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Update: Dangdang Announces First Quarter 2013 Results
May 16, 2013 (09:05 PM EDT)
BEIJING, May 17, 2013 /PRNewswire/ -- E-Commerce China Dangdang Inc. ("Dangdang" or the "Company") (NYSE: DANG), a leading business-to-consumer e-commerce company in China, today announced its unaudited financial results for the first quarter ended March 31, 2013.
First Quarter 2013 Highlights
"We are pleased to report another quarter of solid financial and operational results with better than expected sales, highest gross margin since the second quarter of 2011, and better operating efficiency," said Ms. Peggy Yu Yu, Dangdang's Executive Chairwoman. "Books and media sales grew by 24% in this quarter, which allows us to maintain dominant market share in online media sector. Dangdang's marketplace program once again demonstrated outstanding growth momentum, as marketplace GMV grew at 193% year-over-year in the first quarter. Sales from general merchandise, which include both self-procurement and marketplace, exceeded sales from books and media for the second consecutive quarter."
"We are confident that Dangdang's transition from online bookstore to an integrated online shopping mall is well under way. Our strategy of placing more emphasis on third party marketplace continues in 2013. Going forward, we will undertake more business initiatives to drive marketplace growth, bringing in more merchants and providing more fulfilment support to them, and to ensure that Dangdang customers enjoy rich selections, competitive pricing and seamless shopping experience," Ms. Yu continued.
"We are pleased with the strengthening financial results in the first quarter, making it a robust start of the fiscal year. As we continued to grow sales and drive operational efficiencies, our gross margin increased to 17.2%, an improvement of 300 basispoints over the same period last year. Our net loss narrowed to RMB72.7 million, or negative 5.5% of total net revenues, representing improving margin for the third quarter in row," said Mr. Jun Zou, Dangdang's Chief Financial Officer. "Likewise, cash flow from operations increased by 51% year-over-year, mainly due to better working capital management."
First Quarter 2013 Results
Dangdang's total net revenues in the first quarter of 2013 were RMB1,333.8 million ($214.7 million), a 23% increase from the corresponding period in 2012.
Media product revenue for the first quarter of 2013 was RMB863.9 million ($139.1 million), representing a 24% increase from the corresponding period in 2012. General merchandise revenue for the first quarter of 2013 was RMB411.7 million ($66.3 million), a 12% increase from the corresponding period in 2012, representing 31% of total net revenues, as compared to 34% in the corresponding period in 2012. Other revenue including revenue from third-party merchants for the first quarter of 2013 was RMB58.1 million ($9.4 million), representing a 194% increase from the corresponding period in 2012.
Dangdang had approximately 7.4 million active customers including approximately 2.4 million new customers in the first quarter of 2013, representing a 21% and 24% increase from the corresponding period in 2012. Total orders for the first quarter 2013 were approximately 14.8 million, a 21% increase from the corresponding period in 2012.
Cost of revenues was RMB1,104.9 million ($177.9 million), representing 82.8% of total revenues, as compared to 85.8% in the corresponding period in 2012. The decreased cost of revenues as a percentage of total revenues was primarily due to the execution on the strategic category mapping to move certain categories to the marketplace and economies-of-scale in some of Dangdang's self-procurement categories. Gross margin in the first quarter of 2013 was 17.2%, as compared to 14.2% in the corresponding period in 2012 and 13.4% in the fourth quarter of 2012. The year-over-year increase was primarily due to the increase of other revenue, representing the sustained scaling of the marketplace, as well as improved self-procurement margin due to economies of scale. The quarter-over-quarter margin improvement was primarily due to increased margin of self-procurement business as a result of better category selection and commercial terms with suppliers.
Fulfillment expenses which include warehousing and shipping expenses, were RMB184.6 million ($29.7 million), representing 13.8% of total revenues, compared to 16.2% in the corresponding period in 2012 and 12.0% in the fourth quarter of 2012. The year-over-year decrease was primarily due to consistent operating leverage and improved warehousing management systems.
Marketing expenses were RMB43.2 million ($7.0million), representing 3.2% of total revenues, compared to 2.7% in the corresponding period in 2012. The increase was primarily due to increased spending in navigation website and other targeted marketing campaigns related to our membership program.
Technology and content expenses were RMB49.3 million ($7.9 million), representing 3.7% of total revenues, compared to 3.0% in the corresponding period in 2012. The increase was primarily due to increased engineering headcount and investment in IT facilities.
General and administrative expenses were RMB32.4 million ($5.2 million), representing 2.4% of total revenues, compared to 2.5% in the corresponding period in 2012. General and administrative expenses remained in line with the expansion of the business year-over-year.
Share-based compensation expenses, which were allocated to related expense line items, were RMB2.6 million ($0.4 million) in the first quarter of 2013, compared to RMB2.8 million in the corresponding period in 2012,representing a 7% decrease.
Dangdang recorded an operating loss of RMB80.4 million ($12.9 million) in the first quarter of 2013, as compared with an operating loss of RMB107.2 million in the corresponding period in 2012, primarily due to increase of gross margin and consistent operating leverage.
