Company Exceeds Revenue Guidance Previously Issued by Sohu by
US$1.6 Million; BEIJING, May 4 /PRNewswire-Asia/ -- Changyou.com
Limited ("Changyou" or the "Company") (NASDAQ:CYOU), a leading
online game developer and operator in China, today announced its
unaudited financial results for the first quarter ended March 31,
2009. (Logo: http://www.newscom.com/cgi-bin/prnh/20090402/CNTH020 )
First Quarter 2009 Highlights -- Total revenues reached a record of
US$61.6 million, an increase of 6% quarter-over-quarter and 50%
year-over-year. -- GAAP net income reached a record of US$33.5
million, an increase of 15% quarter-over-quarter and 120%
year-over-year. -- Non-GAAP(1) net income (i.e., net income
excluding share-based compensation expense) reached a record of
US$34.4 million, an increase of 13% quarter-over-quarter and 100%
year-over-year. -- Non-GAAP fully diluted earnings per American
depositary share ("ADS") (one ADS represents two Class A ordinary
shares) were US$0.72, compared to US$0.64 in the fourth quarter of
2008 and US$0.36 in the first quarter of 2008. -- Aggregate peak
concurrent users ("PCU") for both MMORPGs(2) grew 16%
quarter-over-quarter and 47% year-over-year to 970,000. -- Active
paying accounts ("APA") for both MMORPGs grew 14% quarter-over-
quarter and 50% year-over-year to 2.27 million. (1) Explanation of
the Company's non-GAAP financial measures and related
reconciliations to GAAP financial measures are included in the
accompanying "Non-GAAP Disclosure" and the "Reconciliation to
Unaudited Condensed Consolidated Statements of Operations." (2)
MMORPGs include Tian Long Ba Bu and Blade Online. "I'm pleased to
have delivered another quarter of record results as we report for
the first time as a standalone public company," said Mr. Tao Wang,
Changyou's chief executive officer. "Online games, which provide
low-cost entertainment, continue to be a very popular leisure time
activity in China, even in an economic downturn, making the
industry a strong defensive play. Our peak concurrent users and
active paying accounts reached record highs during the quarter,
demonstrating the efficacy of our strategy of focusing on the user
experience. We continued to leverage synergies with our parent
company Sohu.com Inc. ("Sohu") and our expanded offline marketing
efforts to reach gamers in new cities and increase our penetration
in existing cities. With our strong execution capabilities, I'm
confident that we can successfully extend the lifespan of our
existing games and release new titles that capture the imagination
and mindshare of China's growing population of online gamers." Mr.
Tao Wang continued, "Going forward, Sohu and Changyou will continue
to enjoy the same synergies as before. Sohu provides Changyou with
advertising resources on the Sohu portal and its verticals,
especially China's largest gaming portal 17173.com, marketing and
promotion of Changyou's games through the use of Sohu's web
domains, single user-ID system and base of more than 250 million
registered users, as well as Sohu's strong brand recognition and
user platforms. Meanwhile, Changyou continues to bring users to
Sohu portal." Mr. Alex Ho, Changyou's chief financial officer said,
"Our relentless focus on executing our business strategies resulted
in record results in the first quarter of 2009, and we exceeded
Sohu's previously issued guidance for the seventh time in the
previous eight quarters. We would also like to thank all
shareholders and the investment community for their support in our
IPO process. Our IPO provides us with the platform and resources to
become a leading company in the MMORPG industry. Our strong brand
recognition, rich cash flow, high margins and high profitability
position us to capitalize on opportunities as they arise." First
Quarter 2009 Operational Results Aggregate PCU for both MMORPGs
increased 16% quarter-over-quarter and 47% year-over-year to
970,000, while PCU for Tian Long Ba Bu ("TLBB"), the Company's
in-house-developed, martial-arts-style game, increased 19% quarter-
over-quarter and 48% year-over-year to 875,000 following the
release of the Company's "Legend of the Shadow" expansion pack on
March 26, 2009. Registered accounts of TLBB as of March 31, 2009
increased 12% quarter-over-quarter and 80% year-over-year to 50.1
million. Aggregate APA for both MMORPGs increased 14%
quarter-over-quarter and 50% year-over-year to 2.27 million, while
APA for TLBB increased 16% quarter-over- quarter and 52%
year-over-year to 2.11 million. Average revenue per user ("ARPU")
for both MMORPGs decreased 8% quarter- over-quarter and 7%
year-over-year to RMB179, while ARPU for TLBB decreased 9%
quarter-over-quarter and 12% year-over-year to RMB176. The decrease
was mainly a result of the Company's strategic decision to maintain
TLBB ARPU at a level that is comfortable for the majority of
Chinese game players with the goal of fostering a healthy in-game
environment so as to further extend the lifecycle of the game.
