UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRVIATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 2010
Commission File Number: 001-34271
CHANGYOU.COM
LIMITED
(Exact name of registrant as specified in its charter)
East Tower, Jing Yan Building
No. 29
Shijingshan Road, Shijingshan District
Beijing 100043
Peoples Republic of China
(8610) 6272-7777
(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
þ
Form 40-F
¨
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):
¨
No
þ
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):
¨
No
þ
Press Releases
On February 1, 2010, the registrant announced its unaudited financial results for the quarter ended December 31, 2009. A copy of the press release issued by the registrant regarding the
foregoing is filed herewith as Exhibit 99.1 and is incorporated herein by reference.
On February 1, 2010, the registrant also announced
the appointment of Dewen Chen as President of the registrant. A copy of the press release issued by the registrant regarding the foregoing is filed herewith as Exhibit 99.2 and is hereby incorporated by reference.
Safe Harbor Statement
This report on 6-K
contains forward-looking statements. Statements that are not historical facts, including statements about the registrants 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 registrant cautions you 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 in 2009, which could continue in 2010, the uncertain regulatory landscape in the Peoples Republic of China, fluctuations in the registrants quarterly operating results, the
registrants historical and possible future losses and limited operating history, and the registrants reliance on its online game Tian Long Ba Bu as a major revenue source. Further information regarding these and other risks is included
in the registrants 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.
Exhibits.
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99.1
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Press release regarding financial results for the quarter ended December 31, 2009.
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99.2
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Press release regarding the registrants appointment of Dewen Chen as President.
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SIGNATURE
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 hereunto duly authorized.
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CHANGYOU.COM LIMITED
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By:
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/s/ Alex Ho
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Alex Ho, Chief Financial Officer
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Date: February 3, 2010
EXHIBIT INDEX
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Exhibit
No.
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Description
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99.1
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Press Release regarding financial results for the quarter ended December 31, 2009.
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99.2
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Press Release regarding the registrants appointment of Dewen Chen as President.
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Exhibit 99.1
Changyou Reports Fourth Quarter and Fiscal Year 2009 Results
Fourth Quarter Total Revenues Reach a Record US$70.7 million, Up 3% Quarter-over-Quarter;
Fourth Quarter Non-GAAP Net Income Reaches a Record US$42.2 million, Up 2%
Quarter-over-Quarter;
Full Year Total Revenues Increase 33% to US$267.6 million;
Full Year Non-GAAP Net Income Increases 39% to US$158.1 million
Beijing, China, February 1, 2010
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 fourth quarter and fiscal year ended
December 31, 2009.
Fourth Quarter 2009 Highlights
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Total revenues reached a record US$70.7 million, an increase of 3% quarter-over-quarter and 21% year-over-year, within the Companys guidance.
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Net income reached a record US$38.9 million, or US$0.73 per fully diluted ADS
1
. Net income increased by 3% quarter-over-quarter and 34% year-over-year.
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Non-GAAP
2
net income (i.e. excluding share-based compensation expenses) reached a record US$42.2 million, or US$0.79 per fully
diluted ADS. Non-GAAP net income increased by 2% quarter-over-quarter and 39% year-over-year, within the Companys guidance.
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Aggregate registered accounts for the Companys games
3
grew 8% quarter-over-quarter and 41% year-over-year to 80.9 million.
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Aggregate peak concurrent users (PCU) for the Companys games grew 9% quarter-over-quarter and 19% year-over-year to 990,000.
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Average revenue per active paying account (ARPU) for the Companys games increased 3% quarter-over-quarter and 1% year-over-year to
RMB196.
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Fiscal Year 2009 Highlights
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Total revenues reached a record US$267.6 million, up 33% year-over-year.
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Net income reached a record US$144.7 million, or US$2.81 per fully diluted ADS. Net income increased 34% year-over-year.
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Non-GAAP net income (i.e. excluding share-based compensation expenses) reached a record US$158.1 million, or US$3.05 per fully diluted ADS. Non-GAAP
net income increased 39% year-over-year.
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I am pleased that Changyou has delivered another quarter of solid results to
close out an historic year, said Mr. Tao Wang, Changyous chief executive officer. In 2009, we executed on our strategies and enhanced our brand value through a successful IPO while experiencing consistent growth in our
existing games, investing in and strengthening our game pipeline, and making various advances in game development technologies. Our user-centric development model and commitment to building our business for the long-term have generated record
performances and have made Changyou one of the leaders in Chinas online gaming industry.
1
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Each American depositary share (ADS) represents two Class A ordinary shares.
