Reiterates FY2012 Revenue and Net Income Guidance
of $42 Million and $2.8 Million, Respectively Management to Host
Conference Call on Tuesday, August 21st at 8:30 a.m. Eastern
Time
ChinaNet Online Holdings, Inc. ("ChinaNet" or the "Company"),
(Nasdaq:CNET), a leading B2B (business to business) Internet
technology company providing online-to-offline ("O2O") sales
channel expansion service for small and medium-sized enterprises
(SMEs) and entrepreneurial management and networking services for
entrepreneurs in the People's Republic of China, today announced
financial results for the second quarter of 2012.
Summary Financials
|
Second Quarter 2012
Results (USD) (Unaudited) |
|
|
Q2 2012 |
Q2 2011 |
CHANGE |
Sales |
$ 13.1 million |
$ 9.1 million |
+45% |
Gross Profit |
$ 3.8 million |
$ 5.6 million |
-32% |
Gross Margin |
28.7% |
62.2% |
-54% |
Net Income Attributable to Common
Stockholders |
$ 0.9 million |
$ 2.8 million |
-68% |
EPS (Diluted) |
$ 0.04 |
$ 0.15 |
-73% |
Second Quarter 2012 Financial Results
Revenues increased by $4.0 million to $13.1 million for the
three months ended June 30, 2012 compared to the three months ended
June 30, 2011, representing a 45% increase.
"Our diverse portfolio of services helped us generated higher
sales and positive cash flows," explained Mr. Handong Cheng,
Chairman and CEO of the Company. "Even though small business
customers remain extremely cautious with their spending, we are
working hard to offer essential and value added services to new and
existing clients. We are optimistic that small businesses will be a
driving force behind China's economic rebound. ChinaNet is well
positioned to capture our share of that growing opportunity when
SMEs resume their growth."
Second Quarter 2012 Revenue Breakdown by Business Unit
(USD in thousands)
|
Q2 2012 |
% |
Q2 2011 |
% |
% Change |
Internet Advertisement |
$ 5,358 |
41% |
$ 6,457 |
71% |
-17% |
TV Advertisement |
$ 6,144 |
47% |
$ 2,059 |
23% |
+198% |
Bank Kiosk |
$ 71 |
1% |
$ 138 |
2% |
-49% |
Brand Mgmt. & Sales Channel
Expansion |
$ 1,554 |
12% |
$ 427 |
5% |
+264% |
Revenue from Internet advertisement for the three months ended
June 30, 2012 declined by 17% to $5.4 million compared to the three
months ended June 30, 2011, primarily due to a significant
reduction in value added services revenues, as branded clients
reduced their advertising spending. Sales of brand management and
sales channel expansion increased 264% to $1.6 million for the
three months ended June 30, 2012 due to an increase in the average
advertising spending per customer from larger-sized clients. TV
advertising revenues increased from $2.1 million in the second
quarter of 2011 to $6.1 million in the second quarter of 2012.
Total cost of revenues increased to $9.4 million for the three
months ended June 30, 2012 from $3.4 million for the same period in
2011. The increase of total cost of revenues for the three months
ended June 30, 2012 was primarily due to the significant increase
in costs associated with the TV advertising business
segment.
Gross profit for the three months ended June 30, 2012 was $3.8
million compared to $5.6 million in the same period a year ago.
Gross margin decreased to 28.7% from 62.2% for the same period in
2011 as a result of the significant increase of the low margin TV
advertising revenue, which accounted for approximately 47% of total
revenues for the three months ended June 30, 2012 compared to 23%
for the same period of 2011.
Operating expenses for the three months ended June 30, 2012 were
approximately $3.0 million, an increase of 30% from $2.3 million in
the comparable period in 2011. General and administrative expenses
increased by $0.8 million to $1.8 million due to an increase in the
allowance for doubtful accounts. Selling expenses decreased 21%
quarter-over-quarter to $0.7 million, as the Company reduced brand
building investments in response to the slowdown in small business
activity in China.
The Company generated $0.8 million of operating income in the
three months ended June 30, 2012 compared to $3.4 million in the
same period a year ago.