First Quarter 2009 Unaudited Financial Results Revenues Total
revenues for the first quarter of 2009 increased 6% quarter-over-
quarter and 50% year-over-year to US$61.6 million. The increases
were mainly attributable to an increase in TLBB revenues as a
result of user base expansion and enhanced user loyalty, as well as
increased revenues from Blade Online ("BO"). Revenues from game
operations increased 5% quarter-over-quarter and 46% year-over-year
to US$59.3 million. The increases were mainly due to the higher
APA, which reflects the growing popularity of the Company's online
games. Revenues from game operations include those generated from
TLBB, which increased 6% quarter-over-quarter and 41%
year-over-year to US$54.4 million and revenues for Blade Online,
which increased 2% quarter-over-quarter and 139% year-over-year to
US$5.0 million. Overseas licensing revenues increased 14%
quarter-over-quarter and 493% year-over-year to US$2.3 million.
Changyou began licensing TLBB to Vietnam in August 2007, and Hong
Kong and Taiwan in April 2008. The quarter-over-quarter increase
was primarily due to the successful launch and user acceptance of
expansion packs in overseas markets during the first quarter of
2009. Cost of Revenues Cost of revenues decreased 21%
quarter-over-quarter and increased 7% year- over-year to US$3.4
million. Non-GAAP cost of revenues decreased 22% quarter-
over-quarter and increased 6% year-over-year to US$3.4 million. The
quarter- over-quarter decrease was primarily the result of
relatively higher cost of revenues in the fourth quarter of 2008
due to a special promotion the Company ran in the fourth quarter
that bundled virtual items with a printed anthology of Louis Cha's
books. Louis Cha is the author of the books on which TLBB and the
Company's pipeline game Duke of Mount Deer are based. Gross Profit
Gross profit increased 8% quarter-over-quarter and 54%
year-over-year to US$58.2 million. First quarter 2009 gross margin
was 94%, compared to 92% in both the previous quarter and the first
quarter of 2008. Non-GAAP gross profit increased 8%
quarter-over-quarter and 54% year-over-year to US$58.2 million.
First quarter 2009 non-GAAP gross margin was 94%, compared to 93%
in the previous quarter and 92% in the first quarter of 2008.
Operating Expenses Operating expenses increased 1%
quarter-over-quarter and 23% year-over- year to US$20.3 million.
Non-GAAP operating expenses increased 3% quarter- over-quarter and
34% year-over-year to US$19.4 million. Non-GAAP product development
expenses decreased 7% quarter-over-quarter and increased 41%
year-over-year to US$5.4 million. The quarter-over-quarter decrease
was primarily attributable to a higher content and licensing
expense for a licensed game in the Company's game pipeline that was
expensed in the fourth quarter of 2008. Non-GAAP sales and
marketing expenses increased 9% quarter-over-quarter and 27%
year-over-year to US$10.8 million. The increases were primarily the
result of the Company's continual focus on the marketing and
promotion of its games and an expansion of its offline marketing
initiatives into tier 3 and tier 4 cities in China. Non-GAAP
general and administrative expenses increased 1%
quarter-over-quarter and 50% year-over- year to US$3.2 million. The
year-over-year increase was primarily due to expansion of
back-office headcount, and an increase in salaries and bonuses.
Operating Profit Operating profit increased 12%
quarter-over-quarter and 79% year-over-year to US$37.9 million.
First quarter 2009 operating margin was 61%, compared to 58% in the
previous quarter and 52% in the first quarter of 2008. Non-GAAP
operating profit increased 10% quarter-over-quarter and 67%
year-over-year to US$38.7 million. First quarter 2009 non-GAAP
operating margin was 63%, compared to 60% in the previous quarter
and 57% in the first quarter of 2008. Net Income Net income
increased 15% quarter-over-quarter and 120% year-over-year to
US$33.5 million. Non-GAAP net income increased 13%
quarter-over-quarter and 100% year-over-year to US$34.4 million.
Fully diluted earnings per ADS were US$0.71, compared to US$0.61 in
the previous quarter and US$0.32 in the first quarter of 2008.