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2
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Explanation of the Companys non-GAAP financial measures and related reconciliations to GAAP financial measures are included in the accompanying
Non-GAAP Disclosure and Reconciliations to Unaudited Condensed Consolidated Statements of Operations.
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3
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Comprised of
Tian Long Ba Bu
(
TLBB
),
Blade Online
, and
Blade Hero 2
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Mr. Wang continued, Throughout 2010, in addition to releasing new game content, we have
several pipeline games slated for release that we expect will further diversify our game roster and attract new users by appealing to a variety of gamers. We believe that our pipeline games and new technologies will firmly establish Changyou in new
market sub-segments and serve as catalysts for growth.
Mr. Alex Ho, Changyous chief financial officer, added,
Changyous solid fourth quarter and full year performances are a result of the successful execution of our business strategies and our continuous focus on the in-game experience of our users. With continued growth in the operational and
financial metrics of our existing games, a robust game pipeline, industry-leading margins, rich cash flows, and a track record of meeting our guidance targets, we continue to inspire confidence while further enhancing shareholder value.
Fourth Quarter 2009 Operational Results
Aggregate registered accounts for the Companys games as of December 31, 2009 increased 8% quarter-over-quarter and 41% year-over-year to 80.9 million.
Aggregate PCU for the Companys games was approximately 990,000, an increase of 9% quarter-over-quarter and an increase of 19% year-over-year.
Aggregate active paying accounts (APA) for the Companys games was flat quarter-over-quarter and increased 21%
year-over-year to 2.4 million.
ARPU for the Companys games increased 3% quarter-over-quarter and 1% year-over-year to RMB196, which the
Company believes is within a range that is affordable for the majority of Chinese game players.
Fourth Quarter 2009 Unaudited Financial
Results
Revenues
Total revenues for the fourth quarter of 2009 increased 3% quarter-over-quarter and 21% year-over-year to US$70.7 million.
Revenues
from game operations for the fourth quarter of 2009 increased 3% quarter-over-quarter and 22% year-over-year to US$68.6 million. The sequential increase primarily reflects the growing popularity of our games. The year-over-year increase was mainly
due to increased popularity of the Companys flagship game,
TLBB
.
Overseas licensing revenues for the fourth quarter of 2009
increased 15% quarter-over-quarter and 5% year-over-year to US$2.1 million. The increases were mainly due to increased momentum of
TLBB
in Vietnam and Malaysia.
Gross Profit
Gross profit for the fourth quarter of 2009 increased 2%
quarter-over-quarter and 21% year-over-year to US$65.3 million. Gross margin in the fourth quarter of 2009 was 92%, compared to 93% in the previous quarter and 92% in the fourth quarter of 2008. Non-GAAP gross profit for the fourth quarter of 2009
increased 2% quarter-over-quarter and 21% year-over-year to US$65.3 million. Non-GAAP gross margin in the fourth quarter of 2009 was 92%, compared to 93% in both the previous quarter and the fourth quarter of 2008.
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Operating Expenses
For the fourth quarter of 2009, total operating expenses decreased 3% quarter-over-quarter and increased 4% year-over-year to US$21.0 million. Non-GAAP operating expenses totaled US$17.7 million, down 3%
quarter-over-quarter and 6% year-over-year.
Non-GAAP product development expenses increased 5% sequentially and decreased 12% year-over-year
to US$5.1 million. The sequential increase was primarily attributable to an increase in salaries and benefits due to hiring of more game engineers. The year-over-year decrease was primarily the result of a change in the Companys bonus program
for key engineers, for whom the Company lessened cash bonuses after share-based awards previously granted increased in value after the Companys IPO.
Non-GAAP sales and marketing expenses increased 3% sequentially and decreased 5% year-over-year to US$9.5 million. The sequential increase was primarily due to an increase in marketing and promotional
activities for new content releases of the Companys existing games. The year-over-year decrease was primarily because of savings in marketing and promotional spending due to the Companys optimization of marketing campaigns in 2009 offset
by an increase in salaries and benefits from the expansion of our sales and marketing team.
Non-GAAP general and administrative expenses
decreased 25% sequentially and 2% year-over-year to US$3.1 million. The sequential decrease was primarily due to an increase in legal expenses to enforce the Companys intellectual property rights in the previous quarter. The year-over-year
decrease was primarily the result of a change in our bonus program for management, for whom we lessened cash bonuses after share-based awards previously granted increased in value after the IPO.