Net income attributable to common stockholders for the three
months ended June 30, 2012 was $0.9 million and earnings per share
was $0.04, compared to $2.8 million and $0.15 for the three months
ended June 30, 2011, respectively. The weighted average shares
outstanding for the three months ended June 30, 2012 and 2011 was
22.2 million shares and 20.0 million shares, respectively.
|
First Half 2012
Results (USD) (Unaudited) |
|
|
H1 2012 |
H1 2011 |
CHANGE |
Sales |
$ 28.1 million |
$ 16.1 million |
+75% |
Gross Profit |
$ 6.2 million |
$ 10.6 million |
-42% |
Gross Margin |
22.0% |
66.1% |
-67% |
Net Income Attributable to Common
Stockholders |
$ 0.5 million |
$ 5.5 million |
-91% |
Adjusted Net Income Attributable to
Common Stockholders |
$ 0.5 million |
$ 5.3 million(1) |
-91% |
EPS (Diluted) |
$ 0.02 |
$ 0.28 |
-93% |
Adjusted EPS (Diluted) |
$ 0.02 |
$ 0.27(1) |
-93% |
(1) Non-GAAP adjusted net income attributable to common
stockholders and EPS exclude a $0.23 million non-cash gain on
deconsolidation of a subsidiary in the six month period ended June
30, 2011.
Six Months Ended June 30, 2012 Revenue Breakdown by
Business Unit (USD in thousands)
|
H1 2012 |
% |
H1 2011 |
% |
% Change |
Internet Advertisement |
$ 9,703 |
34% |
$ 12,541 |
78% |
-23% |
TV Advertisement |
$ 16,513 |
59% |
$ 2,777 |
17% |
+495% |
Bank Kiosk |
$ 142 |
1% |
$ 275 |
2% |
-48% |
Brand Mgmt. & Sales Channel
Expansion |
$ 1,704 |
6% |
$ 500 |
3% |
+241% |
Net revenues for the six months ended June 30, 2012 increased
75% to $28.1 million compared to the six months ended June 30,
2011. Higher revenues from TV advertisement and brand management
and sales channel expansion services offset lower revenues in
Internet advertising and the bank kiosk business.
Total cost of revenues increased to $21.9 million for the six
months ended June 30, 2012 from $5.5 million for the same period in
2011. The increase of total cost of revenues for the six months
ended June 30, 2012 was primarily due to the significant increase
in costs associated with the TV advertising business
segment.
Gross profit for the six months ended June 30, 2012 was $6.2
million compared to $10.6 million in the same period a year ago.
Gross margin decreased to 22.0% from 66.1% for the same period in
2011 as a result of the significant increase of the low margin TV
advertising revenue, which accounted for approximately 59% of total
revenues in the first half of 2012 compared to 17% for the same
period of 2011.
Operating expenses for the six months ended June 30, 2012 were
approximately $5.2 million, an increase of 24% from $4.2 million in
the comparable period in 2011. General and administrative expenses
increased by $1.2 million to $3.1 million due to the increase in
the allowance for doubtful accounts and amortization expenses
related to the intangible assets identified in the acquisition
transactions consummated in 2011 and the inclusion of expenses
incurred by operating entities that we acquired or incorporated in
the second half of 2011. Selling expenses decreased 13%
year-over-year to $1.4 million, as the Company reduced brand
building investments in response to the slowdown in small business
activity in China.
The Company generated $0.9 million of operating income in the
six months ended June 30, 2012 compared to $6.4 million in the same
period a year ago.
GAAP net income attributable to common stockholders for the
first half of 2012 was $0.5 million and earnings per share was
$0.02 compared to $5.5 million and $0.28 for the first half of
2011, respectively. Non-GAAP adjusted net income attributable to
common stockholders and earnings per share for the first half of
2012 were $5.3 million and $0.27, respectively. The weighted
average shares outstanding for the first six months of 2012 and
2011 was 22.2 million shares and 20.4 million shares,
respectively.
Balance Sheet and Cash Flow
The Company had $8.6 million in cash and cash equivalents as of
June 30, 2012, compared to $10.7 million as of December 31, 2011,
working capital of $28.8 million, compared to $27.0 million as of
December 31, 2011, and a current ratio of 4.1 to 1 compared 4.5 to
1 as of December 31, 2011. Total shareholders' equity of ChinaNet
was $42.5 million at June 30, 2012 compared to $41.7 million at
December 31, 2011.