Non-GAAP fully diluted earnings per ADS were US$0.72, compared to
US$0.64 in the previous quarter and US$0.36 in the first quarter of
2008. Non-GAAP net margin for the first quarter was 56% compared
with 52% in the previous quarter and 42% in the first quarter of
2008. Cash Balances As of March 31, 2009, the Company had cash and
bank deposits of US$195.0 million, compared to US$134.4 million as
of December 31, 2008. Operating cash flow for the quarter was a net
inflow of US$61.7 million. As described in the Company's IPO
prospectus, Changyou declared on April 1, 2009, prior to the
Company's IPO, a US$96.8 million cash dividend payable to Sohu.com
(Game) Limited ("Sohu Game"), an indirect wholly-owned subsidiary
of Sohu. Changyou expects to pay this dividend after receiving
required PRC approvals, which it expects will occur in the second
or third quarter of 2009. The dividend will be paid from the
Company's existing cash balance. In addition, the Company's cash
balance will reflect a deposit of approximately US$55.8 million of
IPO proceeds, less expenses of the IPO payable by the Company, in
the second quarter of 2009. Other Recent Developments On April 7,
2009, Changyou completed an initial public offering of a total of
8,625,000 ADSs at a public offering price of US$16 per ADS. The
Company sold 3,750,000 ADSs and Sohu Game, as selling shareholder,
sold 4,875,000 ADSs. Proceeds to the Company and the selling
shareholder from ADSs sold in the offering were approximately
US$55.8 million and US$72.5 million, respectively, for total
proceeds of approximately US$128.3 million after deducting
underwriting discounts and commissions but before deducting
offering expenses payable by the Company or Sohu Game. Immediately
following the initial public offering, through its indirect
ownership of Sohu Game, Sohu holds approximately 68.5% of the total
equity interests and controls 80.8% of the total voting power in
Changyou. Changyou received a number of awards during first quarter
of 2009, including being named as one of the 2008 Top Ten Game
Developers and one of the 2008 Top Ten Game Operators at the 2008
China Game Industry Annual Conference. Business Outlook Changyou
estimates total revenues for the second quarter of 2009 to be
between US$63 million and US$65 million. Changyou estimates
non-GAAP net income for the second quarter of 2009 to be between
US$37 million and US$38 million. Changyou estimates non-GAAP fully
diluted earnings per ADS for the second quarter of 2009 to be
between US$0.69 and US$0.71. Assuming no new grants of share-based
awards, Changyou estimates share- based compensation expense for
the second quarter of 2009 to be between US$5.5 million and US$6.0
million, reducing fully diluted earnings per ADS by US$0.10 to
US$0.11. This expense includes a one-time catch up of US$3.1
million in share-based compensation expense upon Changyou's IPO.
Following the completion of the Company's IPO, Changyou estimates
the number of ADSs to be used in calculating non-GAAP diluted
earnings per ADS for the second quarter of 2009 to be approximately
53.5 million. Non-GAAP Disclosure To supplement the unaudited
consolidated financial statements presented in accordance with
United States Generally Accepted Accounting Principles ("GAAP"),
Changyou's management uses non-GAAP measures of cost of revenues,
operating expenses, net income and net income per ADS, which are
adjusted from results based on GAAP to exclude the compensation
cost of share-based awards granted to employees under Statement of
Financial Accounting Standard 123R. These measures should be
considered in addition to results prepared in accordance with GAAP,
but should not be considered a substitute for, or superior to, GAAP
results. Changyou's management believes that excluding the
share-based compensation expense from its non-GAAP financial
measure is useful for itself and investors. Further, the amount of
share-based compensation expense cannot be anticipated by
management, and these expenses are not built into the Company's
annual budgets and quarterly forecasts, which generally will be the
basis for information Changyou provides to analysts and investors
as guidance for future operating performance. As share-based
compensation expense does not involve any upfront or subsequent
cash outflow, Changyou does not factor this in when evaluating and
approving expenditures or when determining the allocation of its
resources to its business segments. As a result, the monthly
financial results for internal reporting and any performance
measure for commissions and bonuses are based on non-GAAP financial
measures that exclude share-based compensation expense. The
non-GAAP financial measures are provided to enhance the investors'
overall understanding of Changyou's current financial performance
and prospects for the future. A limitation of using non-GAAP cost
of revenues, operating expenses, net income and net income per ADS,
excluding share-based compensation expense, is that the share-based
compensation charge has been and will continue to be a significant
recurring expense in the Company's business for the foreseeable
future. In order to mitigate these limitations the Company has
provided specific information regarding the GAAP amounts excluded
from each non-GAAP measure. The accompanying tables include details
on the reconciliation between GAAP financial measures that are most
directly comparable to the non-GAAP financial measures the Company
has presented. Notes to Financial Information Financial information
in this press release other than the information indicated as being
non-GAAP is extracted from Changyou's unaudited financial
statements prepared in accordance with GAAP. Safe Harbor Statement
This announcement contains forward-looking statements. It is
currently expected that the Business Outlook will not be updated
until release of Changyou's next quarterly earnings announcement;
however, Changyou reserves right to update its Business Outlook at
any time for any reason. Statements that are not historical facts,
including statements about the Company's beliefs and expectations,
are forward-looking statements. These statements are based on
current plans, estimates and projections, and therefore you should
not place undue reliance on them. Forward-looking statements
involve inherent risks and uncertainties. The Company cautions that
a number of important factors could cause actual results to differ
materially from those contained in any forward-looking statement.