Operating Profit
Operating profit
for the fourth quarter of 2009 increased 5% quarter-over-quarter and 31% year-over-year to US$44.3 million. Operating margin in the fourth quarter of 2009 was 63%, up from 62% in the previous quarter and 58% in the fourth quarter of 2008. Non-GAAP
operating profit for the fourth quarter of 2009 increased 4% quarter-over-quarter and 36% year-over-year to US$47.6 million. Non-GAAP operating margin in the fourth quarter of 2009 was 67%, unchanged from the previous quarter and up from 60% in the
fourth quarter of 2008.
Net Income
For the fourth quarter of 2009, net income increased 3% quarter-over-quarter and 34% year-over-year to US$38.9 million. Non-GAAP net income increased 2% quarter-over-quarter and 39% year-over-year to
US$42.2 million. Fully diluted earnings per ADS were US$0.73, up from US$0.71 in the previous quarter and US$0.61 in the fourth quarter of 2008. Non-GAAP fully diluted earnings per ADS were US$0.79, up from US$0.77 in the previous quarter and
US$0.64 in the fourth quarter of 2008. Net margin for the fourth quarter of 2009 was 55%, unchanged from the previous quarter and up from 50% in the fourth quarter of 2008. Non-GAAP net margin for the fourth quarter was 60%, unchanged from the
previous quarter and up from 52% in the fourth quarter of 2008.
Cash Balances
As of December 31, 2009, Changyou had a net cash balance of US$226.9 million, down from US$312.9 million as of September 30, 2009. Operating cash
flow for the quarter was a net inflow of US$46.2 million.
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The decrease in the net cash balance is due to the payment of a US$96.8 million pre-IPO cash dividend to
Sohu.com (Game) Limited, an indirect, wholly-owned subsidiary of Sohu, during the fourth quarter of 2009. This dividend was declared on April 1, 2009, prior to the Companys IPO, and was described in the Companys IPO prospectus.
Fiscal Year 2009 Unaudited Financial Results
Revenues
Total revenues for the fiscal year 2009 were US$267.6 million, an increase
of 33% from US$201.8 million for the fiscal year 2008.
Revenues from game operations for the fiscal year 2009 were US$259.8 million, an
increase of 33% from US$194.6 million for the fiscal year 2008. The increase was mainly due to increased popularity of the Companys flagship game,
TLBB
.
Overseas licensing revenues for the fiscal year 2009 were US$7.8 million, an increase of 8% from US$7.2 million for the fiscal year 2008. The increase was mainly due to increased momentum of
TLBB
in Vietnam and Malaysia.
Gross Profit
Gross profit for the fiscal year 2009 was US$250.1 million, an increase of 34% from US$187.2 million for the fiscal year 2008. Gross margin for the fiscal year 2009 was 93%, unchanged from 93% for the
fiscal year 2008. Non-GAAP gross profit for the fiscal year 2009 was US$250.4 million, an increase of 34% from US$187.2 million for the fiscal year 2008. Non-GAAP gross margin for the fiscal year 2009 was 94%, up from 93% for the fiscal year 2008.
Operating Expenses
Total operating expenses for the fiscal year 2009 were US$86.2 million, an increase of 20% from US$71.8 million for the fiscal year 2008. Non-GAAP operating expenses for the fiscal year 2009 totaled US$73.1 million, an increase of 10% from
US$66.5 million for the fiscal year 2008.
Non-GAAP product development expenses for the fiscal year 2009 were US$19.9 million, an increase of
5% from US$18.9 million for the fiscal year 2008. The increase was primarily attributable to a doubling of the Companys R&D workforce in 2009 offset by changes in the Companys bonus program for key engineers, for whom the Company
lessened cash bonuses after share-based awards previously granted increased in value after the Companys IPO.
Non-GAAP sales and
marketing expenses for the fiscal year 2009 were US$39.8 million, an increase of 2% from US$38.9 million for the fiscal year 2008. The increase was primarily attributable to an increase in salaries and benefits due to expansion in sales and
marketing headcount offset by savings in marketing and promotional spending due to the Companys optimization of marketing campaigns in 2009.
Non-GAAP general and administrative expenses for the fiscal year 2009 were US$13.3 million, an increase of 54% from US$8.6 million for the fiscal year 2008. The increase was primarily due to the expansion of back-office headcount and an
increase in legal expenses to enforce the Companys intellectual property rights.
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of
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Operating Profit
Operating profit for the fiscal year 2009 was US$163.9 million, an increase of 42% from US$115.4 million for the fiscal year 2008. Operating margin for the fiscal year 2009 was 61%, up from 57% for the
fiscal year 2008. Non-GAAP operating profit for the fiscal year 2009 was US$177.3 million, an increase of 47% from US$120.7 million for the fiscal year 2008. Non-GAAP operating margin for the fiscal year 2009 was 66%, up from 60% for the fiscal year
2008.
