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Tudou Reports Second Quarter 2012 Financial Results
Aug 05, 2012 (08:08 AM EDT)


2Q 2012 Net Revenues of RMB171.9 Million, Up 47.3% Year-over-Year

SHANGHAI, Aug. 5, 2012 /PRNewswire-Asia/ -- Tudou Holdings Limited (NASDAQ: TUDO) ("Tudou" or the "Company"), a leading Internet video company in China, today announced its unaudited financial results for the second quarter ended June 30, 2012. 

Second Quarter 2012 Revenue Highlights

  • Net revenues increased to RMB171.9 million (US$27.1 million), up 47.3% year-over-year.
  • Online advertising service revenues increased to RMB150.7 million (US$23.7 million), up 47.4% year-over-year.
  • Mobile video service revenues increased to RMB16.7 million (US$2.6 million), up 50.6% year-over-year.
  • Other (sub-licensing) revenues increased to RMB4.5 million (US$0.7 million), up 34.2% year-over-year.

Second Quarter 2012 Financial Results

Revenues:  Net revenues for the second quarter 2012 increased by 47.3% to RMB171.9 million (US$27.1 million) from RMB116.7 million in the corresponding period in 2011, driven by increases in online advertising service revenues, mobile video service revenues and other (sub-licensing) revenues.[1]  Online advertising service revenues for the second quarter 2012 increased by 47.4% to RMB150.7 million (US$23.7 million) from RMB102.2 million in the corresponding period in 2011. Mobile video service revenues for the second quarter 2012 increased by 50.6% to RMB16.7 million (US$2.6 million) from RMB11.1 million in the corresponding period in 2011. Other (sub-licensing) revenues increased by 34.2% to RMB4.5 million (US$0.7 million) from RMB3.4 million in the corresponding period in 2011.

Cost of Revenues:  Cost of revenues for the second quarter 2012 increased by 123.2% to RMB191.0 million (US$30.1 million) from RMB85.6 million in the corresponding period in 2011, partially offset by a RMB12.7 million decrease in share-based compensation expenses. The increase in cost of revenues was primarily attributable to increased Internet bandwidth costs, content costs and mobile video services costs.  Internet bandwidth costs for the second quarter 2012 totaled RMB65.1 million (US$10.2 million), compared to RMB34.5 million 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 for the second quarter 2012 totaled RMB100.5 million (US$15.8 million), compared to RMB35.7 million 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 service costs for the second quarter 2012 totaled RMB12.3 million (US$1.9 million), compared to RMB5.8 million, 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 second quarter 2012, gross loss totaled RMB19.2 million (US$3.0 million), compared to gross profit of RMB31.1 million in the corresponding period in 2011.

Operating Expenses: Operating expenses for the second quarter 2012 were RMB135.8 million (US$21.4 million), compared to RMB86.7 million in the corresponding period in 2011.  The increase was primarily due to merger related expenses of RMB23.7 million (US $3.7 million) resulting from the Company's pending transaction with Youku, Inc. (NYSE: YOKU) ("Youku") and an increase in sales and marketing expenses, mainly as a result of the Company's hiring of additional sales professionals and enhanced promotion and marketing efforts.

Net Loss: Net loss for the second quarter 2012 increased to RMB154.7 million (US$24.4 million) from a net loss of RMB78.9 million in the corresponding period in 2011.

Adjusted Net Loss: Adjusted net loss for the second quarter 2012, which excluded share-based compensation expenses, was RMB144.8 million (US$22.8 million), compared to an adjusted net loss of RMB37.2 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" and "Adjusted Net Loss – Non-GAAP Reconciliation" below.

Recent Developments

In July 2012, Tudou announced it will hold its 2012 annual general meeting of shareholders on the 18th Floor, One Exchange Square, 8 Connaught Place, Central, Hong Kong on Monday, August 20, 2012 at 10:00 a.m. (Hong Kong time), to consider and vote on, among other things, the proposal to approve the pending merger with Youku announced on March 11, 2012.  The notice of the annual general meeting of shareholders and joint proxy statement can be obtained from the Company's investor relations website (http://ir.tudou.com) and the Company's filings with the Securities and Exchange Commission (http://www.sec.gov).

In July 2012, Tudou announced that Ms. Evelyn Wang tendered resignation from her position as Chief Operating Officer due to personal reasons. Ms. Wang will continue to assist the Company throughout the ongoing merger process with Youku, which remains on track to close during the third quarter of 2012, subject to closing conditions including approvals by Youku's and Tudou's shareholders.

