SINA Reports Third Quarter 2010 Financial Results

Nov 16, 2010, 17:00 ET from SINA Corporation

SHANGHAI, Nov. 16, 2010 /PRNewswire-Asia/ -- SINA Corporation (Nasdaq: SINA), a leading online media company and mobile value-added service ("MVAS") provider for China and for the global Chinese communities, today announced its unaudited financial results for the quarter ended September 30, 2010.

Starting in the fourth quarter of 2009, in addition to the disclosure of GAAP results below, SINA's historical revenues and certain non-GAAP measures (namely, gross profit, operating expenses, income from operations and advertising gross margin) have been revised to exclude results from China Online Housing Technology Corporation ("COHT"), adjusted for the impact of the amended and restated advertising agency agreement on a pro forma basis as if the agreement had been effective at the beginning of the periods presented.  These adjustments were made to reflect SINA injecting its online real estate advertising business into its majority-owned subsidiary COHT and exchanging its interest in COHT for approximately 33% interest in China Real Estate Information Corporation ("CRIC") upon the successful listing of CRIC on the NASDAQ Global Select Market in October 2009 ("Transaction").  Non-GAAP measures are described below and reconciled to the corresponding GAAP measures in the section below titled "Unaudited Reconciliation of Non-GAAP to GAAP Results."

Third Quarter 2010 Highlights

  • Net revenues grew 12% year over year to $108.2 million.
  • Non-GAAP net revenues grew 20% year over year to $103.6 million, reaching the high end of SINA's guidance between $101.0 million and $104.0 million.
  • Advertising revenues grew 27% year over year to $81.0 million.
  • Non-GAAP advertising revenues grew 50% year over year to $81.0 million, within SINA's guidance between $80.0 million and $82.0 million.
  • Non-advertising revenues decreased 16% year over year to $27.3 million.
  • Non-GAAP non-advertising revenues decreased 31% year over year to $22.6 million, but exceeded SINA's guidance between $21.0 million and $22.0 million.
  • Net income attributable to SINA increased 87% year over year to $31.3 million, or $0.48 diluted net income per share attributable to SINA.
  • Non-GAAP net income attributable to SINA increased 65% year over year to $33.2 million, or $0.50 non-GAAP diluted net income per share attributable to SINA.

"For the third quarter of 2010, SINA's online advertising business, which excludes the adjusted results of SINA real estate advertising, grew 50% year over year to reach a historical high.  The strength of SINA's online advertising business has accelerated our bottom line growth." said Charles Chao, CEO of SINA.  "On the operation side, we believe the continued momentum around our mini-blog SINA Weibo and the formation of strategic partnerships with MSN and NBA will further enhance our leadership position in China's online media space."  

Financial Results

For the third quarter of 2010, SINA reported net revenues of $108.2 million, compared to $96.4 million for the same period last year.   Non-GAAP net revenues for the third quarter of 2010 totaled $103.6 million, compared to $86.5 million for the same period last year.  Advertising revenues for the third quarter of 2010 were $81.0 million, compared to $63.8 million for the same period last year.  Non-GAAP advertising revenues for the third quarter of 2010 were $81.0 million, compared to $53.9 million for the same period last year. The strong year over year growth of SINA's online advertising business was partially due to a successful coverage of the World Cup in the third quarter of 2010 and an improvement of the business climate in China.

Non-advertising revenues for the third quarter of 2010 totaled $27.3 million, compared to $32.6 million for the same period last year.  MVAS revenues for the third quarter of 2010 amounted to $20.7 million, compared to $30.9 million for the same period last year.  The year over year decline in MVAS revenues was primarily due to China Mobile implementing a series of measures in late 2009 and early 2010. Other non-advertising revenues for the third quarter of 2010 included amortized deferred revenue of $4.7 million relating to the license agreements resulting from the Transaction.  