Net Income
Net
income for the fiscal year 2009 was US$144.7 million, an increase of 34% from US$108.0 million for the fiscal year 2008. Non-GAAP net income for the fiscal year 2009 was US$158.1 million, an increase of 39% from US$113.3 million for the fiscal year
2008. Fully diluted earnings per ADS for the fiscal year 2009 were US$2.81, up from US$2.27 for the fiscal year 2008. Non-GAAP fully diluted earnings per ADS for the fiscal year 2009 were US$3.05, up from US$2.39 for the fiscal year 2008. Net margin
for the fiscal year 2009 was 54%, up from 53% for the fiscal year 2008. Non-GAAP net margin for the fiscal year 2009 were 59%, up from 56% for the fiscal year 2008.
Other Business Developments and Awards
Newly Licensed Game
The Company licensed and received the exclusive operating rights for
Da Hua Shui Hu
in China from Firestone Technologies, a Guangzhou-based game
development studio.
Da Hua Shui Hu
is a 2D turn-based cartoon-style MMORPG based on
Outlaws of the Marsh
, one of the four great classical novels of Chinese literature. The game is currently in closed beta testing.
The Assets Triple A Regional Award for Best ADR Equity Deal/IPO of 2009
In January 2010, Changyou was honored as the Best ADR Equity Deal/IPO of 2009 in
The Assets
2009 Triple A Regional Awards.
The Asset
magazines annual Triple A awards
recognize institutions and individuals that have made a significant contribution to the development of the finance industry in Asia and are highly regarded due to their rigorous assessment process. Changyou was awarded Best ADR Equity Deal/IPO
of 2009 based on a number of factors, including the execution, size, pricing and after-market performance of the Companys IPO.
Business Outlook
Changyou estimates total revenues for the first quarter of 2010 to be between US$70.0 million and US$73.0
million.
Changyou estimates non-GAAP net income for the first quarter of 2010 to be between US$41.0 million and US$42.5 million.
Changyou estimates non-GAAP fully diluted earnings per ADS for the first quarter of 2010 to be between US$0.77 and US$0.80.
Assuming no new grants of share-based awards, Changyou estimates share-based compensation expense for the first quarter of 2010 to be between US$3.0 million
and US$3.5 million, reducing fully diluted earnings per ADS by US$0.06 to US$0.07.
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Non-GAAP Disclosure
To supplement the unaudited consolidated financial information prepared in accordance with United States Generally Accepted Accounting Principles (GAAP), Changyous 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. 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.
Changyous 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 Companys 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 operations.
As a result, in general, 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 investors overall understanding of Changyous 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 Companys 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 Changyous unaudited financial statements prepared in accordance with GAAP.
Safe Harbor Statement
It is currently expected that the Business Outlook will not be updated until the release of
Changyous next quarterly earnings announcement; however, Changyou reserves the right to update its Business Outlook at any time for any reason.
This announcement contains forward-looking statements. Statements that are not historical facts, including statements about the Companys 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 in 2009, which could continue through 2010, the uncertain regulatory landscape in the Peoples Republic of China, fluctuations in Changyous quarterly
operating results, Changyous historical and possible future losses and limited operating history, and the Companys reliance on Tian Long Ba Bu as its major revenue source. Further information regarding these and other risks is included
in Changyous 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.
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Conference Call Information
Changyous management team will host an earnings conference call today at 7 a.m. U.S. Eastern Daylight Time, February 1, 2010 (or 8 p.m. Beijing/Hong Kong time, February 1, 2010). To listen
to the conference call, please use the dial in numbers below:
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US:
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+1-866-713-8563
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Hong Kong:
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+852-3002-1672
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International:
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+1-617-597-5311
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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
February 8, 2010:
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International:
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+1-617-801-6888
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Passcode:
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39188151
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The conference call will be available on webcast live and available for replay at:
http://www.changyou.com/ir/.
About Changyou
Changyou.com Limiteds (Changyou) (NASDAQ: CYOU) massively multi-player online role-playing games (MMORPG) business began operations as a business unit within Sohu.com Inc.
(NASDAQ: SOHU) in 2003. Changyou was carved out as a separate, stand-alone company in December 2007, completed an initial public offering on April 7, 2009, and is now a leading developer and operator of online games in China. Changyou currently
operates three online games, including the in-house developed
Tian Long Ba Bu
, one of the most popular online games in China, and the licensed
Blade Online
and
Blade Hero 2
. Changyou has a diversified pipeline of games with
various graphic styles and themes, including the licensed
Da Hua Shui Hu
,
Zhong Hua Ying Xiong
,
Immortal Faith
,
Legend of the Ancient World
, and the in-house developed
Duke of Mount Deer
, which received an award as
one of Chinas most anticipated online games. Changyous leading technology platform includes advanced 2.5D and 3D graphics engines, 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/.
