Taomee Reports Fourth Quarter and Fiscal Year 2012 Unaudited Financial Results

14 March 2013 21 h 04 min Comments Off

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 SHANGHAI, March 14, 2013  — 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 fourth quarter and fiscal year ended December 31, 2012.

 Fourth Quarter of 2012 Financial Highlights

 Total net revenues were US$7.5 million in the fourth quarter of 2012, as compared with US$8.6 million in the fourth quarter of 2011.

Net income attributable to holders of ordinary shares increased 39.2% to US$2.3 million in the fourth quarter of 2012, as compared with US$1.6 million in the fourth quarter of 2011.

Basic and diluted earnings per ADS[1] increased to US$0.06 and US$0.06, respectively, in the fourth quarter of 2012, as compared with US$0.04 and US$0.04, respectively, in the fourth quarter of 2011.

Non-GAAP net income attributable to holders of ordinary shares increased 21.0% to US$2.7 million in the fourth quarter of 2012, as compared with US$2.3 million in the fourth quarter of 2011.

Non-GAAP basic and diluted earnings per ADS increased to US$0.07 and US$0.07, respectively, in the fourth quarter of 2012, as compared with US$0.06 and US$0.06, respectively, in the fourth quarter of 2011.

Fiscal Year 2012 Financial Highlights

 Total net revenues were US$40.2 million in 2012, compared with US$45.4 million in 2011.

Net income attributable to holders of ordinary shares was US$8.9 million in 2012, compared with US$19.3 million in 2011.

Basic and diluted earnings per ADS were US$0.24 and US$0.24, respectively, in 2012, compared with US$0.58 and US$0.56, respectively, in 2011.

Non-GAAP net income attributable to holders of ordinary shares was US$11.1 million in 2012, compared with US$17.6 million in 2011.

Non-GAAP basic and diluted earnings per ADS were US$0.30 and US$0.29, respectively, in 2012, compared with US$0.53 and US$0.51, respectively, in 2011.

  Each American depositary share (“ADS”) represents twenty ordinary shares.

 Mr. Benson Wang, co-founder and chief executive officer of Taomee, stated, “Last year marked a year of transformation and growth for Taomee in terms of our user growth and content expansion.  We accelerated the expansion of our cross-media platform through the launch of multiple award-winning films and TV animations, new online virtual worlds, children’s interactive toys, mobile applications, as well as several licensing agreements with some of the world’s leading companies, like P&G and GAP. More specifically, we experienced a strong increase in year-over-year active online users and have successfully extended those relationships to other online services including, social networking services, video and mobile applications. Our core franchise, Seer, was ranked the number two TV animation series last year by viewership throughout China, according to China Animation Association. On the mobile front, our accumulated mobile downloads on Apple iOS and Android platforms increased to over 15.4 million by the end of 2012. We are pleased with our 2012 achievements as evidenced by this strengthened presence across online, offline and mobile fronts.

 ”In 2013, we  remain focused on further leveraging our core competency in developing popular franchises for family entertainment by further expanding our online and offline business, as we continue to build our diversified cross-media entertainment platform in Greater China,” concluded Mr. Wang.

 Operational Results for Fourth Quarter of 2012

 Active accounts for the Company’s virtual worlds under operation in mainland China increased 27.4% to approximately 34.3 million from 27.0 million in the fourth quarter of 2011.

Active paying accounts for the Company’s virtual worlds under operation in mainland China decreased to 1.2 million in the fourth quarter of 2012 from 1.7 million in the fourth quarter of 2011. The year over year decrease in active paying accounts was primarily due to the Company’s strategy to temporarily focus on growing and strengthening user stickiness.

Average revenue per user (“ARPU”) for the Company’s virtual worlds under operation in mainland China was approximately RMB30 (US$4.8) compared with RMB30 (US$4.7) in the fourth quarter of 2011.

Mobile application downloads reached over 15.4 million by year end 2012, as compared with 1.1 million total downloads by the end of 2011.

Unaudited Financial Results for Fourth Quarter of 2012

 Net Revenues

 Total net revenues were US$7.5 million in the fourth quarter of 2012, as compared with US$8.6 million in the fourth quarter of 2011.

 Net online business revenues were US$6.3 million in the fourth quarter of 2012, as compared with US$7.5 million in the fourth quarter of 2011. The year-over-year decrease was primarily due to the implementation of the Company’s strategy to focus less on short-term revenue growth and instead invest in long-term brand enhancement and platform expansion to attract new users and increase user stickiness.

 Net offline business revenues increased to US$1.2 million in the fourth quarter of 2012, as compared with US$1.1 million in the fourth quarter of 2011. The increase was primarily due to the revenue contribution from the Company’s interactive toy trading business.

 Cost of Services

 Total cost of services was US$2.0 million in the fourth quarter of 2012, as compared with US$1.6 million in the fourth quarter of 2011.

