SHANGHAI, Aug 16, 2011 /PRNewswire-Asia/ -- Taomee Holdings
Limited (NYSE: TAOM) ("Taomee" or the "Company"), one of the
leading children's entertainment and media companies in
China, today reported its
unaudited financial results for the second quarter ended
June 30, 2011.
Second Quarter 2011 Financial
Highlights
- Total net revenues were US$11.8
million, a 22.6% increase from US$9.6
million in the second quarter 2010 and a seasonal 5.1%
decrease from US$12.4 million in the
first quarter of 2011.
- Gross margin rose to 85.1% from 84.2% in the first quarter 2011
and decreased from 85.3% in the second quarter 2010.
- Non-GAAP net income attributable to holders of ordinary shares
was US$4.7 million, compared with
US$5.6 million in the first quarter
2011.
- Non-GAAP basic and diluted earnings per ADS were US$0.15 and US$0.14, respectively, compared with US$0.20 and US$0.18, respectively, in the first quarter 2011
and US$0.20 and US$0.19, respectively, in the second quarter
2010.
"We are pleased to report our results for the first time as a
publicly traded company," said Mr. Benson
Wang, Co-founder, Director and Chief Executive Officer of
Taomee. "Our second quarter results exceeded our expectations, and
we remain focused on investing in new content offerings for the
future. Following our successful listing on the New York Stock
Exchange, some of our key objectives for 2011 are to expand our
user base, launch new offerings- including our social networking
site and mobile entertainment products, demonstrate success to
partners through brand licensing, and increase the popularity of
our franchises through film and TV. I am extremely pleased with the
highly successful launches of our first two movies,
'Seer: The Search for the
Sacred Phoenix' last month and 'Legend of
the Moles-The Frozen Horror'
just a few days ago. The sophisticated production and the
tremendous audience reception of these movies demonstrate our
potential to expand our franchises further. As we look forward, our
commitment to create the very best in children's entertainment
content and to deliver it across multiple platforms remains strong.
We are optimistic about the third quarter as we actively execute
our strategy to drive long-term growth and further build our
entertainment franchise in China."
Operational Results for Second Quarter 2011
For the second quarter of 2011, the number of active accounts
for the Company's games under operation in mainland China decreased 12% to approximately 24.0
million from 27.3 million in the first quarter of 2011.
Active paying accounts for the Company's games under operation
in mainland China decreased 19% to
approximately 2.2 million from 2.7 million in the first quarter of
2011. The declines in active accounts and active paying accounts
were primarily due to seasonality as the second quarter has fewer
non-school days compared with the other three quarters during the
year.
Unaudited Financial Results for Second
Quarter 2011
Total Net Revenues
Total net revenues were US$11.8
million, compared with US$12.4
million in the first quarter 2011 and US$9.6 million in the second quarter 2010.
- Net online business revenues were US$10.7 million, compared with US$11.8 million in the first quarter 2011 and
US$9.0 million in the second quarter
2010. The quarter-over-quarter decrease was primarily due to
seasonality as the second quarter has the fewest non-school days
during the year. The year-over-year increase was primarily due to
the revenue generated by our new virtual worlds launched in
2011.
- Net offline business revenues were US$1.1 million, compared with US$0.6 million in the first quarter 2011 and
US$0.6 million in the second quarter
2010. The sequential and year-over-year increases were mainly due
to a rise in offline merchandise and book licensing. Our offline
licensing business posted strong growth as our brands continue to
grow in awareness and popularity across China.
Total Cost of
Services
Total cost of services was US$1.8
million, compared with US$2.0
million in the first quarter 2011 and US$1.4 million in the second quarter 2010.
- Online business related costs were US$1.6 million, compared with US$1.7 million in the first quarter 2011 and
US$1.3 million in the second quarter
2010. The quarter-over-quarter decline was primarily due to lower
bandwidth costs associated with the seasonal slowdown while the
year-over-year increase was mainly due to an increase in headcount
and share based compensation.