For investor and media inquiries, please contact:
In China:
Ms. Angie Chang
Investors Relations Manager
Changyou.com Limited
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Tel:
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+86 (10) 5956-3358
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E-mail:
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ir@cyou-inc.com
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Ms. Cathy Li
Ogilvy Financial, Beijing
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Tel:
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+86 (10) 8520-6104
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E-mail:
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cathy.li@ogilvy.com
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In the United States:
Ms. Jessica Barist Cohen
Ogilvy Financial, New York
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Tel:
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+1 (646) 460-9989
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E-mail:
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jessica.cohen@ogilvypr.com
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CHANGYOU.COM LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT PER ADS AMOUNTS)
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Three Months Ended
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Twelve Months Ended
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Dec. 31, 2009
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Sep. 30, 2009
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Dec. 31, 2008
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Dec. 31, 2009
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Dec. 31, 2008
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Revenues:
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Game operation revenues
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$
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68,621
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$
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66,880
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$
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56,410
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$
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259,783
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$
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194,607
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Overseas licensing revenues
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2,077
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1,804
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1,980
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7,802
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7,238
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Total revenues
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70,698
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68,684
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58,390
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267,585
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201,845
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Cost of revenues
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(includes share-based compensation expense of $57, $169, $4, $324 and $14, respectively)
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5,420
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4,714
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4,380
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17,518
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14,633
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Gross profit
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65,278
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63,970
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54,010
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250,067
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187,212
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Operating expenses:
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Product development (includes share-based compensation expense of $1,763, $1,885, $1,155, $7,404 and $4,919,
respectively)
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6,888
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6,788
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6,965
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27,353
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23,862
