2014

Taomee Reports Unaudited First Quarter 2013 Financial Results

 

SHANGHAI, May 23, 2013 /PRNewswire/ -- Taomee Holdings Limited (NYSE: TAOM) ("Taomee" or the "Company"), one of the leading children's entertainment and media companies in China, today reported its unaudited financial results for the first quarter ended March 31, 2013.

First Quarter of 2013 Financial Highlights

  • Total net revenues were US$9.6 million in the first quarter of 2013, as compared with US$10.4 million in the first quarter of 2012.
  • Net income attributable to the holders of ordinary shares was US$1.0 million in the first quarter of 2013, as compared with US$1.6 million in the first quarter of 2012.
  • Basic and diluted earnings per ADS[1] were US$0.03 and US$0.03, respectively in the first quarter of 2013 as compared with US$0.04 and US$0.04, respectively, in the first quarter of 2012.
  • Non-GAAP net income attributable to holders of ordinary shares was US$1.6 million in the first quarter of 2013, as compared with US$2.2 million in the first quarter of 2012.
  • Non-GAAP basic and diluted earnings per ADS were US$0.04 and US$0.04, respectively, in the first quarter of 2013, as compared with US$0.06 and US$0.06, respectively, in the first quarter of 2012.

[1]

Each American Depositary Share ("ADS") represents twenty ordinary shares

Mr. Benson Wang, co-founder and chief executive officer of Taomee, stated, "This quarter demonstrated solid progress in executing our multi-pronged growth strategies to continue expanding our user base age range as well as to improve the monetization capabilities of our robust cross-media platform. Strong growth in our core games, Seer, Gong Fu Pai and Flower Fairy, helped us significantly exceed our own guidance and consensus estimates by 16% and 17%, respectively.

"Going forward, we plan to continue our balanced focus on increasing profitability and user growth over the coming quarters. As the summertime approaches we expect our new games like Avatar Star and Heroes Alliance, to continue to attract new users as well as to further strengthen our brand equity that can drive offline sales. This trend is exemplified by our self-produced TV show, Taomee Dream School, which was recently rated as one of the top three animation programs in China, according to our partnered TV stations' rating. This success has strengthened our overall brand equity and trust with children and families throughout China and we hope this will continue to drive our online and offline business expansion over the coming years," concluded Mr. Wang.

Operational Results for First Quarter of 2013

  • Active paying accounts for the Company's virtual worlds under operation in mainland China increased by 25% sequentially to 1.5 million in the first quarter of 2013 from 1.2 million in the fourth quarter of 2012 due to strong seasonality effect, but decreased from 1.9 million in the first quarter of 2012, as the company did not commercially launch any new online games in recent quarters.
  • Average revenue per user ("ARPU") for the Company's virtual worlds under operation in mainland China was approximately RMB 33, an increase of 11% and 6.5% from the fourth quarter of 2012 and the first quarter of 2012, respectively.
  • The number of downloads for the mobile applications operated by the Company increased by over 23% to approximately 3.7 million in the first quarter of 2013 from 3.0 million in the first quarter of 2012, and increased by 35% from 2.7 million in the fourth quarter of 2012. As of March 31, 2013, the total cumulative downloads for Taomee's mobile applications reached approximately 19.0 million.

Unaudited Financial Results for First Quarter of 2013

Total Net Revenues

Total net revenues were US$9.6 million in the first quarter of 2013, as compared with US$10.4 million in the first quarter of 2012.

Net online business revenues were US$8.2 million in the first quarter of 2013, as compared with US$9.3 million in the first quarter of 2012.

Net offline business revenues increased 28.5% to US$1.4 million in the first quarter of 2013, as compared with US$1.1 million in the first quarter of 2012. The increase was driven by the increase in interactive toy sales.

Total Cost of Services

Total cost of services was US$2.3 million in the first quarter of 2013, as compared with US$2.1 million in the first quarter of 2012, primarily due to the increase in costs of service in both online and offline business.

Online business related costs were US$1.8 million in the first quarter of 2013, as compared with US$1.7 million in the first quarter of 2012. The increase was primarily due to amortization costs associated with the Company's upfront game licensing fees which were partially offset by the decrease in bandwidth and hosting costs.

Offline business related costs were US$0.5 million in the first quarter of 2013, as compared with US$0.4 million in the first quarter of 2012. The slight increase was mainly due to an increase in costs related to interactive toys business.

Gross Profit and Gross Margin

Gross profit was US$7.3 million in the first quarter of 2013, as compared with US$8.3 million in the first quarter of 2012.

Gross margin was 76.3% in the first quarter of 2013, as compared with 79.6% in the first quarter of 2012, reflecting increased growth in offline sales as a percentage of total net revenues.

Gross margin for the online business was 78.6% in the first quarter of 2013, as compared with 81.4% in the first quarter of 2012.

Gross margin for the offline business was 62.7% in the first quarter of 2013, as compared with 63.9% in the first quarter of 2012.

