Dangdang Announces Unaudited Second Quarter 2015 Results

Active customers increased 15% and new customers rose 19% year-over-year in Q2

Mobile orders accounted for 40% of total orders in Q2

Aug 31, 2015, 20:00 ET from E-Commerce China Dangdang Inc.

BEIJING, Aug. 31, 2015 /PRNewswire/ -- E-Commerce China Dangdang Inc. ("Dangdang" or the "Company") (NYSE: DANG), a leading business-to-consumer e-commerce company in China, today announced its unaudited financial results for the second quarter ended June 30, 2015.

Second Quarter 2015 Highlights

  • Total net revenues for the second quarter of 2015 were RMB2,312.3 million ($373.0 million), a 29.8% increase from the corresponding period in 2014. Gross Merchandise Value ("GMV") from the marketplace in the second quarter of 2015 was RMB1,890.6 million ($304.9 million), a 32.1% increase from the corresponding period in 2014. The combination of product revenue from principal business and GMV from the marketplace reached RMB4,130.3 million ($666.2 million) and grew 31.8% year-over-year. 
  • Dangdang had approximately 9.7 million active customers, including approximately 3.5 million new customers, in the second quarter of 2015, representing increases of 15% and 19%, respectively, from the corresponding period in 2014. Total orders for the second quarter of 2015 were approximately 19.5 million, a 19% increase from the corresponding period in 2014.
  • Mobile orders accounted for 40% of total orders for the second quarter of 2015, compared to 17.0% for the corresponding period in 2014.
  • Net loss for the second quarter of 2015 was RMB21.2 million ($3.4 million), or negative 0.9% of total net revenues, compared to net income of RMB28.8 million in the second quarter of 2014, or 1.6% of total net revenues.

"During the second quarter of 2015, we achieved another quarter of steady growth in revenue and new and active customers. We expanded our leading position in China's books and media market, gained additional share in the baby, children and maternity destination category and continued to enjoy some of the highest conversion rates in the industry," said Ms. Peggy Yu Yu, Executive Chairwoman of Dangdang. 

"Mobile orders remained close to record levels at 40% of total orders, and we improved monetization of our mobile platform with a sharp increase in mobile advertising revenue. Our digital business is gaining momentum, driven by our growing catalog of e-books, including original content.  Although we incurred a loss for the quarter, we generated RMB77.6 million in operating cash flow and closed the quarter with RMB1.7 billion in cash and equivalents.  We remain focused on the future healthy development of our business," Ms. Peggy Yu Yu concluded.

Second Quarter 2015 Results

Dangdang's total net revenues in the second quarter of 2015 were RMB2,312.3 million ($373.0 million), a 29.8% increase from the corresponding period in 2014.

Media product revenue for the second quarter of 2015 was RMB1,391.8 million ($224.5 million), representing an 18.3% increase from the corresponding period in 2014. General merchandise revenue for the second quarter of 2015 was RMB847.8 million ($136.7 million), representing a 61.7% increase from the corresponding period in 2014. Other revenue including revenue from third-party merchants for the second quarter of 2015 was RMB72.7 million ($11.7 million), representing a 9.7% decrease from the corresponding period in 2014, primarily due to a decline in logistics revenue from third-party merchants.

Dangdang had approximately 9.7 million active customers, including approximately 3.5 million new customers, in the second quarter of 2015, representing increases of 15% and 19%, respectively, from the corresponding period in 2014. Total orders for the second quarter of 2015 were approximately 19.5 million, a 19% increase from the corresponding period in 2014.

Gross margin in the second quarter of 2015 was 14.8%, compared to 20.1% in the second quarter of 2014 and 15.2% in the first quarter of 2015. The year-over-year decrease in gross margin was due to a larger contribution of general merchandise sales as a percentage of total net revenues and a decline in logistics revenue from third-party merchants. The quarter-over-quarter decrease in gross margin was due to adjustments associated with customer loyalty programs.

Fulfillment expenses, which include warehousing, shipping and customer service expenses, were RMB204.7 million ($33.0 million), representing 8.9% of total net revenues, compared to 10.7% in the corresponding period in 2014 and 9.1% in the first quarter of 2015. The year-over-year and quarter-over-quarter decreases in fulfillment expenses as a percentage of total net revenues were primarily due to improved operational efficiency.

Marketing expenses were RMB74.6 million ($12.0 million), representing 3.2% of total net revenues, compared to 4.6% in the corresponding period in 2014 and 4.3% in the first quarter of 2015. The year-over-year and quarter-over-quarter decreases in marketing expenses as a percentage of total net revenues were the result of lower expenditures for advertisements and online marketing programs during the quarter.