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Sales and marketing (includes share-based compensation expense of $77, $68, $2, $261 and $10, respectively)
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9,551
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9,280
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9,949
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40,048
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38,917
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General and administrative (includes share-based compensation expense of $1,432, $1,432, $57, $5,412 and $404,
respectively)
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4,556
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5,614
|
|
|
|
3,253
|
|
|
|
18,759
|
|
|
|
9,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
20,995
|
|
|
|
21,682
|
|
|
|
20,167
|
|
|
|
86,160
|
|
|
|
71,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
44,283
|
|
|
|
42,288
|
|
|
|
33,843
|
|
|
|
163,907
|
|
|
|
115,380
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(67
|
)
|
|
|
(104
|
)
|
|
|
(245
|
)
|
Interest income and foreign currency exchange gain/loss
|
|
|
762
|
|
|
|
966
|
|
|
|
598
|
|
|
|
3,379
|
|
|
|
1,235
|
|
Other income (expense)
|
|
|
125
|
|
|
|
34
|
|
|
|
13
|
|
|
|
158
|
|
|
|
(278
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax expense
|
|
|
45,170
|
|
|
|
43,288
|
|
|
|
34,387
|
|
|
|
167,340
|
|
|
|
116,092
|
|
Income tax expense
|
|
|
(6,312
|
)
|
|
|
(5,494
|
)
|
|
|
(5,315
|
)
|
|
|
(22,656
|
)
|
|
|
(8,106
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
38,858
|
|
|
$
|
37,794
|
|
|
$
|
29,072
|
|
|
$
|
144,684
|
|
|
$
|
107,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per ADS
|
|
$
|
0.75
|
|
|
$
|
0.74
|
|
|
$
|
0.61
|
|
|
$
|
2.87
|
|
|
$
|
2.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADSs used in computing basic net income per ADS
|
|
|
51,496
|
|
|
|
51,251
|
|
|
|
47,500
|
|
|
|
50,364
|
|
|
|
47,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per ADS
|
|
$
|
0.73
|
|
|
$
|
0.71
|
|
|
$
|
0.61
|
|
|
$
|
2.81
|
|
|
$
|
2.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADSs used in computing diluted net income per ADS
|
|
|
52,999
|
|
|
|
53,001
|
|
|
|
47,500
|
|
|
|
51,526
|
|
|
|
47,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
of
12
CHANGYOU.COM LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED,
IN THOUSANDS)
|
|
|
|
|
|
|
|
|
As of Dec. 31, 2009
|
|
As of Dec. 31, 2008
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and bank deposits
|
|
$
|
226,901
|
|
$
|
134,439
|
Accounts receivable, net
|
|
|
3,395
|
|
|
1,019
|
Prepaid and other current assets
|
|
|
4,720
|
|
|
22,187
|
Due from Sohu
|
|
|
340
|
|
|
8,535
|
|
|
|
|
|
|
|
Total current assets
|
|
|
235,356
|
|
|
166,180
|
|
|
|
|
|
|
|
Non-current assets:
|
|
|
|
|
|
|
Fixed assets, net
|
|
|
49,178
|
|
|
9,260
|
Intangible assets, net
|
|
|
3,221
|
|
|
57
|
Other assets, net
|
|
|
1,636
|
|
|
1,159
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
289,391
|
|
$
|
176,656
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
Receipts in advance and deferred revenue
|
|
$
|
30,244
|
|
$
|
20,703
|
Accrued liabilities
|
|
|
26,618
|
|
|
22,834
|
Tax payables
|
|
|
6,628
|
|
|
9,163
|
Short-term loan from Sohu
|
|
|
|
|
|
8,450
|
Due to Sohu
|
|
|
5,046
|
|
|
10,812
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
68,536
|
|
|
71,962
|
Total shareholders equity
|
|
|
220,855
|
|
|
104,694
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
|
|
$
|
289,391
|
|
$
|
176,656
|
|
|
|
|
|
|
|
10
of
12
CHANGYOU.COM LIMITED
RECONCILIATIONS TO UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER ADS AMOUNTS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended Dec. 31, 2009
|
|
|
Three Months Ended Sep. 30, 2009
|
|
|
Three Months Ended Dec. 31, 2008
|
|
|
|
GAAP
|
|
|
Non-GAAP
Adjustments
|
|
|
|
|
Non-GAAP
|
|
|
GAAP
|
|
|
Non-GAAP
Adjustments
|
|
|
|
|
Non-GAAP
|
|
|
GAAP
|
|
|
Non-GAAP
Adjustments
|
|
|
|
|
Non-GAAP
|
|
Total revenues
|
|
$
|
70,698
|
|
|
$
|
|
|
|
|
|
$
|
70,698
|
|
|
$
|
68,684
|
|
|
$
|
|
|
|
|
|
$
|
68,684
|
|
|
$
|
58,390
|
|
|
$
|
|
|
|
|
|
$
|
58,390
|
|
Less: Cost of revenues
|
|
|
5,420
|
|
|
|
(57
|
)
|
|
(a)
|
|
$
|
5,363
|
|
|
|
4,714
|
|
|
|
(169
|
)
|
|
(a)
|
|
$
|
4,545
|
|
|
|
4,380
|
|
|
|
(4
|
)
|
|
(a)
|
|
$
|
4,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
65,278
|
|
|
$
|
57
|
|
|
|
|
$
|
65,335
|
|
|
$
|
63,970
|
|
|
$
|
169
|
|
|
|
|
$
|
64,139
|
|
|
$
|
54,010
|
|
|
$
|
4
|
|
|
|
|
$
|
54,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
92
|
%
|
|
|
|
|
|
|
|
|
92
|
%
|
|
|
93
|
%
|
|
|
|