In June 2012, Tudou held the awards ceremony for the 2012 Tudou Video Festival in Chengde, China. This was Tudou's 5th annual video festival and was co-hosted with the China Film Group Corporation, the largest film enterprise in China.  With the slogan Be Creative and Live, this year's festival attracted over 15,000 video submissions, including submissions from a talented group of 200 video finalists that competed for 15 grand prizes.  Over 1,500 producers, directors, writers, studio representatives and advertisers attended the event in anticipation of the opportunity to work with the creators of the winning submissions. 

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.

SOURCE: Tudou

 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; the ability of the online video and advertising  industry in China to grow at rates projected by market data; and ability of the Company to timely close its pending merger with Youku.  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

The Company defines 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. The Company reviews adjusted net income (loss) together with net income (loss) to obtain a better understanding of its operating performance. The Company believes it is useful supplemental information for investors and other interested persons to assess the Company's operating performance without the effect of non-cash fair value changes in warrant liabilities, which would not likely be a recurring factor in its business in the future, and share-based compensation expenses, which have been and continue to be a significant recurring factor in our business.

The Company presents its non-GAAP financial measure because management uses it to evaluate the Company's operating performance. The Company believes that 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 the Company uses to assess its operating performance.  In addition, this information allows investors and other interested persons to understand and evaluate the Company's consolidated results of operations in the same manner as management and to make period-over-period comparisons of its 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 the Company's net income (loss) for the period. In addition, because companies may not calculate adjusted net income (loss) in the same manner, 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. The Company encourages investors and other interested persons to review the Company's 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 June 30, 2012 were made at a rate of RMB6.3530 to US$1.00, the noon buying rate in effect on June 29, 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 presents net revenues net of third party advertising agency fees and sales tax as a reduction of revenues.  For the second quarter 2012, third party advertising agency fees were RMB32.3 million (US$5.1 million) and sales tax was RMB7.4 million (US$1.2 million), compared to third party advertising agency fees of RMB23.6 million and sales tax of RMB14.6 million in the corresponding period in 2011.

 






Tudou Holdings Limited


Consolidated Balance Sheet Information


(Amounts expressed in RMB, unless otherwise stated)








Jun 30, 2011

Mar 31, 2012

Jun 30, 2012

Jun 30, 2012


(unaudited)

(unaudited)

(unaudited)

(unaudited)


RMB

RMB

RMB

US$






Assets










Current assets:





Cash and cash equivalents

135,769,594

695,746,338

516,192,285

81,251,737

Restricted cash

78,629,940

96,685,338

50,599,200

7,964,615

Accounts receivable, net

259,354,944

256,602,540

316,334,475

49,792,929

Prepayments and other current assets

34,481,051

15,347,958

12,694,496

1,998,189

Premium content licensed

18,720,530

47,551,257

40,316,868

6,346,115

Content produced


695,922

176,761

27,823

Total current assets

526,956,059

1,112,629,353

936,314,085

147,381,408

Equipment

66,825,250

93,393,641

94,764,562

14,916,506

Intangible assets

4,696,093

5,973,504

6,467,861

1,018,080

Other assets

4,282,679

4,175,908

-

-

Other long-term receivables


10,000,000

10,000,000

1,574,059

Prepayment for premium content licensed


166,091,005

181,731,422

28,605,607

Premium content licensed

59,980,909

200,466,206

235,529,108

37,073,683

Total assets

662,740,990

1,592,729,617

1,464,807,038

230,569,343






Liabilities and shareholders' equity










Current liabilities:





Accounts payable

76,297,318

163,179,211

188,110,362

29,609,690

Taxes payable

25,456,201

28,491,533

25,241,179

3,973,112

Accrued liabilities and other payables

170,319,316

225,563,977

243,956,753

38,400,245

Short-term loan

72,343,510

83,343,510

41,543,510

6,539,196

Share-based compensation liability

263,420,394

-

-

-

Total current liabilities

607,836,739

500,578,231

498,851,804

78,522,243






Warrant liabilities

343,404,204

-

-

-

Total liabilities

951,240,943

500,578,231

498,851,804

78,522,243






Series A redeemable convertible preferred shares

7,617,308

-

-

-

Series B redeemable convertible preferred shares

55,008,503

-

-

-

Series C redeemable convertible preferred shares

122,960,400

-

-

-

Series D redeemable convertible preferred shares

367,586,880

-

-

-

Series E redeemable convertible preferred shares

378,063,467

-

-

-






Shareholders' equity





Ordinary shares

9,700

74,907

76,747

12,080

Additional paid-in capital

11,054,330

2,554,379,616

2,582,926,377

406,567,980

Accumulated deficit

(1,230,800,541)

