Net Revenues and Non-GAAP Net Income Exceeding Guidance
Net Revenues up 33% Q-o-Q, 156% Y-o-Y
Non-GAAP Net Income up 11% Q-o-Q, 202% Y-o-Y
Net Income up 30% Q-o-Q, 192% Y-o-Y
BEIJING, Aug. 28 /Xinhua-PRNewswire/ -- China Finance Online Co. Limited
(Nasdaq: JRJC), a leading Chinese online financial information and listed
company data provider, today announced its financial results for the second
quarter ended June 30, 2008:
Q2 2008 Highlights
Second Quarter
2008 2007 Variance in %
1) Financial Data: (in thousands of U.S. dollars,
except per ADS data)
Net revenues $14,679 $5,723 156%
GAAP net income 4,561 1,562 192%
Non-GAAP net income 6,528 2,159 202%
GAAP net income per ADS
Basic $0.23 $0.08 188%
Diluted $0.20 $0.08 150%
Non-GAAP net income per ADS
Basic $0.33 $0.11 200%
Diluted $0.28 $0.11 155%
2) Operating Data:
Registered users 10,500,000 7,300,000 44%
Active paid individual
subscribers 100,600 37,400 169%
-- In the second quarter of 2008, Chinese stock market continued to
experience significant correction, with Shanghai Stock Exchange
Composite Index down additional 21% following a record-setting 34%
decline in Q1 2008. Despite the sharp decline in the stock market, the
Company's core subscription service business still achieved solid
growth.
-- As a result, net revenues reached $14.68 million for Q2 2008, exceeding
the high end of the Company's previous guidance of $13.0 to $13.50
million, up 156% year-over-year and 33% quarter-over-quarter.
-- Non-GAAP net income, which is defined as net income excluding stock-
based compensation expenses, was $6.53 million for Q2 2008, exceeding
the high end of the Company's previous guidance of $5.5 to $6.0 million,
up 202% year-over-year and 11% quarter-over-quarter. Non-GAAP basic
and diluted net income per share were $0.07 and $0.06, respectively,
and non-GAAP basic and diluted net income per ADS were $0.33 and $0.28
for Q2 2008, respectively.
-- GAAP net income was $4.56 million for Q2 2008, up 192% compared to
$1.56 million for the second quarter of 2007. Basic and diluted GAAP
net income per share were $0.05 and $0.04, respectively. Basic and
diluted GAAP net income per ADS were $0.23 and $0.20 for Q2 2008,
respectively.
-- Registered user accounts of jrj.com and stockstar.com grew to 10.50
million, an increase of 700,000 from the previous quarter. Active paid
individual subscribers, which refer to individual investors who
subscribe for a fee to our products through downloading, via web or by
mobile phones, grew to 100,600 up 34% from the previous quarter. As of
June 30, 2008, our Hong Kong brokerage operation Daily Growth, which
was acquired in November, 2007, had approximately 1,100 customer
accounts.
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''.
Q2 2008 Financial Results
Net Revenues:
During the second quarter of 2008, China Finance Online reported net
revenues of $14.68 million, exceeding the high end of the Company's previous
guidance of $13.0 to $13.5 million, compared to $5.72 million for the same
period in 2007, and $11.06 million for the first quarter of 2008, up 156%
year-over-year and 33% quarter-over-quarter. The increase is primarily due to
the growth in subscription service fees from individual customers. Revenues
from subscription service fees paid by individual customers were $13.13
million in the second quarter of 2008, representing 89% of net revenues for
the quarter. Revenues from mobile value added services were $370,000,
representing 3% of net revenues for the quarter. Revenues from subscription
service fees paid by institutional customers were $267,000 in the second
quarter of 2008, approximately 2% of net revenues for the quarter. Revenues
from advertising-related business for the quarter contributed $758,000,
representing 5% of net revenues for the quarter. Revenues from brokerage-
related services, provided by Daily Growth, the Hong Kong securities brokerage
firm which was acquired in November 2007, were $121,000 in the second quarter
of 2008, representing 1% of net revenue for the quarter. Other revenues were
$30,000, less than 1% of net revenues for the quarter.
Revenues breakdown is summarized in the following table:
Three months ended
June 30, March 31, June 30,
2008 2008 2007
(In thousands of U.S. dollars)
1) Subscription service fees paid
by individual customers 13,133 89% 9,618 87% 4,667 81%
2) Revenues from mobile value added
services 370 3% 310 3% 334 6%
3) Subscription service fees paid by
institutional customers 267 2% 231 2% 258 5%
4) Revenues from advertising-related
business 758 5% 585 6% 396 7%
5) Revenues from brokerage-related
services 121 1% 153 1% n/a n/a
6) Revenues from others 30 <1% 158 1% 68 1%
Total net revenues
14,679 100% 11,055 100% 5,723 100%
Gross Profit:
Gross profit for the quarter was $12.58 million, compared to $4.64 million
for the same period in 2007 and $9.34 million for the first quarter of 2008.
