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 2015

 


 

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/ Hugh Wu

 

Name

:

Hugh Wu

 

Title

:

Chief Financial Officer

 

Date: August 21, 2015

 

2



 

EXHIBIT INDEX

 

Exhibit 99.1                             Press Release Announcing the Second Quarter 2015 Unaudited Financial Results

 

3




Exhibit 99.1

 

Youku Tudou Announces Second Quarter 2015 Unaudited Financial Results

Consumer Revenues Grew 596% Year-on-Year; Multi-Screen Monthly User Time Spent Grew 50% Year-on-Year

 

BEIJING, China, August 19, 2015 — Youku Tudou Inc. (NYSE: YOKU), a leading multi-screen entertainment and media company in China (“Youku Tudou” or the “Company”), today announced its unaudited financial results for the second quarter 2015.

 

Second Quarter 2015 Highlights(1)

 

·             Net revenues were RMB1.61 billion (US$259.6 million), a 57% increase from the corresponding period in 2014(2). Non-GAAP(3) net revenues were RMB1.51 billion (US$244.3 million) in the second quarter of 2015, a 58% increase from the corresponding period in 2014.

 

·             Gross profit was RMB254.1 million (US$41.0 million), an 11% increase from the corresponding period in 2014. Non-GAAP gross profit was RMB253.8 million (US$40.9 million) in the second quarter of 2015, a 14% increase from the corresponding period in 2014.

 

·             Net loss was RMB342.0 million (US$55.2 million), as compared to RMB142.3 million (US$23.0 million) from the corresponding period in 2014. Non-GAAP net loss was RMB220.7 million (US$35.6 million) in the second quarter of 2015, as compared to RMB76.9 million (US$12.4 million) from the corresponding period in 2014.

 

·             Basic and diluted loss per ADS, each representing 18 Class A ordinary shares of the Company, for the second quarter of 2015 amounted to RMB1.76 (US$0.28) and RMB1.76 (US$0.28), respectively. Non-GAAP basic and diluted loss per ADS for the second quarter of 2015 amounted to RMB1.13 (US$0.18) and RMB1.13 (US$0.18), respectively.

 

·             Cash, cash equivalents, restricted cash and short-term investments totaled RMB8.33 billion (US$1.34 billion) as of June 30, 2015.

 

·             Acquisition of property and equipment for the second quarter of 2015 was RMB71.5 million (US$11.5 million).

 

·             Acquisition of licensed copyright for the second quarter of 2015 was RMB366.2 million (US$59.1 million).

 

I am very pleased that once more we delivered accelerated and increasingly diversified topline growth in the second quarter, driven by robust consumer business development and supported by healthy advertising revenues. Our revenue diversification through consumer business is successful and based on progress driven by our business unit reorganizations and management team additions. Meanwhile, with nearly half of advertising revenues coming from mobile, we have achieved broad adoption of mobile advertising by domestic and international advertisers alike,” said Victor Koo, Chairman and Chief Executive Officer of Youku Tudou. “We expect these positive trends, reinforced by our clear growth strategy and improving business economics, to continue during the second half of this year.”

 

Dele Liu, President of Youku Tudou, added, “We continued to significantly increase web-native content, which is one of the key growth pillars driving our business development this year, in addition to accelerated topline growth and revenue diversification. More specifically, we are creating cross-domain synergy for high quality IPs taking the forms of web series, online game, and movies, leveraging our large and growing user base and high quality traffic as measured by user time spent and user engagement.”

 

Second Quarter 2015 Results

 

Net revenues were RMB1.61 billion (US$259.6 million) in the second quarter of 2015, a 57% increase from the corresponding period in 2014. Non-GAAP net revenues were RMB1.51 billion (US$244.3 million) in the second quarter of 2015, a 58% increase from the corresponding period in 2014, meeting the non-GAAP net revenues guidance previously announced by the Company.

 

Advertising net revenues were RMB1.28 billion (US$206.1 million) in the second quarter of 2015, a 40% increase from the corresponding period in 2014, 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.

 

Consumer revenues, which are derived from our subscription-based service, interactive live entertainment and mobile game joint operation, were RMB174.5 million (US$28.1 million) in the second quarter of 2015, a 596% increase from the corresponding period in 2014. The growth was primarily attributable to the increasing user adoption of our consumer services as evidenced by expansion of subscriber base of our subscription-based service, and growing number of paying users and average spend per user of our interactive live entertainment service.