|
|
|
|
|
93
|
%
|
|
|
92
|
%
|
|
|
|
|
|
|
|
|
93
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
$
|
20,995
|
|
|
$
|
(3,272
|
)
|
|
(a)
|
|
$
|
17,723
|
|
|
$
|
21,682
|
|
|
$
|
(3,385
|
)
|
|
(a)
|
|
$
|
18,297
|
|
|
$
|
20,167
|
|
|
$
|
(1,214
|
)
|
|
(a)
|
|
$
|
18,953
|
|
Product development expenses
|
|
$
|
6,888
|
|
|
$
|
(1,763
|
)
|
|
(a)
|
|
$
|
5,125
|
|
|
$
|
6,788
|
|
|
$
|
(1,885
|
)
|
|
(a)
|
|
$
|
4,903
|
|
|
$
|
6,965
|
|
|
|
(1,155
|
)
|
|
(a)
|
|
$
|
5,810
|
|
Sales and marketing expenses
|
|
$
|
9,551
|
|
|
$
|
(77
|
)
|
|
(a)
|
|
$
|
9,474
|
|
|
$
|
9,280
|
|
|
$
|
(68
|
)
|
|
(a)
|
|
$
|
9,212
|
|
|
$
|
9,949
|
|
|
|
(2
|
)
|
|
(a)
|
|
$
|
9,947
|
|
General and administrative expenses
|
|
$
|
4,556
|
|
|
$
|
(1,432
|
)
|
|
(a)
|
|
$
|
3,124
|
|
|
$
|
5,614
|
|
|
$
|
(1,432
|
)
|
|
(a)
|
|
$
|
4,182
|
|
|
$
|
3,253
|
|
|
|
(57
|
)
|
|
(a)
|
|
$
|
3,196
|
|
Operating profit
|
|
$
|
44,283
|
|
|
$
|
3,329
|
|
|
|
|
$
|
47,612
|
|
|
$
|
42,288
|
|
|
$
|
3,554
|
|
|
|
|
$
|
45,842
|
|
|
$
|
33,843
|
|
|
$
|
1,218
|
|
|
|
|
$
|
35,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
|
63
|
%
|
|
|
|
|
|
|
|
|
67
|
%
|
|
|
62
|
%
|
|
|
|
|
|
|
|
|
67
|
%
|
|
|
58
|
%
|
|
|
|
|
|
|
|
|
60
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
38,858
|
|
|
$
|
3,329
|
|
|
|
|
$
|
42,187
|
|
|
$
|
37,794
|
|
|
$
|
3,554
|
|
|
|
|
$
|
41,348
|
|
|
$
|
29,072
|
|
|
$
|
1,218
|
|
|
|
|
$
|
30,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net margin
|
|
|
55
|
%
|
|
|
|
|
|
|
|
|
60
|
%
|
|
|
55
|
%
|
|
|
|
|
|
|
|
|
60
|
%
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
52
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per ADS
|
|
$
|
0.73
|
|
|
|
|
|
|
|
|
$
|
0.79
|
|
|
$
|
0.71
|
|
|
|
|
|
|
|
|
$
|
0.77
|
|
|
$
|
0.61
|
|
|
|
|
|
|
|
|
$
|
0.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADSs used in computing diluted net income per ADS
|
|
|
52,999
|
|
|
|
|
|
|
|
|
|
53,436
|
|
|
|
53,001
|
|
|
|
|
|
|
|
|
|
53,436
|
|
|
|
47,500
|
|
|
|
|
|
|
|
|
|
47,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
(a)
|
To eliminate share-based compensation expense as measured using the fair value method.
|
CHANGYOU.COM LIMITED
RECONCILIATIONS TO UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER ADS AMOUNTS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended Dec. 31, 2009
|
|
|
Twelve Months Ended Dec. 31, 2008
|
|
|
|
GAAP
|
|
|
Non-GAAP
Adjustments
|
|
|
|
|
Non-GAAP
|
|
|
GAAP
|
|
|
Non-GAAP
Adjustments
|
|
|
|
|
Non-GAAP
|
|
Total revenues
|
|
$
|
267,585
|
|
|
$
|
|
|
|
|
|
$
|
267,585
|
|
|
$
|
201,845
|
|
|
$
|
|
|
|
|
|
$
|
201,845
|
|
Less: Cost of revenues
|
|
|
17,518
|
|
|
|
(324
|
)
|
|
(a)
|
|
$
|
17,194
|
|
|
|
14,633
|
|
|
|
(14
|
)
|
|
(a)
|
|
$
|
14,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
250,067
|
|
|
$
|
324
|
|
|
|
|
$
|
250,391
|
|
|
$
|
187,212
|
|
|
$
|
14
|
|
|
|
|
$
|
187,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
93
|
%
|
|
|
|
|
|
|
|
|
94
|
%
|
|
|
93
|
%
|
|
|
|
|
|
|
|
|
93
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
$
|
86,160
|
|
|
$
|
(13,077
|
)
|
|
(a)
|
|
$
|
73,083
|
|
|
$
|
71,832
|
|
|
$
|
(5,333
|
)
|
|
(a)
|
|
$
|
66,499
|
|
Product development expenses
|
|
$
|
27,353
|
|
|
$
|
(7,404
|
)
|
|
(a)
|
|
$
|
19,949
|
|
|
$
|
23,862
|
|
|
$
|
(4,919
|
)
|
|
(a)
|
|
$
|
18,943
|
|
Sales and marketing expenses
|
|
$
|
40,048
|
|
|
$
|
(261
|
)
|
|
(a)
|
|
$
|
39,787
|
|
|
$
|
38,917
|
|
|
$
|
(10
|
)
|
|
(a)
|
|
$
|
38,907
|
|
General and administrative expenses
|
|
$
|
18,759
|
|
|
$
|
(5,412
|
)
|
|
(a)
|
|
$
|
13,347
|
|
|
$
|
9,053
|
|
|
$
|
(404
|
)
|
|
(a)
|
|
$
|
8,649
|
|
Operating profit
|
|
$
|
163,907
|
|
|
$
|
13,401
|
|
|
|
|
$
|
177,308
|
|
|
$
|
115,380
|
|
|
$
|
5,347
|
|
|
|
|
$
|
120,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
|
61
|
%
|
|
|
|
|
|
|
|
|
66
|
%
|
|
|
57
|
%
|
|
|
|
|
|
|
|
|
60
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
144,684
|
|
|
$
|
13,401
|
|
|
|
|
$
|
158,085
|
|
|
$
|
107,986
|
|
|
$
|
5,347
|
|
|
|
|
$
|
113,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net margin
|
|
|
54
|
%
|
|
|
|
|
|
|
|
|
59
|
%
|
|
|
53
|
%
|
|
|
|
|
|
|
|
|
56
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per ADS
|
|
$
|
2.81
|
|
|
|
|
|
|
|
|
$
|
3.05
|
|
|
$
|
2.27
|
|
|
|
|
|
|
|
|
$
|
2.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADSs used in computing diluted net income per ADS
|
|
|
51,526
|
|
|
|
|
|
|
|
|
|
51,909
|
|
|
|
47,500
|
|
|
|
|
|
|
|
|
|
47,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
(a)
|
To eliminate share-based compensation expense as measured using the fair value method.
