Taomee Reports Unaudited Third Quarter 2013 Financial Results
SHANGHAI, Nov. 21, 2013 /PRNewswire/ -- Taomee Holdings Limited (NYSE: TAOM) ("Taomee" or the "Company"), China's leading children's entertainment and media company, today reported its unaudited financial results for the third quarter ended September 30, 2013.
Highlights of the Third Quarter of 2013
- Total net revenues were US$15.8 million in the third quarter of 2013, an increase of 33.3% compared with US$11.8 million in the third quarter of 2012.
- Revenues from online business were US$10.3 million in the third quarter of 2013, an increase of 28.2% compared with US$8.0 million in the third quarter of 2012.
- Revenues from offline businesses were US$5.5 million in the third quarter of 2013, an increase of 43.9% compared with US$3.8 million in the third quarter of 2012.
- Gross profit was US$11.2 million in the third quarter of 2013, compared with US$8.3 million in the third quarter of 2012.
- Profit from operations was US$1.7 million in the third quarter of 2013, compared with US$0.7 million in the third quarter of 2012.
- Non-GAAP net income attributable to holders of ordinary shares was US$2.9 million in the third quarter of 2013, an increase of 20.4%, compared with US$2.4 million in the third quarter of 2012.
- Non-GAAP basic and diluted earnings per ADS[1] were US$0.08 and US$0.08, respectively, in the third quarter of 2013, compared with US$0.07 and US$0.06, respectively, in the third quarter of 2012.
- Key Operating Metrics
- The number of active accounts ("ACA") for the Company's virtual worlds under operation in mainland China was approximately 60.8 million in the third quarter of 2013, an increase of 5.3% from 57.7 million in the third quarter of 2012.
- Active paying accounts ("APA") for the Company's virtual worlds under operation in mainland China remained stable at 1.7 million in the third quarter of 2013, compared with the third quarter of 2012.
- Average revenue per user ("ARPU") for the Company's virtual worlds under operation in mainland China was approximately RMB36 in the third quarter of 2013, an increase of 24% from RMB30 in the third quarter of 2012. The increase reflected the Company's strategy to continuously improve monetization trends.
- The number of downloads of the mobile applications operated by the Company increased by approximately 3.7 million in the third quarter of 2013, and the total number of downloads amounted to approximately 9.7 million for the first three quarters of 2013.
| [1] Each American Depositary Share ("ADS") represents twenty ordinary shares. |
"Our results of this quarter demonstrate broad-base growth across our online and offline business segments, and we achieved a new record level of revenues and reached an all-time high of 60.8 million active accounts, " said Mr. Benson Wang, co-founder and CEO of Taomee. "We are encouraged by the early results of the building blocks for growth that we have been putting in place -- most notably, our cross-platform investments in mobile and online games, interactive toys, television, feature films and education."
"By focusing on our core customers -- children, parents, teachers and other caregivers – who are reachable through an integrated multi-media network with diverse distribution channels, we are building a highly solid platform with sustainable revenue growth and attractive returns to shareholders. Today, our vision is being demonstrated by the reacceleration of growth in our online revenues, combined with the continuous growth in our offline business, and we believe that we are well-positioned for strong earnings growth heading into 2014 and beyond."
Unaudited Financial Results for Third Quarter of 2013
Total Net Revenues
Total net revenues were US$15.8 million in the third quarter of 2013, an increase of 33.3% compared with US$11.8 million in the third quarter of 2012.
Net online business revenues were US$10.3 million in the third quarter of 2013, an increase of 28.2% compared with US$8.0 million in the third quarter of 2012. The increase was mainly driven by the continued revenue growth of our core virtual worlds, as well as contribution from several newly launched franchises.
Net offline business revenues were US$5.5 million in the third quarter of 2013, an increase of 43.9% compared with US$3.8 million in the third quarter of 2012. The increase was driven by an increase in interactive toy sales and merchandise licensing business, as well as strong film box-office of our feature film Seer III: Universal Force.
Total Cost of Services
Total cost of services was US$4.5 million in the third quarter of 2013, compared with US$3.5 million in the third quarter of 2012.
Online business related costs were US$2.1 million in the third quarter of 2013, compared with US$1.9 million in the third quarter of 2012. The increase was primarily due to an increase in bandwidth and hosting costs.
