SINA Reports Second Quarter 2007 Financial Results

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SINA Reports Second Quarter 2007 Financial Results

SHANGHAI, Aug 06, 2007 /Xinhua-PRNewswire via COMTEX News Network/ -- SINA Corporation (Nasdaq: SINA), a leading online media company and mobile value-added service (MVAS) provider for China and for the global Chinese communities, today announced its unaudited financial results for the quarter ended June 30, 2007.
    Second Quarter 2007 Highlights
     - Net revenues increased 11% year over year to $59.8 million, within the
       upper range of the Company's guidance of between $58.0 million and
       $60.0 million.
     - Advertising revenues increased 40% year over year to $41.2 million,
       exceeding the Company's guidance of between $40.0 million and $41.0
       million.
     - Non-advertising revenues decreased 23% year over year to $18.6 million,
       within the Company's guidance of between $18.0 million and $19.0
       million.
     - GAAP net income was $14.5 million or $0.25 diluted net income per
       share, compared to $10.4 million or $0.18 diluted net income per share
       in the same period last year.
     - Non-GAAP net income* was $16.1 million or $0.27 diluted non-GAAP net
       income per share, compared to $12.3 million or $0.21 diluted non-GAAP
       net income per share in the same period last year.

*Non-GAAP measures are described below and reconciled to the corresponding GAAP measures in the section below titled "Reconciliation of Non-GAAP to GAAP Results."

"Our second quarter results continue to demonstrate our strength in our core online advertising business. Despite comparison to a high revenue base in the same period last year, which included a record-breaking FIFA World Cup coverage, we managed to grow our online advertising business by 40% or more year over year for the fifth consecutive quarter." said Charles Chao, CEO of SINA. "On the operational side, while we continued to focus on improving our products and services, we have also forged strategic partnerships with industry heavyweights, like Google and China Telecom, to enhance our users' experience."

Financial Results

For the second quarter of 2007, SINA reported total revenues of $59.8 million, compared to $53.7 million in the same period in fiscal 2006 and $51.3 million for the first quarter of 2007.

Advertising revenues for the second quarter of 2007 totaled $41.2 million, representing a 40% increase from the same period last year and a 30% increase from last quarter. Advertising revenues in China grew 40% year over year or 30% quarter over quarter to $40.3 million for the second quarter of 2007. Advertising revenues in the second quarter of 2007 represented 69% of total revenues, up from 55% in the same period last year and 62% in the previous quarter.

Non-advertising revenues for the second quarter of 2007 totaled $18.6 million, a 23% decrease from the same period in 2006 and a 5% decrease from the previous quarter.

MVAS revenues for the second quarter of 2007 were $17.0 million, declining 24% from the same period last year and 7% from last quarter. The year over year decline can be mostly attributed to the changes in mobile operators' policies over the past year. The quarter over quarter decline was mostly related to the decline of revenues from interactive voice response ("IVR") which decreased 39% sequentially to $2.1 million as a result of reduced promotional efforts.

Other non-advertising revenues, mainly search and other fee-based revenues, were $1.6 million for the second quarter of 2007, representing a decline of 10% from the same period last year and an increase of 27% from last quarter. The sequential increase was mostly due to an increase in search revenues, only a small portion of which is related to the Google arrangement.

Gross margin for the second quarter of 2007 was 62%, compared to 63% in the same period last year and 59% in the last quarter. Advertising gross margin for the second quarter of 2007 was 62%, compared to 65% in the same period last year and 58% in the previous quarter. Advertising gross margin in the second quarter of 2007 included stock-based compensation, which was equivalent to 1% of advertising revenues. Excluding this item, advertising gross margin in the second quarter of 2007 was 63%, compared to 66% in the same period last year and 59% in the previous quarter. The year over year decline in advertising gross margin was mainly due to higher content, web production and bandwidth costs. The sequential increase in advertising gross margin was due to revenues growing faster than advertising cost of sales. MVAS gross margin for the second quarter of 2007 was 61%, compared to 60% in the same period last year and last quarter.

Operating expenses for the second quarter of 2007 totaled $24.5 million, a decline of 7% from the same period last year and an increase of 7% from last quarter. Non-GAAP operating expenses for the second quarter of 2007, which exclude stock-based compensation and amortization expense of intangible assets, was $22.6 million, representing a decline of 3% from the same period last year and an increase of 9% from last quarter. The year over year decline was mainly due to lower marketing spending, particularly related to MVAS promotions, offset by higher expenses related to payroll, depreciation and bad debt as well as the impact of renminbi appreciation on spending in China. The quarter over quarter increase in operating expenses was primarily due to higher payroll-related costs as well as increased travel and entertainment expenses.