 Online business related costs were US$1.6 million in the fourth quarter of 2012, as compared with US$1.3 million in the fourth quarter of 2011. The increase was primarily due to the increase in payroll expenses and amortization costs associated with the Company’s game licensing fees, which was partially offset by the decrease in bandwidth cost.

Offline business related costs were US$0.4 million in the fourth quarter of 2012, as compared with US$0.3 million in the fourth quarter of 2011. This slight increase was primarily due to the increase in payroll expenses and interactive toy costs.

 Gross Profit and Gross Margin

 Gross profit was US$5.5 million in the fourth quarter of 2012, as compared with US$7.0 million in the fourth quarter of 2011.

 Gross margin was 73.2% in the fourth quarter of 2012, as compared with 81.3% in the fourth quarter of 2011.

 Gross margin for the online business was 74.0% in the fourth quarter of 2012, as compared with 82.2% in the fourth quarter of 2011.

 Gross margin for the offline business was 69.1% in the fourth quarter of 2012, as compared with 75.3% in the fourth quarter of 2011.

 Operating Expenses

 Total operating expenses were US$4.2 million in the fourth quarter of 2012, as compared with US$6.4 million in the fourth quarter of 2011.

 Product development expenses were US$2.7 million in the fourth quarter of 2012, as compared with US$3.1 million in the fourth quarter of 2011. The decrease was primarily due to a decrease in share-based compensation and depreciation expenses.

Sales and marketing expenses were US$2.1 million in the fourth quarter of 2012, as compared with US$1.6 million in the fourth quarter of 2011. The increase was primarily due to the increase in promotion expenses and animation production expenses.

General and administrative expenses were US$2.2 million in the fourth quarter of 2012, as compared with US$2.1 million in the fourth quarter of 2011. The increase was primarily related to the increased professional fees and was partially offset by a decrease in payroll expense.

Other operating income was US$2.8 million in the fourth quarter of 2012, which primarily consisted of government subsidies.

 Share of Profit/(Loss) from Equity Method Investment

 Share of profit from equity method investment was US$0.1 million in the fourth quarter of 2012, as compared with a loss of US$0.3 million in the fourth quarter of 2011.

 Profit from Operations

 Profit from operations increased to US$1.3 million in the fourth quarter of 2012, as compared with US$0.6 million in the fourth quarter of 2011.

 Income Tax Expense

 Income tax expense was US$0.4 million in the fourth quarter of 2012, as compared with an income tax expense of US$0.1 million in the fourth quarter of 2011.

 Net Income Attributable to Ordinary shareholders

 Net income attributable to holders of ordinary shares increased 39.2% to US$2.3 million in the fourth quarter of 2012, as compared with US$1.6 million in the fourth quarter of 2011.

 Basic and diluted earnings per ADS increased to US$0.06 and US$0.06 in the fourth quarter of 2012, as compared with US$0.04 and US$0.04, respectively in the fourth quarter of 2011.

 Non-GAAP net income attributable to holders of ordinary shares increased 21.0% to US$2.7 million in the fourth quarter of 2012, as compared with US$2.3 million in the fourth quarter of 2011.

 Non-GAAP basic and diluted earnings per ADS increased to US$0.07 and US$0.07 in the fourth quarter of 2012, as compared with US$0.06 and US$0.06, respectively, in the fourth quarter of 2011.

 Cash and Cash Equivalents

 As of December 31, 2012, the Company had US$118.6 million of cash and cash equivalents, as compared with US$120.7 million as of December 31, 2011.

 Share Repurchase Program

 During the fourth quarter of 2012, Taomee had repurchased 211,947 ADSs. As of December 31, 2012, the Company has repurchased a total of 585,552 ADSs under the Company’s share repurchase program at an average price of approximately US$4.0 per ADS.

 Unaudited Financial Results for Fiscal year 2012

 Net Revenues

 Total net revenues were US$40.2 million in 2012, representing a decrease of 11.4% from US$45.4 million in 2011. This decrease was primarily due to the decline in online revenues and was partially offset by the increase in offline revenues.

 Net online business revenues were US$32.2 million in 2012, as compared with US$40.3 million in 2011. The decrease was primarily due to the implementation of the Company’s strategy to focus less on short-term revenue growth and instead invest in long-term brand enhancement and platform expansion to attract new users and increase user stickiness.

 Net offline business revenues increased significantly to US$8.0 million in 2012 from approximately US$5.1 million in 2011. The increase was primarily due to revenues generated from the Company’s co-branding and merchandise licensing for the Company’s two films based on the Mole and Seer franchises and revenue contributed by the interactive toy design and sales business.

 Cost of Services

 Total cost of services was US$10.0 million in 2012, as compared with US$7.7 million in 2011. The increase was primarily due to the increase in costs related to the development of both online and offline businesses.

