.
Q4 2007 Highlights
-- Subscription services provided to retail investors, the Company's
current core business, produced another solid quarter despite the
severe correction of China's stock market in the fourth quarter of 2007.
Active paying retail subscriber grew to 56,200, up 24% from the
previous quarter, and deferred revenue on the balance sheet at the end
of Q4 2007 reached a new record high of $25.12 million, up 291%
compared to the end of Q4 2006 and up 33% compared to the end of Q3
2007. Deferred revenue represents upfront service fees made by
customers for subscription services that have not been rendered at
December 31, 2007.
-- Net revenues of $8.88 million for Q4 2007, meeting the Company's
previously updated guidance, up 252% year-over-year and 22%
quarter-over-quarter.
-- Non-GAAP net income, which excludes stock-based compensation expenses
and the investment impairment in Moloon International Inc ('Moloon'),
was $3.63 million for Q4 2007, compared to a non-GAAP net loss of
$149,000 for the fourth quarter of 2006. Non-GAAP basic and diluted net
income per share were $0.04 and $0.03, respectively, and non-GAAP basic
and diluted net income per ADS were $0.18 and $0.16 for Q4 2007,
respectively.
-- Due to Moloon's deteriorating financial conditions, a non-cash
investment impairment of $11.13 million was recorded in Q4 2007 against
the Company's cost method investment in Moloon, reducing the carrying
amount of the investment from $12.61 million to $1.48 million, 88% off
the book value.
-- The Company does not consolidate Moloon's financial results, and the
impairment charge against the investment in Moloon will not have any
adverse impact on China Finance Online's business growth. In addition,
the Company does not have any investment other than the investment in
Moloon.
-- Reflecting the non-cash impairment charge, net loss for Q4 2007 was
$8.37 million. Both basic and diluted net loss per share were $0.09,
and both basic and diluted net loss per ADS were $0.43 for Q4 2007.
-- The following Chart 1 reconciles between GAAP and non-GAAP results for
the fourth quarter of 2007 (in thousands of U.S. dollars):
Chart 1:
Three months ended
Dec. 31,2007 Sep. 30,2007 Dec. 31,2006
(In thousands of U.S. dollars)
Non-GAAP net income (loss) 3,633 2,983 (149)
Share-based compensation expenses (875) (1,081) (225)
Investment impairment in Moloon (11,127) -- (1,322)
GAAP net income (loss) (8,369) 1,902 (1,696)
-- Registered user accounts of jrj.com and stockstar.com grew to 9.0
million, an increase of 0.9 million from the previous quarter. Active
paying retail subscribers grew to 56,200, up 24% from the previous
quarter.
Explanation of the Company's non-GAAP financial measures and the related reconciliations to GAAP financial measures are included in the accompanying 'Reconciliation to Unaudited Condensed Consolidated Statements of Operations', 'Non-GAAP Measures' and ' Reconciliations from operating profit to EBITDA and adjusted EBITDA'.
Full Year 2007 Highlights
-- Net revenues increased by 263% to $25.90 million in 2007 from
$7.13 million in 2006.
-- Non-GAAP net income, excluding stock-based compensation expenses of
$2.95 million and the investment impairment of $11.13 million in Moloon,
totalled $9.94 million for the full year 2007, up 422% year-on-year.
Non-GAAP basic and diluted net income per share were $0.11 and $0.09,
respectively, and non-GAAP basic and diluted net income per ADS were
$0.51 and $0.45 for 2007, respectively.
-- Reflecting the non-cash impairment charge, net loss in 2007 was
$4.13 million. Both basic and diluted net loss per share were $0.04
in 2007, and both basic and diluted net loss per ADS were $0.22 in 2007.
