SINA Reports
First Quarter 2003 Financial Results
Thursday April
24, 4:52 pm ET
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Reports Record Revenues of
$18.1 Million, US GAAP Net Income of $3.4 Million
SHANGHAI,
China--(BUSINESS WIRE)--April 24, 2003--SINA Corporation (Nasdaq:SINA - News), 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 first
quarter ended March 31, 2003:
"Q1 2003 was a terrific quarter. We have substantially
outperformed our guidance in both revenues and profit," said, Daniel Mao,
CEO of SINA. "All of our core business segments have done well. In
particular, our non-advertising business has almost doubled from last quarter
to reach $10.8 million and now accounts for 60% of our total revenues. We have
now achieved a diversified, balanced and scalable revenue model that we have
set for ourselves one year ago."
Financial Results
For the quarter ended March 31, 2003, SINA reported record
net revenues of $18.1 million, an increase of 41% from the previous quarter and
an increase of 155% from the same period in 2002.
Advertising revenues totaled $7.3 million for the quarter,
representing a 46% increase over $5.0 million reported in the same period in
2002.
Non-advertising revenues totaled $10.8 million for the
quarter, a 97% increase over $5.5 million reported in the previous quarter and
a 412% increase over $2.1 million reported in the same period in 2002.
Non-advertising revenues accounted for 60% of the total net revenues for the
quarter, compared to 43% for the previous quarter and 30% for the same period in
2002. The increase in non-advertising revenues was primarily driven by the
growth in mobile short messaging services ("SMS"). SMS revenues for
the quarter grew 165% from the previous quarter to $9.2 million. The Company's
January 2003 acquisition of MemeStar, a leading mobile content provider,
contributed significantly to the growth in SMS revenues for the quarter due to
the consolidation of MemeStar's SMS revenues from January 6th to March 31st. To
illustrate on a pro forma basis the impact of the MemeStar acquisition on the
Company's SMS revenues, if MemeStar's operating results had been consolidated
for the quarters ended December 31, 2002 and March 31, 2003, the Company's SMS
revenues would have grown by 30% sequentially in a quarter to quarter comparison.
"As our results have shown, we have successfully
integrated our Memestar acquisition," said Wang Yan, President of SINA.
"Our newly expanded SINA mobile division has become the leading
value-added mobile data service provider leveraging both SINA's brand and
Memestar's offline customer care and channel sales force."
The gross margin for the quarter was 66%, up from 65%
reported in the previous quarter and 52% reported in the same period in 2002.
The improvement in gross margin was primarily due to the increase in net
revenues which outpaced increases in cost of revenues.
Excluding the amortization of intangible assets and charges
for stock based compensation, operating expenses for the quarter totaled $8.0
million, an increase of 13% over $7.1 million reported in the previous quarter
and of 17% over $6.8 million reported in the same period in 2002. The increase
was primarily due to additional operation expenses related to MemeStar.
Net income for the quarter totaled $3.4 million,
representing an improvement of 129% from a net income of $1.5 million for the
previous quarter. For the same period in 2002, the Company recorded a net loss
of $4.0 million. Diluted net income per share was $0.07 for the quarter,
compared to diluted net income per share of $0.03 for the previous quarter and
diluted net loss per share of $0.09 for the same period in 2002.
Excluding the amortization of intangible assets and charges
for stock based compensation, on a pro forma basis, net income for the quarter
totaled $4.1 million, compared to a net income of $1.8 million for the previous
quarter and a net loss of $1.7 million for the same period in 2002. Diluted net
income per share, on a pro forma basis, was $0.08 for the quarter, compared to
diluted net income per share of $0.04 for the previous quarter and diluted net
loss per share of $0.04 for the same period in 2002.
As of March 31, 2003, SINA's cash, cash equivalents and
investments in marketable securities totaled $89.7 million, a decrease of $7.0
million from three months ago. During the quarter ended March 31, 2003, the
Company paid $10.5 million in net cash for the MemeStar acquisition and
investment in a joint venture. Cash flow from operating activities for the
quarter was $3.5 million.
Strategic Transactions
On January 6, 2003, the Company announced the signing of a
definitive agreement to acquire 100% of the equity interest in MemeStar, a
leading mobile content value-added service provider in China. The acquisition
closed on January 31, 2003. Immediately after the signing of the definitive
agreement the Company obtained effective control over MemeStar, accordingly,
the operating results of MemeStar have been consolidated with those of the
Company starting January 6, 2003. The total consideration included $15.5 million
in cash and deferred cash payments and 1.1 million of SINA ordinary shares. As
a result of the acquisition, the Company recorded certain intangible assets in
the amount of $2.2 million, which will be amortized over periods ranging from
fourteen to eighteen months. The amortization expense related to these
intangible assets amounted to $0.4 million for the quarter ended March 31,
2003. In addition, the Company recorded goodwill in the amount of $16.8 million
for this acquisition.
In January 2003, the Company formed a joint venture in China
with NCsoft, a leading Korean online game company. The Company invested $2.6
million in cash for a 51% interest in the joint venture. During the quarter
ended March 31, 2003, the joint venture began beta testing a version of
"Lineage", a popular online game, in the China market. To date, the
joint venture has not started to charge fees for the game.
Business Outlook
The Company estimates that its total revenues for Q2 2003 to
be between $19.6 million and $20.3 million, with advertising revenues between
$7.6 million and $7.9 million and non-advertising revenues between $12.0
million and $12.4 million. GAAP EPS is expected to be $0.08 to $0.09.
There has been a recent outbreak of Severe Acute Respiratory
Syndrome ("SARS") in China where most of the Company's revenues are
derived and in Beijing and Guangzhou where most of the Company's employees are
located. The Company is continuing to monitor the possible implications of the
SARS outbreak, but at this time it is difficult to quantify the future impact
on the business. For example, the SARS outbreak could result in quarantines or
closures of some of the Company's offices which would severely disrupt the
Company's operations. In addition, the SARS outbreak could result in a
reduction in advertising and fee-based revenues. Due to the uncertainty
surrounding the SARS outbreak, it may be necessary for the Company to update
its Business Outlook in the coming months.