Ku6 Media Reports Unaudited Financial Results for the First Quarter of Fiscal Year 2013

29 May 2013 21 h 48 min Comments Off

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Ku6 Media Co., Ltd. (“Ku6 Media” or the “Company,” NASDAQ: KUTV), a leading internet video company focused on User Generated Content (“UGC”) in China, today announced unaudited financial results for the first quarter of fiscal year 2013, ended March 31, 2013.

First Quarter 2013 Highlights (1)

The Company generates substantially all of its revenues from online advertising, primarily through an advertising agency agreement with Shengyue, an affiliate wholly owned by Shanda Interactive, pursuant to which Shengyue acts as the Company’s exclusive advertising agency for standard media resources and as its non-exclusive advertising agency for highly interactive advertising resources.
GAAP net loss was US$1.67 million (RMB10.38 million), as compared to a net loss of US$2.98 million in the fourth quarter of 2012 and US$1.79 million in the first quarter of 2012. Non-GAAP net loss, which the Company defines as net loss excluding expenses (benefits) associated with share-based compensation, was US$2.32 million (RMB14.40 million) in the first quarter of 2013, as compared to non-GAAP net loss of US$2.96 million in the fourth quarter of 2012 and US$1.28 million in the first quarter of 2012.
Basic and diluted loss per ADS was US$0.04 (RMB0.22) in the first quarter of 2013, as compared to US$0.06 in the fourth quarter of 2012 and US$0.04 in the first quarter of 2012.
Cash and cash equivalents were US$10.81 million (RMB67.15 million) as of March 31, 2013.
Net cash used in operating activities was US$2.27 million (RMB14.10 million) in the first quarter of 2013, as compared to US$3.68 million in the fourth quarter of 2012 and US$1.07 million in the first quarter of 2012.
(1) The reporting currency of the Company is the United States dollar (“U.S. dollar”), but solely for the convenience of the reader, the amounts of Renminbi (“RMB”) presented throughout the release were calculated at the rate of US$1.00=RMB6.2108, representing the noon buying rate as of March 29, 2013 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. This convenience translation is not intended to imply that the U.S. dollar amounts could have been, or could be, converted, realized or settled into RMB at that rate on March 29, 2013, or at any other rate.
“I am pleased to announce our first quarter 2013 earnings release.” Mr. Jeff Shi, Chief Executive Officer of Ku6 Media, commented, “In first quarter 2013, we enhanced our infrastructure and product design, improved our key technology and product index tremendously. The credit went to our entire technology and product team. As Mr. Kelvin Liu and Mr. Jian Lu joined Ku6 as the President and Chief Technology Officer respectively in April, with the strongly enhanced team, I believe our product design and user experience will get into another level in the near future.
At the same time, we have continuously being focused on our UGC strategy. Our contracted content production team reached a new high, had over 30,000 people as of the end of the first quarter. On top of that, since we expanded our mobile product portfolio in 2012, we have seen a big progress in mobile market already. “