Gross margin for the third quarter of 2010 was 60%, up from 59% for the same period last year.  Advertising gross margin for the third quarter of 2010 was 63%, up from 61% for the same period last year. Non-GAAP advertising gross margin for the third quarter of 2010 was 63%, compared to 59% for the same period last year.  The increase in non-GAAP advertising gross margin was mostly due to revenues growing faster than advertising cost of revenues.  MVAS gross margin for the third quarter of 2010 was 38%, compared to 54% for the same period last year.  The decline in MVAS gross margin was primarily due to product mix and increased revenue share with MVAS partners.  

Operating expenses for the third quarter of 2010 totaled $36.0 million, compared to $38.3 million for the same period last year.  Operating expenses for the third quarter of 2010 included $2.2 million in stock-based compensation expenses and $0.2 million in amortization expenses of intangible assets.  Non-GAAP operating expenses for the third quarter of 2010 were $33.5 million, compared to $32.9 million for the same period last year.  

Operating income for the third quarter of 2010 was $28.5 million, compared to $18.3 million for the same period last year.  Non-GAAP operating income for the third quarter of 2010 was $26.9 million, compared to $16.7 million for the same period last year.

Interest and other income, net for the third quarter of 2010 was $3.4 million, compared to $1.8 million for the same period last year.  Interest and other income, net for the third quarter of 2010 included a foreign exchange gain of $1.4 million resulting from a distribution of dividends from a subsidiary to its overseas parent company.

The Company accounts for its investment in CRIC using the equity method of accounting and reports its interest in CRIC one quarter in arrears.  Equity income from CRIC for the third quarter of 2010 was $1.7 million, which is based on the Company's share of net income attributable to CRIC for the second quarter of 2010 less its share of amortization of CRIC's intangibles not on CRIC's books. On a non-GAAP basis, equity income from CRIC for the third quarter of 2010 was $5.3 million, which was calculated based on non-GAAP net income attributable to CRIC following the same non-GAAP financial measures as the Company.  

Provision for income taxes for the third quarter of 2010 was $2.2 million, compared to $3.3 million for the same period last year.

Net income attributable to SINA for the third quarter of 2010 was $31.3 million, compared to $16.7 million for the same period last year.  Diluted net income per share attributable to SINA for the third quarter of 2010 was $0.48, compared to $0.29 for the same period last year.  Non-GAAP net income attributable to SINA for the third quarter of 2010 was $33.2 million, compared to $20.1 million for the same period of last year.  Non-GAAP diluted net income per share attributable to SINA for the third quarter of 2010 was $0.50, compared to $0.34 for the same period last year.

As of September 30, 2010, SINA's cash, cash equivalents and short-term investments totaled $857.0 million, compared to $821.5 million as of December 31, 2009.  Cash flow from operating activities was $51.3 million for the third quarter of 2010, compared to $29.1 million for the same period last year.

Business Outlook

SINA estimates that its non-GAAP net revenues for the fourth quarter of 2010 to be between $103 million and $106 million, with non-GAAP advertising revenues to be between $81 million and $83 million and non-GAAP non-advertising revenues to be between $22 million and $23 million.  Non-GAAP net revenues and non-GAAP non-advertising revenues exclude the recognition of $4.7 million in deferred revenue, which is related to the license agreements resulting from the Transaction.

Non-GAAP Measures

This release contains non-GAAP financial measures.  These non-GAAP financial measures, which are used as measures of SINA's performance, should be considered in addition to, not as a substitute for, measures of the Company's financial performance prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP").  The Company's non-GAAP financial measures may be defined differently than similar terms used by other companies.  Accordingly, care should be exercised in understanding how the Company defines its non-GAAP financial measures.

Reconciliations of the Company's non-GAAP measures to the nearest GAAP measures are set forth in the section below titled "Unaudited Reconciliation of Non-GAAP to GAAP Results."  These non-GAAP measures include non-GAAP revenues, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income attributable to SINA, non-GAAP diluted net income per share attributable to SINA, and non-GAAP advertising gross margin.