 Online business related costs were US$6.9 million in 2012, as compared with US$6.0 million in 2011. The increase was primarily due to an increase in payroll expenses, wireless products hosting cost and amortization cost associated with game licensing fees.

 Offline business related costs were US$3.0 million in 2012, as compared with US$1.7 million in 2011. The increase was primarily due to the increase in film production costs, payroll expenses and interactive toy expenses.

 Total Operating Expenses

 Total operating expenses were US$26.8 million in 2012, as compared with US$22.8 million in 2011.

 Product development expenses were US$12.3 million in 2012, as compared with US$10.3 million in 2011. The increase was primarily attributable to the increased payroll expenses associated with headcount expansion and was partially offset by a decrease in outsourced R&D expenses and share-based compensation.

Sales and marketing expenses were US$10.0 million in 2012, as compared with US$6.3 million in 2011. The increase was primarily attributable to the increased advertising and promotional activities, including the costs associated with the promotion for the Company’s new films, as well as an increase in animation production expenses.

General and administrative expenses were US$10.1 million in 2012, as compared with US$8.0 million in 2011. The increase was primarily due to the increased payroll expenses related to new hires and share-based compensation incremental expenses associated with being a listed company as well as increased investment activities.

 Share of Profit in Equity Method Investments

 Share of profit in equity method investments was US$1.1 million in 2012, as compared with US$4.2 million in 2011. The decrease was mainly due to the Company’s transfer of all its equity interest in Shenzhen Ruigao Information Technology Co., Ltd. for US$1.0 million and recorded a gain of US$0.3 million in 2012, compared with a one-time gain of US$3.7 million realized from the sale of 10.5% equity method interest in Elyn Corporation in 2011.

 Profit from Operations

 Profit from operations was US$3.4 million in 2012, as compared with US$14.9 million in 2011.

 Income Tax Benefit (Expense)

 Income tax benefit was US$0.8 million in 2012, as compared with an expense of US$1.7 million in 2011.

 Net Income Attributable to Ordinary shareholders

 Net income attributable to holders of ordinary shares was US$8.9 million in 2012, as compared with US$19.3 million in 2011.

 Basic and diluted earnings per ADS were US$0.24 and US$0.24, respectively in 2012, as compared with US$0.58 and US$0.56, respectively, in 2011.

 Non-GAAP net income attributable to holders of ordinary shares was US$11.1 million in 2012, as compared with US$17.6 million in 2011.

 Non-GAAP basic and diluted earnings per ADS were US$0.30 and US$0.29, respectively in 2012, as compared with US$0.53 and US$0.51, respectively, in 2011.

 Recent Business Highlights

 In the fourth quarter, 2012:

 Taomee, in cooperation with schools and shopping malls, debuted live performances in Shanghai, Beijing, Hangzhou, and Chongqing featuring Mole and Seer characters. Taomee has also scheduled approximately 100 live events to take place in Greater China in 2013.

Taomee launched the official Chinese online portal for Cartoon Network’s Ben 10 franchise, ben10.61.com, which was co-developed with the Cartoon Network.

Taomee launched Seer and Spin Galaxy on the Apple iOS platform.

Taomee was awarded by China’s Ministry of Culture the “National Culture Industries Demonstration Base,” a specially designated business classification which the central government grants to leading Chinese cultural and media-related enterprises.

Seer and Mole’s World animation series were ranked No.2 and No.6 most beloved domestic cartoon animations in 2012, respectively, by the China Animation Association.

In the first quarter, 2013:

 Taomee began broadcasting self-branded TV show Taomee Dream School on thirteen TV stations across China, including China’s top cartoon channels Jin Ying Cartoon with Hunan State TV Station and Kaku TV with Beijing TV.

Taomee launched several new mobile games and applications, including Mole’s World animation app, Xian Jian Q Xia Zhuan on Apple’s iOS platform, and Mole’s World on Android platform.

Taomee started close beta testing for a cartoon style online action game in March.

March 15, 2013, Taomee will begin broadcasting Mole’s World animation season 3 throughout mainland China, followed by its broadcasting in Hong Kong on March 16.

 Outlook for First Quarter of 2013

 Net revenues for the first quarter of 2013 are expected to be in the range of US$8.0 million to US$8.3 million. This forecast reflects the Company’s current and preliminary view, which is subject to change.

 full press release

 About Taomee Holdings Limited

 Taomee Holdings Limited is one of the leading children’s entertainment and media companies in China, driven to deliver exceptional entertainment to children and families. Founded in 2007, Taomee is one the first companies in Greater China to develop animated franchises for children through online virtual world that are both fun and educational. The Company’s virtual worlds are widely trusted by millions of children, parents and caregivers across Asia. The Company’s Mole’s World and Seer franchises and characters have reached millions of children and families through virtual worlds, books, monthly print magazines, mobile applications, animated television series and movies.

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