Non-operating income for the second quarter of 2007 included a gain of $0.8 million from the sale of an investment, while non-operating income for the second quarter of 2006 included a $2.0 million gain from the sale of the Company's interest in a joint venture.

Net income for the second quarter of 2007 was $14.5 million, compared to $10.4 million in the same period last year and $8.6 million last quarter. Diluted net income per share for the second quarter of 2007 was $0.25, compared to $0.18 in the same period last year and $0.15 last quarter. Non- GAAP net income for the second quarter of 2007 totaled $16.1 million, compared to $12.3 million in the same period last year and $11.4 million in the previous quarter. Non-GAAP diluted net income per share for the second quarter of 2007 was $0.27, compared to $0.21 in the same period last year and $0.19 last quarter.

As of June 30, 2007, SINA's cash, cash equivalents and short-term investments totaled $415.2 million, compared to $312.5 million and $382.7 million as of June 30, 2006 and March 31, 2007, respectively. Cash flow from operating activities for the second quarter of 2007 was $20.9 million, compared to $8.1 million for the same period last year and $16.6 million last quarter.

Business Outlook

The Company estimates its total revenues for the third quarter of 2007 to be between $63.0 million and $65.0 million, with advertising revenues to be between $45.0 million and $46.0 million and non-advertising revenues to be between $18.0 million and $19.0 million. Stock-based compensation for the third quarter of 2007 is expected to be approximately $1.7 million, which excludes any new shares that may be granted.

Management Promotion

The Company announced today that Herman Yu, who previously held the position of Acting Chief Financial Officer of the Company, has been promoted to Chief Financial Officer effective immediately. Mr. Yu joined SINA in September 2004 as Vice President and Corporate Controller and became Acting Chief Financial Officer in May 2006.

Other Events

On June 29, 2007, the Company held its Annual General Meeting of Shareholders. At the meeting, the shareholders elected Hurst Lin (with 39,852,692 shares voting for and 184,015 shares withheld), Ter Fung Tsao (with 39,847,172 shares voting for and 189,535 shares withheld), and Song-Yi Zhang (with 39,851,551 shares voting for and 185,156 shares withheld) as Class II Directors of the Company.

The shareholders also approved and ratified the appointment of PricewaterhouseCoopers Zhong Tian CPAs Limited Company as the Company's independent auditors for the fiscal year ending December 31, 2007 (with 39,982,694 shares voting for, 34,759 shares against and 19,253 shares abstaining).

Finally, the shareholders approved the Company's 2007 Share Incentive Plan (with 30,344,580 shares voting for, 1,070,455 shares against, 61,680 shares abstaining and 8,559,992 broker non-vote).

Non-GAAP Measures

This release contains non-GAAP financial measures. These non-GAAP financial measures, which are used as measures of the Company's performance, should be considered in addition to, not as a substitute for, measures of the Company's financial performance prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP"). The Company's non-GAAP financial measures may be defined differently than similar terms used by other companies. Accordingly, care should be exercised in understanding how the Company defines its non-GAAP financial measures.

Reconciliations of the Company's non-GAAP measures to the nearest GAAP measures are set forth in the section below titled "Reconciliation of Non-GAAP to GAAP Results." These non-GAAP measures include non-GAAP gross profit, non- GAAP operating expenses, non-GAAP income from operations, non-GAAP net income, non-GAAP diluted net income per share and non-GAAP advertising gross margin.

The Company's management uses non-GAAP financial measures to gain an understanding of the Company's comparative operating performance (when comparing such results with previous periods or forecasts) and future prospects. The Company's non-GAAP financial measures exclude certain special items, including stock-based compensation charges, amortization of intangible assets, amortization of convertible debt issuance cost and gain and loss on the sale of business and investments, from its internal financial statements for purposes of its internal budgets. Non-GAAP financial measures are used by the Company's management in their financial and operating decision-making, because management believes they reflect the Company's ongoing business in a manner that allows meaningful period-to-period comparisons. The Company's management believes that these non-GAAP financial measures provide useful information to investors and others in the following ways: 1) in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose, and 2) in comparing in a consistent manner the Company's current financial results with the Company's past financial results. The Company's management further believes the non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses, gains and losses (i) that are not expected to result in future cash payments or (ii) that are non- recurring in nature or may not be indicative of its core operating results and business outlook.

The Company's management believes excluding stock-based compensation from its non-GAAP financial measures is useful for itself and investors as such expense will not result in future cash payment and is otherwise unrelated to the Company's core operating results.

