SINA Reports Second Quarter 2003 Financial Results - Company Reports Revenue Growth of 203% to $26 million

News Release

View printer-friendly version
<< Back

SINA Reports Second Quarter 2003 Financial Results - Company Reports Revenue Growth of 203% to $26 million

SHANGHAI, China--(BUSINESS WIRE)--July 23, 2003--SINA Corporation (Nasdaq:SINA), a leading online media company and value-added information service provider for China and for global Chinese communities, today announced its financial results for the second quarter ended June 30, 2003:

    --  US GAAP net income for the quarter grew to $7.1 million; or
        $0.14 per diluted share

    --  Net revenues for the quarter grew by 203% year-over-year and
        by 43% quarter-over-quarter to a record $26.0 million

    --  Advertising revenues for the quarter grew by 63%
        year-over-year and by 30% quarter-over-quarter to $9.5 million
        and accounted for 37% of the total revenues

    --  Non-advertising revenues for the quarter grew by 504%
        year-over-year and by 52% quarter-over-quarter to $16.5
        million and accounted for 63% of the total revenues

"We're extremely proud of our second quarter results," said Wang Yan, CEO of SINA. "SINA accelerated its growth momentum. By leveraging our strong brand and strategically targeting growth opportunities, we more than doubled our net income from a quarter ago, despite the effect of SARS. We have proven ourselves again to be the leading Chinese online media company with a balanced and sustainable business model."

Financial Results

For the quarter ended June 30, 2003, SINA reported record net revenues of $26.0 million, an increase of 43% from the previous quarter and an increase of 203% from the same period in 2002.

Advertising revenues totaled $9.5 million for the quarter, representing a 30% increase over $7.3 million reported in the previous quarter and a 63% increase over $5.8 million reported in the same period in 2002.

Non-advertising revenues totaled $16.5 million for the quarter, a 52% increase over $10.8 million reported in the previous quarter and a 504% increase over $2.7 million reported in the same period in 2002. Non-advertising revenues accounted for 63% of the total net revenues for the quarter, compared to 60% for the previous quarter and 32% for the same period in 2002. The increase in non-advertising revenues was primarily driven by the growth in mobile short messaging services.

"The tremendous growth in both our advertising and non-advertising revenues spoke to our focus on a balanced growth approach across all of our revenue contributors," said, Hurst Lin, Chief Operating Officer of SINA. "Moving forward, we aim to continue to maintain this balance through diversified revenue streams."

The gross margin for the quarter was a record high of 69%, up from 66% reported in the previous quarter and 59% reported in the same period in 2002.

Operating expenses for the quarter totaled $11.1 million, an increase of 27% over $8.7 million reported in the previous quarter and of 55% over $7.2 million reported in the same period in 2002. The increase in operating expenses from the previous quarter was largely due to the one-time charges relating to the write-off of $0.9 million intangible assets associated with the acquisition of Shanghai Techur Technology Development Co. Ltd. and a $0.6 million severance benefit to the Company's departed CEO.

Net income for the quarter totaled $7.1 million, representing an improvement of 111% from a net income of $3.4 million for the previous quarter. For the same period in 2002, the Company recorded a net loss of $1.9 million. Diluted net income per share was $0.14 for the quarter, compared to diluted net income per share of $0.07 for the previous quarter and diluted net loss per share of $0.04 for the same period in 2002.

Excluding the amortization of intangible assets, non-cash charges for stock based compensation, and one-time charges relating to intangible assets write-offs and severance benefit, on a pro forma basis, net income for the quarter totaled $9.2 million, compared to a net income of $4.1 million for the previous quarter and a net loss of $1.4 million for the same period in 2002. Diluted net income per share, on a pro forma basis, was $0.18 for the quarter, compared to diluted net income per share of $0.08 for the previous quarter and diluted net loss per share of $0.03 for the same period in 2002.