 

Bandwidth costs as a component of cost of revenues were RMB330.3 million (US$53.3 million) in the second quarter of 2015, representing 21% of net revenues, as compared to 21% of net revenues for the corresponding period in 2014.

 


(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 RMB6.2000 to US$1.00, the effective noon buying rate as of June 30, 2015 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.

 

(2)  As noted in the Company’s annual report for fiscal year 2014 on Form 20-F (the “2014 Annual Report”), certain adjustments were made to the Company’s historical consolidated financial statements reflecting certain revisions to its accounting treatment for (i) licensed copyrights and (ii) nonmonetary exchanges of licensed copyrights, as further described in the 2014 Annual Report. Accordingly, unaudited financial information in this release in relation to the second quarter of 2014 has been amended, where applicable, principally as a result of, and to reflect the adjustment caused by, such revisions of the Company’s accounting treatment.

 

(3)  All non-GAAP measures exclude, as applicable, barter sublicensing revenues, amortization of licensed copyrights from nonmonetary content exchanges, 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



 

Content costs as a component of cost of revenues were RMB744.4 million (US$120.1 million) in the second quarter of 2015, representing 46% of net revenues as compared to 45% of net revenues for the corresponding period in 2014. Non-GAAP content costs were RMB649.8 million (US$104.8 million) in the second quarter of 2015, representing 43% of non-GAAP net revenues, as compared to 42% of non-GAAP net revenues for the corresponding period in 2014. This increase was primarily due to expansion of our video content portfolio to support our new business growth initiatives.

 

Gross profit was RMB254.1 million (US$41.0 million) in the second quarter of 2015, an 11% increase from the corresponding period in 2014. Non-GAAP gross profit was RMB253.8 million (US$40.9 million) in the second quarter of 2015, a 14% increase from the corresponding period in 2014.

 

Operating expenses were RMB645.9 million (US$104.2 million) in the second quarter of 2015, as compared to RMB384.2 million (US$62.0 million) for the corresponding period in 2014. Non-GAAP operating expenses were RMB524.4 million (US$84.6 million) in the second quarter of 2015, as compared to RMB312.1 million (US$50.3 million) for the corresponding period in 2014. Detailed discussion of each component of operating expenses is as follows:

 

Sales and marketing expenses were RMB354.3 million (US$57.1 million) in the second quarter of 2015, as compared to RMB212.0 million (US$34.2 million) for the corresponding period in 2014. Non-GAAP sales and marketing expenses were RMB305.6 million (US$49.3 million) in the second quarter of 2015, as compared to RMB185.8 million (US$30.0 million) for the corresponding period in 2014. This increase was primarily due to increases in marketing expenses and commission paid to our sales force in line with our revenue growth.

 

Product development expenses were RMB181.9 million (US$29.3 million) in the second quarter of 2015, as compared to RMB98.6 million (US$15.9 million) for the corresponding period in 2014. Non-GAAP product development expenses were RMB141.8 million (US$22.9 million) in the second quarter of 2015, as compared to RMB78.6 million (US$12.7 million) for the corresponding period in 2014. This increase was primarily due to an increase in personnel related expenses for our product development in mobile, search, social, subscription and interactive live entertainment services.

 

General and administrative expenses were RMB109.8 million (US$17.7 million) in the second quarter of 2015, as compared to RMB73.7 million (US$11.9 million) from the corresponding period in 2014. Non-GAAP general and administrative expenses were RMB77.0 million (US$12.4 million) in the second quarter of 2015, as compared to RMB47.6 million (US$7.7 million) from the corresponding period in 2014.

 

Net loss was RMB342.0 million (US$55.2 million) in the second quarter of 2015, as compared to RMB142.3 million (US$23.0 million) for the corresponding period in 2014. Non-GAAP net loss was RMB220.7 million (US$35.6 million) in the second quarter of 2015, as compared to RMB76.9 million (US$12.4 million) from the corresponding period in 2014.

 

Business Outlook

 

For the third quarter of 2015, the Company expects non-GAAP net revenues will be between RMB1.69 billion and RMB1.78 billion, with advertising net revenues contributing between RMB1.34 billion and RMB1.40 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, 2015 (9:00 a.m. Beijing/Hong Kong Time on August 20, 2015).