(1,462,303,137)

(1,617,047,890)

(254,532,960)

Total shareholders' equity

(1,219,736,511)

1,092,151,386

965,955,234

152,047,100





-

Total liabilities and shareholders' equity

662,740,990

1,592,729,617

1,464,807,038

230,569,343






  










Tudou Holdings Limited





Consolidated Statement of Operations Information





(Amounts expressed in RMB, unless otherwise stated) 

 






 For the Three Months Ended 


 For the Six Months Ended 


 Jun 30, 2011 

 Mar 31, 2012 

 Jun 30, 2012 

 Jun 30, 2012 


 June 30, 2011 

 June 30, 2012 

 June 30, 2012 


 (unaudited) 

 (unaudited) 

 (unaudited) 

 (unaudited) 


 (unaudited) 

 (unaudited) 

 (unaudited) 


 RMB 

 RMB 

 RMB 

 US$ 


 RMB 

 RMB 

 US$ 










Revenues

131,307,230

145,856,999

179,264,317

28,217,270


222,725,998

325,121,316

51,176,030

Less: Sales taxes

(14,635,680)

(5,575,694)

(7,403,565)

(1,165,365)


(26,677,477)

(12,979,259)

(2,043,013)

Net revenues

116,671,550

140,281,305

171,860,752

27,051,905


196,048,521

312,142,057

49,133,017










Cost of revenues

(85,577,861)

(179,632,865)

(191,026,368)

(30,068,687)


(166,573,691)

(370,659,233)

(58,343,969)

Gross profit / (loss)

31,093,689

(39,351,560)

(19,165,616)

(3,016,782)


29,474,830

(58,517,176)

(9,210,952)










Operating expenses:









Sales and marketing expenses

(55,679,672)

(68,808,006)

(84,959,552)

(13,373,139)


(132,063,602)

(153,767,558)

(24,203,928)

General and administrative expenses

(31,029,507)

(24,527,517)

(50,870,494)

(8,007,318)


(114,917,061)

(75,398,011)

(11,868,096)

Total operating expenses

(86,709,179)

(93,335,523)

(135,830,046)

(21,380,457)


(246,980,663)

(229,165,569)

(36,072,024)










Loss from operations

(55,615,490)

(132,687,083)

(154,995,662)

(24,397,239)


(217,505,833)

(287,682,745)

(45,282,976)










Finance income

76,330

639,483

563,307

88,668


152,987

1,202,790

189,326

Finance expense

(1,090,078)

(1,517,576)

(973,768)

(153,277)


(1,957,240)

(2,491,344)

(392,152)

Other income / (expense), net

(119,253)

-

(168,525)

(26,527)


(119,253)

(168,525)

(26,527)

Foreign exchange gain / (loss)

(3,135,290)

(893,968)

829,895

130,630


(6,049,673)

(64,073)

(10,085)

Fair value change in warrant liabilities

(18,979,502)

-


-


(189,364,593)

-

-

Loss before income taxes

(78,863,283)

(134,459,144)

(154,744,753)

(24,357,745)


(414,843,605)

(289,203,897)

(45,522,414)










Income taxes

-

-

-

-


-

-

-










Net loss

(78,863,283)

(134,459,144)

(154,744,753)

(24,357,745)


(414,843,605)

(289,203,897)

(45,522,414)










Accretion and effect of foreign exchange movement on Series A Preferred Shares

(105,067)

-

-

-


(236,052)

-

-

Effect of foreign exchange movement on Series B Preferred Shares

720,799

-

-

-


1,284,348

-

-

Effect of foreign exchange movement on Series C Preferred Shares

1,611,200

-

-

-


2,870,900

-

-

Effect of foreign exchange movement on Series D Preferred Shares

4,816,640

-

-

-


8,582,480

-

-

Accretion and effect of foreign exchange movement on Series E Preferred Shares

(16,505,338)