Gross margin was 86% in the second quarter, compared to 81% in the same period
of 2007 and 84% in the first quarter of 2008. The gross margin improvement
was primarily due to cost leverage on increased sales and favourable sales mix.
A large portion of costs of revenue are website maintenance expenses,
which consist of bandwidth costs, personnel-related expenses, server
depreciation expenses, and content expenses for our jrj.com and stockstar.com
websites. Website maintenance expenses for the second quarter of 2008 was
$1.12 million in the quarter, compared to $730,000 from the second quarter of
2007 and $1.04 million for the previous quarter. As a percentage of net
revenue, website maintenance expenses for the second quarter of 2008 were 8%
in the quarter, compared to 13% for the second quarter of 2007 and 9% for the
previous quarter.
Operating Expenses:
Operating expenses for the second quarter of 2008 totalled $9.0 million
compared to $3.59 million for the same period in 2007 and $7.36 million from
the previous quarter. The increase from Q1 2008 is primarily due to the
increased professional fees, advertising fees, marketing promotion expenses
related to the stock picking competition, as well as performance-based sales
commissions. Excluding stock-based compensation of $1.97 million, operating
expenses was $7.03 million for the second quarter of 2008, compared to $3.0
million for the second quarter of 2007 and $5.0 million for the first quarter
of 2008. As a percentage of net revenue for the quarter, operating expenses
excluding stock-based compensation was 48%, compared to 52% for the second
quarter of 2007 and 45% for the first quarter of 2008.
-- General and administrative expenses for the quarter were $4.12 million,
compared to $1.79 million for the same period in 2007 and $3.92 million
from the previous quarter. The increase from the previous quarter is
primarily due to the professional fees. Excluding stock-based
compensation of $1.89 million, general and administrative expenses was
$2.23 million for the second quarter, compared to $1.25 million in the
second quarter of 2007 and $1.64 million in the previous quarter. As a
percentage of net revenue in the quarter, general and administrative
expenses excluding stock-based compensation for the second quarter was
15%, and decreased from 22% for the second quarter of 2007 and flat
from the first quarter of 2008.
-- Sales and marketing expenses for the second quarter were $3.64 million,
compared to $1.36 million for the same period in 2007 and $2.45 million
from the previous quarter. The increase from the previous quarter is
primarily due to the increase in advertising fees, marketing promotion
expenses associated with the stock picking competition, as well as
performance-based sales commissions. Excluding stock-based
compensation of $66,000, sales and marketing expenses was $3.57 million
for the second quarter, compared to $1.33 million in the second quarter
of 2007 and $2.38 million in the previous quarter. As a percentage of
net revenue in the quarter, sales and marketing expenses excluding
stock-based compensation for the second quarter was 24%, relatively
flat from the same quarter in 2007 and a slight increase from 22% for
the first quarter of 2008.
-- Product development expenses for the second quarter were $1.24 million,
compared to $443,000 for the same period in 2007 and $995,000 from the
previous quarter, which were primarily due to the increases in employee
compensation as a result of increased headcounts and server
depreciation expenses. Excluding stock-based compensation of $13,000,
product development expenses were $1.23 million, compared to $418,000
in the second quarter of 2007 and $972,000 in the previous quarter. As
a percentage of net revenue in the quarter, product development
expenses excluding stock-based compensation for the second quarter was
8%, increased from 7% in the second quarter of 2007 and decreased from
9% for the previous quarter.
Income from Operations:
Income from operations for the second quarter of 2008 was $3.58 million,
compared to $1.05 million for the same quarter in 2007 and $1.97 million for
the first quarter of 2008. Adjusted income from operations (non-GAAP), which
is defined as income from operations excluding stock-based compensation
expenses of $1.97 million, was $5.54 million for the quarter, compared to
$1.65 million for the same quarter in 2007 and $4.34 million for the first
quarter of 2008.
Net Income and Non-GAAP Net Income:
Net income was $4.56 million, compared to net income of $1.56 million for
the second quarter of 2007 and $3.51 million for the first quarter of 2008.
Net income margin was 31% for Q2 2008, compared to 27% for the same period in
2007 and 32% for the first quarter of 2008.
Total income tax benefit for the quarter was $88,000, compared to $150,000
for the same period in 2007 and $64,000 for the previous quarter.
Non-GAAP net income, which is defined as net income excluding stock-based
compensation expenses, was $6.53 million for the second quarter of 2008,
compared to $2.16 million for the second quarter of 2007, and $5.88 million
for the first quarter of 2008.