Technology and content expenses were RMB59.9 million ($9.7 million), representing 2.6% of total net revenues, compared to 2.6% in the corresponding period in 2014 and 2.8% in the first quarter of 2015. The quarter-over-quarter decrease in technology and content expenses as a percentage of total net revenues was primarily due to operating leverage.   

General and administrative expenses were RMB47.9 million ($7.7 million), representing 2.1% of total net revenues, compared to 2.3% in the corresponding period in 2014 and 2.3% in the first quarter of 2015. The year-over-year and quarter-over-quarter decreases in general and administrative expenses as a percentage of total net revenues were primarily due to larger scale.

Government grants and value-added tax refunds were RMB1.3 million ($0.2 million) representing 0.1% of total net revenues, compared to 0.9% in the corresponding period in 2014 and 0.0% in the first quarter of 2015. The year-over-year decrease as a percentage of total net revenues was primarily due to a limited amount of government grants and tax refunds.

Share-based compensation expenses, which were allocated to related expense line items, were RMB2.5 million ($0.4 million) in the second quarter of 2015, compared to RMB2.9 million in the corresponding period in 2014,representing a 14.7% decrease.

Dangdang recorded an operating loss of RMB42.7 million ($6.9 million) in the second quarter of 2015, compared to operating income of RMB14.6 million in the corresponding period in 2014.

Operating loss excluding share-based compensation expenses (non-GAAP) was RMB40.2 million ($6.5 million), compared to operating income excluding share-based compensation (non-GAAP) of RMB17.5 million in the corresponding period in 2014.

Net loss was RMB21.2 million ($3.4 million), compared to net income of RMB28.8 million in the corresponding period in 2014.

Net loss excluding share-based compensation expenses (non-GAAP) was RMB18.7 million ($3.0 million), compared to net income excluding share-based compensation (non-GAAP) of RMB31.7 million in the corresponding period in 2014.

Net margin was negative 0.9%, compared to 1.6% in the corresponding period in 2014. Non-GAAP net margin was negative 0.8%, compared to a non-GAAP net margin of 1.8% in the corresponding period in 2014.

Diluted loss per ADS was RMB0.26 ($0.04), compared to diluted earnings per ADS of RMB0.35 in the corresponding period in 2014. 

As of June 30, 2015, Dangdang had cash and cash equivalents, restricted cash, short-term time deposits, held-to-maturity investments and available for sale investments of RMB1,706.7 million ($275.3 million), compared to RMB1,399.0 million as of December 31, 2014. As of June 30, 2015, Dangdang had no bank loans.

Capital expenditures for the second quarter of 2015 were RMB12.6 million ($2.0 million).

Receipt of Preliminary Non-binding "Going Private" Proposal

On July 9, 2015, the Company announced that its Board of Directors (the "Board") received a non-binding proposal letter, dated July 9, 2015, from Ms. Peggy Yu Yu, Chairwoman of the Board, and Mr. Guoqing Li, director and Chief Executive Officer of the Company (together, the "Buyer Group"), proposing a "going-private" transaction (the "Transaction") to acquire all of the outstanding ordinary shares of the Company not already beneficially owned by the Buyer Group for $7.812 in cash per American depositary share ("ADS"), each representing five common shares.  The proposed purchase price represents a premium of 20% to the closing trading price of the Company's ADS on July 8, 2015, the last trading day prior to the receipt of the non-binding proposal letter.

The Board has formed a special committee consisting of independent, disinterested directors to evaluate the Transaction. The special committee has retained Duff & Phelps (Duff & Phelps, LLC and Duff & Phelps Securities, LLC) as its financial advisor and Shearman & Sterling LLP as its United States legal counsel in connection with the review and evaluation of the Transaction.  There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable law.

Conference Call

The Company will not host an earnings conference call. Please reach out to the Investor Relations contacts listed below with any questions.