-

-

-


(26,661,338)

-

-










Net loss attributable to ordinary shareholders

(88,325,049)

(134,459,144)

(154,744,753)

(24,357,745)


(429,003,267)

(289,203,897)

(45,522,414)










Loss per ordinary share









- Basic and diluted

(7.36)

(1.19)

(1.34)

(0.21)


(35.75)

(2.52)

(0.40)










Loss per ADS









- Basic and diluted

(29.44)

(4.74)

(5.34)

(0.84)


(143.00)

(10.09)

(1.59)










Weighted average number of ordinary shares used in computing loss per share









- Basic and diluted

12,000,000

113,431,544

115,853,225

115,853,225


12,000,000

114,653,268

114,653,268










Share-based compensation was allocated in operating expenses as follows:









Cost of revenues

3,038,064

1,379,365

1,372,659

216,064


17,756,069

2,752,024

433,185

Sales and marketing expenses

9,803,139

5,404,764

4,744,666

746,839


44,851,797

10,149,430

1,597,581

General and administrative expenses

9,809,598

3,430,954

3,827,077

602,405


66,659,181

7,258,031

1,142,457










  

  











Tudou Holdings Limited






Adjusted Net Loss — Non-GAAP Reconciliation






(Amounts expressed in RMB, unless otherwise stated) 


















 For the Three Months Ended 


 For the Six Months Ended 



 Jun 30, 2011 

 Mar 31, 2012 

 Jun 30, 2012 

 Jun 30, 2012 


 June 30, 2011 

 June 30, 2012 

 June 30, 2012 



 (unaudited) 

 (unaudited) 

 (unaudited) 

 (unaudited) 


 (unaudited) 

 (unaudited) 

 (unaudited) 



 RMB 

 RMB 

 RMB 

 US$ 


 RMB 

 RMB 

 US$ 











Net loss

(78,863,283)

(134,459,144)

(154,744,753)

(24,357,745)


(414,843,605)

(289,203,897)

(45,522,414)











Add back:

Share-based compensation expenses

22,650,801

10,215,083

9,944,402

1,565,308


129,267,047

20,159,485

3,173,223


Fair value changes in warrant liabilities

18,979,502

-

-

-


189,364,593

-

-











Adjusted net loss


(37,232,980)

(124,244,061)

(144,800,351)

(22,792,437)


(96,211,965)

(269,044,412)

(42,349,191)











  










Tudou Holdings Limited






Consolidated Statement of Cash Flows






(Amounts expressed in RMB, unless otherwise stated) 

 







 For the Three Months Ended 


 For the Six Months Ended 


 Jun 30, 2011 

 Mar 31, 2012 

 Jun 30, 2012 

 Jun 30, 2012 


 June 30, 2011 

 June 30, 2012 

 June 30, 2012 


 (unaudited) 

 (unaudited) 

 (unaudited) 

 (unaudited) 


 (unaudited) 

 (unaudited) 

 (unaudited) 


 RMB 

 RMB 

 RMB 

 US$ 


 RMB 

 RMB 

 US$ 










Cash flows from operating activities:









Net loss

(78,863,283)

(134,459,144)

(154,744,753)

(24,357,745)


(414,843,605)

(289,203,897)

(45,522,414)

Adjustments to reconcile net loss to net cash provided by (used in)  operating activities:

-

-

-

-


-

-

-

Depreciation of equipment

6,734,331

9,637,685

10,277,833

1,617,792


12,867,612

19,915,518

3,134,821

Amortization of intangible assets

50,405

209,660

255,793

40,263


58,255

465,453

73,265

Amortization of other assets

35,590

35,590

-

-


71,180

35,590

5,602

Provision for doubtful accounts

4,085,033

2,643,383

2,807,208

441,871


16,368,108

5,450,591

857,955

Amortization of the premium content licensed

18,124,644

50,863,964

57,165,796

8,998,236


28,140,551

108,029,760

17,004,527

Amortization of the content produced

3,497,227

12,728,947

2,790,348

439,217


6,562,500

15,519,295

2,442,829

Share-based compensation

22,650,802

10,215,083

9,944,403

1,565,308


129,267,046

20,159,486

3,173,223

Fair value changes in warrant liabilities

18,979,502

-

-

-


189,364,593

-

-

Loss from disposal of other assets

-

-

181,908

28,633


-

181,908

28,633

Foreign exchange loss

3,135,290

893,968

(829,895)

