Renren posts US$24.9 Mil. Net Loss in Q2 2012

8 August 2012 19 h 11 min Comments Off

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Renren Inc. (NYSE: RENN), a leading real-name social networking internet platform in China, today announced its unaudited financial results for the second quarter ended June 30, 2012.

Second Quarter 2012 Highlights
• Total net revenues were US$44.8 million, a 47.5% increase from the corresponding period in 2011.
• Online game revenues were US$22.5 million, a 122.1% increase from the corresponding period in 2011.
• Gross profit was US$27.9 million, a 13.4% increase from the corresponding period in 2011.
• Operating loss was US$22.2 million, compared to an operating income of US$0.7 million in the corresponding period in 2011.
• Net loss attributable to Renren was US$24.9 million, compared to a net income of US$0.8 million in the corresponding period in 2011.
• Adjusted net loss (1) (non-GAAP) was US$21.8 million, compared to an adjusted net income of US$2.3 million in the corresponding period in 2011.
(1) Adjusted net income (loss) is a non-GAAP measure, which is defined as income (loss) from continuing operations excluding share-based compensation expenses, amortization of intangible assets and impairment of intangible assets.

“We are pleased that our total net revenues this quarter came in above our guidance, supported by strong gaming growth and a better-than-expected performance by our group-buying business – Nuomi. On the other hand, brand advertising remained challenging, due to macro conditions, increased competition and the continued migration of our user traffic from PC to mobile,” commented Joseph Chen, Chairman and Chief Executive Officer. “Our user base continues to show healthy growth, as total activated users this quarter reached over 162 million compared to 124 million at the end of the second quarter in 2011. Monthly unique log-in users also increased to 45 million in the month of June, representing 31% of year-over-year growth.” “Looking ahead, our strategy remains focused on mobile opportunities, with increasing effort to experiment different monetization models, including mobile gaming, mobile advertising and mobile commerce through Nuomi.”
“Our investment strategy in building a mobile eco-system around our real-name social networking platform remains on course,” added Hui Huang, Renren’s Chief Financial Officer. “These investments will enable us to capture more growth opportunities as our business continues to evolve around mobile services.”

Second Quarter 2012 Results
. Total net revenues for the second quarter of 2012 were US$44.8 million, representing a 47.5% increase from the corresponding period in 2011.
. Online advertising revenues were US$15.1 million, representing a decrease of 10.5% from the corresponding period of 2011. The decrease was due to lower advertising spending by brand advertisers amidst a softer macro-environment, coupled with increased competition and continued migration of Renren’s traffic from PC to mobile. The number of Renren’s activated users however continued to increase from approximately 124 million as of June 30, 2011 to approximately 162 million as of June 30, 2012. Monthly unique log-in users increased from approximately 34 million in June 2011 to approximately 45 million in June 2012.
. Internet Value-Added Services (IVAS) revenues were US$29.7 million, representing a 119.9% increase from the corresponding period of 2011. Within IVAS revenues, online game revenues were US$22.5 million for the second quarter of 2012, a 122.1% increase from the corresponding period of 2011. The increase in online game revenues during this quarter was primarily due to the growing popularity of several in-house developed games Renren recently launched. Other IVAS revenues were US$7.2 million for the second quarter of 2012, a 113.2% increase from the corresponding period of 2011. Within other IVAS revenues, Renren’s social commerce service, Nuomi, recorded US$3.6 million of net revenues for the second quarter of 2012.
. Cost of revenues was US$16.9 million, a 192.6% increase from the corresponding period of 2011. Cost of revenues for the second quarter of 2012 included US$0.5 million for Nuomi. The increase in cost of revenues for the second quarter was largely due to increased bandwidth investments and increased costs of Renren’s recently launched games.
. Operating expenses were US$50.1 million, a 109.3% increase from the corresponding period of 2011. Operating expenses in the second quarter of 2012 included US$10.4 million expenses incurred on Nuomi. Excluding Nuomi, the operating expenses in the second quarter of 2012 would be US$39.7 million, a 116.7% increase from the corresponding period in 2011.
. Selling and marketing expenses were US$21.6 million, a 64.1% increase from the corresponding period of 2011, primarily due to the increased investments in Nuomi’s sales force and advertising campaigns, along with increased personnel related expenses and promotions for products on Renren.
. Research and development expenses were US$17.8 million, a 131.4% increase from the corresponding period in 2011, primarily due to headcount and personnel related expense increases.
. General and administrative expenses were US$10.7 million, a 246.9% increase from the corresponding period in 2011, primarily due to the growth of the company size, business operations and transactional costs associated with M&A activities.
Share-based compensation expense, which were all included in the operating expenses, were US$2.5 million, compared to US$1.4 million in the corresponding period in 2011, due to additional grants issued to directors, executives and employees.
. Operating loss was US$22.2 million, compared to an operating income of US$0.7 million in the corresponding period in 2011.
. Net loss attributable to Renren Inc. was US$24.9 million, compared to a net income of US$0.8 million in the corresponding period in 2011. Excluding results of operations attributable to Nuomi in both quarters, net loss in the second quarter of 2012 would be US$17.7 million, compared to a net income of US$5.0 million in the corresponding period of 2011.
. Adjusted net loss (non-GAAP) was US$21.8 million, compared to adjusted net income of US$2.3 million in the corresponding period in 2011. Excluding results of operations attributable to Nuomi in both quarters, adjusted net loss in the second quarter of 2012 would be US$14.5 million, compared to the adjusted net income of US$6.5 million in the corresponding period in 2011. Adjusted net income (loss) is defined as income (loss) from continuing operations excluding share-based compensation expenses, amortization of intangible assets and impairment of intangible assets.

Business Outlook
The Company expects to generate revenues in an amount ranging from US$49 million to US$51 million in the third quarter of 2012, representing 43% to 49% year-over-year growth. This forecast reflects Renren’s current and preliminary view, which is subject to change.

Source: Renren (07/08/2012)

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