Renren Announces Unaudited Third Quarter 2015 Financial Results

Nov 27, 2015, 05:00 ET from Renren Inc.

BEIJING, Nov. 27, 2015 /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 third quarter ended September 30, 2015. 

Third Quarter 2015 Highlights

  • Total net revenues were US$12.4 million, a 36.4% decrease from the corresponding period in 2014.
    • Renren net revenues were US$8.6 million, a 24.5% decrease from the corresponding period in 2014.
    • Games net revenues were US$3.8 million, a 53.3% decrease from the corresponding period in 2014.
  • Gross profit was US$2.5 million, a 64.9% decrease from the corresponding period in 2014.
  • Operating loss was US$23.2 million, compared to an operating loss of US$77.4 million in the corresponding period in 2014.
  • Net loss attributable to the Company was US$82.0 million, compared to a net loss of US$38.1 million in the corresponding period in 2014.
  • Adjusted net loss (1) (non-GAAP) was US$77.1 million, compared to an adjusted net income (1) (non-GAAP) of US$29.3 million in the corresponding period in 2014.

(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 and goodwill. See "About Non-GAAP Financial Measures" below.

Third Quarter 2015 Results

Total net revenues for the third quarter of 2015 were US$12.4 million, representing a 36.4% decrease from the corresponding period in 2014.

Renren net revenues were US$8.6 million, representing a 24.5% decrease from the corresponding period of 2014. Within Renren net revenues, online advertising revenues were US$1.5 million for the third quarter of 2015, a 77.1% decrease from the corresponding period of 2014. The decrease was due to increasing competition and the continuing migration of our traffic to mobile. Internet Value-Added Services (IVAS) revenues were US$7.1 million, representing a 51.0% increase from the corresponding period in 2014, primarily due to the increase in revenue from woxiu and internet finance business. Monthly unique log-in users increased from approximately 44 million in September 2014 to approximately 45 million in September 2015.

Games net revenues were US$3.8 million for the third quarter of 2015, a 53.3% decrease from the corresponding period of 2014.  The decrease was due to the previously launched games having reached their mature stages. 

Cost of revenues was US$9.9 million, a 20.1% decrease from the corresponding period of 2014.

Operating expenses were US$25.7 million, a 69.6% decrease from the corresponding period of 2014.

Selling and marketing expenses were US$7.7 million, a 22.9% decrease from the corresponding period of 2014. The decrease was primarily due to decreases in advertising and promotions for online games and Renren branding campaigns.

Research and development expenses were US$8.8 million, a 27.4% decrease from the corresponding period in 2014. The decrease was primarily due to headcount reduction and the resulting decrease in personnel-related expenses.

General and administrative expenses were US$9.2 million, a 30.6% decrease from the corresponding period in 2014. The decrease was primarily due to the decrease in personnel-related expenses.

Share-based compensation expenses, all of which were included in operating expenses, were US$4.9 million, compared to US$6.6 million in the corresponding period in 2014. 

Operating loss was US$23.2 million, compared to an operating loss of US$77.4 million in the corresponding period in 2014.

Net loss attributable to the Company was US$82.0 million, compared to a net loss attributable to the Company of US$38.1 million in the corresponding period in 2014.  In the third quarter of 2014, the Company recognized a US$47.2 million gain from equity method investment.

Adjusted net loss (non-GAAP) was US$77.1 million, compared to an adjusted net income of US$29.3 million in the corresponding period in 2014.

Business Outlook

The Company expects to generate revenues in an amount ranging from US$11 million to US$13 million in the fourth quarter of 2015, representing a 24.3% to 36.0% year-over-year decline. This forecast reflects Renren's current and preliminary view, which is subject to change.

Conference Call Information

Due to the receipt of a non-binding proposal to acquire the Company, the Company will not host a conference call. Please contact our Investor Relations Department listed below if you have any questions.

About Renren Inc.

Renren Inc. (NYSE: RENN) operates a leading real name social networking service (SNS) and an internet finance business in China.  Our SNS enables users to connect and communicate with each other, share photo, play online games.  Our internet finance business include primarily consumer financing and auto financing.  Renren.com and renren mobile application had approximately 228 million activated users as of September 30, 2015. 