- Offline business related costs were US$0.2 million in the second quarter 2011,
compared with US$0.3 million in the
first quarter 2011 and US$0.1 million
in the second quarter 2010. The quarter-over-quarter decrease
was primarily due to the Company's low margin books trading
business in the first quarter 2011 that was discontinued in the
second quarter of 2011. The year-over-year increase was mainly due
to the increase in headcount and share based compensation.
Gross Profit and Gross Margin
Gross profit was US$10.0 million,
compared with US$10.4 million in the
first quarter 2011 and US$8.2 million
in the second quarter 2010.
Gross margin was 85.1%, compared with 84.2% in the first quarter
2011 and 85.3% in the second quarter 2010.
- Gross margin for the online business was 85.9%, compared with
85.8% in the first quarter of 2011, and 85.3% in the second quarter
of 2010.
- Gross margin for the offline business was 76.7%, compared with
53.8% in the first quarter of 2011 and 84.4% in the second quarter
2010.
Total Operating Expenses
Total Operating expenses were US$5.6
million, compared with US$4.6
million in the first quarter 2011 and US$3.2 million in the second quarter 2010.
- Product development expenses were US$2.2
million, compared with US$2.1
million in the first quarter 2011 and US$1.1 million in the second quarter 2010. The
sequential and year-over-year increase was primarily due an
increase in headcount for R&D staff.
- Sales and marketing expenses were US$1.7
million, compared with US$1.0
million in the first quarter 2011 and US$0.3 million in the second quarter 2010. The
sequential and year-over-year increases were largely due to an
increase in animation production costs and higher advertising
expenses.
- General and administrative expenses were US$1.9 million, compared with US$1.6 million in the first quarter 2011 and
US$1.8 million in the second quarter
2010. The sequential and year-over-year increase was mainly due to
professional service fees related to being a public company and
higher stock based compensation.
Share of Profit in Equity Investment
Share of profit in equity investment was US$ 0.3 million, compared with US$ 4.0 million in the first quarter 2011 and
US$0.2 million in the second quarter
2010. The quarter-over-quarter decrease was mainly due to a
recognized investment gain of US$3.7
million in the first quarter 2011 from the sale of the
Company's 10.5% equity interest in Elyn Corporation. We currently
own 29.5% of Elyn Corporation and its wholly-owned subsidiary
Taiwan Taomee Co., Ltd., an entity that operates the Company's four
virtual worlds in Taiwan.
Profit (loss) from Operations
Profit from operations was US$4.4
million, compared with US$5.8
million in the first quarter 2011 and US$5.0 million in the second quarter 2010.
Net Income
Net income was US$4.3 million,
compared with US$9.1 million in the
first quarter 2011 and US$5.7 million
in the second quarter 2010.
Net income attributable to holders of ordinary shares was
US$4.3 million, compared with
US$9.0 million in the first quarter
2011 and US$5.6 million in the second
quarter 2010.
Non-GAAP net income attributable to shareholders was
US$4.7 million, compared with
US$5.6 million in the first quarter
2011 and US$5.6 million in the second
quarter 2010.
Basic and diluted earnings per American Depositary Share (ADS)
were US$0.14 and US$0.13 each, compared with US$0.31 and US$0.29, respectively, in the first quarter 2011,
and US$0.20 and US$0.19, respectively in the second quarter
2010.
Non-GAAP basic and diluted earnings per American Depositary
Share (ADS) were US$0.15 and
US$0.14 each, compared with
US$0.20 and US$0.18 each, in the first quarter 2011, and
US$0.20 and US$0.19, respectively, in the second quarter
2010.
Cash and Cash Equivalents
As of June 30, 2011, the Company
had US$119.5 million of cash and cash
equivalents, compared with US$54.1
million as of March 31, 2011.
The increase reflects the proceeds from the Company's initial
public offering in June, 2011.