 

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:

+65-6713-5090

Mainland China Dial In:

+86-800-819-0121 / +86-400-620-8038

Hong Kong Dial In:

+852-3018-6771

 

A replay of the call will be available by dialing +61 2 8199 0299 and entering passcode 12334563. The replay will be available through August 26, 2015.

 

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 a leading multi-screen entertainment and media company in China. Youku Tudou is China’s leading Internet television platform, enabling users to search, view and share high-quality video content quickly and easily across multiple devices. Its Youku brand and Tudou brand are among 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.”

 

2



 

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 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.

 

3



 

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 net revenues, 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 profit or loss from operations and non-GAAP net profit or loss and non-GAAP adjusted EBITDA profit or loss. We define non-GAAP net revenues as net revenues excluding barter sublicensing revenues. We define non-GAAP content costs as content costs excluding amortization of licensed copyrights from nonmonetary content exchanges, 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 barter sublicensing revenues, amortization of licensed copyrights from nonmonetary content exchanges, 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 profit or loss from operations as profit or loss from operations excluding barter sublicensing revenues, amortization of licensed copyrights from nonmonetary content exchanges , share-based compensation expenses, amortization of intangible assets from business combination and business combination related expenses. We define non-GAAP net profit or loss as net loss excluding barter sublicensing revenues, amortization of licensed copyrights from nonmonetary content exchanges , share-based compensation expenses, amortization of intangible assets from business combination and business combination related expenses. We define non-GAAP adjusted EBITDA profit or loss as net profit or loss before income taxes, interest expenses, interest income, depreciation and amortization (excluding amortization of acquired content), further adjusted for barter sublicensing revenues, amortization of licensed copyrights from nonmonetary content exchanges, 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:

 

Chang You

Youku Tudou Inc.

Tel: (+8610) 5890-6883 x 8056

Email: changyou@youku.com

 

4



 

YOUKU TUDOU INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

As of

 

(Amounts in thousands, except for number of shares)

 

December 31, 2014

 

June 30, 2015

 

June 30, 2015

 

 

 

RMB

 

RMB

 

US$

 

 

 

(Audited)

 

(Unaudited)

 

(Unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

3,820,742

 

2,561,775

 

413,190

 

Restricted cash

 

617,586

 

1,441,049

 

232,427

 

Short-term investments

 

4,021,199

 

4,323,246

 

697,298

 

Accounts receivable

 

1,719,760

 

2,135,363

 

344,413

 

Licensed copyrights, net

 

220,152

 

259,052

 

41,783

 

Amounts due from related parties

 

125,204

 

85,408

 

13,775

 

Deferred tax assets, net

 

2,283

 

2,283

 

368

 

Prepayments and other assets

 

117,716

 

315,511

 

50,890

 

Total current assets

 

10,644,642

 

11,123,687

 

1,794,144

 

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

 

Property and equipment, net

 

293,027

 

365,002

 

58,871

 

Long-term investments

 

67,293

 

176,951

 

28,540

 

Available-for-sale financial assets

 

 

21,267

 

3,430

 

Licensed copyrights, net

 

505,173

 

657,606

 

106,065

 

Intangible assets, net

 

875,502

 

869,467

 

140,237

 

Capitalized content production costs

 

1,678

 

3,562

 

575

 

Film assets

 

 

64,885

 

10,465

 

Prepayments and other assets

 

431,377

 

389,162

 

62,768

 

Goodwill

 

4,262,569

 

4,262,569

 

687,511

 

Total non-current assets

 

6,436,619

 

6,810,471

 

1,098,462

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

17,081,261

 

17,934,158

 

2,892,606

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

563,009

 

690,668

 

111,399

 

Advances from customers and deferred revenue

 

36,232

 

156,660

 

25,268

 

Amounts due to related parties

 

4

 

1

 

 

Accrued expenses and other liabilities

 

1,668,122

 

2,017,281

 

325,368

 

Short-term bank loans

 

500,000

 

1,320,386

 

212,965

 

Total current liabilities

 

2,767,367

 

4,184,996

 

675,000

 

 

 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

 

 

Deferred tax liabilities

 

213,608

 

213,608

 

34,453

 

Other liabilities

 

6,570

 

33,458

 

5,396

 