Offline business related costs were US$2.4 million in the third quarter of 2013, compared with US$1.6 million in the third quarter of 2012. The increase was mainly due to an increase in costs related to the expansion of the interactive toys business.
Gross Profit and Gross Margin
Gross profit was US$11.2 million in the third quarter of 2013, compared with US$8.3 million in the third quarter of 2012.
Gross margin was 71.2% in the third quarter of 2013, compared with 70.2% in the third quarter of 2012.
Gross margin for the online business was 79.6% in the third quarter of 2013, compared with 76.4% in the third quarter of 2012.
Gross margin for the offline business was 55.5% in the third quarter of 2013, compared with 57.2% in the third quarter of 2012.
Total Operating Expenses
Total operating expenses were US$9.5 million in the third quarter of 2013, an increase of 24.7% compared with US$7.6 million in the third quarter of 2012.
- Product development expenses were US$3.6 million in the third quarter of 2013, compared with US$3.4 million in the third quarter of 2012. The increase was primarily due to an increase in payroll expense.
- Sales and marketing expenses in the third quarter of 2013 remained stable at US$2.9 million compared with the third quarter of 2012.
- General and administrative expenses were US$3.8 million in the third quarter of 2013, compared with US$2.4 million in the third quarter of 2012. The increase was mainly due to increased indirect tax costs related to intercompany transactions and professional fees paid to outside counsels with respect to equity investment, partially offset by a decrease in share-based compensation.
Profit from Operations
Profit from operations was US$1.7 million in the third quarter of 2013, compared with US$0.7 million in the third quarter of 2012.
Share of Profit/ Loss in Equity Method Investment
Share of profit/loss in equity method investments was a loss of US$0.07 million in the third quarter of 2013, compared with a profit of US$0.4 million in the third quarter of 2012. Profit in equity method in the third quarter of 2012 was partially due to a gain amounted to US$0.3 million from the sale of our equity interests in Shenzhen Ruigao Information Technology Co., Ltd.
Net Income
Net income attributable to holders of ordinary shares in the third quarter of 2013 was US$2.4 million, compared with US$1.8 million in the third quarter of 2012.
Basic and diluted earnings per ADS were US$0.07 and US$0.06, respectively, in the third quarter of 2013, compared with US$0.05 and US$0.05, respectively, in the third quarter of 2012.
Non-GAAP net income attributable to holders of ordinary shares was US$2.9 million in the third quarter of 2013, compared with US$2.4 million in the third quarter of 2012.
Non-GAAP basic and diluted earnings per ADS were US$0.08 and US$0.08, respectively, in the third quarter of 2013, compared with US$0.07 and US$0.06, respectively, in the third quarter of 2012.
Cash and Cash Equivalents
As of September 30, 2013, the Company had US$113.3 million of cash and cash equivalents, compared with US$114.3 million as of June 30, 2013.
Investments in Equity Investees
In September 2013, Taomee entered into an investment agreement to acquire a minority stake of a Beijing-based pre-school education service provider for a cash consideration of US$2.0 million.
In September 2013, Taomee entered into an investment agreement with two third-parties to establish a joint venture, Jiangxi Haomi Network Technology Co., Ltd ("Jiangxi Haomi"). The business of Jiangxi Haomi is to develop family entertainment and education applications on mobile and multi-screen platforms in Mainland China. The total consideration was RMB12.9 million (approximately US$2.1 million) in cash for 43.0% equity interests in Jiangxi Haomi.
Capital Expenditures
We had capital expenditures of US$0.4 million for the third quarter of 2013 compared with US$0.3 million for the same quarter of 2012. Total capital expenditures for the first three quarters of 2013 were US$2.3 million. Our capital expenditures were used primarily for (i) purchase of computer hardware and equipment, (ii) purchase of intangible assets, and (iii) purchase of franchises and online game licensing rights for our pipeline. Actual future capital expenditures may differ from the amounts indicated above.
Share-based Compensation
Share-based compensation was US$0.5 million for the third quarter of 2013 as compared with US$0.6 million for the same quarter of 2012.
Share Repurchase Program
During the third quarter of 2013, Taomee repurchased 68,140 ADSs. As of September 30, 2013, the Company had repurchased a total of 950,237 ADSs under the Company's US$10 million share repurchase program at an average price of approximately US$3.99 per ADS.
Business Highlights
On August 20, 2013 Taomee closed-beta tested Reverse World, an action role-playing mobile game on Android and iOS platforms.
