SHANGHAI, China, Aug. 2 /Xinhua-PRNewswire/ -- SINA Corporation
(Nasdaq: SINA), a leading online media company and mobile value-added service
(MVAS) provider for China and for the global Chinese communities, today
announced its unaudited financial results for the second quarter ended
June 30, 2006.
Q2 2006 Highlights
- Net revenues increased 16% year-over-year to $53.7 million, exceeding
the Company's previous guidance of between $47.5 million and 49.5
million.
- Advertising revenues increased 45% year-over-year to $29.5 million,
exceeding the Company's previous guidance of between $26.0 million and
$27.0 million.
- Non-advertising revenues declined 6% year-over-year to $24.2 million,
exceeding the Company's previous guidance of between $21.5 million and
$22.5 million.
- GAAP net income was $10.4 million, or $0.18 diluted net income per
share.
- Non-GAAP net income* was $12.3 million, or $0.21 non-GAAP diluted net
income per share.
* Non-GAAP measures are described below and reconciled to the
corresponding GAAP measures in the section below titled "Reconciliation
of Non-GAAP to GAAP Results."
"We are very pleased with our outstanding performance for the second
quarter. Our advertising revenues for the quarter hit another record high of
$29.5 million representing a 33% quarter-over-quarter growth, the highest
sequential growth rate ever for advertising revenues in SINA's history.
During the quarter, we benefited from the 2006 FIFA World Cup by leveraging
the strength of our brand and focusing on creating innovative products and
captivating content to cover the event. In addition to a record advertising
revenue quarter, SINA's World Cup website set a new record for online media
coverage of sports events in China. According to ACNielsen, SINA attracted
57.6 million unique visitors during the World Cup event. These milestones are
further validation that our portal strategy is working and that we are taking
away market share from our competitors in China's online brand advertising
sector," said Charles Chao, CEO of SINA. "On the mobile side, while we beat
our internal expectations for the quarter, we anticipate that recently
announced operator policy changes in China will create a more challenging and
uncertain environment for our mobile business in the coming quarters."
Financial Results
For the second quarter of 2006, SINA reported net revenues of
$53.7 million, compared to $46.1 million in the same period last year and
$46.7 million last quarter.
Advertising revenues for the second quarter of 2006 totaled $29.5 million,
representing a 45% increase from the same period last year and a 33% increase
from last quarter. Advertising revenues in the second quarter of 2006
represented 55% of the Company's total revenues, compared to 44% for the same
period last year and 47% last quarter.
Non-advertising revenues for the second quarter of 2006 totaled
$24.2 million, a 6% decrease from the same period last year and a 1% decrease
from last quarter. Revenues from MVAS for the second quarter of 2006 were
$22.4 million, representing a decrease of 1% from the same period last year
and from last quarter. Second quarter 2005 non-advertising revenues included
$0.9 million in revenues from businesses that were disposed in the second half
of 2005.
Gross margin for the second quarter of 2006 was 63%, down from 69% for the
same period last year and up from 61% last quarter. Advertising gross margin
for the second quarter of 2006 was 65%, compared to 68% for the same period
last year and 63% in the previous quarter. Advertising gross margin amount in
the first and second quarter of 2006 each included the impact of $0.4 million
in stock-based compensation from the adoption of Statement of Financial
Accounting Standard No. 123 (revised 2004), Share-Based Payment ("SFAS 123R").
The sequential increase in advertising gross margin was due to revenues
growing faster than advertising cost of sales.
MVAS gross margin for the second quarter of 2006 was 60%, compared to 67%
for the same period last year and 59% last quarter. The year-over-year
decline in MVAS gross margin was primarily a result of increased transmission
costs paid to mobile operators and increased content costs.