Recent Business Highlights
On June
20th, 2011, Taomee
launched a fully animated TV show based on the Mole's World
franchise which received an overwhelmingly positive response from
viewers.
On July
15th, 2011, Taomee began
open-beta testing for Seer 2 in China. This is the second virtual world based
on the Seer franchise.
On July
28th, 2011, Taomee
released its first fully animated movie, Seer: The
Search for the Sacred Phoenix based on the Seer
franchise. As of August 14th, 2011,
the film has generated over RMB 42.9
million (US$ 6.2 million) in
box office revenue(1).
On August
11th, 2011, Taomee
released its second fully animated movie, Legend of
the Moles-The Frozen Horror based on
the Mole's World franchise. In the opening weekend, the movie was
the fifth most watched film in China, generating RMB
10.2 million (US$ 1.6 million)
in box office revenue.
(1) Box office figures as of
August 14, 2011, according to www.EntGroup.cn
|
|
|
Outlook for Third Quarter 2011
For the third quarter of 2011, Taomee expects total net revenues
to increase in the range of 3% to 5% quarter-over-quarter. Although
we expect to have a positive cash flow and remain profitable, we
also anticipate that net income will decline sequentially and
year-over-year as we continue to invest in our business and brands
by adding headcount, primarily in R&D and product development,
as well as higher advertising expenses and increased animation
production costs.
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 charge from net income attributable to the Company's
shareholders and from the calculation of earnings per ADS. For the
three months ended March 31, 2011,
the Company also excluded its one time gain from selling its equity
investment in Elyn Corporation from net income attributable to the
Company's shareholders and earnings per ADS, respectively. 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 charge 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 are set forth at the end of this release.
Conference Call
The Company will host a conference call and live webcast at
8:30pm Eastern Daylight Time on
Tuesday, Aug 16, 2011 (8:30am Beijing
time on Wednesday, Aug 17, 2011).
Dial-in numbers for the live conference call are as follows:
- U.S. Toll Free
Number
|
+1-800-591-6930
|
|
- International Dial-in
Number
|
+1-617-614-4908
|
|
- China
Mainland Dial-in Number
|
+86-400-8811-629 / +86
-400-8811-630
|
|
- Hong Kong
Dial-in Number
|
+852-3002-1672
|
|
Conference ID:
Taomee
|
|
|
|
|
A live and archived webcast of the conference call will be
available on the Investor Relations section of Taomee's website at
http://www.taomee.com/en_taomee.html.
A telephone replay of the call will be available after the
conclusion of the conference call at 11:30
p.m. Eastern Daylight Time on August
16, 2011 through 11:30 p.m. Eastern
Daylight Time, August 24,
2011.
Dial-in numbers for the replay are as follows:
- Dial-in Number
|
+1-888-286-8010
|
|
- International Dial-in
Number
|
+1-617-801-6888
|
|
Conference ID:
61616870
|
|
|
|
|
About Taomee Holdings Limited
Taomee Holdings Limited is one of the leading children's
entertainment and media companies in China with a mission to create exceptional
entertainment experiences for children that are fun, safe and
trusted by parents. Taomee has created online virtual worlds with
enduring and iconic characters, images and story lines that have
resonated and attracted a loyal following among children between
the ages of 5 and 15 in China. As
of June 2010, Taomee was ranked as
the largest online entertainment community for children in
China measured by market share and
active accounts, according to a report from iResearch. Taomee has
expanded into offline business by licensing its franchises to other
media formats including books, films and television and makers of
consumer products targeting children.
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 filings with the U.S. Securities and
Exchange Commission, including its registration statement on its
final prospectus dated June 10, 2011.
