1Q15 Total Revenue Up 81.2% YoY to RMB233.0
Million
1Q15 Revenue From Smartphone Business Up 150.5%
YoY to RMB219.3 Million
Conference Call to be Held at 8:00 AM U.S.
Eastern Time on May 26, 2015
Sky-mobi Limited ("Sky-mobi" or the "Company") (Nasdaq:MOBI), a
leading mobile application platform and game publisher in China,
today announced its unaudited financial results for the first
quarter ended March 31, 2015.
First Quarter 2015
Highlights
- Total revenue increased by 81.2% to RMB233.0 million (US$37.6
million) from RMB128.6 million in the prior year period.
- Revenue from smartphone business increased by 150.5% to
RMB219.3 million (US$35.4 million), or 94.1% of total revenue, from
RMB87.5 million, or 68.1% of total revenue in the prior year
period.
Mr. Michael Tao Song, chairman and chief executive officer of
Sky-mobi, stated, "We are very pleased with our first quarter 2015
financial and operational results, which demonstrate our continued
success in developing our smartphone business and strengthening our
game publishing capabilities. Since the second half of 2014, we
have made tremendous advances in developing Zimon, an innovative
open-source mobile game platform which seamlessly integrates our
marketing solutions, data analytics tools and payment solutions. We
hope that by offering such a pioneering platform, we will be able
to help an increasing number of content providers and small- to
medium-sized developers streamline their product promotions through
Sky-mobi's diversified distribution channels. In addition, we have
begun several new strategic initiatives that will enhance our
long-term growth, including, among others, the introduction of ARIA
Desktop which was designed to increase productivity, improve
customer experience for overseas users, our strengthened execution
to bring high quality foreign casual games into the China market,
as well as our intensified efforts to expand our mobile data
services where we act as a third-party mobile data provider. We are
confident that by continuing to execute upon our expansion
strategy, we will further grow our base of grassroots users."
Mr. Fischer Xiaodong Chen, chief financial officer of the
Company, commented, "Largely driven by the increasing popularity
and strong revenue growth of our smartphone business, we have
witnessed significant improvements in our financial results during
the first quarter of 2015. Specifically, revenue from our
smartphone business accounted for over 94% of our total revenue for
the three months ended March 31, 2015, and our revenue from
single-player games amounted to over 194.9 million RMB,
representing over 144.4% year-over-year growth. Looking ahead, we
firmly believe that by consistently focusing on platform expansion
and operational discipline, we will be able to benefit from
improved economies of scale and deliver sustainable shareholder
value."
First Quarter 2015 Financial
Results
Total Revenue
Total revenue increased by 13.8% to RMB233.0 million (US$37.6
million) from RMB204.7 million in the previous quarter, and
increased by 81.2% from RMB128.6 million in the prior year period.
The increase was largely driven by the continued strong growth of
the Company's smartphone business.
Revenue from smartphone business increased by 20.8% to RMB219.3
million (US$35.4 million), or 94.1% of total revenue, from RMB181.6
million in the previous quarter, or 88.7% of total revenue; and
increased by 150.5% from RMB87.5 million in the prior year period,
or 68.1% of total revenue. The increase was mainly attributable to
the Company's increasing efforts in publishing single-player games
both over the Maopao platform1 and through third-party distribution
channels.
Revenue can be further broken down into three categories:
"revenue from single-player games", "revenue from multiplayer
games" and "other revenue". Revenue from single-player games
increased by 24.7% to RMB194.9 million (US$31.4 million) from
RMB156.3 million in the previous quarter, and increased by 144.4%
from RMB79.8 million in the prior year period. ARPU2 for
single-player games increased to RMB10.3 from RMB10.0 in the
previous quarter. Revenue from multiplayer games was RMB22.8
million (US$3.7 million), compared to RMB23.3 million in the
previous quarter and RMB31.6 million in the prior year period. ARPU
for multiplayer games was RMB169.6, compared to RMB175.8 in the
previous quarter. Other revenue was RMB15.3 million (US$2.5
million), as compared to RMB25.1 million in the previous quarter
and RMB17.2 million in the prior year period.
