Renren Announces Unaudited First Quarter 2014 Financial Results

BEIJING, May 21, 2014 /PRNewswire/ -- Renren Inc. (NYSE: RENN) ("Renren" or the "Company"), a leading real-name social networking internet platform in China, today announced its unaudited financial results for the first quarter ended March 31, 2014. 

First Quarter 2014 Highlights

  • Total net revenues were US$24.9 million, a 39.9% decrease from the corresponding period in 2013.
    • Renren net revenues were US$12.2 million, a 17.3% decrease from the corresponding period in 2013.
    • Games net revenues were US$12.7 million, a 52.5% decrease from the corresponding period in 2013.
  • Gross profit was US$8.7 million, a 65.2% decrease from the corresponding period in 2013.
  • Operating loss was US$29.2 million, compared to an operating loss of US$20.4 million in the corresponding period in 2013.
  • Net income attributable to the Company was US$32.3 million, compared to a net loss of US$3.1 million in the corresponding period in 2013.
  • Adjusted net income (1) (non-GAAP) was US$36.1 million, compared to an adjusted net income of US$0.5 million in the corresponding period in 2013.

"First quarter revenues, as expected, remained under pressure from the challenges in advertising and gaming that we have faced for some quarters.  On the positive side, the portion of advertising from mobile is growing and the interest from brand advertisers for the young target demographic that Renren serves is notably increasing. Meanwhile, we are pleased to see strong growth in the amount of UGC videos uploaded to our on-line video site, 56.com, along with its increasing traffic", commented Joseph Chen, Chairman and Chief Executive Officer. "We remain committed in building and realizing long-term value for our shareholders."

(1) Adjusted net income (loss) is a non-GAAP measure, which is defined as net income (loss) excluding share-based compensation expenses, amortization of intangible assets and impairment of intangible assets.

First Quarter 2014 Results

Total net revenues for the first quarter of 2014 were US$24.9 million, representing a 39.9% decrease from the corresponding period in 2013.

Renren net revenues were US$12.2 million, representing a 17.3% decrease from the corresponding period of 2013. Within Renren net revenues, online advertising revenues were US$7.8 million for the first quarter of 2014, a 19.2% decrease from the corresponding period of 2013. The decrease was due to increasing competition and traffic migration to mobile. Internet Value-Added Services (IVAS) revenues were US$4.4 million, representing a 13.6% decrease from the corresponding period in 2013. The number of accumulated activated users on renren.com increased from approximately 184 million as of March 31, 2013 to approximately 210 million as of March 31, 2014. Monthly unique log-in users in March 2014 was approximately 51 million, compared to approximately 57 million in March 2013 and approximately 45 million in December 2013.

Games net revenues were US$12.7 million for the first quarter of 2014, a 52.5% decrease from the corresponding period of 2013.  The decrease was due to previously launched games having reached mature stages and the earlier disclosed delay of new games release.

Cost of revenues was US$16.2 million, a 1.0% decrease from the corresponding period of 2013.

Operating expenses were US$38.0 million, a 16.7% decrease from the corresponding period of 2013.

Selling and marketing expenses were US$10.8 million, a 16.0% decrease from the corresponding period of 2013. The decrease was primarily due to the decreased marketing related expenses and promotions for online games.

Research and development expenses were US$15.7 million, a 30.5% decrease from the corresponding period in 2013. The decrease was primarily due to headcount reduction and decrease in personnel related expenses.

General and administrative expenses were US$11.4 million, a 12.1% increase from the corresponding period in 2013.  The increase was primarily due to the increase in office rents and share-based-compensation expenses.

Share-based compensation expenses, which were all included in operating expenses, were US$3.4 million, compared to US$3.2 million in the corresponding period in 2013. 

Operating loss was US$29.2 million, compared to an operating loss of US$20.4 million in the corresponding period in 2013.

Realized gain on short-term investments was US$27.1 million, compared to US$15.1 million in the corresponding period in 2013. The gain was primarily derived from the sale of marketable securities.

Gain on disposal of equity method investment, net of income taxes was US$57.1 million, due solely to the one-time gain from the disposal of our remaining equity interest in Nuomi. 

Net income attributable to the Company was US$32.3 million, compared to a net loss of US$3.1 million in the corresponding period in 2013. This was primarily due to the US$57.1 million gain on the disposal of equity method investment.  

Adjusted net income (non-GAAP) was US$36.1 million, compared to an adjusted net income of US$0.5 million in the corresponding period in 2013. The increase was primarily due to the US$57.1 million gain on the disposal of equity method investment. Adjusted net income (loss) is defined as net income (loss) excluding share-based compensation expenses, amortization of intangible assets and impairment of intangible assets.

Share Repurchase Program Update and Extension

As of May 20, 2014, Renren had repurchased approximately 22.4 million ADSs under the current repurchase program for a total consideration of US$68.4 million.  The current share repurchase program will expire on June 27, 2014.  Our board has recently authorized another share repurchase program of US$100 million for one year effective from June 28, 2014.

