UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2014

 


 

Commission File Number: 001-34977

 


 

YOUKU TUDOU INC.

 

11/F, SinoSteel Plaza, 8 Haidian Street

Beijing 100080, People’s Republic of China

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x  Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes o  No  x

 

 

 



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

YOUKU TUDOU INC.

 

 

 

 

 

 

 

By

:

/s/ Michael Ge Xu

 

Name

:

Michael Ge Xu

 

Title

:

Chief Financial Officer

 

Date: August 21, 2014

 

2



 

EXHIBIT INDEX

 

Exhibit 99.1 — Press release

 

3




Exhibit 99.1

 

Youku Tudou Announces Second Quarter 2014 Unaudited Financial Results

Reached over 500 million monthly unique visitors across screens; Subscription revenues grew 379% year on year

 

BEIJING, China, August 20, 2014 — Youku Tudou Inc. (NYSE: YOKU), China’s leading Internet television company (“Youku Tudou” or the “Company”), today announced its unaudited financial results for second quarter 2014.

 

Second Quarter 2014 Highlights(1)

 

·             Net revenues were RMB958.7 million (US$154.5 million), a 27% increase from the corresponding period in 2013. We derive a part of our revenues from mobile value-added services through partnership agreements with third party mobile network operators and shares the fees collected by the mobile network operators for such services. We were still in the process of renewing the service agreement with one of our major mobile network operators by the end of the second quarter of 2014 and as a result, we deferred recognition of such revenues, about RMB40 million, until the completion of the service agreement renewal process.

 

·             Gross profit was RMB208.6 million (US$33.6 million), a 10% increase from the corresponding period in 2013. Non-GAAP(2) gross profit was RMB223.9 million (US$36.1 million) in the second quarter of 2014, an increase of 10% from the corresponding period in 2013.

 

·             Net loss was RMB164.4 million (US$26.5 million), a 57% increase from the corresponding period in 2013. Non-GAAP net loss was RMB75.9 million (US$12.2 million) in the second quarter of 2014, as compared to RMB44.6 million (US$7.2 million) from the corresponding period in 2013. .

 

·             Basic and diluted loss per ADS, each representing 18 Class A ordinary shares of the Company, for the second quarter of 2014 amounted to RMB0.88 (US$0.14) and RMB0.88 (US$0.14), respectively. Non-GAAP basic and diluted loss per ADS for the second quarter of 2014 amounted to RMB0.41 (US$0.07) and RMB0.41 (US$0.07), respectively.

 

·             Cash, cash equivalents, restricted cash and short-term investments totaled RMB10.2 billion (US$1.6 billion) as of June 30, 2014.

 

·             Acquisition of property and equipment for the second quarter of 2014 was RMB85.0 million (US$13.7 million).

 

·             Acquisition of intangible assets for the second quarter of 2014 was RMB246.3 million (US$39.7 million).

 

“Multi-screen Internet is increasingly mainstream and the convergence of online and offline entertainment has presented new market opportunities. We are scaling our investment and leveraging our strengthened resources to enhance our business model,” said Victor Koo, Chairman and Chief Executive Officer of Youku Tudou. “Youku Tudou has helped transform how media and entertainment related content is distributed and marketed since our inception. Going forward, we will work with our online and offline partners to continue to change how content is created and monetized by directly connecting with the ever-growing consumer economy as Youku Tudou is best positioned in developing the leading multi-screen media and entertainment ecosystem in China.”

 


(1)  The reporting currency of the Company is Renminbi (“RMB”), but for the convenience of the reader, the amounts presented throughout the release are in US dollars (“US$”). Unless otherwise noted, all conversions from RMB to US$ are made at a rate of RMB6.2036 to US$1.00, the effective noon buying rate as of June 30, 2014 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.

 

(2)  All non-GAAP measures exclude, as applicable, share-based compensation expenses and amortization of intangible assets from business combination. For further details on non-GAAP measures, please refer to the reconciliation table and a detailed discussion of the Company’s use of non-GAAP information set forth elsewhere in this press release.