As of June 30, 2003, SINA's cash, cash equivalents and investments in marketable securities totaled $96.9 million, an increase of $7.2 million from three months ago. During the quarter, the company paid approximately $1.3 million for the second cash payment of MemeStar acquisition and prepaid approximately $1.3 million for a five-year operating lease relating to a new facility in Beijing. Cash flow from operating activities for the quarter was $9.0 million, compared to $3.8 million for the previous quarter. Capital equipment expenditure for the quarter was about $2.1 million. The Company received $97.5 million net proceeds from convertible bond offering in July 2003.

"This quarter, SINA truly demonstrated the scalability of its businesses. While we have increased revenues by 43% quarter-over-quarter, we kept our operating expense increase to just 13% excluding no-cash and non-recurring charges, and as a result, our net profit has more than doubled," said Charles Chao, Chief Financial Officer of SINA. "Furthermore, with the successful completion of the first and the largest double-zero convertible bond offering for a China based technology company, SINA now has approximately $195 million cash on hand, thereby offering us maximum flexibility in our future strategic expansions."

Business Outlook

The Company estimates that its total revenues for Q3 2003 to be between $28.5 million and $29.3 million, with advertising revenues between $10.5 million and $10.8 million and non-advertising revenues between $18.0 million and $18.5 million. US GAAP EPS on a fully diluted basis is expected to be $0.16 to $0.18. For the second half of 2003, the Company expects its effective income tax rate to be between 5% to 7%.

NON-GAAP Measures

To supplement our consolidated financial statements presented in accordance with GAAP, SINA uses non-GAAP measures of gross profit, operating income, net income and earnings per share, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP measures are provided to enhance the user's overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the non-GAAP results provide useful information to both management and investors by excluding certain expenses that are not expected to result in future cash payments, gains and losses that are non-recurring in nature or may not be indicative of our core operating results. In addition, because we have historically reported certain non-GAAP results to investors, we believe the inclusion of non-GAAP measures provides consistency in our financial reporting. These measures should be considered in addition to results prepared in accordance with generally accepted accounting principles, but should not be considered a substitute for or superior to GAAP results. Consistent with our historical practice, the non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure.

Conference Call

SINA will host a conference call at 8:30 p.m. Eastern Time today to present an overview of the Company's financial performance and business operations for the second quarter. The dial-in number for the call is 617-786-2962. The pass code is 94804360. A live Webcast of the call will be available from 8:30 p.m. - 9:30 p.m. ET on Wednesday, July 23, 2003 (8:30 a.m. - 9:30 a.m. Hong Kong Time on July 24, 2003). The call can be accessed through the Company's corporate web site at http://corp.sina.com. A replay of the conference call will be available for forty-eight hours after the conclusion of the conference call. The dial-in number is 617-801-6888. The pass code for the replay is 10960335.

About SINA

SINA Corporation (FKA: SINA.com) (Nasdaq:SINA) is a leading online media company and value-added information service ("VAS") provider for China and for global Chinese communities. With a branded network of localized web sites targeting Greater China and overseas Chinese, SINA operates three major business lines including SINA.com (online media and entertainment service), SINA Online (consumer fee-based online and wireless VAS) and SINA.net (small and medium-sized enterprises VAS), providing an array of services including online portals, premium email, wireless short messaging, virtual ISP, search, classified information, online games, e-commerce, e-learning and enterprise e-solutions.

Safe Harbor Statement

This announcement contains forward-looking statements concerning SINA's expected financial performance (as described without limitation in the Business Outlook section and quotations from management in this press release), as well as SINA's strategic and operational plans. SINA may also make written or oral forward-looking statements in our periodic reports to the Securities and Exchange commission on forms 10-K, 10-Q, 8-K, etc., in its annual report to shareholders, in its proxy statements, in its offering circulars and prospectuses, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, SINA's historical losses, its limited operating history, the uncertain regulatory landscape in the People's Republic of China, fluctuations in quarterly operating results, the Company's reliance on wireless short messaging service and online advertising sales for a majority of its revenues, the Company's reliance on mobile operators in China to provide wireless short messaging service, any failure to successfully develop and introduce new products and any failure to successfully integrate acquired businesses. Further information regarding these and other risks is included in SINA's Annual Report on Form 10-K for the period ended December 31, 2002 and its recent reports on Form 10-Q as well as in its other filings with the Securities and Exchange Commission.