Business Outlook

The Company expects to generate revenues in an amount ranging from US$21 million to US$23 million in the second quarter of 2014, representing a 47.1% to 51.7% year-over-year decline. This forecast reflects Renren's current and preliminary view, which is subject to change.

Conference Call Information

Management will host an earnings conference call at 9:00 p.m. Eastern Time on Wednesday, May 21, 2014 (Beijing/Hong Kong Time: 9:00 a.m., Thursday, May 22, 2014).

Interested parties may participate in the conference call by dialing the numbers below and entering passcode 10-15 minutes prior to the initiation of the call.

Dial-in Information:

US: +1 845-675-0437
Hong Kong: +852-2475-0994
China: +86 800-819-0121
International: + 65-6723-9381
Passcode: Renren

A replay of the call will be available for one week and dial-in information is as follows:

International: + 61 2-8199-0299
Passcode: 45186498

This call will be webcast live and the replay will be available on Renren's corporate web site at http://ir.renren-inc.com for 12 months.

About Renren Inc.

Renren Inc. (NYSE: RENN) operates a leading real name social networking internet platform in China. It enables users to connect and communicate with each other, share information and user generated content, play online games, watch videos and enjoy a wide range of other features and services. Renren's businesses primarily include the main social networking website renren.com, the game development and operating platform Renren Games, and the user-generated content focused video sharing website 56.com. Renren.com had approximately 210 million activated users as of March 31, 2014. Renren's American depositary shares, each of which represents three Class A ordinary shares, trade on NYSE under the symbol "RENN".

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" and similar statements. Among other things, the business outlook for the second quarter of 2014 and quotations from management in this announcement, as well as Renren's strategic and operational plans, contain forward-looking statements. Renren may also make written or oral forward-looking statements in its filings with the U.S. Securities and Exchange Commission ("SEC"), 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 Renren'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: our goals and strategies; our future business development, financial condition and results of operations; the expected growth of the social networking site market in China; our expectations regarding demand for and market acceptance of our services; our expectations regarding the retention and strengthening of our relationships with key advertisers and customers; our plans to enhance user experience, infrastructure and service offerings; competition in our industry in China; and relevant government policies and regulations relating to our industry. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Renren does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Renren's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Renren uses "adjusted net income (loss)" which is defined as "a non-GAAP financial measure" by the SEC, in evaluating its business. We define adjusted net income (loss) as net income (loss) excluding share-based compensation expenses, amortization of intangible assets and impairment of intangible assets. We present adjusted net income (loss) because it is used by our management to evaluate our operating performance. We also believe that this non-GAAP financial measure provide useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies.

The presentation of this non-GAAP financial measure is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliation of non-GAAP results of operations measures to the comparable GAAP financial measures" at the end of this release.

For more information, please contact:

Cynthia Liu
Investor Relations
Renren Inc.
Tel: (86 10) 8448 1818 ext 1300
Email: ir@renren-inc.com

RENREN INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)





















(Amounts in US dollars, in thousands, except shares,






December 31,



March 31,

per shares, ADS, and per ADS data)




2013



2014











 ASSETS 




















 Current assets: 










 Cash and cash equivalents 





$

154,308


$

242,619

 Term deposits 






492,699



339,478

 Short-term investments 






301,995



403,225

 Accounts and notes receivable, net 






15,958



11,425

 Prepaid expenses and other current assets 






34,080



35,489

 Amounts due from related parties 






62,411



527

 Deferred tax assets-current 






628



628

 Equity method investment-current 






60,508



 Total current assets 






1,122,587



1,033,391











 Non-current assets: 










 Property and equipment, net 






58,560



56,269

 Intangible assets, net 






27,397



26,303

 Goodwill 






61,407



59,800

 Long-term investments 






107,842



144,833

 Deferred tax assets-non-current 






1,109



1,102

 Other non-current assets 






6,784



24,261

 Total non-current assets 






263,099



312,568











 TOTAL ASSETS 





$

1,385,686


$

1,345,959











 LIABILITIES AND EQUITY 




















 Current liabilities: 










 Accounts payable 





$

10,170


$

9,232

 Accrued expenses and other payables 






33,314



29,790

 Amounts due to related parties 






61,062



198

 Deferred revenue and advance from customers  






8,639



7,427

 Derivative contract liabilities 








6,934

 Income tax payable 






2,077



7,964

 Total current liabilities 






115,262



61,545











 Non-current liabilities: 










 Other non-current liabilities 






156



266

 Total non-current liabilities 






156



266











 TOTAL LIABILITIES 






115,418



61,811











 Shareholders' Equity: 










 Class A ordinary shares 






790



770

 Class B ordinary shares 






305



305

 Additional paid-in capital 






1,285,283



1,265,336

 Statutory reserves 






6,712



6,712

 Accumulated deficit 






(197,726)