-- The following Chart 2 reconciles between GAAP and non-GAAP results for
the full year 2007 (in thousands of U.S. dollars):
Chart 2:
Year ended Dec.31
2007 2006
(In thousands of U.S. dollars)
Non-GAAP net income 9,943 1,906
Share-based compensation expenses (2,946) (1,184)
Impairment in Moloon (11,127) (1,322)
Net loss (4,130) (600)
Q4 2007 Financial Results
Deferred Revenue:
Despite the severe correction of China's stock market in the fourth
quarter of 2007, subscription services provided to retail investors, the
Company's current core business, still delivered strong performance and
achieved record results. Deferred revenue at the end of the fourth quarter of
2007, which represents prepaid service fees made by customers for subscription
services that have not been rendered as at
Net Revenues:
During the fourth quarter of 2007,
Gross Profit:
Gross profit for the quarter was
Operating Expenses:
Operating expenses for the fourth quarter totalled
General and administrative expenses for the quarter were
Sales and marketing expenses for the fourth quarter were
Product development expenses for the fourth quarter were
Income from Operations:
Income from operations for the fourth quarter of 2007 was
Non-GAAP Net Income and Net Income (Loss):
In the fourth quarter of 2007, the Company recorded an investment
impairment of
Non-GAAP net income, excluding stock-based compensation expenses of
Reflecting the non-cash impairment charge, net loss for Q4 2007 was
As part of the net income for the fourth quarter, the Company recorded a
net exchange gain of
Excluding stock-based compensation expenses of
Cash and Cash Equivalents:
Balance of cash and cash equivalents was approximately
Cash Flow Statement:
Cash inflow from subscription services provided to retail customers was
Adjusted EBIDTA (Non-GAAP):
Adjusted EBITDA (non-GAAP), which is defined as earnings before interest,
taxes, depreciation, amortization, other non-operating income and stock-based
compensation expenses, was
Full Year 2007 Financial Results
For the full year ended
Gross profit in 2007 increased by 279% to
Total operating expenses in 2007 were
Income from operations in 2007 was
Non-GAAP net income in 2007, excluding stock-based compensation expenses
of
Non-GAAP net income margin in 2007 was 38%, compared to non-GAAP net income margin of 27% in 2006.
Reflecting the non-cash impairment charge, net loss in 2007 was
Investment Impairment
In December of 2005, the Company purchased a minority interest in Moloon,
a provider of mobile stream media technology and services. During the second
half of 2006,
Thereafter, Moloon adopted new strategies to transform itself into a
leading provider of mobile online gaming services in
However, despite the new strategies Moloon's financial conditions have
deteriorated and, following an independent valuation of the Company's cost
method investment in Moloon, it was determined that the Company should record
a non-cash investment impairment of
Q4 2007 Operating Results
As of
Active paying retail subscriber as of
Outlook for First Quarter and Full Year 2008
The Company currently expects to generate net revenues in an amount
ranging from
On a non-GAAP basis, the Company estimates adjusted earnings, which
represents net income excluding share-based compensation expenses, will be
between
Backed by record deferred revenue and operating cash flows, steadily
increasing registered user base and continuous enhancement in telemarketing
capabilities and our recent partnerships with
The Company believes that the projected 2008 financial results will be
back-end loaded due to, among other things, the following reasons: 1) prepaid
subscription fees from retail subscribers are recognized over subscription
periods; 2) the Company does not expect the recent initiatives including
The above forecast reflects the Company's current and preliminary view, which is subject to change. A number of important factors including, but not limited to, fluctuation in the Chinese stock market could cause the actual results to differ materially from those contained in the above guidance.
Conference Call
The conference call will be available on Webcast live and replay at: http://www.chinafinanceonline.com/investor/earning_releases.asp . The call will be archived for 12 months at this website.
The dial-in details for the live conference call: U.S. Toll Free Number
+1-877-847-0047,
A replay of the conference call will be available from approximately
About
Safe Harbor Statements
This announcement contains forward-looking statements. These statements are made under the 'safe harbor' provisions of the U.S. Private Securities Litigation Reform Act of 1995.
Statements that are not historical facts, including statements about our
beliefs and expectations, are forward-looking statements. These statements are
based on current plans, estimates and projections, and therefore you should
not place undue reliance on them. Forward-looking statements involve inherent
risks and uncertainties. We caution you that a number of important factors
could cause actual results to differ materially from those contained in any
forward-looking statement. Potential risks and uncertainties include, but not
limited to, our historical and possible future losses, limited operating
history, uncertain regulatory landscape in the People's Republic of
Non-GAAP Measures
To supplement the unaudited condensed consolidated financial information
presented in accordance with Accounting Principles Generally Accepted in the
Reconciliations of the Company's non-GAAP financial measures to unaudited Condensed Consolidated Statements of Operations are set fourth after the 'Condensed Consolidated Statements of Operations' included in this release.