Total non-current liabilities

 

220,178

 

247,066

 

39,849

 

 

 

 

 

 

 

 

 

Total liabilities

 

2,987,545

 

4,432,062

 

714,849

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Class A Ordinary Shares (US$0.00001 par value, 9,340,238,793 authorized, 3,123,742,699 and 3,158,011,117 issued as of December 31, 2014 and June 30, 2015, respectively, 2,834,270,299 and 2,868,538,717 outstanding as of December 31, 2014 and June 30, 2015, respectively)

 

201

 

203

 

33

 

Class B Ordinary Shares (US$0.00001 par value, 659,761,207 authorized, 645,691,903 and 645,691,903 issued and outstanding as of December 31, 2014 and June 30, 2015, respectively)

 

48

 

48

 

8

 

Additional paid-in capital

 

18,878,497

 

19,136,913

 

3,086,599

 

Treasury stock (at cost, 289,472,400 and 289,472,400 as of December 31, 2014 and June 30, 2015, respectively)

 

(1,845,892

)

(1,845,892

)

(297,725

)

Statutory reserves

 

13,146

 

13,146

 

2,120

 

Accumulated deficit

 

(2,681,658

)

(3,541,118

)

(571,148

)

Accumulated other comprehensive loss

 

(270,626

)

(261,204

)

(42,130

)

Total shareholders’ equity

 

14,093,716

 

13,502,096

 

2,177,757

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

17,081,261

 

17,934,158

 

2,892,606

 

 

5



 

YOUKU TUDOU INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 

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

 

For the Three Months Ended

 

For the Six Months Ended

 

share and per ADS data)

 

June 30, 2014

 

March 31, 2015

 

June 30, 2015

 

June 30, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2015

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

(Unaudited-As revised)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited-As revised)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues (including advertising net revenues from related parties amounting to RMB48,010 and RMB47,339 for the three months ended March 31, 2015 and June 30, 2015, respectively, and RMB95,349 for the six months ended June 30, 2015)

 

1,023,340

 

1,139,458

 

1,609,687

 

259,627

 

1,798,025

 

2,749,145

 

443,410

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues (Note 1)

 

(794,771

)

(1,137,987

)

(1,355,570

)

(218,640

)

(1,437,331

)

(2,493,557

)

(402,187

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

228,569

 

1,471

 

254,117

 

40,987

 

360,694

 

255,588

 

41,223

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product development

 

(98,551

)

(139,573

)

(181,856

)

(29,332

)

(178,689

)

(321,429

)

(51,843

)

Sales and marketing

 

(211,979

)

(320,433

)

(354,259

)

(57,139

)

(397,675

)

(674,692

)

(108,821

)

General and administrative

 

(73,670

)

(84,058

)

(109,830

)

(17,715

)

(119,799

)

(193,888

)

(31,272

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

(384,200

)

(544,064

)

(645,945

)

(104,186

)

(696,163

)

(1,190,009

)

(191,936

)

Government grant income

 

880

 

123

 

11,075

 

1,786

 

880

 

11,198

 

1,806

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(154,751

)

(542,470

)

(380,753

)

(61,413

)

(334,589

)

(923,223

)

(148,907

)

Interest income

 

9,923

 

29,811

 

34,265

 

5,527

 

15,976

 

64,076

 

10,335

 

Interest expenses

 

 

(10,743

)

(17,126

)

(2,762

)

 

(27,869

)

(4,495

)

Share of net loss of equity investee

 

 

(1,247

)

(1,459

)

(235

)

 

(2,706

)

(436

)

Other income, net

 

2,562

 

7,352

 

1,781

 

287

 

303

 

9,133

 

1,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(142,266

)

(517,297

)

(363,292

)

(58,596

)

(318,310

)

(880,589

)

(142,030

)

Income tax expense

 

(12

)

(144

)

21,273

 

3,431

 

(12

)

21,129

 

3,408

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

(142,278

)

(517,441

)

(342,019

)

(55,165

)

(318,322

)

(859,460

)

(138,622

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), before tax Foreign currency translation adjustments

 

(13,645

)

36,587

 

(27,165

)

(4,381

)

7,314

 

9,422

 

1,520

 

Other comprehensive income (loss), net of tax

 

(13,645

)

36,587

 

(27,165

)

(4,381

)

7,314

 