(165,409)

 Accumulated other comprehensive income  






174,781



176,312











 Total Renren Inc. shareholders' equity 






1,270,145



1,284,026











 Noncontrolling Interests 






123



122











 TOTAL EQUITY 






1,270,268



1,284,148











 TOTAL LIABILITIES AND EQUITY 





$

1,385,686


$

1,345,959

 

 

 

RENREN INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)













For the Three Months Ended

(Amounts in US dollars, in thousands, except shares,


March 31,


December 31,



March 31,

per shares, ADS, and per ADS data)

2013


2013



2014











 Net revenues 










 Renren 


$

14,796


$

15,129


$

12,235

 Games 



26,658



15,557



12,660

 Total net revenues 



41,454



30,686



24,895











 Cost of revenues  



(16,325)



(17,737)



(16,160)











 Gross profit 



25,129



12,949



8,735











 Operating expenses: 










 Selling and marketing 



(12,840)



(19,610)



(10,791)

 Research and development 



(22,533)



(17,843)



(15,669)

 General and administrative 



(10,193)



(14,409)



(11,423)

 Impairment of intangible assets 





(208)



(66)

 Restructuring cost 





(3,475)



-











 Total operating expenses 



(45,566)



(55,545)



(37,949)











 Loss from operations 



(20,437)



(42,596)



(29,214)











 Other income 



257



603



265

 Exchange gain (loss) on offshore bank accounts 



(6)



1,036



(2,527)

 Interest income 



3,733



2,888



2,733

 Realized gain on short-term investments 



15,073



9,049



27,093

 Impairment of short-term investments 





(2,098)



 Impairment of equity method investments 





(23,025)













 Loss before provision of income tax, earnings (loss) in
    equity method investments and noncontrolling interest, net of
    income taxes 



(1,380)



(54,143)



(1,650)

 Income tax benefit 



80



7,054



19











 Loss before earnings (loss) in equity method
    investments and noncontrolling interest, net of income taxes 



(1,300)



(47,089)



(1,631)

 (Loss) earnings in equity method investments, net of income taxes 



5,143



17,974



(23,145)

 Income (loss) from continuing operations 



3,843



(29,115)



(24,776)











 Discontinued operation 










 Loss from operations of discontinued operations, net of income taxes 



(6,997)



(2,720)



 Gain on deconsolidation of the subsidiaries 





132,665



 Gain on disposal of equity method investment, net of income taxes 







57,092

 Gain (loss) from discontinued operations, net of income taxes 



(6,997)



129,945



57,092











 Net income (loss) 



(3,154)



100,830



32,316

 Net loss attributable to noncontrolling interests 



17





1











 Net income (loss) attributable to Renren Inc. 


$

(3,137)


$

100,830


$

32,317











 Net income (loss) per share from continuing operations attributable to
    Renren Inc.shareholders per share:










 Basic 


$

0.00


$

(0.03)


$

(0.02)

 Diluted 


$

0.00


$

(0.03)


$

(0.02)

 Net income (loss) per share from discontinued operations attributable to
    Renren Inc.shareholders per share: 










 Basic 


$

(0.01)


$

0.12


$

0.05

 Diluted 


$

(0.01)


$

0.12


$

0.05

 Net income (loss) per share attributable to Renren Inc. shareholders per share: 










 Basic 


$

(0.00)


$

0.09


$

0.03

 Diluted 


$

(0.00)


$

0.09


$

0.03

 Net income (loss) attributable to Renren Inc. shareholders per ADS: 










 Basic 


$

(0.01)


$

0.27


$

0.09

 Diluted 


$

(0.01)


$

0.27


$

0.09











 Weighted average number of shares used in calculating net income (loss) per
   ordinary share from continuing operations attributable to Renren Inc.
   shareholders: 










 Basic 



1,132,823,805



1,106,742,708



1,082,856,840

 Diluted 



1,160,711,624



1,106,742,708



1,082,856,840

 Weighted average number of shares used in calculating net income (loss) per 
   ordinary share from discontinued operations attributable to Renren Inc.
   shareholders: 










 Basic 



1,132,823,805



1,106,742,708



1,082,856,840

 Diluted 



1,160,711,624



1,117,484,147



1,092,355,990











Reconciliation of Non-GAAP results of operations measures to the comparable GAAP financial measures











Adjusted net income












 For the Three Months Ended 

 (Amounts in US dollars, in thousands) 


March 31,



December 31,



March 31,

2013



2013



2014











 Net income (loss) 


$

(3,154)


$

100,830


$

32,316

    Add back: Shared-based compensation expenses 



3,235



3,188



3,351

     Add back: Amortization of intangible assets 



391



456



319

    Add back: Impairment of intangible assets 





208



66

 Adjusted net income 


$

472


$

104,682


$

36,052

SOURCE Renren Inc.



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