The Company's management uses non-GAAP financial measures to gain an understanding of the Company's comparative operating performance (when comparing such results with previous periods or forecasts) and future prospects.  The Company's non-GAAP financial measures exclude certain items, including stock-based compensation, amortization of intangible assets, recognition of deferred revenues relating to the license agreements resulting from the Transaction and COHT's adjusted results (for certain non-GAAP measures) from its internal financial statements for purposes of its internal budgets. Non-GAAP financial measures are used by the Company's management in their financial and operating decision-making, because management believes they reflect the Company's ongoing business in a manner that allows meaningful period-to-period comparisons.  The Company's management believes that these non-GAAP financial measures provide useful information to investors and others in the following ways:  1) in comparing the Company's current financial results with the Company's past financial results in a consistent manner, and 2) in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose.  The Company's management further believes the non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses, gains/losses and other items (i) that are not expected to result in future cash payments or (ii) that are non-recurring in nature or may not be indicative of its core operating results and business outlook.

The Company's management believes excluding stock-based compensation from its non-GAAP financial measures is useful for itself and investors, as such expense will not result in future cash payment and is not an indicator used by management to measure the Company's core operating results and business outlook.

The Company's management believes excluding the amortization expense of intangible assets from its non-GAAP financial measures is useful for itself and investors, because they enable a more meaningful comparison of the Company's cash performance between reporting periods.  In addition, such charges will not result in cash settlement in the future and is not an indicator used by management to measure the Company's core operating results and business outlook.

The Company's management believes excluding the recognition of deferred revenues relating to the license agreements resulting from the Transaction from its non-GAAP financial measures is useful for itself and investors, because they enable a more meaningful comparison of the Company's revenue performance between reporting periods.  In addition, such revenues will not result in cash settlement in the future and is not an indicator used by management to measure the Company's core operating results and business outlook.

The Company's management believes excluding COHT's results, adjusting for the impact of the amended and restated advertising agency agreement on a pro forma basis as if the agreement had been effective at the beginning of the periods presented, from its non-GAAP financial measures to reflect the spin off of COHT is useful for itself and investors, because they enable management and investors to gain a better understanding of the Company's comparative operating performance (when comparing such results with the current period or forecasts) and future prospects.

The Company's non-GAAP equity income from its interest in net income attributable to CRIC exclude stock-based compensation, amortization expense of intangible assets and gains from the purchase of a business, which are consistent with the Company's adjusted items to calculate non-GAAP measures.

The non-GAAP financial measures have limitations.  They do not include all items of income and expense that affect the Company's operations.  Specifically, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and, with respect to the non-GAAP financial measures that exclude certain items under GAAP, do not reflect any benefit that such items may confer to the Company.  Management compensates for these limitations by also considering the Company's financial results as determined in accordance with GAAP.

Conference Call

SINA will host a conference call at 8:00 p.m. Eastern Time to present an overview of the Company's financial performance and business operations. A live webcast of the call will be available from 8:00 p.m.9:00 p.m. Eastern Time on Tuesday, November 16, 2010 (9:00 a.m.10:00 a.m. Beijing Time on November 17, 2010). The webcast can be accessed through the Company's corporate website at http://corp.sina.com. A dial-in to the conference is also available. Dial-in details are as follows:

US:

+1 857 350 1586

UK:

+44 207 365 8426

Hong Kong:

+852 3002 1672

Password for all regions:

73304515

A replay of the conference call will be available through midnight Eastern Time, November 23, 2010. The dial-in number is + 1 617 801 6888 (International). The pass code for the replay is 29517329.

About SINA

SINA Corporation (NASDAQ GS: SINA) is a leading online media company and mobile value-added service provider for China and for the global Chinese communities.  With a branded network of localized websites targeting Greater China and overseas Chinese, the Company provides services through five major business lines including SINA.com (online news and content), SINA Mobile (MVAS), SINA Community (Web 2.0-based services and games), SINA.net (search and enterprise services) and SINA E-Commerce (online shopping).  Together these business lines provide an array of services, including region-focused online portals, MVAS, social networking service (SNS), blog, audio and video streaming, album, online games, email, search, classified listings, fee-based services, e-commerce and enterprise e-solutions.  The Company generates the majority of its revenues from online advertising and MVAS offerings, and, to a lesser extent, from search and other fee-based services.