About Dangdang

E-Commerce China Dangdang Inc. is a leading business-to-consumer e-commerce company in China. On its website dangdang.com and through mobile Dangdang, the Company offers books and media products as well as selected general merchandise products including fashion and apparel, baby, children and maternity and home and lifestyle products, among others. It also operates the dangdang.com marketplace program, which allows third-party merchants to sell their products alongside products sourced by the Company. Dangdang is transforming itself into an integrated online shopping experience with prominent destination categories. Dangdang's nationwide fulfilment and delivery capabilities, high-quality customer service support and scalable technology infrastructure enable it to provide a compelling online shopping experience to customers. For more information, please visit ir.dangdang.com.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Dangdang may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Dangdang's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Dangdang's growth strategies; its future business development, results of operations and financial condition; its ability to attract and retain new customers and to increase revenues generated from repeat customers; its expectations regarding demand for and market acceptance of its products and services; trends and competition in China's business-to-consumer e-commerce market; changes in its revenues and certain cost or expense items; the expected growth of the Chinese business-to-consumer e-commerce market; Chinese governmental policies relating to Dangdang's industry and general economic conditions in China. Further information regarding these and other risks is included in Dangdang's annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. Dangdang does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of this press release, and Dangdang undertakes no duty to update such information, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Dangdang's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), the Company uses the following measures as non-GAAP financial measures: non-GAAP operating (loss) income, non-GAAP operating margin, non-GAAP net (loss) income, non-GAAP net margin and adjusted EBITDA (collectively referred to as the "Non-GAAP Financial Measures" hereafter). The Company defines non-GAAP operating (loss) income, non-GAAP operating margin, non-GAAP net (loss) income and non-GAAP net margin as operating (loss) income, operating margin, net (loss) income and net margin excluding the impact of share-based compensation expenses, respectively. The Company defines adjusted EBITDA as (loss) income before interest, taxes, depreciation, amortization, other non-operating income and share-based compensation expenses. The Company reviews the Non-GAAP Financial Measures together with operating (loss) income, operating margin, net (loss) income and net margin to obtain a better understanding of its operating performance. The Company believes that these Non-GAAP Financial Measures provide meaningful supplemental information regarding the Company's performance and liquidity. However, a limitation of using the Non-GAAP Financial Measures as an analytical tool is that they do not include all items that impact operating (loss) income, operating margin, net (loss) income and net margin for the period. In addition, because they are not calculated in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider the Non-GAAP Financial Measures in isolation from or as an alternative to operating (loss) income, operating margin, net (loss) income and net margin prepared in accordance with U.S. GAAP.

For information on the reconciliation between the Non-GAAP Financial Measures and the GAAP financial measures presented in accordance with U.S. GAAP for the periods presented, please see the tables captioned "Non-GAAP operating income (loss), operating margin and net income (loss)" and "Adjusted EBITDA" at the end of this release.

Investor Contacts:

Tony Hung Senior Investor Relations Director E-Commerce China Dangdang Inc.  Phone: +86-10-5799-2301 E-mail: ir@dangdang.com

Elaine Ketchmere, CFA  Compass Investor Relations +1-310-528-3031  Email: eketchmere@compass-ir.com 

- Financial Tables Follow

 

 

E-Commerce China Dangdang Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share related data)

As of December 31, 2014

As of June 30, 2015

RMB

RMB

US$

(Audited)

(Unaudited)

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

350,946

978,352

157,799

Restricted cash

23,726

1,000

161

Time deposits

674,363

244,544

39,443

Held-to-maturity investments

350,000

201,000

32,419

Available for sale investments

-

281,759

45,445

Inventories

2,201,170

2,084,340

336,184

Accounts receivable, net

28,763

37,012

5,970

Prepaid expenses and other current assets

575,646

511,271

82,463

Amounts due from related parties

375

429

69

Total current assets

4,204,989

4,339,707

699,953

Fixed assets, net

252,966

250,403

40,388

Prepaid land lease payments

42,423

41,976

6,770

Prepaid expenses, deposits

14,589

17,580

2,835

Other non-current assets

-

20,507

3,308

Total assets

4,514,967

4,670,173

753,254

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts and notes payable

2,479,314

3,078,377

496,512

Deferred revenue

627,122

334,674

53,980

Accrued expenses and other current

 liabilities

704,483

626,512

101,050

Amounts due to related parties

2,237

2,168

350

Total current liabilities

3,813,156

4,041,731

651,892

Non-current liabilities

24,227

27,104

4,372

Total liabilities

3,837,383

4,068,835

656,264

Shareholders' equity:

Class A common shares (par value of

 US$0.0001 per share; 686,505,790 shares

 authorized; 272,092,590 and 272,659,840

 shares issued and outstanding as of

 December 31, 2014 and June 30, 2015,

 respectively)

201

201

32

Class B common shares (par value of

 US$0.0001 per share; 313,494,210 shares

 authorized; 131,876,660 shares issued  

 and outstanding)

103

103

17

Additional paid-in capital

1,885,878

1,890,556

304,928

Accumulated other comprehensive loss

(129,948)

(129,504)

(20,887)

Accumulated deficit

(1,078,650)

(1,160,018)

(187,100)

Total shareholders' equity

677,584

601,338

96,990

Total liabilities and shareholders' equity

4,514,967

4,670,173

753,254

 

 

E-Commerce China Dangdang Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, except share related data)

Three Months Ended

June 30, 2014

June 30, 2015

RMB

RMB

US$

(Unaudited)

(Unaudited)

(Unaudited)

Net revenues

  Product revenue

1,701,177

2,239,639

361,232

    Media

1,176,871

1,391,811

224,486

    General merchandise

524,306

847,828

136,746

  Other revenue

80,477

72,701

11,726

Total net revenues

1,781,654

2,312,340

372,958

Cost of revenues

(1,423,084)