The Company had positive cash flow from operations of $1.1
million for the first six months of 2012.
Guidance for 2012
Management forecasts full year 2012 revenues to be at least $42
million and net income of at least $2.8 million.
Business Updates
ChinaNet attended the 13th Annual Beijing Franchise Expo from
May 11 to May 13, 2012. Management met dozens of prospective small
business customers and promoted its advertising and brand
management and sales channel expansion services to
entrepreneurs.
On June 4, 2012, the Company entered into a strategic agreement
with the China Youth Employment and Entrepreneurship Foundation to
help college graduates prepare for their professional careers.
College graduates from leading universities such as Beijing
University of Science and Technology and China University of
Political Science and Law will have access to ChinaNet's online
platforms, Chuangye.com, Liansuo.com and 28.com, to look for
business investments and job opportunities, formulate a career plan
and learn about starting a new business.
Chuangye.com, the Company's website for entrepreneurial social
networking services, become the most searched entrepreneurship term
on Baidu.com and Sina Corporation's popular social networking
service Weibo.com during May 2012. Chuangye.com continues to refine
its search engine marketing, optimization and social networking
strategies to promote its website and related services.
ChinaNet COO George Chu attended Baidu's launch of its mobile
app – Fengchao - on July 17, 2012. ChinaNet and Baidu will
collaborate on integrating ChinaNet's advertising and marketing
services solutions with Baidu's online and mobile services,
including Fengchao.
Conference Call
Date: |
Tuesday, August 21, 2012 |
Time: |
8:30 a.m. Eastern Time |
Conference Line (U.S.): |
1-877-317-6776 |
International Dial-In: |
1-412-317-6776 |
Conference ID: |
10017587 |
Webcast: |
http://webcast.mzvaluemonitor.com/Home/Login/395 |
Please dial in at least 10 minutes before the call to ensure
timely participation.
A playback of the call will be available until 9:00 p.m. Eastern
Time on August 31, 2012. To listen, call 1-877-344-7529 within the
United States or 1-412-317-0088 when calling internationally.
Please use the replay pin number 10017587.
About ChinaNet Online Holdings, Inc.
ChinaNet Online Holdings, Inc., a parent company of ChinaNet
Online Media Group Ltd., incorporated in the BVI, is a leading
business to business Internet technology company focusing on
providing online-to-offline sales channel expansion service for
small and medium-sized enterprises and entrepreneurial management
and networking service for entrepreneurs in China. Founded in 2003
and based in Beijing, PRC, the Company's services include its
28.com portal to connect SME franchisors with new franchisees,
Internet advertising and marketing with other value-added
communication channels, brand management and sales channel
solutions, and cloud-computing based management tools, expected to
be officially commercialized in 2012. Website:
http://www.chinanet-online.com.
About Non-GAAP Financial Measures
To supplement the unaudited interim consolidated statement of
income and comprehensive income presented in accordance with GAAP,
we are also providing non-GAAP measures of income before income tax
expenses, equity method investments and noncontrolling interests,
net income, net income attributable to us, net income attributable
to our common stockholders and basic and diluted earnings per share
for the six months ended June 30, 2011, which are adjusted from
results based on GAAP to exclude the non-cash gain recognized on
deconsolidation of a subsidiary incurred during the six months
ended June 30, 2011. For the six months ended June 30, 2012 and for
the three months ended June 30, 2012 and 2011, there is no non-cash
income or expenses from nonrecurring transaction under non-GAAP
measures. The non-GAAP financial measures are provided to enhance
the investors' overall understanding of our current performance in
on-going core operations as well as prospects for the future. These
measures should be considered in addition to results prepared and
presented in accordance with GAAP, but should not be considered a
substitute for or superior to GAAP results. We use both GAAP
and non-GAAP information in evaluating our operating business
results internally and therefore deemed it important to provide all
of this information to investors.