Operating expenses for the second quarter of 2006 totaled $26.4 million,
an increase of 30% from the same period last year and an increase of 20% from
the previous quarter. Due to the adoption of SFAS 123R, operating expenses in
the first and second quarter of 2006 included $1.2 million and $2.7 million in
stock-based compensation, respectively. During the second quarter of 2006,
the Company granted options to purchase approximately 2.1 million ordinary
shares to employees, executives and directors. The sequential increase in
stock-based compensation can be mostly attributed to the director options
granted, which totaled $1.2 million in the second quarter of 2006 due to
immediate vesting. In addition to stock-based compensation, the year-over-year
increase in operating expenses was primarily related to increased marketing
spending and increased headcount and salaries, while the quarter-over-quarter
increase was mainly due to increased marketing expenditures.
For the second quarter of 2006, gain on the sale of a business included a
$2.0 million gain from the sale of interests in the joint venture with NC
Soft, a Korean online game company.
Net income for the second quarter of 2006 was $10.4 million, compared to
$10.0 million in the same period last year and $7.0 million last quarter.
Diluted net income per share for the second quarter of 2006 was $0.18,
compared to $0.17 in the same period last year and $0.12 last quarter. Non-
GAAP net income for the second quarter of 2006 totaled $12.3 million, compared
to $12.5 million in the same period last year and $9.6 million in the previous
quarter. Non-GAAP diluted net income per share for the second quarter of 2006
was $0.21, compared to $0.21 in the same period last year and $0.16 last
quarter.
As of June 30, 2006, SINA's cash, cash equivalents and investments in
marketable securities totaled $312.5 million. Cash flow from operating
activities for the second quarter of 2006 was $8.1 million.
Other Development
As previously noted in the Company's press release dated July 7, 2006,
China Mobile Communication Corporation ("CMCC") recently announced changes to
its policies on subscription MVAS, which included extending the trial period
and requiring double reminders on new MVAS subscriptions as well as sending
SMS reminders to existing monthly subscribers of SMS, MMS and WAP to inform
them of their MVAS subscription and fee information. The Company believes
that these policy changes will have a significant, negative impact on its MVAS
revenues going forward. The Company will continue to monitor and assess the
situation as the policies are rolled out individually by CMCC's provincial
subsidiaries. For the second quarter of 2006, 42% of the Company's revenues
were derived from MVAS, approximately 67% of which related to monthly
subscriptions from CMCC users.
Business Outlook
The Company estimates its total revenues for the third quarter of 2006 to
be between $51.0 million and $54.0 million, with advertising revenues to be
between $31.0 million and $32.0 million and non-advertising revenues to be
between $20.0 million and $22.0 million. Stock-based compensation for the
third quarter of 2006 is expected to be approximately $2.7 million, which
excludes any new shares that may be granted.
Conference Call
SINA will host a conference call at 9:00 p.m. Eastern Time today to
present an overview of the Company's financial performance and business
operations for the second quarter ended June 30, 2006. The dial-in number for
the call is 617-614-3473. The pass code is 26769718. A live Webcast of the
call will be available from 9:00 p.m. - 10:00 p.m. ET on Wednesday, August 2,
2006 (9:00 a.m. - 10:00 a.m. Beijing Time on August 3, 2006). The call can be
accessed through SINA's corporate web site at http://corp.sina.com. The call
will be archived for 12 months on SINA's corporate web site at
http://corp.sina.com. A replay of the conference call will be available
through August 9, 2006 at midnight eastern time. The dial-in number is
617-801-6888. The pass code for the replay is 73704374.
Non-GAAP Measures
To supplement the unaudited consolidated financial statements presented in
accordance with the United States Generally Accepted Accounting Principles
("GAAP"), the Company uses non-GAAP financial measures to evaluate its ongoing
operations and for internal planning and forecasting purposes as well as to
enhance the investors' overall understanding of the Company's current
financial performance and prospects for the future. These non-GAAP measures
include non-GAAP income from operations, non-GAAP net income and non-GAAP
diluted net income per share. The Company's non-GAAP income from operations
excludes, as applicable, stock-based compensation (under SFAS 123R, adopted as
of January 1, 2006) and amortization of intangible assets. Non-GAAP net income
and non-GAAP diluted net income per share exclude, as applicable, stock-based
compensation, amortization of intangibles, amortization of convertible debt
issuance cost, gain and loss from the sale of a business and gain and loss on
investment.