|
Exhibit 99.2
Changyou.com Appoints Dewen Chen as President
Beijing, China, February 1, 2010
Changyou.com Limited (Changyou or the Company) (Nasdaq: CYOU), a leading online
game developer and operator in China, today announced that Mr. Dewen Chen, Changyous chief operating officer, has been promoted to president; a role he will serve in addition to his duties as chief operating officer.
Dewen Chen, one of Changyous founders, has over 11 years experience in Chinas information technology industry and has been with the Company
since 2005, when it operated solely as a business unit within Sohu.com Inc. (Sohu). Since then, Mr. Chen has assumed various roles, including director of marketing & operations for Sohus massively multi-player online
role-playing games (MMORPG) business. As Changyous chief operating officer, Mr. Chen plays an integral role in several key strategic areas, such as running the Qibao licensing plan, which to date has already
secured several game titles for the Companys pipeline. At the recent 2009 China Game Industry Annual Conference, Mr. Chen was named 2009s Most Outstanding Pioneer in the Chinese Game Industry in recognition for his
contributions to the overall game industry in China.
Mr. Tao Wang, Changyous chief executive officer, commented, We are
delighted to appoint Dewen as the president of our company. He has played an instrumental role in guiding our operating strategies since the founding of our business. His strong execution abilities and deep technological expertise have helped to
drive organic growth in our business, and helped us evolve into one of Chinas leading online game companies. We are excited to see Dewen make further contributions to Changyou in his expanded role.
About Changyou
Changyou.com Limiteds
(Changyou) (NASDAQ: CYOU) MMORPG business began operations as a business unit within Sohu.com Inc. (NASDAQ: SOHU) in 2003. Changyou was carved out as a separate, stand-alone company in December 2007, completed an initial public offering
on April 7, 2009 and is now a leading developer and operator of online games in China. Changyou currently operates three online games, including the in-house developed Tian Long Ba Bu, one of the most popular online games in China, and the
licensed Blade Online and Blade Hero 2. Changyou has a diversified pipeline of games with various graphic styles and themes, including the licensed Da Hua Shui Hu, Zhong Hua Ying Xiong, Immortal Faith, Legend of the Ancient World, and the in-house
developed Duke of Mount Deer, which received an award as one of Chinas most anticipated online games. Changyous leading technology platform includes advanced 2.5D and 3D graphics engines, 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/
.
1
Safe Harbor Statement
This announcement contains forward-looking statements. Statements that are not historical facts, including statements about the Companys 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 in 2009, which could continue through to 2010, the uncertain regulatory landscape in the Peoples Republic of China,
fluctuations in Changyous quarterly operating results, Changyous historical and possible future losses and limited operating history, and the Companys reliance on Tian Long Ba Bu as its major revenue source. Further information
regarding these and other risks is included in Changyous 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.
For investor and media inquiries, please contact:
In China:
Ms. Angie Chang
Investors Relations Manager
Changyou.com Limited
|
|
|
Tel:
|
|
+86 (10) 5956-3358
|
E-mail:
|
|
ir@cyou-inc.com
|
Ms. Cathy Li
Ogilvy Financial, Beijing
|
|
|
Tel:
|
|
+86 (10) 8520-6104
|
E-mail:
|
|
cathy.li@ogilvy.com
|
In the United States:
Ms. Jessica Barist Cohen
Ogilvy Financial, New York
|
|
|
Tel:
|
|
+1 (646) 460-9989
|
E-mail:
|
|
jessica.cohen@ogilvypr.com
|
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