Operating loss excluding share-based compensation expenses (non-GAAP) was RMB77.8 million ($12.5 million), as compared with an operating loss excluding share-based compensation expenses (non-GAAP) of RMB104.4 million in the corresponding period in 2012.
Net loss was RMB72.7 million ($11.7 million), as compared with a loss of RMB99.5 million and RMB 122.1 million in the first and fourth quarters of 2012 respectively, primarily due to our efforts to increase gross profit and operating leverage.
Net margin was negative 5.5%, as compared with a negative net margin of 9.2% in the corresponding period in 2012.
Net loss excluding share-based compensation expenses (non-GAAP) was RMB70.1 million ($11.3 million), as compared with a net loss excluding share-based compensation expenses (non-GAAP) of RMB96.7 million in the corresponding period in 2012.
As of March 31, 2013, Dangdang had cash and cash equivalents, restricted cash, and short-term time deposits of RMB1,584.7 million ($255.1 million), as compared to RMB1,634.6 million as of December 31, 2012.
Capital expenditures for the first quarter of 2013 were RMB24.3 million ($3.9 million), including RMB11.8 million spending on the construction of Tianjin warehouse.
Adjusted EBITDA loss (non-GAAP) in the first quarter of 2013 was RMB65.1 million ($10.5 million), as compared with an adjusted EBITDA loss of RMB94.8 million in the corresponding period in 2012.
Outlook for Second Quarter 2013
Dangdang expects total net revenue in the second quarter of 2013 to be around RMB1,486 million representing year-over-year growth of around 23%. We also expect GMV from our marketplace to grow at a rate of 175% year-over-year in the second quarter of 2013. This forecast reflects Dangdang's current and preliminary view, which is subject to change.
Filing of Annual Report on Form 20-F
On April 10, 2013, the Company filed its annual report on Form 20-F for the fiscal year ended December 31, 2012 that includes its audited financial statements with the Securities and Exchange Commission. The annual report is available on the Company's investor relations website at http://ir.dangdang.com. Holders of the Company's securities may request a hard copy of the Company's annual report free of charge.
Conference Call Information
Dangdang's management will host an earnings conference call at 8:00 AM on May 16, 2013 U.S. Eastern Time (or 8:00 PM on May 16, 2013 Beijing/Hong Kong time).
Dial-in details for the earnings conference call are as follows:
Please dial-in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is "Dangdang earnings call."
A replay of the conference call may be accessed by phone at the following number until May 23, 2013:
Additionally, a live and archived webcast of this conference call will be available at http://ir.dangdang.com/ until November 30, 2013.
E-Commerce China Dangdang Inc. ("Dangdang" or the "Company") (NYSE: DANG) is a leading business-to-consumer e-commerce company in China. On its website dangdang.com, the Company offers more than 900,000 books and other media products as well as selected general merchandise products including beauty and personal care products, home and lifestyle products, baby, children and maternity products, apparel, digital and electronics products. It also operates the dangdang.com marketplace program, which allows third-party merchants to sell their products alongside products sourced by the Company. Dangdang's nationwide fulfillment and delivery capabilities, high-quality customer service support and scalable technology infrastructure enable it to provide a compelling online shopping experience to customers.
Safe Harbor Statement
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. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the outlook for the second quarter 2013 and quotations from management in this announcement, as well as Dangdang's strategic and operational plans, contain forward-looking statements. Dangdang may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Dangdang's beliefs and expectations, are forward-looking 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: Dangdang's growth strategies; its future business development, results of operations and financial condition; its ability to attract and retain new customers and to increase revenues generated from repeat customers; its expectations regarding demand for and market acceptance of our products and services; trends and competition in China's business-to-consumer e-commerce market; changes in its revenues and certain cost or expense items; the expected growth of the Chinese business-to-consumer e-commerce market; Chinese governmental policies relating to Dangdang's industry and general economic conditions in China. Further information regarding these and other risks is included in Dangdang's annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. Dangdang does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of this press release, and Dangdang undertakes no duty to update such information, except as required under applicable law.
About Non-GAAP Financial Measures
To supplement Dangdang's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), we use the following measures as the non-GAAP financial measures defined by the SEC: non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss and adjusted EBITDA loss (collectively referred to as the "Non-GAAP Financial Measures" thereafter). We define non-GAAP operating loss, non-GAAP operating margin and non-GAAP net loss as operating loss, operating margin and net loss excluding the impact of share-based compensation expenses respectively; we define adjusted EBITDA loss as loss before interest, taxes, depreciation, amortization, other non-operating income, and share-based compensation expenses. We review the Non-GAAP Financial Measures together with net loss or income to obtain a better understanding of our operating performance. We believe that these Non-GAAP Financial Measures provide meaningful supplemental information regarding the Company's performance and liquidity. However, a limitation of using the Non-GAAP Financial Measures as an analytical tool is that they do not include all items that impact our net loss for the period. In addition, because they are not calculated in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider the Non-GAAP Financial Measures in isolation from or as an alternative to net income/loss prepared in accordance with U.S. GAAP.
For information on the reconciliation between the Non-GAAP Financial Measures and the GAAP financial measures presented in accordance with U.S. GAAP for the periods presented, please see the table captioned "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP financial measures" at the end of this release.
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SOURCE E-commerce China Dangdang Inc.