Safe Harbor Statement

This announcement contains forward-looking statements that relate to, among other things, SINA's expected financial performance and SINA's strategic and operational plans (as described without limitation in the "Business Outlook" section and in quotations from management in this press release).  SINA may also make forward-looking statements in the Company's periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in its proxy statements, in its offering circulars and prospectuses, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties.  SINA assumes no obligation to update the forward-looking statements in this release and elsewhere.  Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements.  Forward-looking statements involve inherent risks and uncertainties.  A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement.  Potential risks and uncertainties include, but are not limited to, SINA's limited operating history, the current global financial and credit market crisis and its impact on the Chinese economy, the recent slower growth of the Chinese economy, the uncertain regulatory landscape in the People's Republic of China, fluctuations in the Company's quarterly operating results, the Company's reliance on online advertising sales and MVAS for a majority of its revenues, the Company's reliance on mobile operators in China to provide MVAS, changes by mobile operators in China to their policies for MVAS, any failure to successfully develop and introduce new products, including MVAS products, any failure to successfully integrate acquired businesses, and risks associated with CRIC, including the merger of SINA online real estate business with CRIC.  Further information regarding these and other risks is included in SINA's Annual Report on Form 20-F for the year ended December 31, 2009 and its other filings with the Securities and Exchange Commission.

Contact:

Cathy Peng

SINA Corporation

Phone: 8610-82628888 x 3112

Email: ir@staff.sina.com.cn

SINA CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. Dollar in thousands, except per share data)

Three months ended

Nine months ended

September 30,

June 30,

September 30,

2010

2009

2010

2010

2009

Net revenues:

   Advertising

$ 80,994

$ 63,782

$ 73,090

$ 208,363

$ 164,708

   Non-advertising

27,252

32,576

26,326

84,300

95,673

108,246

96,358

99,416

292,663

260,381

Cost of revenues:

   Advertising  (a)

30,269

25,104

29,053

83,324

70,978

   Non-advertising

13,465

14,627

12,303

38,637

43,873

43,734

39,731

41,356

121,961

114,851

Gross profit

64,512

56,627

58,060

170,702

145,530

Operating expenses:

   Sales and marketing (a)

21,132

21,757

19,584

57,766

58,704

   Product development (a)

8,684

7,851

7,983

24,352

23,170

   General and administrative (a)

5,914

8,324

4,169

16,289

21,804

   Amortization of intangibles

240

412

246

3,086

1,234

35,970

38,344

31,982

101,493

104,912

Income from operations

28,542

18,283

26,078

69,209

40,618

Non-operating income:

  Interest and other income, net

3,355

1,848

1,601

6,549

6,904

  Income (loss) from investments, net

1,570

-

(84)

11,477

-

4,925

1,848

1,517

18,026

6,904

Income before income taxes

33,467

20,131

27,595

87,235

47,522

Provision for income taxes

(2,226)

(3,268)

(2,391)

(6,515)

(7,311)

Net income

31,241

16,863

25,204

80,720

40,211

  Less: Net income (loss) attributable to the noncontrolling interest

(69)

160

(25)

(172)

421

Net income attributable to SINA

$ 31,310

$ 16,703

$ 25,229

$   80,892

$   39,790

Basic net income per share attributable to SINA

$     0.51

$     0.31

$     0.41

$       1.32

$       0.74

Diluted net income per share attributable to SINA

$     0.48

$     0.29

$     0.38

$       1.23

$       0.68

Shares used in computing  basic

  net income per share attributable to SINA

61,249

53,884

61,066

61,080

54,025

Shares used in computing diluted

  net income per share attributable to SINA

65,825

58,504

65,562

65,653

58,347

(a) Stock-based compensation included was as follows:

Cost of revenues - advertising

$      566

$      622

$      812

$     2,399

$     1,883

Sales and marketing

479

558

615

1,847

1,638

Product development

333

435

444

1,429

1,285

General and administrative

     1,377

     1,305

     1,531

       4,640

       4,714

SINA CORPORATION

UNAUDITED RECONCILIATION OF NON-GAAP TO GAAP RESULTS

(U.S. Dollar in thousands, except per share data)

Three months ended

Three months ended

Three months ended

September 30, 2010

September 30, 2009

June 30, 2010

Non-GAAP

Non-GAAP

Non-GAAP

Actual

Adjustments

Results

Actual

Adjustments

Results

Actual

Adjustments

Results

Advertising revenues

$        80,994

$        80,994

$        63,782

(9,875)

(d)

$        53,907

$        73,090

$        73,090

Non-advertising revenues

27,252

(4,687)

(c)

22,565

32,576

32,576

26,326

(4,686)

(c)

21,640

Revenues

$      108,246

$          (4,687)

$      103,559

$        96,358

$           (9,875)

$        86,483

$        99,416

$           (4,686)

$        94,730

622

(a)

566

(a)

88

(b)

812

(a)

(4,687)

(c)

(7,797)

(d)

(4,686)

(c)

Gross profit

$        64,512

$          (4,121)

$        60,391

$        56,627

$           (7,087)

$        49,540

$        58,060

$           (3,874)

$        54,186

(2,298)

(a)

(2,189)

(a)

(412)

(b)

(2,590)

(a)

(240)

(b)

(2,757)

(d)

(246)

(b)

Operating expenses

$        35,970

$          (2,429)

$        33,541

$        38,344

$           (5,467)

$        32,877

$        31,982

$           (2,836)

$        29,146

2,755

(a)

2,920

(a)

3,402

(a)

240

(b)

500

(b)

246

(b)

(4,687)

(c)

(5,040)

(d)

(4,686)

(c)

Income from operations

$        28,542

$          (1,692)

$        26,850

$        18,283

$           (1,620)

$        16,663

$        26,078

$           (1,038)

$        25,040

2,755

(a)

3,402

(a)

240

(b)

246

(b)

3,569

(e)

2,903

(a)

3,558

(e)

(4,687)

(c)

470

(b)

(4,686)

(c)

Net income attributable to SINA

$        31,310

$            1,877

$        33,187

$        16,703

$             3,373

$        20,076

$        25,229

$            2,520

$        27,749

Diluted net income per share attributable to SINA

$            0.48

$            0.50

$            0.29

$            0.34

$            0.38

$            0.42

Shares used in computing diluted

net income per share attributable to SINA

65,825

65,825

58,504

58,504

65,562

65,562

Gross margin - advertising

63%

0%

63%

61%

-2%

59%

60%

1%

61%

Nine months ended

Nine months ended

September 30, 2010

September 30, 2009

Non-GAAP

Non-GAAP

Actual

Adjustments

Results

Actual

Adjustments

Results

Advertising revenues

$      208,363

$      208,363

$      164,708

(25,702)

(d)

$      139,006

Non-advertising revenues

84,300

(14,059)

(c)

70,241

95,673

95,673

Revenues

$      292,663

$        (14,059)

$      278,604

$      260,381

$         (25,702)

$      234,679

1,883

(a)

2,399

(a)

265

(b)

(14,059)

(c)

(20,409)

(d)

Gross profit

$      170,702

$        (11,660)

$      159,042

$      145,530

$         (18,261)

$      127,269

(7,637)

(a)

(7,916)

(a)

(1,234)

(b)

(3,086)

(b)

(8,117)

(d)

Operating expenses

$      101,493

$        (11,002)

$        90,491

$      104,912

$         (16,988)

$        87,924

10,315

(a)

9,520

(a)

3,086

(b)

1,499

(b)

(14,059)

(c)

(12,292)

(d)

Income from operations

$        69,209

$             (658)

$        68,551

$        40,618

$           (1,273)

$        39,345

10,315

(a)

3,086

(b)

3,033

(e)

9,479

(a)

(14,059)

(c)

1,409

(b)

Net income attributable to SINA

$        80,892

$            2,375

$        83,267

$        39,790

$           10,888

$        50,678

Diluted net income per share attributable to SINA

$            1.23

$            1.27

$            0.68

$            0.87

Shares used in computing diluted

net income per share attributable to SINA

65,653

65,653

58,347

58,347

Gross margin - advertising

60%

1%

61%

57%

-3%

54%

(a)  To adjust stock-based compensation related to employee incentives.