9,422

 

1,520

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss attributable to ordinary shareholders

 

(155,923

)

(480,854

)

(369,184

)

(59,546

)

(311,008

)

(850,038

)

(137,102

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

(0.04

)

(0.15

)

(0.10

)

(0.02

)

(0.10

)

(0.25

)

(0.04

)

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

 

(0.76

)

(2.67

)

(1.76

)

(0.28

)

(1.80

)

(4.43

)

(0.71

)

Shares used in computation, basic and diluted

 

3,355,310,411

 

3,485,681,620

 

3,500,437,718

 

3,500,437,718

 

3,189,566,616

 

3,493,100,432

 

3,493,100,432

 

ADSs used in computation, basic and diluted

 

186,406,133

 

193,648,978

 

194,468,762

 

194,468,762

 

177,198,145

 

194,061,135

 

194,061,135

 

 

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, 2014

 

March 31, 2015

 

June 30, 2015

 

June 30, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2015

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

(Unaudited-As revised)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited-As revised)

 

(Unaudited)

 

(Unaudited)

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value added, business taxes and surcharges

 

89,550

 

98,388

 

138,329

 

22,311

 

152,508

 

236,717

 

38,180

 

Bandwidth costs

 

213,538

 

306,835

 

330,258

 

53,267

 

415,427

 

637,093

 

102,757

 

Depreciation of servers and other equipment

 

24,452

 

34,349

 

38,479

 

6,206

 

44,617

 

72,828

 

11,746

 

Interactive live entertainment revenue sharing fees

 

3,351

 

24,087

 

70,017

 

11,293

 

4,339

 

94,104

 

15,178

 

Cost of goods sold

 

 

5,337

 

34,073

 

5,496

 

 

39,410

 

6,356

 

Content costs

 

463,880

 

668,991

 

744,414

 

120,067

 

820,440

 

1,413,405

 

227,970

 

Total Cost of Revenues

 

794,771

 

1,137,987

 

1,355,570

 

218,640

 

1,437,331

 

2,493,557

 

402,187

 

 

7



 

YOUKU TUDOU INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

(Amounts in thousands)

 

June 30, 2014

 

March 31, 2015

 

June 30, 2015

 

June 30, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2015

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

(Unaudited-As revised)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited-As revised)

 

(Unaudited)

 

(Unaudited)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

(142,278

)

(517,441

)

(342,019

)

(55,165

)

(318,322

)

(859,460

)

(138,622

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation of fixed assets

 

30,688

 

40,676

 

45,212

 

7,292

 

57,205

 

85,888

 

13,853

 

Bad debt expense

 

5,247

 

14,800

 

1,862

 

300

 

(1,226

)

16,662

 

2,687

 

Amortization of licensed copyrights

 

270,328

 

450,865

 

478,480

 

77,174

 

477,191

 

929,345

 

149,894

 

Amortization and impairment of intangible assets and capitalized content production costs

 

7,337

 

13,930

 

17,493

 

2,821

 

13,267

 

31,423

 

5,068

 

Barter sublicensing revenues

 

(64,621

)

(83,239

)

(94,891

)

(15,305

)

(138,932

)

(178,130

)

(28,731

)

Loss (Gain) on disposal of property and equipment

 

128

 

(47

)

135

 

22

 

218

 

88

 

14

 

Foreign exchange loss (gain)

 

846

 

(20,070

)

21,755

 

3,509

 

3,010

 

1,685

 

272

 

Share-based compensation

 

82,131

 

79,772

 

144,364

 

23,285

 

152,351

 

224,136

 

36,151

 

Deferred government grant income

 

 

 

(167

)

(27

)

 

(167

)

(27

)

Share of net loss of equity investee

 

 

1,247

 

1,459

 

235

 

 

2,706

 

436

 

Changes in operating assets and liabilities, net of acquisition:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted cash

 

(1

)

(5,507

)

6,044

 

975

 

(3

)

537

 

87

 

Accounts receivable

 

(244,056

)

(101,326

)

(330,939

)

(53,377

)

(64,903

)

(432,265

)

(69,720

)

Amounts due from related parties

 

(62,620

)

(53,417

)

93,213

 

15,034

 

(62,620

)

39,796

 

6,419

 

Prepayments and other assets

 

(21,120

)

(103,103

)