On October 21, 2013 Taomee closed-beta tested Elves Pie, a cartoon style role-playing web game.
On October 31, 2013 Taomee closed-beta tested the mobile game Seer: Universal Force on Android platform.
In October, 2013 Taomee launched two interactive toys: second generation of Seer Spin Boom and Seer Mok Pen.
By October 30, 2013 the box-office revenue of the film Seer III: Universal Force accumulated over RMB76 million (approximately US$12.3 million). In November, 2013, the film was released on several China leading online video and internet TV platforms including BestTV, Tencent Video, Sohu Video, iQiyi and Youku Tudou.
Outlook for the Fourth Quarter of 2013
Net revenues for the fourth quarter of 2013 are expected to be in the range of US$10.2 million to US$10.7 million, which represents year-on-year growth of approximately 36.5% to 43.2%. We expect both online and offline revenues to increase year-on-year, although there may be sequential decline due to seasonality of the school year and absence of offline film releases. This forecast reflects the Company's current and preliminary view of the operating results, and is subject to future changes.
Non-GAAP Financial Measures
To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States, or GAAP, this press release presents non-GAAP net income attributable to the Company's shareholders and non-GAAP earnings per ADS by excluding share-based compensation and impairment charges from net income attributable to the Company's shareholders and from the calculation of earnings per ADS. The Company believes these non-GAAP financial measures are important to help investors understand the Company's operating and financial performance compare business trends among different reporting periods on a consistent basis and assess the Company's core operating results. The use of the above non-GAAP financial measures has certain limitations. Share-based compensation charge has been and will continue to be incurred and is not reflected in the presentation of the non-GAAP financial measures; it should be considered in the overall evaluation of our results. None of the non-GAAP measures is a measure of net income attributable to the Company's shareholders, operating profit, operating performance or liquidity presented in accordance with GAAP. We compensate for these limitations by providing the relevant disclosure of our share-based compensation and impairment charges in our reconciliations to the most directly comparable GAAP financial measures, which should be considered when evaluating our performance. These non-GAAP financial measures should be considered in addition to financial measures prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP. Reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure is set forth at the end of this release.
Conference Call
The Company will host a conference call and live webcast at 7:00 a.m. Eastern Standard Time (New York) on Thursday, November 21, 2013 (8:00 p.m. in China on Thursday, November 21, 2013).
The dial-in details for the live conference call are:
| Conference ID: |
87139588 |
| U.S. toll-free: |
+1-866-519-4004 |
| Hong Kong toll-free: |
800-930-346 |
| International: |
+65-6723-9381 |
| China Mainland: |
400-620-8038 |
| Passcode: |
Taomee |
A live webcast and archive of the conference call will be available on the Investor Relations section of Taomee's website at http://www.media-server.com/m/p/wkrrof9m. A telephone replay of the call will be available at 10:00 a.m., Eastern Standard Time on November 21, 2013 through 08:00 a.m., November. The dial-in details for the telephone replay are:
| Conference ID: |
87139588 |
| International: |
+612-8199-0299 |
| China: |
400 1200 932 |
About Taomee Holdings Limited
Taomee Holdings Limited ("Taomee" or "the Company") is China's leader in children's entertainment and media. Its award winning content offerings are both engaging and educational, endearing it to children, as well as to parents and teachers. The Company was founded in 2007 with the mission to bring joy and inspiration to children. Its popular character franchises, including SEER and MOLE'S WORLD, are distributed online via virtual worlds, web games and mobile applications, as well as through traditional media, including animated box office films, TV series, books and consumer products, most notably interactive toys and trading cards. Its online community regularly achieves top search ranking in China, Hong Kong and Taiwan. Taomee has been consistently recognized for its leadership and innovative contributions to the children's market, including accolades from China's Ministry of Culture and the China Animation Association.