Potential risks and uncertainties include, but are not limited to,
the current global financial and credit markets crisis and its
potential impact on the Chinese economy, the slower growth the
Chinese economy experienced during the latter half of 2008 and the
first quarter of 2009, which could continue through the remainder
of 2009, the uncertain regulatory landscape in the People's
Republic of China, fluctuations in Changyou's quarterly operating
results, Changyou's historical and possible future losses and
limited operating history, and the Company's reliance on TLBB as
its major revenue source. Further information regarding these and
other risks is included in Changyou's Registration Statement on
Form F-1 originally filed on March 17, 2009 as amended through
March 31, 2009, and other filings with the Securities and Exchange
Commission. Conference Call Information Changyou's management team
will host an earnings conference call on May 4, 2009 at 7 a.m. U.S.
Eastern Daylight Time (7 p.m. Beijing/Hong Kong time on May 4,
2009) following the quarterly results announcement. Dial-in details
for the earnings conference call are as follows: US:
+1-866-362-4829 Hong Kong: +852-3002-1672 International:
+1-617-597-5346 Please dial in 10 minutes before the call is
scheduled to begin and provide the passcode to join the call. The
passcode is "CYOU." A replay of the conference call may be accessed
by phone at the following number until May 11, 2009: International:
+1-617-801-6888 Passcode: 81001157 Additionally, a live and
archived webcast of the conference call will be available at
http://www.changyou.com/ir/ . About Changyou Changyou.com Limited's
("Changyou") (NASDAQ:CYOU) massively multi-player online games
("MMORPG") business began operations as a business unit within Sohu
in 2003. Changyou was carved out as a separate, stand-alone company
in December 2007 and is now a leading developer and operator of
online games in China and completed an initial public offering on
April 7, 2009. Changyou currently operates two MMORPGs, including
the in-house developed Tian Long Ba Bu, one of the most popular
online games in China, and the licensed Blade Online. Changyou has
three pipeline games scheduled to begin open beta testing in 2009
and 2010, including the in-house developed Duke of Mount Deer,
which received an award as one of China's most anticipated online
games, and the licensed Immortal Faith and Legend of the Ancient
World. Changyou's leading technology platform includes an advanced
2.5D graphics engine, a uniform game development platform,
effective anti-cheating and anti-hacking technologies, proprietary
cross-networking technology and advanced data protection
technology. For more information about Changyou, please visit
http://www.changyou.com/en/ . CHANGYOU.COM LIMITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED, IN THOUSANDS
EXCEPT PER ADS AMOUNTS) Three Months Ended Mar. 31, Dec. 31, Mar.