(130,630)


6,049,673

64,073

10,085










Changes in operating assets and liabilities: 









Accounts receivables

(9,304,512)

(19,441,737)

(62,539,143)

(9,844,033)


(32,689,703)

(81,980,880)

(12,904,278)

Prepayments and other current assets

(2,242,691)

4,835,969

4,289,096

675,129


2,900,427

9,125,065

1,436,340

Content produced

-

(5,210,362)

(2,271,187)

(357,498)


-

(7,481,549)

(1,177,640)

Accounts payable

(2,172,159)

6,636,811

10,506,166

1,653,733


(1,343,849)

17,142,977

2,698,407

Tax payable

3,005,534

(9,149,133)

(3,250,354)

(511,625)


4,297,529

(12,399,487)

(1,951,753)

Other payables and accruals

9,368,177

(5,200,531)

18,392,777

2,895,136


27,373,497

13,192,246

2,076,538










Net cash provided by/(used in) operating activities

(2,916,110)

(74,759,847)

(107,024,004)

(16,846,213)


(25,556,186)

(181,783,851)

(28,613,860)










Cash flows from investing activities:









Purchase of equipment

(18,344,013)

(12,263,333)

(14,456,328)

(2,275,512)


(21,723,420)

(26,719,661)

(4,205,834)

Purchase of intangible assets

(463,656)

-

(750,150)

(118,078)


(1,300,756)

(750,150)

(118,078)

Cash received from disposal of other assets

-

-

3,994,000

628,679


-

3,994,000

628,679

Advance payment for premium content licensed

-

(23,340,704)

(15,640,417)

(2,461,895)


-

(38,981,121)

(6,135,860)

Cash paid for premium content licensed

(45,761,160)

(65,097,644)

(67,761,751)

(10,666,103)


(74,331,397)

(132,859,395)

(20,912,859)

Cash received from maturity of short-term investment

-

-

-

-


5,837,246

-

-

Cash paid for PRC advertising license

-

-

-

-


(1,527,178)

-

-

Net decrease/(increase) in restricted cash

(13,065,940)

101,381

46,086,138

7,254,232


(12,402,940)

46,187,519

7,270,190

Net cash used in investing activities

(77,634,769)

(100,600,300)

(48,528,508)

(7,638,677)


(105,448,445)

(149,128,808)

(23,473,762)










Cash flows from financing activities:









Cash received from short-term loan

11,100,000

-

-

-


11,100,000

-

-

Cash paid for the repayment of short-term loan

-

-

(41,800,000)

(6,579,569)


-

(41,800,000)

(6,579,569)

Cash received from exercise of stock options

-

-

16,968,564

2,670,953


-

16,968,564

2,670,953

Cash paid for initial public offering cost

(613,685)

-

-

-


(1,426,877)

-

-

Net cash used in  financing activities

10,486,315

-

(24,831,436)

(3,908,616)


9,673,123

(24,831,436)

(3,908,616)










Net decrease in cash and cash equivalents

(70,064,564)

(175,360,147)

(180,383,948)

(28,393,506)


(121,331,508)

(355,744,095)

(55,996,238)










Cash and cash equivalents at beginning of period

208,969,448

872,000,453

695,746,338

109,514,613


263,150,775

872,000,453

137,258,060

Effect of foreign exchange rate change on cash

(3,135,290)

(893,968)

829,895

130,630


(6,049,673)

(64,073)

(10,085)

Cash and cash equivalents at end of period

135,769,594

695,746,338

516,192,285

81,251,737


135,769,594

516,192,285

81,251,737










Supplementary Disclosure of Cash Flow Information









Cash paid for interest

1,034,405

1,519,720

1,809,392

284,809


1,855,700

3,329,112

524,022










Supplementary Disclosure of Non-cash Investing and Financial Activities









Unpaid deferred expenses/Payables related to the initial public offering

17,477,601

-

-

-


17,477,601

-

-

Payables related to purchase of equipment

19,702,648

13,723,390

10,915,816

1,718,214


19,702,648

24,639,206

3,878,358

Payables related to premium content licensed

9,895,500

54,296,015

71,528,574

11,259,023


9,895,500

125,824,589

19,805,539

Payables related to purchase of PRC advertising license qualification right

300,124

-

-

-


300,124

-

-

SOURCE Tudou Holdings Limited