The Company believes the non-GAAP measures provide useful information to
both management and investors by excluding certain expenses, gains and losses
(i) that are not expected to result in future cash payments or (ii) that are
non-recurring in nature or may not be indicative of our core operating results
and business outlook.
In addition, because the Company has historically reported certain non-
GAAP results to investors, the Company believes the inclusion of non-GAAP
measures provides consistency in our financial reporting. The Company's
reference to these measures should be considered in addition to results
prepared in accordance with GAAP, but should not be considered a substitute
for, or superior to, GAAP results. Reconciliations of the Company's non-GAAP
measures to the nearest GAAP measures are set forth in the section below
titled "Reconciliation of Non-GAAP to GAAP Results."
The Company's management believes excluding stock-based compensation from
its non-GAAP financial measures of income from operations and net income is
useful for itself and investors as such expense is otherwise unrelated to the
Company's core operating results and does not impact cash earnings. Non-GAAP
measures that exclude stock-based compensation also enhance the comparability
of results against prior periods.
The Company's management believes excluding the non-cash amortization
expense of intangible assets resulting from business acquisitions from its
non-GAAP financial measures of income from operations and net income and
excluding the non-cash amortization expense of intangible assets resulting
from equity-method investments from its non-GAAP financial measure of net
income are useful for itself and investors because they enable a more
meaningful comparison of the Company's cash performance between reporting
periods. In addition, such charges will not result in cash settlement in the
future.
The Company's management believes excluding non-cash amortization expense
of issuance cost relating to convertible bonds from its non-GAAP financial
measure of net income is useful for itself and investors as such expense does
not have any impact on cash earnings.
The Company's management believes excluding gains and losses on the sale
of a business from its non-GAAP financial measure of net income is useful for
itself and investors because such gains and losses are not indicative of the
Company's core operating results.
The Company's management believes excluding gains and losses on investment
from its non-GAAP financial measure of net income is useful for itself and
investors because the Company does not typically invest in common stock of
other companies. Therefore, these charges are otherwise unrelated to the
Company's ongoing business operations.
About SINA
SINA Corporation (Nasdaq: SINA) is a leading online media company and
value-added information service (VAS) provider for China and for global
Chinese communities. With a branded network of localized web sites targeting
Greater China and overseas Chinese, SINA provides services through five major
business lines including SINA.com (online news and content), SINA Mobile
(mobile value-added services), SINA Online (community-based services and
games), SINA.net (search and enterprise services) and SINA E-Commerce (online
shopping). Together these provide an array of services including region-
focused online portals, mobile value-added services, search and directory,
interest-based and community-building channels, free and premium email, online
games, virtual ISP, classified listings, fee-based services, e-commerce and
enterprise e-solutions.
Safe Harbor Statements
This announcement contains forward-looking statements that relate to,
among other things, SINA's expected financial performance (as described
without limitation in the "Business Outlook" section and in quotations from
management in this press release) and SINA's strategic and operational plans.
SINA may also make forward-looking statements in the Company's periodic
reports to the U.S. Securities and Exchange Commission on Forms 10-K, 10-Q,
8-K, etc., in its annual report to shareholders, in its proxy statements, in
its offering circulars and prospectuses, in press releases and other written
materials and in oral statements made by its officers, directors or employees
to third parties. SINA assumes no obligation to update the forward-looking
statements in this release and elsewhere. Statements that are not historical
facts, including statements about the Company's beliefs and expectations, are
forward-looking statements. Forward-looking statements involve inherent risks
and uncertainties. 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 are not limited to, SINA's
historical losses, its limited operating history, the uncertain regulatory
landscape in the People's Republic of China, the recent changes by CMCC to its
policies for MVAS (as described above in the "Other Development" section), the
Company's ability to develop and market other usage-based SMS products,
fluctuations in quarterly operating results, the Company's reliance on MVAS
and online advertising sales for a majority of its revenues, the Company's
reliance on mobile operators in China to provide MVAS, any failure to
successfully develop and introduce new products and any failure to
successfully integrate acquired businesses. Further information regarding
these and other risks is included in SINA's Annual Report on Form 10-K for the
year ended December 31, 2005 and its recent quarterly reports on Form 10-Q, as
well as in its other filings with the Securities and Exchange Commission.