For more information, please visit: http://www.taomee.com/en_taomee.html
- Visit online virtual world communities at www.61.com
- Watch animations and films at http://v.61.com/
- Download mobile games and applications at http://m.61.com/
- Share with other parents and caregivers at http://mama.61.com/
Safe Harbor Statements
This press release contains statements that may constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. Among other things, the management's quotations and outlook information contain forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Potential risks and uncertainties include, but are not limited to: the Company's business strategies and initiatives as well as business plans; future business development, results of operations and financial condition; expected changes in revenues and certain cost or expense items; expectations with respect to increased revenue growth and the Company's ability to sustain profitability; the Company's services and products under development or planning; the Company's ability to attract users and further enhance the Company's brand recognition; and trends and competition in the children's entertainment and media market and industry, including those for online entertainment. Further information regarding these and other risks is included in Taomee's annual report on Form 20-F and other documents filed with the U.S. Securities and Exchange Commission.. All information provided in this press release is as of the date of the press release, and the Company undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as required under applicable law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, the Company cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
For further information, please contact
Angela Wang
Taomee Holdings Limited
+86-21-61280056-8651
[email protected]
| Taomee Holdings Limited - Unaudited Consolidated Balance Sheets |
|||||||
| In USD |
In USD |
||||||
| September 30 |
June 30 |
||||||
| 2013 |
2013 |
||||||
| ASSETS |
|||||||
| Current assets: |
|||||||
| Cash and cash equivalents |
$ 113,255,315 |
$ 114,303,400 |
|||||
| Short term investment |
2,990,621 |
2,988,787 |
|||||
| Accounts receivable |
3,991,579 |
3,037,542 |
|||||
| Inventories |
531,600 |
323,889 |
|||||
| Income tax recoverable |
589,288 |
574,366 |
|||||
| Due from related parties |
32,251 |
247,532 |
|||||
| Prepayments and other current assets |
2,845,731 |
2,644,669 |
|||||
| Deferred tax assets, current |
3,036,318 |
3,021,232 |
|||||
| Total current assets |
127,272,703 |
127,141,417 |
|||||
| Investments in equity investees |
14,168,180 |
10,141,566 |
|||||
| Property and equipment, net |
1,774,312 |
1,647,495 |
|||||
| Acquired intangible assets |
1,501,250 |
562,503 |
|||||
| Other assets |
4,553,432 |
3,529,750 |
|||||
| TOTAL ASSETS |
$ 149,269,877 |
$ 143,022,731 |
|||||
| LIABILITIES AND EQUITY |
|||||||
| Current liabilities: |
|||||||
| Accounts payable |
$ 2,221,153 |
$ 1,535,364 |
|||||
| Advance from customers |
8,493,412 |
7,382,155 |
|||||
| Due to related parties |
257,544 |
237,904 |
|||||
| Deferred revenue |
12,761,597 |
11,927,360 |
|||||
| Deferred tax liabilities, current |
13,774 |
13,706 |
|||||
| Accrued expenses and other current liabilities |
6,092,756 |
5,755,154 |
|||||
| Total current liabilities |
29,840,236 |
26,851,643 |
|||||
| Equity |
|||||||
| Taomee Holdings Limited shareholders' equity |
|||||||
| Ordinary shares ($0.00002 par value; 875,000,000 shares authorized; |
14,769 |
14,716 |
|||||
| Treasury stock |
(618,551) |
(323,870) |
|||||
| Additional paid-in capital |
72,906,646 |
72,070,957 |
|||||
| Retained earnings |
43,121,803 |
40,718,694 |
|||||
| Accumulated other comprehensive income |
3,818,574 |
3,523,776 |
|||||
| Taomee Holdings Limited shareholders' equity |
119,243,241 |
116,004,273 |
|||||
| Non-controlling interests |
186,400 |
166,815 |
|||||
| Total equity |
$ 119,429,641 |
$ 116,171,088 |
|||||
| TOTAL LIABILITIES AND EQUITY |
$ 149,269,877 |
$ 143,022,731 |
|||||
|