(49,712

)

(8,017

)

(31,735

)

(152,815

)

(24,648

)

Capitalized content production costs

 

(6,371

)

(21,974

)

(51,805

)

(8,356

)

(9,343

)

(73,779

)

(11,900

)

Accounts payable

 

8,631

 

71,836

 

(10,033

)

(1,618

)

13,205

 

61,803

 

9,968

 

Advances from customers and deferred revenue

 

(3,229

)

36,933

 

(3,788

)

(611

)

(1,413

)

33,145

 

5,346

 

Accrued expenses and other liabilities

 

(16,266

)

88,424

 

246,747

 

39,800

 

13,325

 

335,171

 

54,060

 

Amount due to related parties

 

70

 

1

 

(4

)

(1

)

70

 

(3

)

 

Net cash provided (used in) by operating activities

 

(155,156

)

(107,640

)

173,406

 

27,970

 

101,345

 

65,766

 

10,607

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of property and equipment

 

(84,968

)

(72,990

)

(71,508

)

(11,534

)

(113,159

)

(144,498

)

(23,306

)

Purchase of available-for-sale financial assets

 

 

(21,267

)

 

 

 

(21,267

)

(3,430

)

Proceeds received from maturity of short-term investments

 

66,037

 

 

20,000

 

3,226

 

1,198,496

 

20,000

 

3,226

 

Short-term investments placed with financial institutions

 

(4,698

)

(280,308

)

 

 

(1,395,937

)

(280,308

)

(45,211

)

Proceeds from disposal of property and equipment

 

10

 

47

 

15

 

2

 

190

 

62

 

10

 

Collection of loans to third parties

 

 

 

3,000

 

484

 

 

3,000

 

484

 

Loans to third parties

 

 

(3,000

)

 

 

 

(3,000

)

(484

)

Acquisition of shares of investees

 

 

 

(77,250

)

(12,460

)

 

(77,250

)

(12,460

)

Acquisition of licensed copyrights

 

(245,390

)

(495,247

)

(366,228

)

(59,069

)

(411,281

)

(861,475

)

(138,948

)

Acquisition of intangible assets

 

(930

)

 

 

 

(930

)

 

 

Net cash used in investing activities

 

(269,939

)

(872,765

)

(491,971

)

(79,351

)

(722,621

)

(1,364,736

)

(220,119

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of employee stock options

 

7,355

 

4,529

 

29,754

 

4,799

 

19,164

 

34,283

 

5,530

 

Increase in restricted cash

 

 

(670,000

)

(154,000

)

(24,839

)

 

(824,000

)

(132,903

)

Proceeds from short-term bank loans

 

 

670,253

 

148,247

 

23,911

 

 

818,500

 

132,016

 

Proceeds from Ali investment, net of issuance costs

 

7,387,520

 

 

 

 

7,387,520

 

 

 

Net cash provided by financing activities

 

7,394,875

 

4,782

 

24,001

 

3,871

 

7,406,684

 

28,783

 

4,643

 

Effect of exchange rate changes on cash and cash equivalents

 

(14,491

)

41,693

 

(30,473

)

(4,915

)

4,304

 

11,220

 

1,810

 

Net (decrease) increase in cash and cash equivalents

 

6,955,289

 

(933,930

)

(325,037

)

(52,425

)

6,789,712

 

(1,258,967

)

(203,059

)

Cash and cash equivalents at the beginning of the period

 

1,598,644

 

3,820,742

 

2,886,812

 

465,615

 

1,764,221

 

3,820,742

 

616,249

 

Cash and cash equivalents at the end of the period

 

8,553,933

 

2,886,812

 

2,561,775

 

413,190

 

8,553,933

 

2,561,775

 

413,190

 

 

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 Net Revenues

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2014

 

March 31, 2015

 

June 30, 2015

 

June 30, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2015

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Net Revenues

 

1,023,340

 

1,139,458

 

1,609,687

 

259,627

 

1,798,025

 

2,749,145

 

443,410

 

Deduct: barter sublicensing revenues

 

64,621

 

83,239

 

94,891

 

15,305

 

138,932

 

178,130

 

28,731

 

Non-GAAP Net Revenues

 

958,719

 

1,056,219

 

1,514,796

 

244,322

 

1,659,093

 

2,571,015

 

414,679

 

 