 

1



 

Dele Liu, President and Board Director of Youku Tudou, added, “Our traffic has grown strongly this quarter with our user base reaching over 500 million on a monthly basis. We have made a smooth transition to multi-screen monetization with over 30% of revenues generated from mobile and solid progress on subscription services with 379% growth year on year. By partnering with Alibaba on big data initiatives, we are enhancing our products to create an unique value proposition to advertising partners and consumers. We are confident that our revenue will continue to diversify and grow.”

 

Second Quarter 2014 Results

 

Net revenues were RMB958.7 million (US$154.5 million) in the second quarter of 2014, a 27% increase from the corresponding period in 2013, meeting net revenues guidance previously announced by the Company. Advertising net revenues were RMB915.5 million (US$147.6 million), meeting the advertising net revenues guidance previously announced by the Company. The growth was primarily attributable to the increased use by brand advertisers of our advertising services as evidenced by an increase in the number of advertisers and the rising average spend per advertiser.

 

Bandwidth costs as a component of cost of revenues were RMB213.5 million (US$34.4 million) in the second quarter of 2014, representing 22% of net revenues, as compared to 22% of net revenues for the corresponding period in 2013.

 

Content costs as a component of cost of revenues were RMB418.3 million (US$67.4 million) in the second quarter of 2014, representing 44% of net revenues as compared to 40% of net revenues for the corresponding period in 2013. Non-GAAP content costs were RMB402.9 million (US$65.0 million) in the second quarter of 2014, representing 42% of net revenues, as compared to 38% of net revenues for the corresponding period in 2013.

 

Gross profit was RMB208.6 million (US$33.6 million) in the second quarter of 2014, an increase of 10% from the corresponding period in 2013. Non-GAAP gross profit was RMB223.9 million (US$36.1 million) in the second quarter of 2014, an increase of 10% from the corresponding period in 2013 due to strong operating leverage.

 

Operating expenses were RMB386.4 million (US$62.3 million) in the second quarter of 2014, as compared to RMB306.8 million (US$49.5 million) for the corresponding period in 2013. Non-GAAP operating expenses were RMB313.2 million (US$50.5 million) in the second quarter of 2014, as compared to RMB260.6 million (US$42.0 million) for the corresponding period in 2013. Detailed discussion of each component of operating expenses is as follows:

 

Sales and marketing expenses were RMB212.8 million (US$34.3 million) in the second quarter of 2014, as compared to RMB165.2 million (US$26.6 million) for the corresponding period in 2013. Non-GAAP sales and marketing expenses were RMB186.1 million (US$30.0 million) in the second quarter of 2014, as compared to RMB150.4 million (US$24.2 million) for the corresponding period in 2013. This increase was due to higher commission expenses paid to our sales force in line with our revenue growth.

 

Product development expenses were RMB99.1 million (US$16.0 million) in the second quarter of 2014, as compared to RMB66.1 million (US$10.7 million) for the corresponding period in 2013. Non-GAAP product development expenses were RMB78.9 million (US$12.7 million) in the second quarter of 2014, as compared to RMB54.8 million (US$8.8 million) for the corresponding period in 2013. This increase was primarily due to an increase in personnel related expenses for our product development in mobile, search, social, paid and live broadcasting services.

 

General and administrative expenses were RMB74.5 million (US$12.0 million) in the second quarter of 2014, as compared to RMB75.6 million (US$12.2 million) for the corresponding period in 2013. Non-GAAP general and administrative expenses were RMB48.2 million (US$7.8 million) in the second quarter of 2014, a decrease of 13% from the corresponding period in 2013.

 

Net loss was RMB164.4 million (US$26.5 million) in the second quarter of 2014, as compared to RMB105.1 million (US$16.9 million) for the corresponding period in 2013. Non-GAAP net loss was RMB75.9 million

 

2



 

(US$12.2 million) in the second quarter of 2014, as compared to RMB44.6 million (US$7.2 million) from the corresponding period in 2013.