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 fourth quarter of 2015 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 and goodwill. 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 Department 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,

per share, ADS, and per ADS data)

December 31,

2014

September 30,

2015

 ASSETS 

 Current assets: 

 Cash and cash equivalents 

$

183,025

$

161,528

 Term deposits 

494,065

7,813

 Restricted Cash 

-

15,370

 Short-term investments 

29,384

5,599

 Accounts and notes receivable, net 

18,044

115,157

 Prepaid expenses and other current assets 

37,638

68,984

 Amounts due from related parties 

1,047

971

 Total current assets 

763,203

375,422

 Non-current assets: 

 Property and equipment, net 

43,690

35,755

 Intangible assets, net 

2

320

 Long-term investments 

320,414

600,087

 Other non-current assets 

21,844

21,872

 Total non-current assets 

385,950

658,034

 TOTAL ASSETS 

$

1,149,153

$

1,033,456

 LIABILITIES AND EQUITY 

 Current liabilities: 

 Accounts payable 

$

5,501

$

5,118

 Short-term loan 

-

3,271

 Accrued expenses and other payables 

24,094

88,841

 Amounts due to related parties 

303

1,791

 Deferred revenue and advance from customers  

6,917

6,888

 Income tax payable 

9,229

7,595

 Total current liabilities 

46,044

113,504

 Non-current liabilities: 

 Other non-current liabilities 

730

730

 Total non-current liabilities 

730

730

 TOTAL LIABILITES 

46,774

114,234

 Shareholders' Equity: 

 Class A ordinary shares 

720

713

 Class B ordinary shares 

305

305

 Additional paid-in capital 

1,224,393

1,232,486

 Statutory reserves 

6,712

6,712

 Accumulated deficit 

(137,266)

(324,669)

 Accumulated other comprehensive income  

7,774

4,245

 Total Renren Inc. shareholders' equity 

1,102,638

919,792

 Noncontrolling Interests 

(259)

(570)

 TOTAL EQUITY 

1,102,379

919,222

 TOAL LIABILITIES AND EQUITY 

$

1,149,153

$

1,033,456

 

RENREN INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the Three Months Ended

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

per share, ADS, and per ADS data)

September 30,

2014

June 30,

2015

September 30,

2015

 Net revenues 

 Renren 

$

11,458

$

10,281

$

8,646

 Games 

8,071

4,847

3,771

 Total net revenues 

19,529

15,128

12,417

 Cost of revenues  

(12,402)

(9,934)

(9,913)

 Gross profit 

7,127

5,194

2,504

 Operating expenses: 

 Selling and marketing 

(9,974)

(9,189)

(7,689)

 Research and development 

(12,147)

(8,776)

(8,814)

 General and administrative 

(13,246)

(11,511)

(9,195)

 Impairment of intangible assets 

(203)

 Impairment of goodwill 

(46,864)

 Restructuring cost 

(2,110)

 Total operating expenses 

(84,544)

(29,476)

(25,698)

 Loss from operations 

(77,417)

(24,282)

(23,194)

 Other income 

1,214

1,398

359

 Other expense 

 Exchange gain (loss) on offshore bank accounts 

930

(18)

(62)

 Interest income 

3,260

61

315

 Realized gain(loss) on short-term investments 

4,602

(48,809)

(49,742)

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

(67,411)

(71,650)

(72,324)

 Income tax expenses 

(6)

(2,150)

(2,169)

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

(67,417)

(73,800)

(74,493)

 Earnings(losses) in equity method investments, net of  income taxes 

47,217

(4,297)

(7,583)

 Loss from continuing operations 

(20,200)

(78,097)

(82,076)

 Discontinued operation 

 Loss from operations of discontinued operations, net  of income taxes 

(18,045)

-

-

 Loss from discontinued operations, net of  income taxes 

(18,045)

-

-

 Net loss 

(38,245)

(78,097)

(82,076)

 Net loss attributable to noncontrolling interests 

122

191

82

 Net loss attributable to Renren Inc. 

$

(38,123)

$

(77,906)

$

(81,994)

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

 Basic 

$

(0.02)

$

(0.08)

$

(0.08)

 Diluted 

$

(0.02)

$

(0.08)

$

(0.08)

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

 Basic 

$

(0.02)

$

-

$

-

 Diluted 

$

(0.02)

$

-

$

-

 Net loss per share attributable to Renren Inc.  shareholders: 

 Basic 

$

(0.04)

$

(0.08)

$

(0.08)

 Diluted 

$

(0.04)

$

(0.08)

$

(0.08)

 Net loss attributable to Renren Inc. shareholders  per ADS: 

 Basic 

$

(0.11)

$

(0.23)

$

(0.24)

 Diluted 

$

(0.11)

$

(0.23)

$

(0.24)

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

 Basic 

1,057,907,133

1,018,522,306

1,017,864,443

 Diluted 

1,057,907,133

1,018,522,306

1,017,864,443

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

 Basic 

1,057,907,133

1,018,522,306

1,017,864,443

 Diluted 

1,057,907,133

1,018,522,306

1,017,864,443

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

For the Three Months Ended

 (Amounts in US dollars, in thousands)

September 30,

2014

June 30,

2015

September 30,

2015

 Net loss

$

(38,245)

$

(78,097)

$

(82,076)

 Add back: Shared-based compensation expenses

6,615

6,169

4,917

     Add back: Amortization of intangible assets

324

33

32

 Add back: Impairment of goodwill

46,864

 Add back: Impairment of intangible assets

13,739

 Adjusted net income (loss)

$

29,297

$

(71,895)

$

(77,127)

SOURCE Renren Inc.