Cost of Revenue and Gross
Profit
Total cost of revenue was RMB185.3 million (US$29.9 million), as
compared to RMB162.9 million in the previous quarter and RMB96.0
million in the prior year period.
The discussion and analysis below focuses on non-IFRS cost of
revenue, which the Company believes more accurately reflects its
operating performance than the IFRS cost of revenue.
Total non-IFRS cost of revenue was RMB184.9 million (US$29.8
million), as compared to RMB162.9 million in the previous quarter
and RMB95.8 million in the prior year period. Non-IFRS cost of
revenue was composed of non-IFRS cost associated with payments to
industry participants and non-IFRS direct cost as further discussed
below.
Non-IFRS cost associated with payments to industry participants
was RMB178.8 million (US$28.8 million), as compared to RMB155.3
million in the previous quarter and RMB89.2 million in the prior
year period. The increase was primarily due to increased channel
costs, which grew largely in line with revenue.
Non-IFRS direct cost was RMB6.1 million (US$1.0 million), as
compared to RMB7.6 million in the previous quarter and RMB6.6
million in the prior year period. Non-IFRS direct cost included
salaries and benefits, depreciation, office expenses and utilities
directly related to the operation of Maopao platform. The decrease
in non-IFRS direct cost was due to the decreases in
employee-related expenses as a result of the Company's headcount
restructuring in an effort to achieve greater efficiency.
Non-IFRS gross profit increased by 15.2% to RMB48.1 million
(US$7.8 million) from RMB41.7 million in the previous quarter, and
increased by 46.6% from RMB32.8 million in the prior year period.
Non-IFRS gross margin increased to 20.6% from 20.4% in the previous
quarter; non-IFRS gross margin was 25.5% in the prior year period.
The year-over-year decrease in non-IFRS gross margin was primarily
due to the higher revenue contribution of the Company's smartphone
business. The Company's smartphone business in general has a lower
profit margin compared to its feature phone business as the Company
generally offers more attractive revenue sharing arrangements to
its smartphone content providers and handset companies.
Operating Expenses and Profit from
Operations
Total operating expenses, primarily consisting of employee
salaries and benefits, training expenses, travel, entertainment and
office related expenses, were RMB40.6 million (US$6.5 million), as
compared to RMB32.2 million in the previous quarter and RMB31.8
million in the prior year period.
Total non-IFRS operating expenses were RMB35.2 million (US$5.7
million), as compared to RMB32.8 million in the previous quarter
and RMB27.8 million in the prior year period. The increase in total
non-IFRS operating expenses was mainly due to the increased
marketing and promotion expenses to promote the Company's Maopao
platform and products, as well as the expansion of its product
development team to support its expanding smartphone business.
Profit from operations was RMB7.2 million (US$1.2 million), as
compared to RMB9.6 million in the previous quarter and RMB0.8
million in the prior year period.
Non-IFRS profit from operations increased by 44.5% to RMB12.9
million (US$2.1 million) from RMB9.0 million in the previous
quarter, and increased by 158.5% from RMB5.0 million in the prior
year period.
Net Profit
Net profit was RMB14.2 million (US$2.3 million), as compared to
RMB20.8 million in the previous quarter; net profit increased by
207.7% from RMB4.6 million in the prior year period. Basic and
diluted EPS were RMB0.06 (US$0.01) and RMB0.06 (US$0.01),
respectively, which represents the equivalent of RMB0.51 (US$0.08)
and RMB0.51 (US$0.08) per ADS, respectively.