2. Non-GAAP Content Costs

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2014

 

March 31, 2015

 

June 30, 2015

 

June 30, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2015

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Content costs

 

463,880

 

668,991

 

744,414

 

120,067

 

820,440

 

1,413,405

 

227,970

 

Deduct: amortization of licensed copyrights from nonmonetary content exchanges

 

43,187

 

36,445

 

69,121

 

11,149

 

61,699

 

105,566

 

17,027

 

Deduct: share-based compensation

 

12,694

 

12,407

 

25,473

 

4,109

 

24,917

 

37,880

 

6,110

 

Deduct: amortization of intangible assets from business combination

 

1,970

 

 

 

 

3,830

 

 

 

Non-GAAP content costs

 

406,029

 

620,139

 

649,820

 

104,809

 

729,994

 

1,269,959

 

204,833

 

 

3. Non-GAAP Gross Profit

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2014

 

March 31, 2015

 

June 30, 2015

 

June 30, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2015

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Gross profit

 

228,569

 

1,471

 

254,117

 

40,987

 

360,694

 

255,588

 

41,223

 

Deduct: barter sublicensing revenues

 

64,621

 

83,239

 

94,891

 

15,305

 

138,932

 

178,130

 

28,731

 

Add back: amortization of licensed copyrights from nonmonetary content exchanges

 

43,187

 

36,445

 

69,121

 

11,149

 

61,699

 

105,566

 

17,027

 

Add back: share-based compensation

 

12,694

 

12,407

 

25,473

 

4,109

 

24,917

 

37,880

 

6,110

 

Add back: amortization of intangible assets from business combination

 

1,970

 

 

 

 

3,830

 

 

 

Non-GAAP gross profit (loss)

 

221,799

 

(32,916

)

253,820

 

40,940

 

312,208

 

220,904

 

35,629

 

 

4. Non-GAAP Operating Expenses

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2014

 

March 31, 2015

 

June 30, 2015

 

June 30, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2015

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Operating expenses

 

384,200

 

544,064

 

645,945

 

104,186

 

696,163

 

1,190,009

 

191,936

 

Deduct: share-based compensation

 

69,437

 

67,365

 

118,891

 

19,176

 

127,434

 

186,256

 

30,041

 

Deduct: amortization of intangible assets from business combination

 

2,691

 

2,691

 

2,689

 

434

 

5,382

 

5,380

 

869

 

Non-GAAP operating expenses

 

312,072

 

474,008

 

524,365

 

84,576

 

563,347

 

998,373

 

161,026

 

 

5. Non-GAAP Sales and Marketing Expenses

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2014

 

March 31, 2015

 

June 30, 2015

 

June 30, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2015

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Sales and marketing expenses

 

211,979

 

320,433

 

354,259

 

57,139

 

397,675

 

674,692

 

108,821

 

Deduct: share-based compensation

 

24,824

 

32,351

 

47,305

 

7,630

 

45,996

 

79,656

 

12,848

 

Deduct: amortization of intangible assets from business combination

 

1,344

 

1,344

 

1,344

 

217

 

2,688

 

2,688

 

434

 

Non-GAAP sales and marketing expenses

 

185,811

 

286,738

 

305,610

 

49,292

 

348,991

 

592,348

 

95,539

 

 

6. Non-GAAP Product Development Expenses

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2014

 

March 31, 2015

 

June 30, 2015

 

June 30, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2015

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Product development expenses

 

98,551

 

139,573

 

181,856

 

29,332

 

178,689

 

321,429

 

51,843

 

Deduct: share-based compensation

 

19,006

 

18,708

 

39,159

 

6,316

 

36,212

 

57,867

 

9,333

 

Deduct: amortization of intangible assets from business combination

 

905

 

905

 

903

 

146

 

1,810

 

1,808

 

292

 

Non-GAAP product development expenses

 

78,640

 

119,960

 

141,794

 

22,870

 

140,667

 

261,754

 

42,218

 

 

9



 

7. Non-GAAP General and Administrative Expenses

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2014

 

March 31, 2015

 

June 30, 2015

 

June 30, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2015

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

General and administrative expenses

 

73,670

 

84,058

 

109,830

 

17,715

 

119,799

 

193,888

 

31,272

 

Deduct: share-based compensation

 

25,607

 

16,306

 

32,427

 

5,230

 