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
Taomee Holdings
Limited
|
|
Email: ir@taomee.com
|
|
|
|
Christensen
|
|
|
|
In China
|
|
Christian Arnell
|
|
Phone:
+86-10-5826-4939
|
|
E-mail: carnell@christensenir.com
|
|
|
|
In US
|
|
Kimberly Minarovich
|
|
Phone:
+1-917-533-3268
|
|
E-mail: kminarovich@christensenir.com
|
|
|
Taomee
Holdings Limited - Unaudited Consolidated Balance
Sheets
|
|
|
In
USD
|
|
In
USD
|
|
|
June
30
|
|
March
31
|
|
|
2011
|
|
2011
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
119,461,002
|
|
54,100,520
|
|
Accounts receivable
|
161,053
|
|
252,887
|
|
Prepayments
and other current
assets
|
1,278,101
|
|
2,872,179
|
|
Deferred tax
assets, current
|
2,865,237
|
|
2,828,178
|
|
Total
current assets
|
123,765,393
|
|
60,053,764
|
|
|
|
|
|
|
Investments in equity
investees
|
1,972,907
|
|
1,629,928
|
|
Property
and equipment,
net
|
2,724,974
|
|
3,015,089
|
|
Acquired intangible
assets
|
149,545
|
|
147,611
|
|
Other
assets
|
1,536,098
|
|
1,665,645
|
|
TOTAL
ASSETS
|
130,148,917
|
|
66,512,037
|
|
|
|
|
|
|
LIABILITIES,
MEZZANINE EQUITY AND EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
44,318
|
|
90,088
|
|
Income tax
payable
|
1,449,753
|
|
933,615
|
|
Advance from
customers
|
10,587,779
|
|
11,097,458
|
|
Due to
related parties
|
89,432
|
|
88,889
|
|
Deferred
revenue
|
14,226,052
|
|
13,638,397
|
|
Dividends
payable
|
6,400,000
|
|
6,400,000
|
|
Deferred tax liabilities,
current
|
388,760
|
|
381,996
|
|
Accrued expenses and
other current
liabilities
|
6,015,372
|
|
5,466,952
|
|
Total
current liabilities
|
39,201,466
|
|
38,097,395
|
|
|
|
|
|
|
Mezzanine
equity
|
|
|
|
|
Series A
convertible redeemable preferred shares ($0.00002 par value,
125,000,000 shares authorized,
issued and outstanding as of March 31, 2011; nil as of June 30,
2011).
(Redemption value was $7,500,000
as of March 31, 2011 and nil as of June 30, 2011 )
|
-
|
|
5,746,906
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Ordinary
shares ($0.00002 par value; 875,000,000 shares
authorized;
575,000,000 shares issued and outstanding as of March 31, 2011 and
723,250,000 shares issued and outstanding as of June 30,
2011)
|
14,465
|
|
9,000
|
|
Additional
paid-in capital
|
65,020,949
|
|
1,432,091
|
|
Retained
earnings
|
24,522,932
|
|
20,268,026
|
|
Accumulated
other
comprehensive income
|
1,389,105
|
|
958,619
|
|
Total equity
|
90,947,451
|
|
22,667,736
|
|
|
|
|
|
|
TOTAL LIABILITIES, MEZZANINE
EQUITY AND EQUITY
|
130,148,917
|
|
66,512,037
|
|
|
|
|
|
|
|
Taomee
Holdings Limited - Unaudited Consolidated Statements
of Operations
|
|
|
|
In
USD, except for share
data
For three
months
|
|
|
|
ended June
30,
|
|
ended March
31,
|
|
ended June
30,
|
|
|
|
2011
|
|
2011
|
|
2010
|
|
Revenues:
|
|
|
|
|
|
|
|
Online
business, net
|
|
10,692,370
|
|
11,775,969
|
|
9,022,278
|
|
Offline
business, net
|
|
1,068,729
|
|
622,806
|
|
567,716
|
|
Total net
revenues
|
|
11,761,099
|
|
12,398,775
|
|
9,589,994
|
|
|
|
|
|
|
|
|
|
Cost of
services
|
|
|
|
|
|
|
|
Online
business
|
|
(1,502,720)
|
|
(1,667,624)
|
|
(1,325,986)
|
|
Offline
business
|
|
(248,639)
|
|
(287,519)
|
|
(88,315)
|
|
Total cost
of services
|
|
(1,751,359)
|
|
(1,955,143)
|
|
(1,414,301)
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
10,009,740
|
|
10,443,632
|
|
8,175,693
|
|
|
|
|
|
|
|
|
|
Operating
income
expenses:
|
|
|
|
|
|
|
|
Product
development
|
|
(2,212,485)
|
|
(2,092,025)
|
|
(1,134,900)
|
|
Sales and
marketing
|
|
(1,678,841)
|
|
(1,034,939)
|
|
(264,414)
|
|
General and
administrative
|
|
(1,896,278)
|
|
(1,648,904)
|
|
(1,808,606)
|