 

Non-GAAP adjusted EBITDA Loss was RMB52.9 million (US$8.5 million) in the second quarter of 2014, as compared to RMB28.7 million (US$4.6 million) from the corresponding period in 2013.

 

Business Outlook

 

For the third quarter of 2014, the Company expects net revenues will be between RMB1.09 billion and RMB1.13 billion, with advertising net revenues contributing between RMB965 million and RMB1.01 billion. This forecast reflects the Company’s current and preliminary view, which is subject to change.

 

Conference Call Information

 

Youku Tudou’s management will host an earnings conference call at 9:00 p.m. U.S. Eastern Time on August 19, 2014 (9:00 a.m. Beijing/Hong Kong Time on August 20, 2014).

 

Interested parties may participate in the conference call by dialing one of the following numbers below and entering passcode Youku# (i.e., 96858#) starting 10-15 minutes prior to the beginning of the call.

 

US Toll Free Dial In: 1-866-519-4004

International Dial In: +65-6723-9381

Mainland China Toll Free Dial In: +86-400-620-8038 / +86-800-819-0121

Hong Kong Dial In: +852-2475-0994

 

A replay of the call will be available by dialing +61 2 8199 0299 and entering passcode 87262225#. The replay will be available through August 27, 2014.

 

This call will be webcast live and the replay will be available for 12 months. Both will be available on the Investor Relations section of Youku Tudou’s corporate website at http://ir.youku.com.

 

About Youku Tudou Inc.

 

Youku Tudou Inc. (NYSE: YOKU) is China’s leading Internet television company. Its Youku and Tudou Internet television platforms enable users to search, view and share high-quality video content quickly and easily across multiple devices. Its Youku brand and Tudou brand are the most recognized online video brands in China. Youku Tudou’s American depositary shares, each representing 18 of Youku Tudou’s Class A ordinary shares, are traded on the NYSE under the symbol “YOKU.”

 

Safe Harbor Statement

 

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Youku Tudou’s strategic and operational plans, contain forward-looking statements. Youku Tudou may also make written or oral forward-looking statements in its filings with the U.S. Securities and Exchange Commission (“SEC”), in its annual report to shareholders, 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 Youku Tudou’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our goals and strategies; our future business development, financial condition and results of operations; the expected growth of the online video market in China; our expectations regarding demand for and market acceptance of our services; our expectations regarding the retention and strengthening of our relationships with key advertisers and

 

3



 

customers; our plans to enhance user experience, infrastructure and service offerings; competition in our industry in China; and relevant government policies and regulations relating to our industry. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Youku Tudou does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

 

About Non-GAAP Financial Measures

 

To supplement Youku Tudou’s financial results presented in accordance with United States Generally Accepted Accounting Principles (GAAP), Youku Tudou uses the following measures defined as non-GAAP financial measures by the SEC in evaluating its business:  non-GAAP content costs, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP sales and marketing expenses, non-GAAP product development expenses, non-GAAP general and administrative expenses, non-GAAP loss from operations, non-GAAP net loss and non-GAAP EBITDA loss. We define non-GAAP content costs as content costs excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content. We define non-GAAP gross profit or loss as the respective nearest comparable GAAP financial measure to exclude share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content. We define non-GAAP operating expenses as operating expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to customer relationship, technology and non-compete provisions. We define non-GAAP sales and marketing expenses as sales and marketing expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to customer relationship. We define non-GAAP product development expense as product development expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to technology. We define non-GAAP general and administrative expenses as general and administrative expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to non-compete provisions. We define non-GAAP loss from operations as loss from operations excluding share-based compensation expenses, amortization of intangible assets from business combination and business combination related expenses. We define non-GAAP net loss as net loss excluding share-based compensation expenses, amortization of intangible assets from business combination and business combination related expenses. We define non-GAAP EBITDA loss as net loss before income taxes, interest expenses, interest income, depreciation and amortization (excluding amortization of acquired content), further adjusted for share-based compensation expenses, amortization of intangible assets from business combination, business combination related expenses and other non-operating items.