(b)  To adjust  amortization of intangible assets.

(c)  To adjust the recognition of deferred revenue related to the license agreements resulting from the transaction with CRIC.

(d)  To exclude COHT’s results, adjusting for the impact of the amended and restated advertising agency agreement on a pro forma basis as if the agreement had been effective at the beginning of the period presented.

(e)  To adjust share of CRIC's GAAP to Non-GAAP reconciling items, net of share of amortization of CRIC's intangibles not on CRIC's books.

Three months ended

Three months ended

Nine months ended

September 30, 2010

June 30, 2010

September 30, 2010

Actual

Adjustments

Non-GAAP Results

Actual

Adjustments

Non-GAAP Results

Actual

Adjustments

Non-GAAP Results

To adjust stock-based compensation

$            1,311

$             1,311

$            3,912

To adjust amortization expenses of intangible

assets resulting from business acquisitions

1,485

1,474

4,658

To adjust gains from the purchase of a business:

Income from investment in affiliates*

-

-

(7,155)

Gain from settlement of pre-existing

relationship with COHT

-

-

(701)

Equity income from CRIC

$          2,491

$            2,796

$          5,287

$             650

$             2,785

$          3,435

$        13,947

$               714

$        14,661

Share of amortization of CRIC's intangibles not

on CRIC's books

$           (773)

$               773

$                -

$           (773)

$                773

$                -

$        (2,319)

$            2,319

$                -

$          1,718

$            3,569

$          5,287

$           (123)

$             3,558

$          3,435

$        11,628

$            3,033

$        14,661

 * Represents the excess of fair value over the carrying amount recognized as a result of acquisition of COHT.  

SINA CORPORATION

UNAUDITED SEGMENT INFORMATION

(U.S. Dollar in thousands)

Three months ended

Nine months ended

September 30,

June 30,

September 30,

2010

2009

2010

2010

2009

Net revenues

Advertising

$              80,994

$             63,782

$               73,090

$            208,363

$            164,708

Mobile related

20,658

30,881

19,964

65,176

90,745

Others

6,594

1,695

6,362

19,124

4,928

$            108,246

$             96,358

$               99,416

$            292,663

$            260,381

Cost of revenues

Advertising

$              30,269

$             25,104

$               29,053

$              83,324

$              70,978

Mobile related

12,741

14,223

11,660

36,825

42,644

Others

724

404

643

1,812

1,229

$              43,734

$             39,731

$               41,356

$            121,961

$            114,851

SINA CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollar in thousands)

September 30,

December 31,

2010

2009

Assets

Current assets:

Cash and cash equivalents

$                  620,777

$                746,423

Short-term investments

236,236

75,095

Accounts receivable, net

86,158

74,999

Other current assets

30,415

22,381

     Total current assets

973,586

918,898

Property and equipment, net

29,043

23,022

Goodwill and intangible assets, net

85,367

87,740

Investments

628,228

580,606

Other assets

4,060

3,576

Total assets

$               1,720,284

$             1,613,842

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable

$                      4,864

$                    1,918

Accrued liabilities

118,766

108,970

Income taxes payable

14,251

14,526

Convertible debt

99,000

99,000

    Total current liabilities

236,881

224,414

Long-term deferred revenue

150,190

164,019

Other long-term liabilities

3,548

2,710

    Total liabilities

390,619

391,143

Shareholders' equity

SINA shareholders' equity

1,328,389

1,221,727

Noncontrolling interest

1,276

972

    Total shareholders' equity

1,329,665

1,222,699

Total liabilities and shareholders' equity

$               1,720,284

$             1,613,842

SOURCE SINA Corporation



RELATED LINKS

http://www.sina.com