Total Operating Expenses

Total operating expenses decreased by 3.8% to US$7.3 million in the first quarter of 2013, as compared with US$7.5 million in the first quarter of 2012.

  • Product development expenses were US$3.3 million in the first quarter of 2013, which remained stable as compared with the first quarter of 2012.
  • Sales and marketing expenses decreased 21.7% to US$1.7 million in the first quarter of 2013, as compared with US$2.2 million in the first quarter of 2012. The decrease was primarily due to lower advertising expenses for both online virtual worlds and mobile products.
  • General and administrative expenses were US$3.0 million in the first quarter of 2013, as compared with US$2.7 million in the first quarter of 2012.The increase was mainly due to higher payroll expenses including share based compensation expenses.

Share of Profit/ Loss in Equity Method Investment

Share of profit in equity methods investments was US$0.3 million in the first quarter of 2013, as compared with US$0.2 million in the first quarter of 2012.

Profit from Operations

Profit from operations was US$66,847 in the first quarter of 2013, as compared with US$0.8 million in the first quarter of 2012.

Net Income

Net income attributable to holders of ordinary shares was US$1.0 million, compared with US$1.6 million in the first quarter of 2012.

Basic and diluted earnings per ADS were US$0.03 and US$0.03, respectively, in the first quarter of 2013, as compared with US$0.04 and US$0.04, respectively, in the first quarter of 2012.

Non-GAAP net income attributable to holders of ordinary shares was US$1.6 million in the first quarter of 2013, as compared with US$2.2 million in the first quarter of 2012.

Non-GAAP basic and diluted earnings per ADS were US$0.04 and US$0.04, respectively, in the first quarter of 2013, as compared with US$0.06 and US$0.06, respectively, in the first quarter of 2012.

Cash and Cash Equivalents

As of March 31, 2013, the Company had US$113.1 million of cash and cash equivalents, compared with US$118.6million as of December 31, 2012.

Share Repurchase Program

During the first quarter of 2013, Taomee had repurchased 217,934 ADSs. As of March 31, 2013 the Company had repurchased a total of 803,486 ADSs under the Company's share repurchase program at an average price of approximately US$3.95 per ADS.

Business Highlights

On February 1st, 2013, Taomee began broadcasting its self-produced TV show Taomee Dream School, and Seer animation Season 2 on leading cartoon channels across China.

On March 14th, 2013, Taomee started closed beta testing for Avatar Star, a cartoon style action game.

On March 15th, 2013, Taomee began broadcasting Mole's World Season 3 on leading cartoon channels throughout mainland China and Hong Kong.

On April 2nd, 2013, Taomee started the second round of closed beta testing for Speedy Hunter, a 3-D racing game.

On May 10th,, 2013, Taomee started closed beta testing for Heroes Alliance, a new action game and major brand extension of Seer franchise.

On May 14th, 2013, Taomee partnered with Shanghai Youhug Media Co., Ltd to co-market a new family entertainment TV program called "Bao Bei", or "Baby" in English.

Outlook for Second Quarter of 2013

Net revenues for the second quarter of 2013 are expected to be in the range of US$9.0 million to US$9.5 million. This forecast reflects the Company's current and preliminary view, which is subject to change.

Non-GAAP Financial Measures

To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States, or GAAP, this press release presents non-GAAP net income attributable to the Company's shareholders and non-GAAP earnings per ADS by excluding share-based compensation charge from net income attributable to the Company's shareholders and from the calculation of earnings per ADS. The Company believes these non-GAAP financial measures are important to help investors understand the Company's operating and financial performance compare business trends among different reporting periods on a consistent basis and assess the Company's core operating results. The use of the above non-GAAP financial measures has certain limitations. Share-based compensation charge has been and will continue to be incurred and is not reflected in the presentation of the non-GAAP financial measures; it should be considered in the overall evaluation of our results. None of the non-GAAP measures is a measure of net income attributable to the Company's shareholders, operating profit, operating performance or liquidity presented in accordance with GAAP. We compensate for these limitations by providing the relevant disclosure of our share-based compensation charge in our reconciliations to the most directly comparable GAAP financial measures, which should be considered when evaluating our performance. These non-GAAP financial measures should be considered in addition to financial measures prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP. Reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure is set forth at the end of this release.

Conference Call

The Company will host a conference call and live webcast at 8:00 a.m. Eastern Standard Time (New York) on Thursday, May 23, 2013 (which is 8:00 p.m. in China on Thursday, May 23, 2013).