 

We present non-GAAP financial measures because they are used by our management to evaluate our operating performance. We also believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies. A limitation of using non-GAAP financial measures is that non-GAAP measures exclude share-based compensation charges that have been and will continue to be significant recurring expenses in Youku Tudou’s business for the foreseeable future.

 

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP financial measures” at the end of this release.

 

For more information, please contact:

 

Ryan Cheung

Corporate Finance Senior Director

Youku Tudou Inc.

Tel: (+8610) 5885-1881 x6090

Email: ryan.cheung@youku.com

 

4



 

YOUKU TUDOU INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

As of

 

(Amounts in thousands, except for number of shares)

 

December 31, 2013

 

June 30, 2014

 

June 30, 2014

 

 

 

RMB

 

RMB

 

US$

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

1,764,221

 

8,553,933

 

1,378,866

 

Restricted cash

 

2,679

 

2,682

 

432

 

Short-term investments

 

1,409,439

 

1,610,026

 

259,531

 

Accounts receivable, net

 

1,370,031

 

1,498,779

 

241,598

 

Intangible assets, net

 

51,942

 

105,546

 

17,014

 

Deferred tax assets

 

7,843

 

7,843

 

1,264

 

Prepayments and other assets

 

82,300

 

100,386

 

16,183

 

Total current assets

 

4,688,455

 

11,879,195

 

1,914,888

 

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

 

Property and equipment, net

 

222,229

 

266,781

 

43,004

 

Intangible assets, net

 

1,197,671

 

1,353,780

 

218,225

 

Capitalized content production costs

 

1,176

 

9,843

 

1,587

 

Prepayments and other assets

 

197,856

 

240,894

 

38,830

 

Goodwill

 

4,262,569

 

4,262,569

 

687,112

 

Total non-current assets

 

5,881,501

 

6,133,867

 

988,758

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

10,569,956

 

18,013,062

 

2,903,646

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

213,825

 

361,253

 

58,233

 

Advances from customers

 

25,081

 

23,668

 

3,815

 

Accrued expenses and other liabilities

 

1,124,342

 

1,147,253

 

184,933

 

Total current liabilities

 

1,363,248

 

1,532,174

 

246,981

 

 

 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

 

 

Deferred tax liability

 

219,519

 

219,519

 

35,386

 

Other liabilities

 

4,070

 

6,380

 

1,028

 

Total non-current liabilities

 

223,589

 

225,899

 

36,414

 

 

 

 

 

 

 

 

 

Total liabilities

 

1,586,837

 

1,758,073

 

283,395

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Class A Ordinary Shares (US$0.00001 par value, 9,340,238,793 authorized, 2,356,529,401 and 3,103,408,891 issued and outstanding as of December 31, 2013 and June 30, 2014, respectively)

 

154

 

200

 

32

 

Class B Ordinary Shares (US$0.00001 par value, 659,761,207 authorized, 659,561,893 and 645,691,903 issued and outstanding as of December 31, 2013 and June 30, 2014, respectively)

 

49

 

48

 

8

 

Additional paid-in capital

 

11,058,360

 

18,712,011

 

3,016,315

 

Statutory reserves

 

2,063

 

2,063

 

333

 

Accumulated deficit

 

(1,878,454

)

(2,267,594

)

(365,529

)

Accumulated other comprehensive loss

 

(199,053

)

(191,739

)

(30,908

)

Total shareholders’ equity

 

8,983,119

 

16,254,989

 

2,620,251

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

10,569,956

 

18,013,062

 

2,903,646

 

 

5



 

YOUKU TUDOU INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 

(Amounts in thousands, except for number of shares and ADS and per share and per ADS

 

For the Three Months Ended

 

For the Six Months Ended

 

data)

 

June 30, 2013

 

March 31, 2014

 

June 30, 2014

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2014

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

753,457

 