Non-IFRS net profit was RMB20.0 million (US$3.2 million), as
compared to RMB20.2 million in the previous quarter; non-IFRS net
profit increased by 125.0% from RMB8.9 million in the prior year
period. Non-IFRS basic and diluted earnings per common share were
RMB0.09 (US$0.01) and RMB0.09 (US$0.01), respectively, which
represents the equivalent of RMB0.71 (US$0.11) and RMB0.71
(US$0.11)per ADS, respectively.
The weighted average number of ADSs used to calculate basic and
diluted earnings per ADS for the first quarter 2015 was 27,807, 989
and 27,874, 209, respectively.
Common Shares
Sky-mobi had approximately 223.1 million common shares
outstanding as of March 31, 2015, or the equivalent of
approximately 27.9 million ADSs outstanding.
Other Operating Data
|
For the three months
ended |
|
December 31, 2014 |
March 31, 2015 |
|
|
|
Maopao Platform |
|
|
Average MAU3 (in
thousands) |
33,686 |
37,742 |
|
|
|
Single-player
games |
|
|
Average ARPU (RMB) |
10.0 |
10.3 |
|
|
|
Multiplayer
games |
|
|
Average ARPU (RMB) |
175.8 |
169.6 |
Extension of Share Repurchase Program
The Company also announced today that its board of directors has
authorized the extension of its existing repurchase program under
which the Company may repurchase up to US$20 million of its ADSs to
May 25, 2016. The Company expects to purchase shares on the open
market, in privately negotiated transactions or otherwise in
compliance with all the conditions of Rule 10b-18 and Rule 10b5-1
under the Securities Exchange Act of 1934, as amended, at times and
in such amounts as the Company deems appropriate. The share
repurchase program does not obligate the Company to acquire any
particular number of ADSs and may be suspended, terminated or
extended at any time at the Company's discretion without prior
notice.
Business Outlook
Since the second quarter of 2015, each of the three mobile
carriers in China (China Mobile, China Unicom and China Telecom)
has implemented various measures, including but not limited to
temporarily suspending certain of their billing and payment
channels and introducing an additional mandatory payment
verification step to the payment process. While these measures
strengthened the payment system security and partially addressed
subscriber complaints, they have discouraged mobile subscribers
from purchasing mobile content from mobile application providers,
including Sky-mobi, resulting in lost revenue of these mobile
application providers.
As it relies primarily on China Mobile, China Unicom and China
Telecom for billing and payment collection, Sky-mobi expects that
its results of operations starting from the second quarter of 2015
to be materially and adversely affected by these new policies.
Sky-mobi is assessing and will continue to assess the impact of
these new policies and their implication on its business. In
addition, Sky-mobi is in the process of expanding its overseas
operations, launching a series of new smartphone games on both iOS
and Android platforms and growing its mobile data solution
businesses in the coming months, which it believes will partially
offset the impact of these recent policy changes by the three major
mobile carriers.
Conference Call and Webcast
The Company will hold a conference call on Tuesday, May 26, 2015
at 8:00 am Eastern Time, or 8:00 pm Beijing Time to discuss the
financial results. Participants may access the call by dialing the
following numbers:
United States: |
+1-845-675-0438 |
International Toll Free: |
+1-855-500-8701 |
China Domestic: |
400-1200654 |
Hong Kong: |
+852 3018-6776 |
Conference ID: |
# 44140032 |
The replay will be accessible through June 2, 2015 by dialing
the following numbers:
United States Toll Free: |
+1-855-452-5696 |
International: |
+61 2 90034211 |
Conference ID: |
# 44140032 |
A live and archived webcast of the conference call will be
available on the Company's investor relation website at
http://ir.sky-mobi.com
About Non-IFRS Financial Measures
To supplement its consolidated financial statements prepared in
accordance with International Financial Reporting Standards, or
IFRS, Sky-mobi uses several non-IFRS financial measures defined
below. The Company believes management and investors benefit
from non-IFRS financial measures in assessing the Company's
performance and prospects. Specifically, the Company believes that
non-IFRS financial measures provide meaningful supplemental
information regarding its performance by excluding certain items
that may not be indicative of the Company's operating
performance.
