Fourth Quarter Total Revenues Reach a Record US$70.7 million, Up 3%
Quarter- over-Quarter; BEIJING, Feb. 1 /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 fourth quarter
and fiscal year ended December 31, 2009. (Logo:
http://www.newscom.com/cgi-bin/prnh/20090402/CNTH020 ) Fourth
Quarter 2009 Highlights -- Total revenues reached a record US$70.7
million, an increase of 3% quarter-over-quarter and 21%
year-over-year, within the Company's guidance. -- 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. -- 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 Company's guidance. -- Aggregate registered accounts for the
Company's games(3) grew 8% quarter-over-quarter and 41%
year-over-year to 80.9 million. -- Aggregate peak concurrent users
("PCU") for the Company's games grew 9% quarter-over-quarter and
19% year-over-year to 990,000. -- Average revenue per active paying
account ("ARPU") for the Company's games increased 3%
quarter-over-quarter and 1% year-over-year to RMB196. (1) Each
American depositary share ("ADS") represents two Class A ordinary
shares. (2) 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
"Reconciliations to Unaudited Condensed Consolidated Statements of
Operations." (3) Comprised of Tian Long Ba Bu ("TLBB"), Blade
Online, and Blade Hero 2 Fiscal Year 2009 Highlights -- Total
revenues reached a record US$267.6 million, up 33% year-over-year.
-- Net income reached a record US$144.7 million, or US$2.81 per
fully diluted ADS. Net income increased 34% year-over-year. --
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. "I
am pleased that Changyou has delivered another quarter of solid
results to close out an historic year," said Mr. Tao Wang,
Changyou's 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 China's online gaming industry." 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, Changyou's chief financial officer, added, "Changyou's 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 Company's games as of December 31, 2009 increased
8% quarter-over-quarter and 41% year-over-year to 80.9 million.
Aggregate PCU for the Company's 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
Company's games was flat quarter-over-quarter and increased 21%
year-over-year to 2.4 million. ARPU for the Company's 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 Company's 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. 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
Company's bonus program for key engineers, for whom the Company
lessened cash bonuses after share-based awards previously granted
increased in value after the Company's 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 Company's existing
games. The year-over-year decrease was primarily because of savings
in marketing and promotional spending due to the Company's
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 Company's 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. 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 Company's IPO, and was described in the
Company's 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 Company's 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 Company's R&D workforce in 2009 offset by
changes in the Company's bonus program for key engineers, for whom
the Company lessened cash bonuses after share-based awards
previously granted increased in value after the Company's 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 Company's 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 Company's intellectual property
rights. 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 was 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 Asset's 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 Asset's 2009 Triple A Regional Awards. The
Asset magazine's 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 Company's 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. Non-GAAP
Disclosure To supplement the unaudited consolidated financial
information prepared 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. 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 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 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
It is currently expected that the Business Outlook will not be
updated until the release of Changyou's 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 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 in 2009, which could continue
through 2010, 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 Tian Long
Ba Bu 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 today at 7
a.m. U.S. Eastern Standard 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: US:
+1-866-713-8563 Hong Kong: +852-3002-1672 International:
+1-617-597-5311 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:
International: +1-617-801-6888 Passcode: 39188151 The conference
call will be available on webcast live and available for replay at:
http://www.changyou.com/ir/ . About Changyou Changyou.com Limited's
("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 China's most anticipated online games. Changyou's 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 Tel:
+86-10-5956-3358 Email: Ms. Cathy Li Ogilvy Financial, Beijing Tel:
+86-10-8520-6104 Email: In the United States: Ms. Jessica Barist
Cohen Ogilvy Financial, New York Tel: +1-646-460-9989 Email:
CHANGYOU.COM LIMITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED, IN THOUSANDS EXCEPT PER ADS AMOUNTS) Three
Months Ended Twelve Months Ended Dec. 31, Sep. 30, Dec. 31, Dec.