700,374

 

958,719

 

154,542

 

1,269,454

 

1,659,093

 

267,441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues (Note 1)

 

(563,281

)

(614,808

)

(750,107

)

(120,915

)

(1,065,047

)

(1,364,915

)

(220,020

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

190,176

 

85,566

 

208,612

 

33,627

 

204,407

 

294,178

 

47,421

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product development

 

(66,051

)

(80,700

)

(99,116

)

(15,977

)

(122,879

)

(179,816

)

(28,986

)

Sales and marketing

 

(165,201

)

(186,542

)

(212,826

)

(34,307

)

(292,801

)

(399,368

)

(64,376

)

General and administrative

 

(75,569

)

(46,823

)

(74,457

)

(12,002

)

(158,919

)

(121,280

)

(19,550

)

Total operating expenses

 

(306,821

)

(314,065

)

(386,399

)

(62,286

)

(574,599

)

(700,464

)

(112,912

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(116,645

)

(228,499

)

(177,787

)

(28,659

)

(370,192

)

(406,286

)

(65,491

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

7,090

 

6,053

 

9,923

 

1,600

 

14,269

 

15,976

 

2,574

 

Interest expenses

 

(158

)

 

 

 

(545

)

 

 

Other, net

 

4,720

 

(2,259

)

3,441

 

555

 

19,001

 

1,182

 

191

 

Total other income, net

 

11,652

 

3,794

 

13,364

 

2,155

 

32,725

 

17,158

 

2,765

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(104,993

)

(224,705

)

(164,423

)

(26,504

)

(337,467

)

(389,128

)

(62,726

)

Income taxes

 

(58

)

 

(12

)

(2

)

(58

)

(12

)

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

(105,051

)

(224,705

)

(164,435

)

(26,506

)

(337,525

)

(389,140

)

(62,728

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income, before tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

(33,457

)

20,959

 

(13,645

)

(2,200

)

(39,423

)

7,314

 

1,179

 

Other comprehensive (loss) income, before tax

 

(33,457

)

20,959

 

(13,645

)

(2,200

)

(39,423

)

7,314

 

1,179

 

Income tax expense related to components of other comprehensive (loss) income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income, net of tax

 

(33,457

)

20,959

 

(13,645

)

(2,200

)

(39,423

)

7,314

 

1,179

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

(0.04

)

(0.07

)

(0.05

)

(0.01

)

(0.11

)

(0.12

)

(0.02

)

Net loss per ADS (each ADS represents 18 class A ordinary shares), basic and diluted

 

(0.63

)

(1.34

)

(0.88

)

(0.14

)

(2.05

)

(2.20

)

(0.35

)

Shares used in computation, basic and diluted

 

2,980,162,122

 

3,021,981,224

 

3,355,310,411

 

3,355,310,411

 

2,969,000,985

 

3,189,566,616

 

3,189,566,616

 

ADSs used in computation, basic and diluted

 

165,564,562

 

167,887,845

 

186,406,133

 

186,406,133

 

164,944,499

 

177,198,145

 

177,198,145

 

 

6



 

The accompanying notes are an integral part of the press release.

 

Note 1. Cost of Revenues

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

(Amounts in thousands)

 

June 30, 2013

 

March 31, 2014

 

June 30, 2014

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2014

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value added, business taxes and surcharges

 

74,334

 

62,958

 

89,550

 

14,435

 

123,259

 

152,508

 

24,584

 

Bandwidth costs

 

164,111

 

201,889

 

213,538

 

34,422

 

325,156

 

415,427

 

66,965

 

Depreciation of servers and other equipment

 

21,384

 

24,306

 

28,756

 

4,636

 

43,854

 

53,062

 

8,553

 

Content costs

 

303,452

 

325,655

 

418,263

 

67,422

 

572,778

 

743,918

 

119,918

 

Total Cost of Revenues

 

563,281

 

614,808

 

750,107

 

120,915

 

1,065,047

 

1,364,915

 