SINA CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. Dollar in thousands, except per share data)
Three months ended Six months ended
June 30, March 31, June 30,
2006 2005 2006 2006 2005
Net revenues:
Advertising $29,454 $20,373 $22,181 $51,635 $37,021
Non-advertising 24,224 25,757 24,531 48,755 54,957
53,678 46,130 46,712 100,390 91,978
Cost of revenues (a):
Advertising 10,317 6,541 8,298 18,615 12,435
Non-advertising 9,343 7,794 9,747 19,090 16,834
19,660 14,335 18,045 37,705 29,269
Gross profit 34,018 31,795 28,667 62,685 62,709
Operating expenses:
Sales and marketing (a) 13,497 10,718 11,805 25,302 22,202
Product development (a) 4,993 3,520 4,610 9,603 7,222
General and
administrative (a) 7,427 5,078 5,157 12,584 9,775
Amortization of
intangibles 469 1,041 468 937 2,082
26,386 20,357 22,040 48,426 41,281
Income from operations 7,632 11,438 6,627 14,259 21,428
Non-operating income:
Interest and other income 2,012 1,564 1,940 3,952 3,096
Gain (loss) on sale of
business 2,006 - (212) 1,794 -
Loss on investments, net - (1,338) - - (1,282)
Loss on equity investments (162) (858) (343) (505) (1,424)
Amortization of convertible
debt issuance cost (171) (171) (171) (342) (342)
3,685 (803) 1,214 4,899 48
Income before income taxes 11,317 10,635 7,841 19,158 21,476
Provision for income taxes (878) (682) (805) (1,683) (1,213)
Net income $10,439 $ 9,953 $ 7,036 $17,475 $20,263
Basic net income per share $ 0.19 $ 0.19 $ 0.13 $ 0.33 $ 0.39
Diluted net income per share $ 0.18 $ 0.17 $ 0.12 $ 0.30 $ 0.35
Shares used in computing
basic net income per share 53,554 52,111 53,438 53,496 51,771
Shares used in computing
diluted net income per
share 58,444 58,783 58,617 58,522 58,642
Net income used for diluted
net income per share
calculation:
Net income $10,439 $ 9,953 $ 7,036 $17,475 $20,263
Amortization of convertible
debt issuance cost 171 171 171 342 342
$10,610 $10,124 $ 7,207 $17,817 $20,605
(a) Stock-based compensation
included under SFAS 123R was
as follows:
Cost of revenues $ 350 $ - $ 350 $ 700 $ -
Sales and marketing 353 - 261 614 -
Product development 377 - 334 711 -
General and administrative 1,943 - 571 2,514 -
$ 3,023 $ - $ 1,516 $ 4,539 $ -
SINA CORPORATION
RECONCILIATION OF NON-GAAP TO GAAP RESULTS
(U.S. Dollar in thousands, except per share data)
Three months ended
June 30, 2006
Non-GAAP
Actual Adjustments Results
3,023 (a)
469 (b)
Income from operations $ 7,632 $ 3,492 $11,124
3,023 (a)
469 (b)
171 (c)
(2,006)(d)
177 (b)
Net income $10,439 $ 1,834 $12,273
Diluted net income per share $ 0.18 $ 0.21
Shares used in computing diluted
net income per share 58,444 58,444
Net income used in computing
diluted net income per share:
Net income $10,439 $12,273
Amortization of convertible debt
issuance costs 171 -
$10,610 $12,273
Three months ended
June 30, 2005
Non-GAAP
Actual Adjustments Results
1,041 (b)
Income from operations $11,438 $ 1,041 $12,479
1,041 (b)
171 (c)
1,338 (e)
Net income $ 9,953 $ 2,550 $12,503
Diluted net income per share $ 0.17 $ 0.21
Shares used in computing diluted
net income per share 58,783 58,783
Net income used in computing
diluted net income per share:
Net income $ 9,953 $12,503
Amortization of convertible debt
issuance costs 171 -
$10,124 $12,503
Three months ended
March 31, 2006
Non-GAAP
Actual Adjustments Results
1,516 (a)
468 (b)
Income from operations $ 6,627 $ 1,984 $ 8,611
1,516 (a)
468 (b)
171 (c)
212 (d)
177 (b)
Net income $ 7,036 $ 2,544 $ 9,580
Diluted net income per share $ 0.12 $ 0.16
Shares used in computing diluted
net income per share 58,617 58,617
Net income used in computing diluted
net income per share:
Net income $ 7,036 $ 9,580
Amortization of convertible debt
issuance costs 171 -
$ 7,207 $ 9,580
Six months ended
June 30, 2006
Non-GAAP
Actual Adjustments Results
4,539 (a)
937 (b)
Income from operations $14,259 $ 5,476 $19,735
4,539 (a)
937 (b)
342 (c)
(1,794)(d)
354 (b)
Net income $17,475 $ 4,378 $21,853
Diluted net income per share $ 0.30 $ 0.37
Shares used in computing diluted
net income per share 58,522 58,522
Net income used in computing
diluted net income per share:
Net income $17,475 $21,853
Amortization of convertible debt
issuance costs 342 -
$17,817 $21,853
Six months ended
June 30, 2005
Non-GAAP
Actual Adjustments Results
2,082 (b)
Income from operations $21,428 $ 2,082 $23,510
2,082 (b)
342 (c)
1,282 (e)
Net income $20,263 $ 3,706 $23,969
Diluted net income per share $ 0.35 $ 0.41
Shares used in computing diluted
net income per share 58,642 58,642
Net income used in computing
diluted net income per share:
Net income $20,263 $23,969
Amortization of convertible debt
issuance costs 342 -
$20,605 $23,969
(a) To adjust stock-based compensation charges
(b) To adjust amortization of intangible assets
(c) To adjust amortization of convertible debt issuance cost
(d) To adjust gain or loss on the sale of a business
(e) To adjust gain or loss on investment
SINA CORPORATION
UNAUDITED SEGMENT INFORMATION
(U.S. Dollar in thousands)
Three months ended Six months ended
June 30, March 31, June 30,
2006 2005 2006 2006 2005
Net revenues
Advertising $29,454 $20,373 $22,181 $ 51,635 $37,021
Mobile related 22,448 22,618 22,694 45,142 49,133
Others 1,776 3,139 1,837 3,613 5,824
$53,678 $46,130 $46,712 $100,390 $91,978
Cost of revenues
Advertising $10,317 $ 6,541 $ 8,298 $ 18,615 $12,435
Mobile related 8,925 7,374 9,400 18,325 16,044
Others 418 420 347 765 790
$19,660 $14,335 $18,045 $ 37,705 $29,269
SINA CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollar in thousands)
June 30, December 31,
2006 2005
Assets
Cash, cash equivalents and investments
in marketable securities $312,481 $300,689
Accounts receivable, net 44,895 33,940
Property and equipment, net 23,248 22,207
Long-term investments 2,987 3,977
Goodwill and intangible assets, net 91,417 92,354
Other assets 12,174 15,554
Total assets $487,202 $468,721
Liabilities and Shareholders' Equity
Liabilities $ 42,809 $ 49,099
Convertible Debt 100,000 100,000
Shareholders' equity 344,393 319,622
Total liabilities and
shareholders' equity $487,202 $468,721
SOURCE SINA Corporation
08/02/2006
CONTACT: Chen Fu, SINA Corporation, +86-21-62895678, ext. 6089,
fuchen@staff.sina.com; Denise Roche, The Ruth Group, +1-646-536-7008,
droche@theruthgroup.com
Web site: http://www.sina.com
Chinese