The following table presents reconciliations of our non-GAAP
financial measures to the unaudited interim consolidated statements
of income and comprehensive income for the six months ended June
30, 2011 (all amounts, except number of shares and per share data,
are presented in thousands of US dollars):
|
Six Months Ended
June 30, 2011 |
|
GAAP |
NON
GAAP |
|
US$ |
US$ |
|
(Unaudited) |
(Unaudited) |
|
|
|
Income from operations |
$ 6,426 |
$ 6,426 |
Other income
(expenses): |
|
|
Interest income |
4 |
4 |
Gain on deconsolidation of
subsidiaries |
230 |
-- |
Other income |
5 |
5 |
|
239 |
|
|
|
9 |
Income before income tax expense,
equity method investments and noncontrolling
interests |
6,665 |
|
Adjusted income before income tax
expense, equity method investments and noncontrolling
interests |
|
6,435 |
Income tax expense |
751 |
751 |
Income before equity method
investments and noncontrolling interests |
5,914 |
|
Adjusted income before equity method
investments and noncontrolling interests |
|
5,684 |
Share of losses in equity investment
affiliates |
(105) |
(105) |
Net income |
5,809 |
|
Adjusted net income |
|
5,579 |
Net income attributable to
noncontrolling interest |
(3) |
(3) |
Net income attributable to ChinaNet
Online Holdings, Inc. |
5,806 |
|
Adjusted net income attributable to
ChinaNet Online Holdings, Inc. |
|
5,576 |
Dividend for series A
convertible preferred stock |
(322) |
(322) |
Net income attributable to common
stockholders of ChinaNet
Online |
$ 5,484 |
|
Adjusted net income attributable to
common stockholders of ChinaNet
Online |
|
$ 5,254 |
|
|
|
|
|
|
Earnings per common
share-Basic |
$ 0.32 |
|
Adjusted earnings per common
share-Basic |
|
$ 0.30 |
|
$ 0.28 |
|
Earnings per common
share-Diluted |
|
|
Adjusted earnings per common
share-Diluted |
|
$ 0.27 |
|
|
|
Weighted average number of common
shares outstanding: |
|
|
Basic |
17,387,336 |
17,387,336 |
Diluted |
20,410,724 |
20,410,724 |
Safe Harbor
This release contains certain "forward-looking statements"
relating to the business of ChinaNet Online Holdings, Inc., which
can be identified by the use of forward-looking terminology such as
"believes," "expects," "anticipates," "estimates" or similar
expressions. Such forward-looking statements involve known and
unknown risks and uncertainties, including business uncertainties
relating to government regulation of our industry, market demand,
reliance on key personnel, future capital requirements, competition
in general and other factors that may cause actual results to be
materially different from those described herein as anticipated,
believed, estimated or expected. Certain of these risks and
uncertainties are or will be described in greater detail in our
filings with the Securities and Exchange Commission. These
forward-looking statements are based on ChinaNet's current
expectations and beliefs concerning future developments and their
potential effects on the company. There can be no assurance that
future developments affecting ChinaNet will be those anticipated by
ChinaNet. These forward-looking statements involve a number of
risks, uncertainties (some of which are beyond the control of the
Company) or other assumptions that may cause actual results or
performance to be materially different from those expressed or
implied by such forward-looking statements. ChinaNet undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required under applicable securities
laws.