220,020

 

 

7



 

YOUKU TUDOU INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

(Amounts in thousands)

 

June 30, 2013

 

March 31, 2014

 

June 30, 2014

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2014

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

(105,051

)

(224,705

)

(164,435

)

(26,506

)

(337,525

)

(389,140

)

(62,728

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and impairment of fixed assets

 

27,502

 

31,883

 

36,328

 

5,856

 

54,297

 

68,211

 

10,995

 

Bad debt expense

 

10,035

 

(6,473

)

5,247

 

846

 

17,111

 

(1,226

)

(198

)

Amortisation and impairment of intangible assets and capitalized content production costs

 

176,523

 

181,777

 

229,561

 

37,004

 

315,514

 

411,338

 

66,306

 

Amortization of long-term debt discounts

 

92

 

 

 

 

313

 

 

 

(Gain) loss on disposal of property and equipment

 

(645

)

90

 

128

 

21

 

50

 

218

 

35

 

Foreign exchange loss (gain)

 

(847

)

2,164

 

846

 

136

 

(522

)

3,010

 

485

 

Share-based compensation

 

48,529

 

70,220

 

82,131

 

13,239

 

86,379

 

152,351

 

24,557

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted cash

 

704

 

(2

)

(1

)

 

694

 

(3

)

 

Accounts receivable

 

(294,698

)

179,153

 

(306,676

)

(49,435

)

(328,342

)

(127,523

)

(20,556

)

Prepayments and other assets

 

21,794

 

(10,615

)

(21,120

)

(3,404

)

23,141

 

(31,735

)

(5,116

)

Capitalized content production costs

 

(42,382

)

(2,972

)

(6,371

)

(1,027

)

(26,421

)

(9,343

)

(1,506

)

Accounts payable

 

11,179

 

4,574

 

8,631

 

1,391

 

1,315

 

13,205

 

2,129

 

Advances from customers

 

(4,180

)

1,816

 

(3,229

)

(521

)

34,277

 

(1,413

)

(227

)

Accrued expenses and other liabilities

 

88,046

 

29,591

 

(16,196

)

(2,611

)

100,514

 

13,395

 

2,159

 

Net cash (used in) provided by operating activities

 

(63,399

)

256,501

 

(155,156

)

(25,011

)

(59,205

)

101,345

 

16,335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of property and equipment

 

(34,549

)

(28,191

)

(84,968

)

(13,697

)

(61,913

)

(113,159

)

(18,241

)

Proceeds received from maturity of short-term investments

 

621,948

 

1,132,459

 

66,037

 

10,645

 

658,651

 

1,198,496

 

193,194

 

Short-term investments placed with financial institutions

 

(739,059

)

(1,391,239

)

(4,698

)

(757

)

(924,649

)

(1,395,937

)

(225,020

)

Proceeds from disposal of property and equipment

 

1,282

 

180

 

10

 

2

 

1,282

 

190

 

31

 

Acquisition of intangible assets

 

(102,500

)

(165,891

)

(246,320

)

(39,706

)

(341,421

)

(412,211

)

(66,447

)

Net cash used in investing activities

 

(252,878

)

(452,682

)

(269,939

)

(43,513

)

(668,050

)

(722,621

)

(116,483

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of employee stock options

 

35,935

 

11,809

 

7,355

 

1,186

 

64,675

 

19,164

 

3,089

 

Principal repayments on long-term debt

 

(3,330

)

 

 

 

(6,566

)

 

 

Proceeds from Ali investment, net of issuance costs

 

 

 

7,387,520

 

1,190,844

 

 

7,387,520

 

1,190,844

 

Net cash provided by financing activities

 

32,605

 

11,809

 

7,394,875

 

1,192,030

 

58,109

 

7,406,684

 

1,193,933

 

Effect of exchange rate changes on cash and cash equivalents

 

(32,608

)

18,795

 

(14,491

)

(2,336

)

(38,901

)

4,304

 

694

 