China Finance Online Co. Limited
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
Dec. 31, 2007 Dec. 31, 2006
Assets
Current assets:
RMB account $51,129 $32,798
Foreign currency account 23,600 12,157
Cash and cash equivalents $74,729 $44,955
Customer bank balances held in trust 2,850 --
Accounts receivable, net 1,491 478
Prepaid expenses and other current
assets 4,620 928
Deferred tax assets, current 1,130 170
Total current assets $84,820 $46,531
Cost method investment 1,480 12,607
Property and equipment, net 5,455 1,698
Acquired intangible assets, net 1,938 2,045
Rental deposits 500 86
Goodwill 9,652 8,152
Deferred tax assets, non-current 14 --
Other deposits 25 --
Total assets $103,884 $71,119
Liabilities and shareholders' equity
Current liabilities:
Deferred revenue, current $20,457 $6,419
Accrued expenses and other current
liabilities 10,540 2,096
Deferred tax liability, current -- --
Income taxes payable 12 5
Total current liabilities $31,009 $8,520
Deferred tax liability, non-current 352 146
Deferred revenue, non-current 4,665 --
Provision for long term service payment 25 --
Total liabilities $36,051 $8,666
Minority interests 471 --
Total shareholders' equity $67,362 $62,453
Total liabilities and shareholders' equity $103,884 $71,119
China Finance Online Co. Limited
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of U.S. dollars, except per share data)
Three months ended Year ended Dec. 31
Dec. 31, Dec. 31, Sep. 30,
2007 2006 2007 2007 2006
Net revenues $8,882 $2,522 $7,303 $25,903 $7,128
Cost of revenues
(includes
share-based
compensation
expenses of $0,
$24, $0, $16 and
$112 respectively) (1,323) (628) (1,192) (4,427) (1,468)
-------- -------- -------- ------- -------
Gross profit 7,559 1,894 6,111 21,476 5,660
Operating expenses
General and
administrative
(includes expenses of
share-based compensation
$797, $150, $1,005,
$2,668 and $834
respectively) (2,631) (1,051) (2,169) (7,784) (2,955)
Sales and marketing
(includes
share-based
compensation
expenses of $45,
$23, $37, $139
and $107
respectively) (2,430) (1,250) (1,887) (6,924) (2,666)
Product development
(includes
share-based
compensation
expenses of $33,
$28, $39, $123 and
$131 respectively) (865) (334) (614) (2,269) (743)
-------- -------- -------- ------- -------
Total operating
expenses (5,926) (2,635) (4,670) (16,977) (6,364)
Subsidy income 136 -- -- 136 --
Income(loss) from
operations 1,769 (741) 1,441 4,635 (704)
Interest income 355 208 243 1,105 1,003
Other income, net 1 -- 1 9 115
Exchange gain, net 220 82 41 424 267
Loss from
impairment of cost
method investment (11,127) (1,322) -- (11,127) (1,322)
-------- -------- -------- ------- -------
Income(loss)
before
income tax
benefit(provision) (8,782) (1,773) 1,726 (4,954) (641)
Income tax benefit
(provision) 398 77 176 809 41
Minority interests
in net income of
consolidated
subsidiary 15 -- -- 15 --
-------- -------- -------- ------- ------
-
Net income(loss) $(8,369) $(1,696) $1,902 $(4,130) $(600)
Net income(loss)
attributable to
ordinary
shareholders $(8,369) $(1,696) $1,902 $(4,130) $(600)
Net income(loss)
per share
Basic $(0.09) $(0.02) $0.02 $(0.04) $(0.01)
Diluted $(0.09) $(0.02) $0.02 $(0.04) $(0.01)
Income(loss) per
ADS
Basic $(0.43) $(0.09) $0.10 $(0.22) $(0.03)
Diluted $(0.43) $(0.09) $0.08 $(0.22) $(0.03)
Weighted average
ordinary shares
Basic 98,191,578 93,676,903 94,746,984 94,500,529 93,650,653
Diluted 98,191,578 93,676,903 112,667,599 94,500,529 93,650,653
Weighed average
ADSs
Basic 19,638,316 18,735,381 18,949,397 18,900,106 18,730,131
Diluted 19,638,316 18,735,381 22,533,520 18,900,106 18,730,131
China Finance Online Co. Limited
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
Three months ended
Dec. 31, 2007 Dec. 31, 2006 Sep. 30,2007
Cash flows from operating
activities:
Net income (loss) $(8,369) $(1,696) $1,902
Minority interests (15) -- --
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Stock-based compensation 875 225 1,081
Depreciation and amortization 316 167 254
Loss from impairment of cost method
investment 11,127 1,322 --
Loss on disposal of property and
equipment 23 17 --
Deferred taxes (349) (77) (146)
Changes in assets and liabilities:
Trust bank balances held on behalf
of customers (465) -- --