45,226

 

48,733

 

7,860

 

Deduct: amortization of intangible assets from business combination

 

442

 

442

 

442

 

71

 

884

 

884

 

143

 

Non-GAAP general and administrative expenses

 

47,621

 

67,310

 

76,961

 

12,414

 

73,689

 

144,271

 

23,269

 

 

8. Non-GAAP Loss from Operations

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2014

 

March 31, 2015

 

June 30, 2015

 

June 30, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2015

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Loss from operations

 

(154,751

)

(542,470

)

(380,753

)

(61,413

)

(334,589

)

(923,223

)

(148,907

)

Deduct: barter sublicensing revenues

 

64,621

 

83,239

 

94,891

 

15,305

 

138,932

 

178,130

 

28,731

 

Add back: amortization of licensed copyrights from nonmonetary content exchanges

 

43,187

 

36,445

 

69,121

 

11,149

 

61,699

 

105,566

 

17,027

 

Add back: share-based compensation

 

82,131

 

79,772

 

144,364

 

23,285

 

152,351

 

224,136

 

36,151

 

Add back: amortization of intangible assets from business combination

 

4,661

 

2,691

 

2,689

 

434

 

9,212

 

5,380

 

869

 

Non-GAAP loss from operations

 

(89,393

)

(506,801

)

(259,470

)

(41,850

)

(250,259

)

(766,271

)

(123,591

)

 

9. Non-GAAP Net Loss

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2014

 

March 31, 2015

 

June 30, 2015

 

June 30, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2015

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Net loss

 

(142,278

)

(517,441

)

(342,019

)

(55,165

)

(318,322

)

(859,460

)

(138,622

)

Deduct: barter sublicensing revenues

 

64,621

 

83,239

 

94,891

 

15,305

 

138,932

 

178,130

 

28,731

 

Add back: amortization of licensed copyrights from nonmonetary content exchanges

 

43,187

 

36,445

 

69,121

 

11,149

 

61,699

 

105,566

 

17,027

 

Add back: share-based compensation

 

82,131

 

79,772

 

144,364

 

23,285

 

152,351

 

224,136

 

36,151

 

Add back: amortization of intangible assets from business combination

 

4,661

 

2,691

 

2,689

 

434

 

9,212

 

5,380

 

869

 

Non-GAAP net loss

 

(76,920

)

(481,772

)

(220,736

)

(35,602

)

(233,992

)

(702,508

)

(113,306

)

 

10.  Non-GAAP adjusted EBITDA Loss

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30, 2014

 

March 31, 2015

 

June 30, 2015

 

June 30, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2015

 

 

 

RMB

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

Net loss

 

(142,278

)

(517,441

)

(342,019

)

(55,165

)

(318,322

)

(859,460

)

(138,622

)

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

30,698

 

40,686

 

45,223

 

7,294

 

57,225

 

85,909

 

13,856

 

Interest income

 

(9,923

)

(29,811

)

(34,265

)

(5,527

)

(15,976

)

(64,076

)

(10,335

)

Interest expenses

 

 

10,743

 

17,126

 

2,762

 

 

27,869

 

4,495

 

Income taxes

 

12

 

144

 

(21,273

)

(3,431

)

12

 

(21,129

)

(3,408

)

EBITDA loss

 

(121,491

)

(495,679

)

(335,208

)

(54,067

)

(277,061

)

(830,887

)

(134,014

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Barter sublicensing revenues

 

(64,621

)

(83,239

)

(94,891

)

(15,305

)

(138,932

)

(178,130

)

(28,731

)

Amortization of licensed copyrights from nonmonetary content exchanges

 

43,187

 

36,445

 

69,121

 

11,149

 

61,699

 

105,566

 

17,027

 

Share-based compensation

 

82,131

 

79,772

 

144,364

 

23,285

 

152,351

 

224,136

 

36,151

 

Amortization of intangible assets from business combination

 

4,661

 

2,691

 

2,689

 

434

 

9,212

 

5,380

 

869

 

Others, net

 

(2,562

)

(7,352

)

(1,781

)

(287

)

(303

)

(9,133

)

(1,473

)

Non-GAAP adjusted EBITDA loss

 

(58,695

)

(467,362

)

(215,706

)

(34,791

)

(193,034

)

(683,068

)

(110,171

)

 


(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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