Net (decrease) increase in cash and cash equivalents

 

(316,280

)

(165,577

)

6,955,289

 

1,121,170

 

(708,047

)

6,789,712

 

1,094,479

 

Cash and cash equivalents at the beginning of the period

 

1,264,090

 

1,764,221

 

1,598,644

 

257,696

 

1,655,857

 

1,764,221

 

284,387

 

Cash and cash equivalents at the end of the period

 

947,810

 

1,598,644

 

8,553,933

 

1,378,866

 

947,810

 

8,553,933

 

1,378,866

 

 

8



 

Reconciliations of Non-GAAP results of operations measures to the nearest comparable GAAP financial measures (1) (Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”), unaudited)

 

1. Non-GAAP Content Costs

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2013

 

March 31, 2014

 

June 30, 2014

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2014

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Content costs

 

303,452

 

325,655

 

418,263

 

67,422

 

572,778

 

743,918

 

119,918

 

Deduct: share-based compensation

 

6,465

 

12,223

 

12,694

 

2,046

 

12,128

 

24,917

 

4,016

 

Deduct: amortization of intangible assets from business combination

 

7,741

 

2,483

 

2,631

 

424

 

16,072

 

5,114

 

824

 

Non-GAAP content costs

 

289,246

 

310,949

 

402,938

 

64,952

 

544,578

 

713,887

 

115,078

 

 

2. Non-GAAP Gross Profit

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2013

 

March 31, 2014

 

June 30, 2014

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2014

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Gross profit

 

190,176

 

85,566

 

208,612

 

33,627

 

204,407

 

294,178

 

47,421

 

Add back: share-based compensation

 

6,465

 

12,223

 

12,694

 

2,046

 

12,128

 

24,917

 

4,016

 

Add back: amortization of intangible assets from business combination

 

7,741

 

2,483

 

2,631

 

424

 

16,072

 

5,114

 

824

 

Non-GAAP gross profit

 

204,382

 

100,272

 

223,937

 

36,097

 

232,607

 

324,209

 

52,261

 

 

3. Non-GAAP Operating Expenses

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2013

 

March 31, 2014

 

June 30, 2014

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2014

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Operating expenses

 

306,821

 

314,065

 

386,399

 

62,286

 

574,599

 

700,464

 

112,912

 

Deduct: share-based compensation

 

42,064

 

57,997

 

69,437

 

11,193

 

74,251

 

127,434

 

20,541

 

Deduct: amortization of intangible assets from business combination

 

4,155

 

3,743

 

3,743

 

604

 

8,310

 

7,486

 

1,205

 

Non-GAAP operating expenses

 

260,602

 

252,325

 

313,219

 

50,489

 

492,038

 

565,544

 

91,166

 

 

4. Non-GAAP Sales and Marketing Expenses

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2013

 

March 31, 2014

 

June 30, 2014

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2014

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Sales and marketing expenses

 

165,201

 

186,542

 

212,826

 

34,307

 

292,801

 

399,368

 

64,376

 

Deduct: share-based compensation

 

12,708

 

21,172

 

24,824

 

4,001

 

22,769

 

45,996

 

7,414

 

Deduct: amortization of intangible assets from business combination

 

2,077

 

1,871

 

1,871

 

302

 

4,154

 

3,742

 

602

 

Non-GAAP sales and marketing expenses

 

150,416

 

163,499

 

186,131

 

30,004

 

265,878

 

349,630

 

56,360

 

 

5. Non-GAAP Product Development Expenses

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2013

 

March 31, 2014

 

June 30, 2014

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2014

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Product development expenses

 

66,051

 

80,700

 

99,116

 

15,977

 

122,879

 

179,816

 

28,986

 

Deduct: share-based compensation

 

9,890

 

17,206

 

19,006

 

3,064

 

16,857

 

36,212

 

5,837

 

Deduct: amortization of intangible assets from business combination

 

1,395

 

1,257

 

1,257

 

203

 

2,790

 

2,514

 

405

 