(1,969,244)

(317,620)

Gross profit

358,570

343,096

55,338

Operating expenses:

  Fulfillment

(189,779)

(204,738)

(33,022)

  Marketing

(81,543)

(74,611)

(12,034)

  Technology and content

(47,040)

(59,885)

(9,659)

  General and administrative

(41,594)

(47,892)

(7,725)

  Government grants and value-added tax refunds

15,980

1,343

217

Total operating expenses, net

(343,976)

(385,783)

(62,223)

Income (loss) from operations

14,594

(42,687)

(6,885)

Interest income

10,426

14,112

2,276

Other expenses, net

3,801

7,376

1,190

Income (loss) before income taxes

28,821

(21,199)

(3,419)

Income tax expense

-

-

-

Net income (loss)

28,821

(21,199)

(3,419)

Net income (loss) attributable to common shareholders

28,821

(21,199)

(3,419)

Income (loss) per common share:

                                         - Basic

0.07

(0.05)

(0.01)

                                         - Diluted

0.07

(0.05)

(0.01)

Income (loss) per ADS:

                                         - Basic

0.36

(0.26)

(0.04)

                                         - Diluted

0.35

(0.26)

(0.04)

Income (loss) allocated to common shareholders used  

 in income (loss) per share/ADS calculation:

                                         - Basic

28,821

(21,199)

(3,419)

                                         - Diluted

28,821

(21,199)

(3,419)

Shares used in income (loss) per common share computation:

Class A common shares:

                                         - Basic

271,309,522

272,315,705

272,315,705

                                         - Diluted

416,177,972

404,192,365

404,192,365

Class B common shares:

                                         - Basic

131,876,660

131,876,660

131,876,660

                                         - Diluted

131,876,660

131,876,660

131,876,660

ADSs used in income (loss) per ADS calculation:

                                         - Basic

80,637,236

80,838,473

80,838,473

                                         - Diluted

83,235,594

80,838,473

80,838,473

Other comprehensive income (loss)

  Foreign currency translation adjustment, net of taxes

156

(6,812)

(1,099)

  Unrealized gain on available-for-sale investments,      net of taxes

978

1,759

284

  Transferred to statements of comprehensive income       (loss) of realized gain on available-for-sale       investments, net of taxes

-

(1,004)

(162)

Comprehensive income (loss) attributable to common

 shareholders

29,955

(27,256)

(4,396)

 

 

Share-based compensation

Share-based compensation expenses included are as follows:

(In thousands, except share related data)

Three Months Ended

June 30, 2014

June 30, 2015

RMB

RMB

US$

(Unaudited)

(Unaudited)

(Unaudited)

Operating expenses:

  Fulfillment

436

623

100

  Marketing

148

208

34

  Technology and content

320

327

53

  General and administrative

1,986

1,307

211

Total

2,890

2,465

398

(1) This announcement contains translations of certain RMB amounts into U.S. dollars at  

    specified rates solely for the convenience of the reader. Unless otherwise noted, all

    translations from RMB to US$ are made at a rate of RMB6.2000 to US$1.00, the noon buying

    rate on June 30, 2015 in The City of New York for cable transfers of RMB as certified for

    customs purposes by the Federal Reserve Bank of New York.

(2) Each ADS represents five common shares of the Company.

 

 

Non-GAAP operating income (loss), operating margin and net income (loss)

(In thousands)

Three Months Ended

June 30, 2014

June 30, 2015

RMB

RMB

US$

(Unaudited)

(Unaudited)

(Unaudited)

Income (loss) from operations

14,594

(42,687)

(6,885)

Share-based compensation expenses

2,890

2,465

398

Non-GAAP operating income (loss)

17,484

(40,222)

(6,487)

Operating margin

0.8%

-1.8%

-1.8%

Share-based compensation expenses

0.2%

0.1%

0.1%

Non-GAAP operating margin

1.0%

-1.7%

-1.7%

Net income (loss)

28,821

(21,199)

(3,419)

Share-based compensation expenses

2,890

2,465

398

Non-GAAP net income (loss)

31,711

(18,734)

(3,021)

 

 

Adjusted EBITDA

(In thousands)

Three Months Ended

June 30, 2014

June 30, 2015

RMB

RMB

US$

(Unaudited)

(Unaudited)

(Unaudited)

Income (loss) from operations

14,594

(42,687)

(6,885)

Add back:

 Depreciation and amortization 

13,314

15,195

2,450

 Share-based compensation expenses

2,890

2,465

398

 Adjusted EBITDA

30,798

(25,027)

(4,037)

 

 

SOURCE E-Commerce China Dangdang Inc.



RELATED LINKS

http://ir.dangdang.com


http://dangdang.com