31, 2009 2008 2008 Revenues: Game operation revenues $59,346
$56,410 $40,574 Overseas licensing revenues 2,261 1,980 381 Total
revenues 61,607 58,390 40,955 Cost of revenues (includes
share-based compensation expense under SFAS 123(R) of $8, $4 and
$5, respectively) 3,441 4,380 3,229 Gross profit 58,166 54,010
37,726 Operating expenses: Product development (includes
share-based compensation expense under SFAS 123(R) of $767, $1,155
and $1,798, respectively) 6,167 6,965 5,633 Sales and marketing
(includes share-based compensation expense under SFAS 123(R) of $4,
$2 and $4, respectively) 10,836 9,949 8,558 General and
administrative (includes share-based compensation expense under
SFAS 123(R) of $67, $57 and $189, respectively) 3,280 3,253 2,334
Total operating expenses 20,283 20,167 16,525 Operating profit
37,883 33,843 21,201 Interest expense (104) (67) (59) Interest
income and foreign currency exchange gain/loss 780 598 37 Other
expense (1) 13 (3) Income before income tax expense 38,558 34,387
21,176 Income tax expense (5,054) (5,315) (5,969) Net income
$33,504 $29,072 $15,207 Basic net income per ADS $0.71 $0.61 $0.32
ADSs used in computing basic net income per ADS 47,500 47,500
47,500 Diluted net income per ADS $0.71 $0.61 $0.32 ADSs used in
computing diluted net income per ADS 47,500 47,500 47,500
CHANGYOU.COM LIMITED CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS) As of Mar. As of Dec. 31, 2009 31, 2008
ASSETS Current assets: Cash and bank deposits $ 195,045 $ 134,439
Accounts receivable, net 1,185 1,019 Prepaid and other current
assets 5,571 22,187 Due from Sohu 1,133 8,535 Total current assets
202,934 166,180 Non-current assets: Fixed assets, net 9,593 9,260
Intangible assets, net 100 57 Other assets, net 1,765 1,159 TOTAL
ASSETS $ 214,392 $ 176,656 LIABILITIES AND SHAREHOLDERS' EQUITY
Receipts in advance and deferred revenue $ 21,254 $ 20,703 Accrued
liabilities 26,130 22,834 Tax payables 14,138 9,163 Short-term loan
from Sohu 8,450 8,450 Due to Sohu 5,341 10,812 Total liabilities
75,313 71,962 Total shareholders' equity 139,079 104,694 TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY $ 214,392 $ 176,656
CHANGYOU.COM LIMITED RECONCILIATIONS TO UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS EXCEPT PER ADS
AMOUNTS) Three Months Ended Three Months Ended Mar. 31, 2009 Dec.
31, 2008 Non-GAAP Non-GAAP GAAP Adjustments Non-GAAP GAAP
Adjustments Non-GAAP Total revenues $61,607 $-- $61,607 $58,390 $--
$58,390 Less: Cost of revenues 3,441 (8)(a) 3,433 4,380 (4)(a)
4,376 Gross profit $58,166 $8 $58,174 $54,010 $4 $54,014 Gross
margin 94% 94% 92% 93% Operating expenses $20,283 $(838)(a) $19,445
$20,167 $(1,214)(a) $18,953 Operating profit $37,883 846 $38,729
$33,843 $1,218 $35,061 Operating margin 61% 63% 58% 60% Net income
$33,504 $846 $34,350 $29,072 $1,218 $30,290 Net margin 54% 56% 50%
52% Diluted net income per ADS $0.71 $0.72 $0.61 $0.64 ADSs used in
computing diluted net income per ADS 47,500 47,500 47,500 47,500
(Cont.) Three Months Ended Mar. 31, 2008 Non-GAAP GAAP Adjustments
Non-GAAP Total revenues $40,955 $-- $40,955 Less: Cost of revenues
3,229 (5)(a) 3,224 Gross profit $37,726 $5 $37,731 Gross margin 92%
92% Operating expenses $16,525 $(1,991)(a) $14,534 Operating profit
$21,201 $1,996 $23,197 Operating margin 52% 57% Net income $15,207
$1,996 $17,203 Net margin 37% 42% Diluted net income per ADS $0.32
$0.36 ADSs used in computing diluted net income per ADS 47,500
47,500 Note: (a) To eliminate share-based compensation expense as
measured using the fair value method under SFAS 123(R). For
investor and media inquiries, please contact: In China: Mr. Yaobin
Wang Changyou.com Limited Tel: +86-10-6272-7777 Email: Mr. Derek
Mitchell Ogilvy Financial, Beijing Tel: +86-10-8520-6284 Email: In
the United States: Mr. Thomas Smith Ogilvy Financial, New York Tel:
+1-212-880-5269 Email:
http://www.newscom.com/cgi-bin/prnh/20090402/CNTH020DATASOURCE:
Changyou.com Limited CONTACT: In China: Mr. Yaobin Wang of
Changyou.com Limited, +86-10-6272- 7777, or ; Mr. Derek Mitchell,
Ogilvy Financial, Beijing, +86-10- 8520-6284, or ; In the United
States: Mr. Thomas Smith, Ogilvy Financial, New York,
+1-212-880-5269, or Web Site: http://www.changyou.com/ir
Copyright
Changyou com (NASDAQ:CYOU)
Historical Stock Chart
From May 2024 to Jun 2024
Changyou com (NASDAQ:CYOU)
Historical Stock Chart
From Jun 2023 to Jun 2024