The presentation of this additional information is not meant to
be considered superior to, in isolation from or as a substitute for
results prepared in accordance with IFRS. A limitation of using
non-IFRS cost of revenue, gross profit, operating expenses, profit
from operations, net profit and net profit per share is that these
non-IFRS measures exclude share-based compensation expenses that
have been and will continue to be for the foreseeable future a
significant recurring expense. Management provides specific
information regarding the IFRS amounts excluded from each non-IFRS
measure. For more information on these non-IFRS financial measures,
please see the tables containing reconciliations of non-IFRS
financial measures to comparable IFRS measures in this release.
Definitions of Non-IFRS Measures
Non-IFRS cost of revenue is
defined as cost of revenue excluding share-based compensation
expenses.
Non-IFRS gross profit is
defined as revenue less non-IFRS cost of revenue.
Non-IFRS operating expenses
are defined as operating expenses excluding share-based
compensation expenses.
Non-IFRS profit (loss) from operations is
defined as Non-IFRS gross profit less non-IFRS operating
expenses.
Non-IFRS net
profit is defined as non-IFRS profit from
operations plus/minus other gains or losses, impairment loss
on investments in associates and share of results of associates,
less income tax.
Non-IFRS basic and diluted
earnings per common share/ADS are defined
as non-IFRS net profit attributable to owners of the Company
divided by weighted average outstanding shares/ADSs during the
period.
Exchange Rate
This announcement contains translations of certain Renminbi
(RMB) amounts into U.S. dollars (US$) at a specified rate solely
for the convenience of the reader. Unless otherwise noted, all
translations from RMB to U.S. dollars are made at a rate of
RMB6.1990 to US$1.00, the exchange rate at March 31, 2015 as set
forth in the H.10 statistical release of the Federal Reserve
Board.
About Sky-mobi Limited
Sky-mobi Limited is a leading mobile application platform and
game publisher in China. The Company works with handset companies
to pre-install its Maopao App Store and other Maopao applications
on handsets and with content providers to provide users with
applications and content titles. Users of Maopao App Store can
browse, download and enjoy a range of applications and content,
such as single-player games, mobile music and books on various
mobile handsets with different hardware and operating system
configurations. The Company also publishes domestic and foreign
game titles through its own Maopao App Store platform and third
party platforms. The Company's mobile social network community in
China, the Maopao Community, offers mobile social games as well as
applications and content with social networking functions to its
registered users. The Company is based in Hangzhou, China. For more
information, please visit: www.sky-mobi.com.
Safe Harbor Statement
This announcement contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. In some cases, you can identify
forward-looking statements by such terms as "may,"
"will,""believes,""expects,""anticipates,""intends,""estimates,"
"plans," "continues" or other similar expressions, the
negative of these terms, or other comparable terminology. Such
statements, including statements relating to the Company's business
outlook, are subject to risks and uncertainties that could cause
actual results to differ materially from those projected. These
forward-looking statements are based on current expectations,
assumptions, estimates and projections about the Company and its
industry. The Company undertakes no obligation to update
forward-looking statements to reflect subsequent occurring events
or circumstances, or changes in its expectations, except as may be
required by law.
1 "Maopao Platform" refers to Sky-mobi's Maopao-branded
smartphone products and services, including but not limited to
Maopao App Store, Maopao Game Center, Maopao Community, Maopao
Browser, Maopao Assistant, Maopao Desktop and Zimon.
2 "ARPU" stands for average revenue per paying user.
3 "MAU" stands for monthly active users. It refers to the
number of users that visit Maopao Platform in a particular month,
adjusted to eliminate double-counting of the same user. Average
MAUs for a particular period is the average of the MAU during that
period.