Taomee Holdings Limited - Unaudited Consolidated Statements of Operations |
|||||||||||||||||
| In USD, except for share data For three months ended |
|||||||||||||||||
| September 30, |
June 30, |
September 30, |
|||||||||||||||
| 2013 |
2013 |
2012 |
|||||||||||||||
| Revenues: |
|||||||||||||||||
| Online business, net |
$ 10,260,703 |
$ 8,635,407 |
$ 8,000,663 |
||||||||||||||
| Offline business, net |
5,518,261 |
3,404,026 |
3,833,942 |
||||||||||||||
| Total net revenues |
15,778,964 |
12,039,433 |
11,834,605 |
||||||||||||||
| Cost of services |
|||||||||||||||||
| Online business |
(2,089,815) |
(1,767,903) |
(1,886,967) |
||||||||||||||
| Offline business |
(2,457,707) |
(1,742,080) |
(1,640,020) |
||||||||||||||
| Total cost of services |
(4,547,522) |
(3,509,983) |
(3,526,987) |
||||||||||||||
| Gross profit |
11,231,442 |
8,529,450 |
8,307,618 |
||||||||||||||
| Operating income (expenses): |
|||||||||||||||||
| Product development |
(3,568,462) |
(3,309,258) |
(3,374,238) |
||||||||||||||
| Sales and marketing |
(2,925,398) |
(2,381,940) |
(2,859,256) |
||||||||||||||
| General and administrative |
(3,820,463) |
(2,950,988) |
(2,435,483) |
||||||||||||||
| Impairment of intangible assets |
- |
(865,910) |
- |
||||||||||||||
| Other operating income |
779,381 |
448,631 |
1,021,371 |
||||||||||||||
| Total operating expenses |
(9,534,942) |
(9,059,465) |
(7,647,606) |
||||||||||||||
| Profit/(loss) from operations |
1,696,500 |
(530,015) |
660,012 |
||||||||||||||
| Interest income, net |
906,470 |
631,997 |
683,697 |
||||||||||||||
| Other income, net |
204,232 |
188,104 |
324,484 |
||||||||||||||
| Income before income taxes and |
2,807,202 |
290,086 |
1,668,193 |
||||||||||||||
| Income tax (expense)/benefit |
(313,048) |
141,211 |
(304,726) |
||||||||||||||
| Share of (loss)/profit in equity method |
(71,459) |
(73,195) |
436,969 |
||||||||||||||
| Net income |
2,422,695 |
358,102 |
1,800,436 |
||||||||||||||
| Less: Net income attributable to |
19,586 |
13,740 |
- |
||||||||||||||
| Net income attributable to holders of |
$ 2,403,109 |
$ 344,362 |
$ 1,800,436 |
||||||||||||||
| Earnings per ADS |
|||||||||||||||||
| -Basic |
$ 0.07 |
$ 0.01 |
$ 0.05 |
||||||||||||||
| -Diluted |
$ 0.06 |
$ 0.01 |
$ 0.05 |
||||||||||||||
| Weighted average number of |
|||||||||||||||||
| - Basic |
733,988,549 |
731,446,938 |
733,158,958 |
||||||||||||||
| - Diluted |
745,799,224 |
744,821,217 |
752,966,298 |
||||||||||||||
| Weighted average number of |
|||||||||||||||||
| - Basic |
36,699,427 |
36,572,347 |
36,657,948 |
||||||||||||||
| - Diluted |
37,289,961 |
37,241,061 |
37,648,315 |
||||||||||||||
|
Taomee Holdings Limited - Unaudited Consolidated Statements of Comprehensive Income |
||||||
| In USD, For three months ended |
||||||
| September 30, 2013 |
June 30, 2013 |
September 30, 2012 |
||||
| Net income |
$ 2,422,695 |
$ 358,102 |
$ 1,800,436 |
|||
| Other comprehensive income/(loss), net of tax |
||||||
| Foreign currency translation adjustments |
294,798 |
822,028 |
(95,558) |
|||
| Comprehensive income |
2,717,493 |
1,180,130 |
1,704,878 |
|||
| Comprehensive income/(loss) attributable to |
19,586 |
13,740 |
- |
|||
| Comprehensive income attributable to |
2,697,907 |
1,166,390 |
1,704,878 |
|||
| Taomee Holdings Limited - Reconciliation of Non-GAAP and GAAP Results |
||||||
| In USD, except for share data For three months ended |
||||||
| September 30, |
June 30, |
September 30, |
||||
| 2013 |
2013 |
2012 |
||||
| Reconciliation from Non-GAAP measures |
||||||
| Non-GAAP net income attributable to |
$ 2,883,239 |
$ 1,551,513 |
$ 2,394,409 |
|||
| Share-based compensation |
(480,130) |
(341,241) |
(593,973) |
|||
| Impairment of intangible assets |
- |
(865,910) |
- |
|||
| GAAP net income attributable to holders of |
$ 2,403,109 |
$ 344,362 |
$ 1,800,436 |
|||
| Non-GAAP diluted earnings per ADS |
||||||
| -Basic |
$ 0.08 |
$ 0.04 |
$ 0.07 |
|||
| -Diluted |
$ 0.08 |
$ 0.04 |
$ 0.06 |
|||
SOURCE Taomee Holdings Limited
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