31, Dec. 31, 2009 2009 2008 2009 2008 Revenues: Game operation
revenues $ 68,621 $ 66,880 $ 56,410 $ 259,783 $ 194,607 Overseas
licensing revenues 2,077 1,804 1,980 7,802 7,238 Total revenues
70,698 68,684 58,390 267,585 201,845 Cost of revenues (includes
share- based compensation expense of $57, $169, $4, $324 and $14,
respectively) 5,420 4,714 4,380 17,518 14,633 Gross profit 65,278
63,970 54,010 250,067 187,212 Operating expenses: Product
development (includes share-based compensation expense of $1,763,
$1,885, $1,155, $7,404 and $4,919, respectively) 6,888 6,788 6,965
27,353 23,862 Sales and marketing (includes share-based
compensation expense of $77, $68, $2, $261 and $10, respectively)
9,551 9,280 9,949 40,048 38,917 General and administrative
(includes share-based compensation expense of $1,432, $1,432, $57,
$5,412 and $404, respectively) 4,556 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 CHANGYOU.COM LIMITED CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED, IN THOUSANDS) As of Dec. As
of Dec. 31, 2009 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 CHANGYOU.COM LIMITED
RECONCILIATIONS TO UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (IN THOUSANDS EXCEPT PER ADS AMOUNTS) Three Months Ended
Dec. 31, 2009 Non-GAAP GAAP Adjustments Non-GAAP Total revenues
$70,698 $-- $70,698 Less: Cost of revenues 5,420 (57)(a) $5,363
Gross profit $65,278 $57 $65,335 Gross margin 92% 92% Operating
expenses $20,995 $(3,272)(a) $17,723 Product development expenses
$6,888 $(1,763)(a) $5,125 Sales and marketing expenses $9,551
$(77)(a) $9,474 General and administrative expenses $4,556
$(1,432)(a) $3,124 Operating profit $44,283 $3,329 $47,612
Operating margin 63% 67% Net income $38,858 $3,329 $42,187 Net
margin 55% 60% Diluted net income per ADS $0.73 $0.79 ADSs used in
computing diluted net income per ADS 52,999 53,436 Three Months
Ended Sep. 30, 2009 Non-GAAP GAAP Adjustments Non-GAAP Total
revenues $68,684 $-- $68,684 Less: Cost of revenues 4,714 (169)(a)
$4,545 Gross profit $63,970 $169 $64,139 Gross margin 93% 93%
Operating expenses $21,682 $(3,385)(a) $18,297 Product development
expenses $6,788 $(1,885)(a) $4,903 Sales and marketing expenses
$9,280 $(68)(a) $9,212 General and administrative expenses $5,614
$(1,432)(a) $4,182 Operating profit $42,288 $3,554 $45,842
Operating margin 62% 67% Net income $37,794 $3,554 $41,348 Net
margin 55% 60% Diluted net income per ADS $0.71 $0.77 ADSs used in
computing diluted net income per ADS 53,001 53,436 Three Months
Ended Dec. 31, 2008 Non-GAAP GAAP Adjustments Non-GAAP Total
revenues $58,390 $-- $58,390 Less: Cost of revenues 4,380 (4)(a)
$4,376 Gross profit $54,010 $4 $54,014 Gross margin 92% 93%
Operating expenses $20,167 $(1,214)(a) $18,953 Product development
expenses $6,965 (1,155)(a) $5,810 Sales and marketing expenses
$9,949 (2)(a) $9,947 General and administrative expenses $3,253
(57)(a) $3,196 Operating profit $33,843 $1,218 $35,061 Operating
margin 58% 60% Net income $29,072 $1,218 $30,290 Net margin 50% 52%
Diluted net income per ADS $0.61 $0.64 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. CHANGYOU.COM LIMITED RECONCILIATIONS TO UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS EXCEPT PER ADS
AMOUNTS) Twelve Months Ended Dec. 31, 2009 Non-GAAP GAAP
Adjustments Non-GAAP Total revenues $267,585 $-- $267,585 Less:
Cost of revenues 17,518 (324)(a) $17,194 Gross profit $250,067 $324
$250,391 Gross margin 93% 94% Operating expenses $86,160
$(13,077)(a) $73,083 Product development expenses $27,353
$(7,404)(a) $19,949 Sales and marketing expenses $40,048 $(261)(a)
$39,787 General and administrative expenses $18,759 $(5,412)(a)
$13,347 Operating profit $163,907 $13,401 $177,308 Operating margin
61% 66% Net income $144,684 $13,401 $158,085 Net margin 54% 59%
Diluted net income per ADS $2.81 $3.05 ADSs used in computing
diluted net income per ADS 51,526 51,909 Twelve Months Ended Dec.
31, 2008 Non-GAAP GAAP Adjustments Non-GAAP Total revenues $201,845
$-- $201,845 Less: Cost of revenues 14,633 (14)(a) $14,619 Gross
profit $187,212 $14 $187,226 Gross margin 93% 93% Operating
expenses $71,832 $(5,333)(a) $66,499 Product development expenses
$23,862 $(4,919)(a) $18,943 Sales and marketing expenses $38,917
$(10)(a) $38,907 General and administrative expenses $9,053
$(404)(a) $8,649 Operating profit $115,380 $5,347 $120,727
Operating margin 57% 60% Net income $107,986 $5,347 $113,333 Net
margin 53% 56% Diluted net income per ADS $2.27 $2.39 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.
http://www.newscom.com/cgi-bin/prnh/20090402/CNTH020 DATASOURCE:
Changyou.com Limited CONTACT: in China, Angie Chang, Investors
Relations Manager of Changyou.com Limited, +86-10-5956-3358, ; or
Cathy Li of Ogilvy Financial, Beijing, +86-10-8520-6104, ; or in
the United States, Jessica Barist Cohen of Ogilvy Financial, New
York, +1-646-460-9989, Web site: http://changyou.com/
http://www.changyou.com/ir http://www.changyou.com/en
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