|
Other operating
income
|
|
158,926
|
|
174,196
|
|
-
|
|
Total
operating expenses
|
|
(5,628,678)
|
|
(4,601,672)
|
|
(3,207,920)
|
|
|
|
|
|
|
|
|
|
Profit
from operations
|
|
4,381,062
|
|
5,841,960
|
|
4,967,773
|
|
|
|
|
|
|
|
|
|
Interest income,
net
|
|
131,699
|
|
105,392
|
|
52,468
|
|
Other
income (expenses), net
|
|
(5,115)
|
|
4,633
|
|
(99,209)
|
|
Income before income taxes and
share of profit in equity investments
|
|
4,507,646
|
|
5,951,985
|
|
4,921,032
|
|
|
|
|
|
|
|
|
|
Income tax
benefit (expense)
|
|
(514,634)
|
|
(799,404)
|
|
665,979
|
|
|
|
|
|
|
|
|
|
Share of profit in equity
investments
|
|
342,979
|
|
3,976,684
|
|
151,584
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
4,335,991
|
|
9,129,265
|
|
5,738,595
|
|
|
|
|
|
|
|
|
|
Less: Deemed dividends on Series
A convertible redeemable preferred shares
|
|
(81,085)
|
|
(119,516)
|
|
(119,649)
|
|
|
|
|
|
|
|
|
|
Net income
attributable to holders of ordinary shares
|
|
4,254,906
|
|
9,009,749
|
|
5,618,946
|
|
|
|
|
|
|
|
|
|
|
Taomee
Holdings Limited - Reconciliation of GAAP and Non-GAAP
Results
|
|
Earnings
per ADS
|
|
|
|
|
|
|
|
-Basic
|
|
0.14
|
|
0.31
|
|
0.20
|
|
-Diluted
|
|
0.13
|
|
0.29
|
|
0.19
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares used in calculation
|
|
|
|
|
|
|
|
- Basic
|
|
514,972,527
|
|
450,000,000
|
|
450,000,000
|
|
- Diluted
|
|
537,289,764
|
|
482,579,336
|
|
452,500,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
USD, except for share
data
For three
months
|
|
|
|
ended June
30,
|
|
ended March
31,
|
|
ended June
30,
|
|
|
|
2011
|
|
2011
|
|
2010
|
|
Reconciliation from GAAP
measures to Non-GAAP measures
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GAAP net income
attributable to holders of ordinary
shares
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4,254,906
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9,009,749
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5,618,946
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Share-based compensation
cost
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455,056
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273,557
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17,040
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Investment income from sell of
equity interest(2)
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-
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(3,662,098)
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-
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Non GAAP net income
attributable to holders of ordinary
shares
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4,709,962
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5,621,208
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5,635,986
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Non-GAAP diluted earnings per
ADS
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-Basic
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0.15
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0.20
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0.20
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-Diluted
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0.14
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0.18
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0.19
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(2) Reflects the transaction to
sell 10.5% of equity interest in Elyn Corporation in February
2011
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SOURCE Taomee Holdings Limited