 SINA CORPORATION
            UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
                 (in thousands, except per share data)


                           Three months ended         Six months ended
                         ------------------------   ------------------
                              June 30,    March 31,     June 30,
                         ---------------- --------- ------------------
                           2003    2002     2003      2003      2002
                         ---------------- --------- ------------------

Net revenues
  Advertising            $9,495 $ 5,833 $7,298 $16,793 $10,834
  Non-Advertising        16,492    2,730    10,816    27,308    4,844
                         ------- --------  -------- --------- --------
                         25,987    8,563    18,114    44,101   15,678
                         ------- --------  -------- --------- --------

Cost of revenues
  Advertising             3,239    2,690     2,826     6,065    5,443
  Non-Advertising         4,855      830     3,267     8,122    1,464
  Stock-based
   compensation              12       29        14        26       60
                         ------- --------  -------- --------- --------
                          8,106    3,549     6,107    14,213    6,967
                         ------- --------  -------- --------- --------

Gross profit             17,881    5,014    12,007    29,888    8,711
                         ------- --------  -------- --------- --------

Operating expenses
  Sales and marketing     5,086    2,890     4,454     9,540    5,962
    Product
     development          1,407    1,587     1,421     2,828    3,161
  General and
   administrative         3,091    2,233     2,116     5,207    4,416
    Stock-based
     compensation           198      473       230       428      993
  Amortization of
   intangibles              414       --       505       919    1,687
  Write-off of
   intangibles              903       --        --       903       --
                         ------- --------  -------- --------- --------
                         11,099    7,183     8,726    19,825   16,219
                         ------- --------  -------- --------- --------

Income (loss) from
 operations               6,782   (2,169)    3,281    10,063   (7,508)

Other income, net           655      717       401     1,056    1,785
Loss on equity
 investment                (316)    (442)     (306)     (622)    (142)
                         ------- --------  -------- --------- --------

Net income (loss)        $7,121  $(1,894)   $3,376 $10,497  $(5,865)
                         ======= ========  ======== ========= ========


Shares used in computing
 basic net income
 (loss) per share        47,661   45,579    46,774    47,217   45,534

Basic net income
 (loss) per share          0.15    (0.04)     0.07      0.22    (0.13)

Shares used in computing
 basic and diluted net
 income (loss)
 per share               51,971   45,579    50,844    51,529   45,534

Diluted net income
 (loss) per share        $ 0.14  $ (0.04)   $ 0.07 $  0.20  $ (0.13)
                         ======= ========  ======== ========= ========



                           SINA CORPORATION
       UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                 (in thousands, except per share data)



                           Three months ended         Six months ended
                         ------------------------   ------------------
                              June 30,    March 31,     June 30,
                         ---------------- --------- ------------------
                           2003    2002     2003      2003      2002
                         ---------------- --------- ------------------
Net revenues
  Advertising            $9,495 $5,833 $7,298 $16,793 $10,834
  Non-Advertising        16,492    2,730    10,816    27,308    4,844
                         ------- --------  -------- --------- --------
                         25,987    8,563    18,114    44,101   15,678
                         ------- --------  -------- --------- --------

Cost of revenues
  Advertising             3,239    2,690     2,826     6,065    5,443
  Non-Advertising         4,855      830     3,267     8,122    1,464
                         ------- --------  -------- --------- --------
                          8,094    3,520     6,093    14,187    6,907
                         ------- --------  -------- --------- --------

Gross profit             17,893    5,043    12,021    29,914    8,771
                         ------- --------  -------- --------- --------

Operating expenses
  Sales and marketing     5,086    2,890     4,454     9,540    5,962
  Product development     1,407    1,587     1,421     2,828    3,161
  General and
   administrative         2,516    2,233     2,116     4,632    4,416
                         ------- --------  -------- --------- --------
                          9,009    6,710     7,991    17,000   13,539
                         ------- --------  -------- --------- --------