The Company's management believes excluding the non-cash amortization expense of intangible assets resulting from business acquisitions from its non-GAAP financial measures of operating expenses, income from operations and net income and excluding the non-cash amortization expense of intangible assets resulting from equity-method investments from its non-GAAP financial measure of net income are useful for itself and investors because they enable a more meaningful comparison of the Company's cash performance between reporting periods. In addition, such charges will not result in cash settlement in the future.

The Company's management believes excluding non-cash amortization expense of issuance cost relating to convertible bonds from its non-GAAP financial measure of net income is useful for itself and investors as such expense does not have any impact on cash earnings.

The Company's management believes excluding gains and losses on the sale of a business and investments from its non-GAAP financial measure of net income is useful for itself and investors because such gains and losses are not indicative of the Company's core operating results.

The non-GAAP financial measures have limitations. They do not include all items of income and expense that affect the Company's operations. Specifically, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and, with respect to the non-GAAP financial measures that exclude certain items under GAAP, do not reflect any benefit that such items may confer to the Company. Management compensates for these limitations by also considering the Company's financial results as determined in accordance with GAAP.

Conference Call

SINA will host a conference call at 9:00 p.m. Eastern Time today to present an overview of the Company's financial performance and business operations for the second quarter of 2007. The dial-in number for the call is +1-617-801-9702. The pass code is 957 24358. A live Webcast of the call will be available from 9:00 p.m. - 10:00 p.m. ET on Monday, August 6, 2007 (9:00 a.m. - 10:00 a.m. Beijing Time on August 7, 2007). The call can be accessed through SINA's corporate web site at http://corp.sina.com. The call will be archived for 12 months on SINA's corporate web site at http://corp.sina.com. A replay of the conference call will be available through August 13, 2007 at midnight eastern time. The dial-in number is +1-617-801-6888. The pass code for the replay is 86256893.

About SINA

SINA Corporation (Nasdaq: SINA) is a leading online media company and value-added information service provider for China and for global Chinese communities. With a branded network of localized web sites targeting Greater China and overseas Chinese, the Company provides services through five major business lines including SINA.com (online news and content), SINA Mobile (mobile value-added services or "MVAS"), SINA Community (Web 2.0-based services and games), SINA.net (search and enterprise services) and SINA E- Commerce (online shopping). Together these business lines provide an array of services including region-focused online portals, MVAS, search and directory, interest-based and community-building channels, free and premium email, blog services, audio and video streaming, online games, classified listings, fee- based services, e-commerce and enterprise e-solutions.

Safe Harbor Statement

This announcement contains forward-looking statements that relate to, among other things, SINA's expected financial performance (as described without limitation in the "Business Outlook" section and in quotations from management in this press release) and SINA's strategic and operational plans. SINA may also make forward-looking statements in the Company's periodic reports to the U.S. Securities and Exchange Commission, 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. SINA assumes no obligation to update the forward-looking statements in this release and elsewhere. Statements that are not historical facts, including statements about the Company's 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 limited operating history, the uncertain regulatory landscape in the People's Republic of China, the changes by mobile operators in China to their policies for MVAS, the Company's ability to develop and market other MVAS products, fluctuations in quarterly operating results, the Company's reliance on online advertising sales and MVAS for a majority of its revenues, the Company's reliance on mobile operators in China to provide MVAS, 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 year ended December 31, 2006 and its other filings with the Securities and Exchange Commission.

     Contact:
     Cathy Peng
     SINA Corporation
     Phone: 8610-82628888 x 3112
     E-mail: ir@staff.sina.com.cn
     David Pasquale
     The Ruth Group
     Phone: 1-646-536-7006
     Email: dpasquale@theruthgroup.com



                                 SINA CORPORATION
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (U.S. Dollar in thousands, except per share data)

                                     Three months ended      Six months ended
                                      June 30,     March 31,     June 30,
                                   2007     2006     2007     2007     2006
    Net revenues:
        Advertising               $41,199  $29,454  $31,767  $72,966  $51,635
        Non-advertising            18,610   24,224   19,513   38,123   48,755
                                   59,809   53,678   51,280  111,089  100,390
    Cost of revenues:
        Advertising  (a)           15,493   10,317   13,342   28,835   18,615
        Non-advertising             7,136    9,343    7,514   14,650   19,090
                                   22,629   19,660   20,856   43,485   37,705
    Gross profit                   37,180   34,018   30,424   67,604   62,685

    Operating expenses:
        Sales and marketing (a)    12,017   13,497   11,064   23,081   25,302
        Product development (a)     5,333    4,993    4,799   10,132    9,603
        General and
         administrative (a)         6,887    7,427    6,657   13,544   12,584
        Amortization of
         intangibles                  258      469      403      661      937
                                   24,495   26,386   22,923   47,418   48,426
    Income from operations         12,685    7,632    7,501   20,186   14,259