First Quarter 2013 Financial Results

Total revenues were US$3.07 million (RMB19.06 million) in the first quarter of 2013, representing a decrease of 8.4% from US$3.35 million in the fourth quarter of 2012 and a decrease of 34.4% from US$4.68 million in the first quarter of 2012.
In the second quarter of 2011, the Company started to generate advertising revenues primarily from performance advertising services using a system called Application Advertisement (“AA”). The performance advertising revenue was realized through an affiliated advertising agent which is under common control of Shanda Interactive Entertainment Limited, the Company’s majority shareholder. The Company generated 95.8% of total revenues in the first quarter of 2013 through this affiliated advertising agent, as compared to 87.5% of total revenues in the fourth quarter of 2012.
Cost of revenues was US$3.13 million (RMB19.46 million) in the first quarter of 2013, representing a decrease of 16.5% from US$3.75 million in the fourth quarter of 2012 and a decrease of 11.3% from US$3.53 million in the first quarter of 2012.
Gross loss was US$0.07 million (RMB0.40 million) in the first quarter of 2013, as compared to a gross loss of US$0.40 million in the fourth quarter of 2012 and a gross profit of US$1.15 million in the first quarter of 2012. Non-GAAP gross loss, which is herein defined as a gross loss excluding expenses (benefits) associated with share-based compensation, was US$0.26 million (RMB1.63 million) in the first quarter of 2013, as compared to a non-GAAP gross loss of US$0.33 million in the fourth quarter of 2012 and a non-GAAP gross profit of US$1.24 million in the first quarter of 2012. The decrease in gross loss as compared to the fourth quarter of 2012 was primarily due to the benefit recorded in 2013 for the reversal of share-based compensation expenses previously recorded, due to changes in the likelihood of achieving performance targets related to profitability for performance-based stock option awards. As the Company’s performance-based stock option awards are tied to whether or not net profits are expected to be generated during the related performance periods, changes in the expected timing of generation of future profits may trigger adjustments to share-based compensation expenses previously recorded.
Operating expenses were US$2.27 million (RMB14.09 million) in the first quarter of 2013, representing a decrease of 28.3% from US$3.17 million in the fourth quarter of 2012 and a decrease of 19.7% from US$2.82 million in the first quarter of 2012. Non-GAAP operating expenses, which is herein defined as operating expenses excluding expenses (benefits) associated with share-based compensation, were US$2.72 million (RMB16.89 million) in the first quarter of 2013, as compared to non-GAAP operating expenses of US$3.21 million in the fourth quarter of 2012 and US$2.41 million in the first quarter of 2012. The decrease in operating expenses as compared to the fourth quarter of 2012 was mainly attributable to the benefit recorded in 2013 for the reversal of share-based compensation expenses previously recorded, due to changes in the likelihood of achieving performance targets related to profitability for performance-based stock option awards, as well as lower amounts of sales and marketing expenses.
Operating loss was US$2.33 million (RMB14.50 million) in the first quarter of 2013, representing an decrease of 34.5% from US$3.57 million in the fourth quarter of 2012 and an increase of 39.3% from US$1.68 million in the first quarter of 2012. Non-GAAP operating loss, which reflects the exclusion of expenses (benefits) associated with share-based compensation, was US$2.98 million (RMB18.51 million) in the first quarter of 2013, as compared to the non-GAAP operating loss of US$3.55 million in the fourth quarter of 2012 and US$1.17 million in the first quarter of 2012.
Net loss was US$1.67 million (RMB10.38 million) in the first quarter of 2013, representing a decrease of 43.9% from US$2.98 million in the fourth quarter of 2012 and a decrease of 6.5% from US$1.79 million in the first quarter of 2012. Non-GAAP net loss, which reflects the exclusion of expenses (benefits) associated with share-based compensation, was US$2.32 million (RMB14.40 million) in the first quarter of 2013, as compared to US$2.96 million in the fourth quarter of 2012 and US$1.28 million in the first quarter of 2012. The decrease in net loss as compared to the fourth quarter of 2012 was primarily attributable to (1) a US$0.65 million (RMB4.02 million) benefit recorded for the reversal of share-based compensation expenses previously recorded, due to changes in the likelihood of achieving performance targets related to profitability for performance-based stock option awards, (2) a US$0.42 million (RMB2.59 million) decrease in marketing and promotions expenses, and (3) a US$0.17 million (RMB1.04 million) net increase in miscellaneous other income recognised in the first quarter of 2013. Other income for the first quarter of 2013 mainly included a US$0.31 million (RMB 1.91 million) write-off of sales rebate payables related to the Company’s previous advertising sales model aged more than three years for which settlement was judged to be remote based upon the Company’s policies and past settlement experience. Other income for the first quarter of 2013 also included reimbursements related to the ADR program from the Company’s depositary and rental income.
Net loss per basic and diluted ADS was US$0.04 (RMB0.22) in the first quarter of 2013, as compared to US$0.06 in the fourth quarter of 2012 and US$0.04 in the first quarter of 2012. Weighted average ADSs used to calculate basic and diluted net loss per ADS were 47.3 million in the first quarter of 2013, 47.4 million in the fourth quarter of 2012 and 50.2 million in the first quarter of 2012.
Adjusted EBITDA loss, which is herein defined as net loss attributable to Ku6 Media before interest income, interest expenses, income taxes, depreciation and amortization (excluding amortization and write-down of licensed video copyrights), further adjusted for share-based compensation expenses (benefits), equity in loss of affiliates and other non-operating items, was US$2.04 million (RMB12.70 million) in the first quarter of 2013, as compared to adjusted EBITDA loss of US$2.60 million in the fourth quarter of 2012 and US$0.34 million in the first quarter of 2012.
As of March 31, 2013, the Company had US$10.81 million (RMB67.15 million) in cash and cash equivalents, compared to US$13.07 million as of December 31, 2012. The decrease was primarily attributable to a US$2.27 million (RMB14.10 million) net cash used in operating activities, as a result of a net loss of US$1.67 million (RMB10.38 million) in the first quarter of 2013.

full press release

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