Income (loss) from
 operations               8,884   (1,667)    4,030    12,914   (4,768)

Other income, net           655      717       401     1,056    1,785
Loss on equity
 investment                (316)    (442)     (306)     (622)    (142)
                         ------- --------  -------- --------- --------

Pro forma net income
 (loss)                  $9,223  $(1,392)   $4,125 $13,348  $(3,125)
                         ======= ========  ======== ========= ========

Shares used in computing
 pro forma basic
 net income (loss)
 per share               47,661   45,579    46,774    47,217   45,534

Pro forma basic net
 income (loss)
 per share                 0.19    (0.03)     0.09      0.28    (0.07)

Shares used in computing
 pro forma diluted
 net income (loss)
 per share               51,971   45,579    50,844    51,529   45,534

Pro forma diluted net
 income (loss) per
 share                    $0.18   $(0.03)    $0.08 $0.26   $(0.07)
                         ======= ========  ======== ========= ========



Reconciliation from GAAP
 results to pro forma
 results:

GAAP net income
 (loss)                  $7,121  $(1,894)   $3,376 $10,497  $(5,865)

Stock based compensation
    Cost of revenues         12       29        14        26       60
    Operating expenses      198      473       230       428      993

Amortization of
 intangibles                414       --       505       919    1,687
Write-off of
 intangibles                903       --        --       903       --
Severance pay               575                          575

                         ------- --------  -------- --------- --------
Pro forma net income
 (loss)                  $9,223  $(1,392)   $4,125 $13,348  $(3,125)
                         ======= ========  ======== ========= ========




                           SINA CORPORATION
            UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
                      (in thousands U.S. dollar)

                                              June 30 December 31
                                               2003           2002
                                            ----------    ------------
Assets
  Cash, cash equivalents and
    investments in marketable securities     $ 96,931 $ 96,736
  Accounts receivable, net                     12,428          5,847
  Property and equipment, net                   8,386          7,599
  Long-term investment                         11,220         16,818
  Goodwill/intangible assets, net              19,489             --
  Other assets                                  4,524          3,479
                                            ----------    ------------
     Total assets                            $152,978 $130,479
                                            ==========    ============

Liabilities and Shareholders' Equity
  Liabilities                                $ 21,352 $ 13,092
  Shareholders' equity                        131,626        117,387
                                            ----------    ------------

     Total liabilities and shareholders'
      equity                                 $152,978 $130,479
                                            ==========    ============



                           SINA CORPORATION
                     UNAUDITED SEGMENT INFORMATION
                            (in thousands)


                                Three months ended    Six months ended
                            ------------------------  ----------------
                                June 30,    March 31,    June 30,
                            --------------- --------  ----------------
                             2003     2002    2003     2003      2002
                            --------------- --------  ----------------

Net revenues
   Advertising              $ 9,495 $5,833 $ 7,298 $16,793 $10,834
   Mobile related            14,177   1,526    9,197   23,374    3,032
   Others                     2,315   1,204    1,619    3,934    1,812
                            ------- ------- --------  -------  -------
                            $25,987 $8,563 $18,114 $44,101 $15,678
                            ------- ------- --------  -------  -------

Cost of revenues
   Advertising              $ 3,239 $2,690 $ 2,826 $ 6,065 $ 5,443
   Mobile related             3,950     421    2,607    6,557    1,009
   Others                       905     409      660    1,565      455
                            ------- ------- --------  -------  -------
                            $ 8,094 $3,520 $ 6,093 $14,187 $ 6,907
                            ------- ------- --------  -------  -------

CONTACT:
SINA Corporation
Chen Fu, 8621-62895678 ext. 6089
fuchen@staff.sina.com
or
The Ruth Group
Denise Roche, 646-536-7008
droche@theruthgroup.com

SOURCE: SINA Corporation