    Non-operating income:
       Interest and other income,
        net                         2,589    2,012    2,660    5,249    3,952
       Gain on sale of business
        and investments, net          830    2,006      -        830    1,794
       Loss on equity investments     -       (162)     -        -       (505)
       Amortization of
        convertible debt issuance
        cost                         (171)    (171)    (171)    (342)    (342)
                                    3,248    3,685    2,489    5,737    4,899

    Income before income taxes     15,933   11,317    9,990   25,923   19,158
    Provision for income taxes     (1,477)    (878)  (1,382)  (2,859)  (1,683)

    Net income                    $14,456  $10,439   $8,608  $23,064  $17,475


    Basic net income per share      $0.26    $0.19    $0.16    $0.42    $0.33
    Diluted net income per share    $0.25    $0.18    $0.15    $0.39    $0.30

    Shares used in computing
     basic
      net income per share         54,884   53,554   54,488   54,686   53,496
    Shares used in computing
     diluted
       net income per share        59,665   58,444   59,264   59,470   58,522

    Net income used for diluted
     net income
      per share calculation:
    Net income                    $14,456  $10,439   $8,608  $23,064  $17,475
    Amortization of convertible
     debt issuance cost               171      171      171      342      342
                                  $14,627  $10,610   $8,779  $23,406  $17,817


    (a) Stock-based compensation
     included under SFAS 123R was
     as follows:
       Cost of revenues -
        advertising                  $441     $350     $463     $904     $700
       Sales and marketing            281      353      392      673      614
       Product development            400      377      485      885      711
       General and administrative     930    1,943      836    1,766    2,514



                             SINA CORPORATION
                RECONCILIATION OF NON-GAAP TO GAAP RESULTS
             (U.S. Dollar in thousands, except per share data)


                                                  Three months ended
                                                    June 30, 2007
                                                                   Non-GAAP
                                           Actual   Adjustments     Results


                                                           441 (a)
    Gross profit                            $37,180       $441       $37,621

                                                        (1,611)(a)
                                                          (258)(b)
    Operating expenses                      $24,495    $(1,869)      $22,626

                                                         2,052 (a)
                                                           258 (b)
    Income from operations                  $12,685     $2,310       $14,995


                                                         2,052 (a)
                                                           258 (b)
                                                           171 (c)
                                                          (830)(d)
    Net income                              $14,456     $1,651       $16,107


    Diluted net income per share              $0.25                    $0.27

    Shares used in computing diluted
       net income per share                  59,665                   59,665

    Net income used in computing diluted
      net income per share:
    Net income                              $14,456                  $16,107
    Amortization of convertible debt
      issuance costs                            171                      -
                                            $14,627                  $16,107

    Gross margin - advertising                  62%         1%           63%



                                                  Three months ended
                                                    June 30, 2006
                                                                   Non-GAAP
                                           Actual   Adjustments     Results


                                                           350 (a)
    Gross profit                            $34,018       $350       $34,368

                                                        (2,673)(a)
                                                          (469)(b)
    Operating expenses                      $26,386    $(3,142)      $23,244

                                                         3,023 (a)
                                                           469 (b)
    Income from operations                   $7,632     $3,492       $11,124

                                                         3,023 (a)
                                                           469 (b)
                                                           171 (c)
                                                           177 (b)
                                                        (2,006)(d)
    Net income                              $10,439     $1,834       $12,273


    Diluted net income per share              $0.18                    $0.21

    Shares used in computing diluted
       net income per share                  58,444                   58,444

    Net income used in computing diluted
      net income per share:
    Net income                              $10,439                  $12,273
    Amortization of convertible debt
      issuance costs                            171                      -
                                            $10,610                  $12,273

    Gross margin - advertising                  65%         1%           66%


                                                  Three months ended
                                                    March 31, 2007
                                                                   Non-GAAP
                                           Actual   Adjustments     Results


                                                           463 (a)
    Gross profit                            $30,424       $463       $30,887

                                                        (1,713)(a)
                                                          (403)(b)
    Operating expenses                      $22,923    $(2,116)      $20,807

                                                         2,176 (a)
                                                           403 (b)
    Income from operations                   $7,501     $2,579       $10,080



                                                         2,176 (a)
                                                           403 (b)
                                                           171 (c)
    Net income                               $8,608     $2,750       $11,358


    Diluted net income per share              $0.15                    $0.19

    Shares used in computing diluted
       net income per share                  59,264                   59,264