– FINANCIAL TABLES –
CHINANET ONLINE
HOLDINGS, INC. |
CONSOLIDATED BALANCE
SHEETS |
(In thousands) |
|
June 30,
2012 |
December 31,
2011 |
|
(US $) |
(US $) |
|
(Unaudited) |
|
Assets |
|
|
Current assets: |
|
|
Cash and cash
equivalents |
$ 8,572 |
$ 10,695 |
Accounts receivable, net |
9,476 |
4,444 |
Other receivables, net |
5,672 |
3,631 |
Prepayment and deposit to
suppliers |
13,485 |
15,360 |
Due from related
parties |
283 |
324 |
Contingent consideration
receivables |
160 |
159 |
Other current assets |
103 |
129 |
Deferred tax
assets-current |
272 |
-- |
Total current
assets |
38,023 |
34,742 |
Investment in and advance to equity
investment affiliates |
1,109 |
1,396 |
Property and equipment, net |
1,666 |
1,902 |
Intangible assets, net |
7,686 |
8,151 |
Goodwill |
11,077 |
10,999 |
Deferred tax assets-non current |
270 |
92 |
Total Assets |
$ 59,831 |
$ 57,282 |
Liabilities and Equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 380 |
$ 268 |
Advances from
customers |
1,800 |
724 |
Accrued payroll and other
accruals |
1,037 |
616 |
Due to equity investment
affiliate |
-- |
220 |
Due to related
parties |
-- |
161 |
Payable for
acquisition |
-- |
550 |
Taxes payable |
5,860 |
5,040 |
Other payables |
188 |
114 |
Dividend payable |
-- |
5 |
Total current
liabilities |
9,265 |
7,698 |
Long-term liabilities: |
|
|
Deferred tax liability-non
current |
1,797 |
1,893 |
Long-term borrowing from
director |
138 |
137 |
Total Liabilities |
11,200 |
9,728 |
Commitments and
contingencies |
|
|
Equity: |
|
|
Common stock (US$0.001 par
value; authorized 50,000,000 shares; issued and outstanding
22,186,540 shares and 22,146,540 shares at June 30, 2012 and
December 31, 2011, respectively) |
22 |
22 |
Additional paid-in capital |
20,774 |
20,747 |
Statutory reserves |
2,117 |
2,117 |
Retained earnings |
17,217 |
16,688 |
Accumulated other comprehensive
income |
2,387 |
2,132 |
Total ChinaNet Online Holdings,
Inc.'s stockholders' equity |
42,517 |
41,706 |
Noncontrolling interests |
6,114 |
5,848 |
Total equity |
48,631 |
47,554 |
Total Liabilities and
Equity |
$ 59,831 |
$ 57,282 |
|
CHINANET ONLINE
HOLDINGS, INC. |
CONSOLIDATED STATEMENTS
OF INCOME AND COMPREHENSIVE INCOME |
(In thousands) |
|
|
Six Months Ended
June 30, |
Three Months
Ended June 30, |
|
2012 |
2011 |
2012 |
2011 |
|
(US $) |
(US $) |
(US $) |
(US $) |
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
Sales |
|
|
|
|
From unrelated parties |
$ 27,996 |
$ 15,636 |
$ 13,076 |
$ 8,814 |
From related parties |
66 |
457 |
51 |
267 |
|
28,062 |
16,093 |
13,127 |
9,081 |
Cost of sales |
21,902 |
5,458 |
9,364 |
3,437 |
Gross margin |
6,160 |
10,635 |
3,763 |
5,644 |
Operating expenses |
|
|
|
|
Selling expenses |
1,402 |
1,620 |
713 |
908 |
General and administrative
expenses |
3,060 |
1,865 |
1,817 |
975 |
Research and development
expenses |
756 |
724 |
425 |
372 |
|
5,218 |
4,209 |
2,955 |
2,255 |
Income from operations |
942 |
6,426 |
808 |
3,389 |
Other income (expenses) |
|
|
|
|
Interest income |
121 |
4 |
116 |
3 |
Gain on deconsolidation of
subsidiaries |
-- |
230 |
-- |
-- |
Other (expenses)/income |
-- |
5 |
1 |
(1) |
|
121 |
239 |
117 |
2 |
Income before income tax expense,
equity method investments and noncontrolling
interests |
1,063 |
6,665 |
925 |
3,391 |
Income tax expense /
(benefit) |
14 |
751 |
(222) |
319 |
Income before equity method
investments and noncontrolling interests |
1,049 |
5,914 |
1,147 |
3,072 |
Share of losses in equity
investment affiliates |
(297) |
(105) |
(104) |
(59) |
Net income |
752 |
5,809 |
1,043 |
3,013 |
Net income attributable to