FINANCIAL TABLES FOLLOW
Sky-mobi
Limited |
Unaudited Consolidated
Statements of Profit or Loss and Other Comprehensive Income
(IFRS) |
|
|
|
For the three months ended |
|
March 31, |
December 31, |
March 31, |
March 31, |
|
2014 |
2014 |
2015 |
2015 |
In thousands |
(RMB) |
(RMB) |
(RMB) |
(US$) |
(Except for share and per share data) |
|
|
|
|
|
|
|
|
|
Revenue |
128,564 |
204,675 |
233,008 |
37,588 |
Cost of revenue |
(96,006) |
(162,936) |
(185,254) |
(29,884) |
Gross profit |
32,558 |
41,739 |
47,754 |
7,704 |
|
|
|
|
|
Research and development expenses |
(9,119) |
(8,042) |
(12,451) |
(2,009) |
Sales and marketing expenses |
(9,994) |
(10,329) |
(13,230) |
(2,134) |
General and administrative expenses |
(14,492) |
(14,408) |
(16,103) |
(2,598) |
Other income and expense |
1,799 |
603 |
1,225 |
198 |
Total operating expenses |
(31,806) |
(32,176) |
(40,559) |
(6,543) |
Profit from operations |
752 |
9,563 |
7,195 |
1,161 |
|
|
|
|
|
Other gains and losses |
5,910 |
4,797 |
6,523 |
1,052 |
Impairment loss on investments in
associates |
-- |
-- |
(2,222) |
(358) |
Share of results of associates |
(962) |
6,779 |
4,690 |
757 |
Profit before tax |
5,700 |
21,139 |
16,186 |
2,612 |
Income tax (benefit) expenses |
(1,071) |
(360) |
(1,941) |
(313) |
Profit for the period |
4,629 |
20,779 |
14,245 |
2,299 |
|
|
|
|
|
Total comprehensive profit for the
period |
4,629 |
20,779 |
14,245 |
2,299 |
|
|
|
|
|
Profit and total comprehensive income
attributable to: |
|
|
|
|
- Owners of the Company |
4,765 |
21,123 |
14,669 |
2,367 |
- Non-controlling interests |
(136) |
(344) |
(424) |
(68) |
|
4,629 |
20,779 |
14,245 |
2,299 |
|
|
|
|
|
Earnings per common share |
|
|
|
|
Basic |
0.02 |
0.09 |
0.06 |
0.01 |
Diluted |
0.02 |
0.09 |
0.06 |
0.01 |
|
|
|
|
|
Weight average number of ADS |
|
|
|
|
Basic |
29,392,071 |
27,749,946 |
27,807,989 |
|
Diluted |
29,656,888 |
27,854,242 |
27,874,209 |
|
|
|
|
|
|
Weight average number of shares |
|
|
|
|
Basic |
235,136,572 |
221,999,567 |
222,463,910 |
|
Diluted |
237,255,104 |
222,833,933 |
222,993,672 |
|
|
Unaudited
Reconciliations of non-IFRS financial measures |
to comparable IFRS
financial measures |
|
|
|
For the three months ended |
|
March 31, |
December 31, |
March 31, |
March 31, |
|
2014 |
2014 |
2015 |
2015 |
In thousands |
(RMB) |
(RMB) |
(RMB) |
(US$) |
(Except for share and per share data) |
|
|
|
|
|
|
|
IFRS cost of revenue |
(96,006) |
(162,936) |
(185,254) |
(29,884) |
Less: share-based compensation expenses |
243 |
(1) |
336 |
54 |
Non-IFRS cost of revenue |
(95,763) |
(162,937) |
(184,918) |
(29,830) |
|
|
|
|
|
IFRS gross profit |
32,558 |
41,739 |
47,754 |
7,704 |
Add: share-based compensation expenses |
243 |
(1) |
336 |
54 |
Non-IFRS gross profit |
32,801 |
41,738 |
48,090 |
7,758 |
|
|
|
|
|
Total IFRS operating expenses |
(31,806) |
(32,176) |
(40,559) |