Non-GAAP product development expenses

 

54,766

 

62,237

 

78,853

 

12,710

 

103,232

 

141,090

 

22,744

 

 

9



 

6. Non-GAAP General and Administrative Expenses

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2013

 

March 31, 2014

 

June 30, 2014

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2014

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

General and administrative expenses

 

75,569

 

46,823

 

74,457

 

12,002

 

158,919

 

121,280

 

19,550

 

Deduct: share-based compensation

 

19,466

 

19,619

 

25,607

 

4,128

 

34,625

 

45,226

 

7,290

 

Deduct: amortization of intangible assets from business combination

 

683

 

615

 

615

 

99

 

1,366

 

1,230

 

198

 

Non-GAAP general and administrative expenses

 

55,420

 

26,589

 

48,235

 

7,775

 

122,928

 

74,824

 

12,062

 

 

7. Non-GAAP Loss from Operations

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2013

 

March 31, 2014

 

June 30, 2014

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2014

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Loss from operations

 

(116,645

)

(228,499

)

(177,787

)

(28,659

)

(370,192

)

(406,286

)

(65,491

)

Add back: share-based compensation

 

48,529

 

70,220

 

82,131

 

13,239

 

86,379

 

152,351

 

24,557

 

Add back: amortization of intangible assets from business combination

 

11,896

 

6,226

 

6,374

 

1,028

 

24,382

 

12,600

 

2,029

 

Non-GAAP loss from operations

 

(56,220

)

(152,053

)

(89,282

)

(14,392

)

(259,431

)

(241,335

)

(38,905

)

 

8. Non-GAAP Net Loss

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2013

 

March 31, 2014

 

June 30, 2014

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2014

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Net loss

 

(105,051

)

(224,705

)

(164,435

)

(26,506

)

(337,525

)

(389,140

)

(62,728

)

Add back: share-based compensation

 

48,529

 

70,220

 

82,131

 

13,239

 

86,379

 

152,351

 

24,557

 

Add back: amortization of intangible assets from business combination

 

11,896

 

6,226

 

6,374

 

1,028

 

24,382

 

12,600

 

2,029

 

Non-GAAP net loss

 

(44,626

)

(148,259

)

(75,930

)

(12,239

)

(226,764

)

(224,189

)

(36,142

)

 

9.  Non-GAAP EBITDA Loss

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2013

 

March 31, 2014

 

June 30, 2014

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2014

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Net loss

 

(105,051

)

(224,705

)

(164,435

)

(26,506

)

(337,525

)

(389,140

)

(62,728

)

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization (excluding amortization of acquired content) (2)

 

27,516

 

31,897

 

36,341

 

5,858

 

54,326

 

68,238

 

11,000

 

Interest income

 

(7,090

)

(6,053

)

(9,923

)

(1,600

)

(14,269

)

(15,976

)

(2,574

)

Interest expenses

 

158

 

 

 

 

545

 

 

 

Income taxes

 

58

 

 

12

 

2

 

58

 

12

 

2

 

EBITDA loss

 

(84,409

)

(198,861

)

(138,005

)

(22,246

)

(296,865

)

(336,866

)

(54,300

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

48,529

 

70,220

 

82,131

 

13,239

 

86,379

 

152,351

 

24,557

 

Amortization of intangible assets from business combination

 

11,896

 

6,226

 

6,374

 

1,028

 

24,382

 

12,600

 

2,029

 

Others, net

 

(4,720

)

2,259

 

(3,441

)

(555

)

(19,001

)

(1,182

)

(191

)

Non-GAAP EBITDA loss

 

(28,704

)

(120,156

)

(52,941

)

(8,534

)

(205,105

)

(173,097

)

(27,905

)

 


(1)         For more information on the Non-GAAP financial measures, please see the section captioned “About Non-GAAP Financial Measures” in this earnings release.

(2)         The amortization expense was related to an advertising license acquired in April 2010. The amortization of acquired content was not treated as a Non-GAAP adjustment.

 

10


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