noncontrolling interests |
(223) |
(3) |
(148) |
(19) |
Net income attributable to ChinaNet
Online Holdings, Inc. |
529 |
5,806 |
895 |
2,994 |
Dividend of Series A
convertible preferred stock |
-- |
(322) |
-- |
(153) |
Net income attributable to common
stockholders of ChinaNet Online Holdings, Inc. |
$ 529 |
$ 5,484 |
$ 895 |
$ 2,841 |
|
|
|
|
|
Earnings per share |
|
|
|
|
Earnings per common share |
|
|
|
|
Basic |
$ 0.02 |
$ 0.32 |
$ 0.04 |
$ 0.16 |
Diluted |
$ 0.02 |
$ 0.28 |
$ 0.04 |
$ 0.15 |
Weighted average number of common
shares outstanding: |
|
|
|
|
Basic |
22,184,562 |
17,387,336 |
22,186,540 |
17,528,785 |
Diluted |
22,184,562 |
20,410,724 |
22,186,540 |
20,005,962 |
|
CHINANET ONLINE
HOLDINGS, INC. |
CONSOLIDATED STATEMENTS
OF CASH FLOWS |
(In thousands) |
|
|
Six Months Ended
June 30, |
|
2012 |
2011 |
|
(US $) |
(US $) |
|
(Unaudited) |
(Unaudited) |
Cash flows from operating
activities |
|
|
Net income |
$ 752 |
$ 5,809 |
Adjustments to reconcile net income
to net cash provided by operating
activities |
|
|
Depreciation and
amortization |
818 |
470 |
Share-based compensation
expenses |
27 |
172 |
Allowances for doubtful
debts |
561 |
-- |
Share of losses in equity
investment affiliates |
297 |
105 |
Gain on deconsolidation of
subsidiaries |
-- |
(230) |
Gain on disposal of property
and equipment |
-- |
(3) |
Deferred taxes |
(558) |
(46) |
Changes in operating assets and
liabilities |
|
|
Accounts receivable |
(5,346) |
(2,171) |
Other receivables |
226 |
1,320 |
Prepayment and deposit to
suppliers |
1,983 |
(309) |
Due from related parties |
43 |
(258) |
Other current assets |
26 |
(2) |
Accounts payable |
109 |
258 |
Advances from customers |
1,070 |
(1,477) |
Accrued payroll and other
accruals |
418 |
(50) |
Due to director |
-- |
(147) |
Due to Control Group |
-- |
(81) |
Due to related parties |
(162) |
(137) |
Other payables |
45 |
77 |
Taxes payable |
783 |
797 |
Net cash provided by
operating activities |
1,092 |
4,097 |
Cash flows from investing
activities |
|
|
Purchases of vehicles and
office equipment |
(46) |
(152) |
Purchase of intangible
assets |
-- |
(1,429) |
Project development deposit to
a third party |
(2,450) |
-- |
Restricted cash for
incorporation of VIEs |
-- |
(186) |
Cash from acquisition of
VIEs |
-- |
24 |
Cash effect on deconsolidation
of VIEs |
-- |
(182) |
Long-term investment in and
advance to equity investment affiliates |
-- |
(1,527) |
Disposal of investment in and
loan repayment from equity investment affiliate |
-- |
1,527 |
Payment for acquisition of
VIEs |
(553) |
(1,451) |
Net cash
used in
investing activities |
(3,049) |
(3,376) |
Cash flows from financing
activities |
|
|
Cash investment contributed by noncontrolling
interests |
-- |
224 |
Dividend paid to convertible preferred
stockholders |
(5) |
(283) |
Short-term loan borrowed from a equity
investment affiliate |
316 |
-- |
Short-term loan repaid to a equity investment
affiliate |
(538) |
-- |
Net cash used
in financing activities |
(227) |
(59) |
Effect of exchange rate fluctuation on cash
and cash equivalents |
61 |
195 |
Net (decrease) / increase in cash and
cash equivalents |
(2,123) |
857 |
Cash and cash equivalents at
beginning of the period |
10,695 |
15,590 |
Cash and cash equivalents at
end of the period |
$ 8,572 |
$ 16,447 |
CONTACT: Ted Haberfield, President
MZ North America, IR
MZ Group
Direct: +1-760-755-2716
Email: thaberfield@mzgroup.us
ZW Data Action Technolog... (NASDAQ:CNET)
Historical Stock Chart
From Jun 2024 to Jul 2024
ZW Data Action Technolog... (NASDAQ:CNET)
Historical Stock Chart
From Jul 2023 to Jul 2024