    Net income used in computing diluted
      net income per share:
    Net income                               $8,608                  $11,358
    Amortization of convertible debt
      issuance costs                            171                      -
                                             $8,779                  $11,358

    Gross margin - advertising                  58%         1%           59%





                                                   Six months ended
                                                    June 30, 2007
                                                                   Non-GAAP
                                           Actual   Adjustments     Results


                                                           904 (a)
    Gross profit                            $67,604       $904       $68,508

                                                        (3,324)(a)
                                                          (661)(b)
    Operating expenses                      $47,418    $(3,985)      $43,433


                                                         4,228 (a)
                                                           661 (b)
    Income from operations                  $20,186     $4,889       $25,075


                                                         4,228 (a)
                                                           661 (b)
                                                           342 (c)
                                                          (830)(d)
    Net income                              $23,064     $4,401       $27,465


    Diluted net income per share              $0.39                    $0.46

    Shares used in computing diluted
       net income per share                  59,470                   59,470

    Net income used in computing diluted
      net income per share:
    Net income                              $23,064                  $27,465
    Amortization of convertible debt
      issuance costs                            342                      -
                                            $23,406                  $27,465

    Gross margin - advertising                  61%         1%           62%




                                                   Six months ended
                                                    June 30, 2006
                                                                   Non-GAAP
                                           Actual   Adjustments     Results


                                                           700 (a)
    Gross profit                            $62,685       $700       $63,385


                                                        (3,839)(a)
    Operating expenses                      $48,426    $(3,839)      $44,587


                                                         4,539 (a)
                                                           937 (b)
    Income from operations                  $14,259     $5,476       $19,735

                                                         4,539 (a)
                                                           937 (b)
                                                           342 (c)
                                                        (1,794)(d)
                                                           354 (b)
    Net income                              $17,475     $4,378       $21,853


    Diluted net income per share              $0.30                    $0.37

    Shares used in computing diluted
       net income per share                  58,522                   58,522

    Net income used in computing diluted
      net income per share:
    Net income                              $17,475                  $21,853
    Amortization of convertible debt
      issuance costs                            342                      -
                                            $17,817                  $21,853

    Gross margin - advertising                  64%         1%           65%

     (a) To adjust stock-based compensation charges

     (b) To adjust amortization of intangible assets

     (c) To adjust amortization of convertible debt issuance cost

     (d) To adjust gain on the sale of business and investments



                               SINA CORPORATION
                        UNAUDITED SEGMENT INFORMATION
                          (U.S. Dollar in thousands)

                                   Three months ended       Six months ended
                                    June 30,     March 31       June 30,
                                 2007     2006     2007      2007      2006

    Net revenues
        Advertising             $41,199  $29,454  $31,767   $72,966   $51,635
        Mobile related           17,007   22,448   18,246    35,253    45,142
        Others                    1,603    1,776    1,267     2,870     3,613
                                $59,809  $53,678  $51,280  $111,089  $100,390

    Cost of revenues
        Advertising             $15,493  $10,317  $13,342   $28,835   $18,615
        Mobile related            6,613    8,925    7,287    13,900    18,325
        Others                      523      418      227       750       765
                                $22,629  $19,660  $20,856   $43,485   $37,705



                               SINA CORPORATION
               UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                          (U.S. Dollar in thousands)

                                                   June 30,       December 31,
                                                     2007              2006
                                Assets
       Current assets:

           Cash and cash equivalents               $208,013          $163,177
           Short-term investments                   207,164           199,574
           Accounts receivable, net                  52,606            45,031
           Other current assets                       7,938            10,330
                 Total current assets               475,721           418,112

       Property and equipment, net                   27,353            27,101
       Long-term investments                            -               1,170
       Goodwill and intangible assets, net           89,873            90,534
       Other assets                                   1,401             1,892
       Total assets                                $594,348          $538,809




                 Liabilities and Shareholders' Equity
       Current liabilities:
           Accounts payable                          $1,013            $1,614
           Accrued liabilities                       50,946            41,993
           Income taxes payable                       5,438             7,389
           Convertible debt                         100,000           100,000
                Total current liabilities           157,397           150,996

       Other long-term liabilities                    1,164               -
                Total liabilities                   158,561           150,996

       Shareholders' equity                         435,787           387,813

       Total liabilities and shareholders' equity  $594,348          $538,809


SOURCE SINA Corporation

Cathy Peng, SINA Corporation, +8610-82628888 x 3112, ir@staff.sina.com.cn; or David
Pasquale, The Ruth Group, +1-646-536-7006, dpasquale@theruthgroup.com
http://www.sina.com