(6,543) |
Less: share-based compensation expenses |
4,008 |
(609) |
5,402 |
871 |
Total non-IFRS operating expenses |
(27,798) |
(32,785) |
(35,157) |
(5,672) |
|
|
|
|
|
IFRS profit from operations |
752 |
9,563 |
7,195 |
1,161 |
Add: share-based compensation expenses |
4,251 |
(610) |
5,738 |
925 |
Non-IFRS profit from operations |
5,003 |
8,953 |
12,933 |
2,086 |
|
|
|
|
|
IFRS net profit for the period |
4,629 |
20,779 |
14,245 |
2,299 |
Add: share-based compensation expenses |
4,251 |
(610) |
5,738 |
926 |
Non-IFRS net profit for the period |
8,880 |
20,169 |
19,983 |
3,225 |
|
|
|
|
|
Non-IFRS earnings per common share |
|
|
|
|
Basic |
0.04 |
0.09 |
0.09 |
0.01 |
Diluted |
0.04 |
0.09 |
0.09 |
0.01 |
|
|
|
|
|
Weight average number of shares |
|
|
|
|
Basic |
235,136,572 |
221,999,567 |
222,463,910 |
|
Diluted |
237,255,104 |
222,833,933 |
222,993,672 |
|
|
|
|
|
|
Sky-mobi
Limited |
Unaudited Consolidated
Statements of Financial Position (IFRS) |
|
|
|
|
As of |
As of |
|
December 31, |
March 31, |
March 31, |
|
2014 |
2015 |
In thousands |
(RMB) |
(RMB) |
(US$) |
|
|
|
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
204,967 |
135,362 |
21,836 |
Term deposits |
282,383 |
369,427 |
59,595 |
Investment at fair value through profit or
loss |
21,373 |
28,702 |
4,630 |
Trade and other receivables |
234,962 |
246,711 |
39,798 |
Amounts due from related parties |
5,524 |
7,879 |
1,271 |
Total current assets |
749,209 |
788,081 |
127,130 |
|
|
|
|
Non-current assets |
|
|
|
Property and equipment |
8,886 |
8,601 |
1,387 |
Investments in associates |
105,486 |
107,954 |
17,415 |
Investments in funds |
9,178 |
12,284 |
1,982 |
Available-for-sale investments |
50 |
50 |
8 |
Other non-current assets |
2,512 |
2,458 |
397 |
Deferred tax assets |
2,746 |
2,746 |
443 |
Total non-current assets |
128,858 |
134,093 |
21,632 |
|
|
|
|
Total assets |
878,067 |
922,174 |
148,762 |
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
232,747 |
239,920 |
38,703 |
Income tax liabilities |
7,029 |
8,226 |
1,327 |
Amounts due to related parties |
26,968 |
44,707 |
7,212 |
Deferred revenue |
3,767 |
3,659 |
590 |
Total current liabilities |
270,511 |
296,512 |
47,832 |
|
|
|
|
Total liabilities |
270,511 |
296,512 |
47,832 |
|
|
|
|
Equity |
|
|
|
Share capital |
81 |
81 |
13 |
Share premium |
600,147 |
602,854 |
97,250 |
Reserves |
152,902 |
154,037 |
24,849 |
Deficit |
(149,653) |
(134,984) |
(21,775) |
Equity attributable to owners of the
Company |
603,477 |
621,988 |
100,337 |
Non-controlling interests |
4,079 |
3,674 |
593 |
Total equity |
607,556 |
625,662 |
100,930 |
|
|
|
|
Total equity and liabilities |
878,067 |
922,174 |
148,762 |
CONTACT: Investor Relations Contact:
Chenjiazi Zhong
ICR, Inc.
Phone: + (1) (646) -915-1615 (US)
Email: investor.relations@sky-mobi.com
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