Accounts receivable 2,525 395 92
Prepaid expenses and other current
assets (631) 17 (2,546)
Rental deposits (380) (77) (29)
Income taxes payable (43) -- (33)
Deferred revenue 5,660 3,294 4,195
Accrued expenses and other current
liabilities 632 253 1,559
Net cash provided by operating
activities 10,906 3,840 6,329
Cash flows from investing
activities:
Acquisition of businesses (994) (691) --
Purchase of property and equipment (1,567) (229) (648)
Proceeds from disposal of fixed
assets 2 -- --
Net cash used in investing
activities (2,559) (920) (648)
Cash flows from financing
activities:
Proceeds from stock options
exercised by employees 876 18 1,199
Proceeds from exercise of options
granted to non-employee 261 -- 214
Dividends paid (8) -- --
Net cash provided by financing
activities 1,129 18 1,413
Effect of exchange rate changes 1,171 393 836
Net increase in cash and cash
equivalents 10,647 3,331 7,930
Cash and cash equivalents, beginning
of quarter 64,082 41,624 56,152
Cash and cash equivalents, end of
quarter 74,729 44,955 64,082
China Finance Online Co. Limited
RECONCILIATIONS OF NON-GAAP MEASURES TO UNAUDITED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(U.S. Dollar in thousands, except share data)
Three months ended Dec. 31, 2007
Reported Adjustment Adjusted
US GAAP Non-GAAP
Net revenues $8,882 -- $8,882
Cost of revenues (1,323) -- (1,323)
Gross profit 7,559 7,559
------- ------- -------
Operating expenses
General and administrative (2,631) 797 (a) (1,834)
Sales and marketing (2,430) 45 (a) (2,385)
Product development (865) 33 (a) (832)
Total operating expenses (5,926) 875 (5,051)
Subsidy income 136 136
Income from operations 1,769 875 2,644
Interest income 355 -- 355
other income, net 1 -- 1
Exchange loss, net 220 -- 220
Loss from impairment of cost method (11,127) 11,127 (b) --
investment
------- ------- -------
Income (loss) before income tax
benefit (8,782) 12,002 3,220
Income tax benefit 398 -- 398
Minority interests in net income of 15 -- 15
consolidated subsidiary
------- ------- -------
Net income (loss) $(8,369) $12,002 $3,633
------- ------- -------
Net income (loss) per share
Basic $(0.09) $0.13 $0.04
Diluted $(0.09) $0.12 $0.03
------- ------- -------
Net income (loss) per ADS
Basic $(0.43) $0.61 $0.18
Diluted $(0.43) $0.59 $0.16
------- ------- -------
Weighted average ordinary shares
Basic 98,191,578 98,191,578
Diluted 98,191,578 116,981,006
Weighed average ADSs
Basic 19,638,316 19,638,316
Diluted 19,638,316 23,396,201
(a) Exclude share-based compensation expense of $875,000.
(b) Exclude the investment impairment of $11.13 million in Moloon.
Non-GAAP Measures
Three months ended Dec. 31, 2007
(U.S. Dollar in thousands)
GAAP Result Adjustment Non-GAAP Results
(a)
Income (loss) from
operation 1,769 875 2,644
Three months ended Dec. 31, 2007
(U.S. Dollar in thousands)
GAAP Result Adjustment Non-GAAP Results
(a) (b)
Net income (loss) (8,369) 875 11,127 3,633
Three months ended Sep. 30, 2007
(U.S. Dollar in thousands)
GAAP Result Adjustment Non-GAAP Results
(a)
Income (loss) from
operation 1,441 1,081 2,522
Three months ended Sep. 30, 2007
(U.S. Dollar in thousands)
GAAP Result Adjustment Non-GAAP Results
(a)
Net income (loss) 1,902 1,081 2,983
Three months ended Dec. 31, 2006
(U.S. Dollar in thousands)
Non-GAAP
GAAP Result Adjustment Results
(a)
Income (loss) from
operation (741) 225 (516)
Three months ended Dec. 31, 2006
(U.S. Dollar in thousands)
Non-GAAP
GAAP Result Adjustment Results
(a) (b)
Net income (loss) (1,696) 225 1,322 (149)
(a) The adjustment is for share-based compensation expenses.
(b) The adjustment is for investment impairment.
Reconciliations from operating profit to EBITDA and adjusted EBITDA
Three months Three months Three months
ended Dec. 31, ended Sep. 30, ended Dec. 31,
2007 2007 2006
(U.S. Dollar (U.S. Dollar (U.S. Dollar
in thousands) in thousands) in thousands)
Income from operation 1,769 1,441 741
Add back: Depreciation 241 180 96
Amortization of
intangibles 75 74 71
EBITDA 2,085 1,695 908
Add back: share-based
compensation 875 1,081 225
Adjusted EBITDA 2,960 2,776 1,133
For further information please contact:
Melissa Zhang
Investor Relations
China Finance Online Co. Limited
Tel: +86-10-5832-5288
Email: ir@jrj.com
SOURCE