The dial-in details for the live conference call are:

Conference ID:

71725351

U.S. toll-free:

+1-866-519-4004

Hong Kong toll-free:

800-930-346

International:

+65-6723-9381

China Mainland:

400-620-8038



Passcode:

Taomee

A live webcast and archive of the conference call will be available on the Investor Relations section of Taomee's website at http://www.media-server.com/m/p/q3whspod. A telephone replay of the call will be available at 11:00am, Eastern Standard Time on May 23, 2013 through 10:00am, May 30. The dial-in details for the telephone replay are:

Conference ID:

71725351

International:            

+612-8199-0299

China:

400 1200 932

About Taomee Holdings Limited

Taomee Holdings Limited is one of the leading children's entertainment and media companies in China driven to deliver exceptional entertainment to children and families. Founded in 2007, Taomee is one the first companies in Greater China to develop animated franchises for children through online virtual world that are both fun and educational. The Company's virtual worlds are widely trusted by millions of parents and caregivers across Asia. The Company's Mole's World and Seer franchises and characters have reached millions of children and families through virtual worlds, books, monthly print magazines, interactive toys, mobile applications, animated television series and movies. For more information, please visit: http://www.taomee.com/en_taomee.html

Safe Harbor Statements

This press release contains statements that may constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. Among other things, the management's quotations and outlook information contain forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Potential risks and uncertainties include, but are not limited to: the Company's business strategies and initiatives as well as business plans; future business development, results of operations and financial condition; expected changes in revenues and certain cost or expense items; expectations with respect to increased revenue growth and the Company's ability to sustain profitability; the Company's services and products under development or planning; the Company's ability to attract users and further enhance the Company's brand recognition; and trends and competition in the children's entertainment and media market and industry, including those for online entertainment. Further information regarding these and other risks is included in Taomee's filings with the U.S. Securities and Exchange Commission, including its registration statement on its final prospectus dated June 10, 2011. All information provided in this press release is as of the date of the press release, and the Company undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as required under applicable law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, the Company cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.

For further information, please contact

Na You
Taomee Holdings Limited
+86-21-61280056-8578
ir@taomee.com


Taomee Holdings Limited - Unaudited Consolidated Balance Sheets



In USD


In USD


March 31


December 31


2013


2012

ASSETS




Current assets:




Cash and cash equivalents

$ 113,098,428


$ 118,570,672

Short term investment

2,986,930


-

Accounts receivable

2,862,442


2,371,060

Inventories

182,308


41,316

Income tax recoverable

-


49,956

    Due from related parties

303,268


893,020

    Prepayments and other current assets

1,754,919


2,071,509

    Deferred tax assets, current

2,977,761


2,969,896

Total current assets

124,166,056


126,967,429





Investments in equity investees

10,470,000


8,262,077

Property and equipment, net

1,390,231


1,305,721

Acquired intangible assets

1,539,503


1,664,763

Other assets

2,589,003


1,557,532

TOTAL ASSETS

$ 140,154,793


$ 139,757,522





LIABILITIES AND EQUITY




Current liabilities:




    Accounts payable

$ 553,891


$ 434,626

    Income tax payable

33,993


-

    Advance from customers

8,348,973


8,142,177

    Due to related parties

179,910


89,728

    Deferred revenue

12,269,666


12,061,510

    Deferred tax liabilities, current

13,508


13,473

    Accrued expenses and other current liabilities

3,996,112


5,265,461

Total current liabilities

25,396,053


26,006,975





Equity




Taomee Holdings Limited shareholders' equity




Ordinary shares ($0.00002 par value; 875,000,000
    shares authorized; 736,648,732 and 735,277,726
    shares issued; 732,409,792 and 730,919,046
    outstanding as of December 31, 2012 and March
    31, 2013, respectively)

14,706


14,733

    Treasury stock

(857,867)


(747,359)

    Additional paid-in capital

72,449,882


72,437,283

    Retained earnings

40,374,332


39,412,717

    Accumulated other comprehensive income

2,701,748


2,555,570

Taomee Holdings Limited shareholders' equity

114,682,801


113,672,944

Non-controlling interests

75,939


77,603

Total equity

$ 114,758,740


$ 113,750,547





TOTAL LIABILITIES AND EQUITY

$ 140,154,793


$ 139,757,522

 

 

 

Taomee Holdings Limited - Unaudited Consolidated Statements of Operations




In USD, except for share data

For three months ended



March 31,


December 31,


March 31,



2013


2012


2012

Revenues:







   Online business, net


$ 8,183,073


$ 6,268,344


$ 9,331,748

   Offline business, net


1,411,829


1,201,174


1,098,999

Total net revenues


9,594,902


7,469,518


10,430,747








Cost of services







   Online business


(1,748,437)


(1,632,259)


(1,735,379)

   Offline business


(526,726)


(370,939)


(397,208)

Total cost of services


(2,275,163)


(2,003,198)


(2,132,587)








Gross profit


7,319,739


5,466,320


8,298,160








Operating income (expenses):







   Product development


(3,294,735)


(2,695,542)


(3,264,035)

   Sales and marketing


(1,727,418)


(2,066,303)


(2,205,483)

   General and administrative


(2,977,947)


(2,198,155)


(2,732,887)

   Other operating income


747,208


2,763,137


664,014

Total operating expenses


(7,252,892)


(4,196,863)


(7,538,391)








Profit from operations


66,847


1,269,457


759,769








Interest income, net


760,734


672,226


624,196

Other income, net


132,446


563,319


253,076

Income before income taxes and share
   of profit in equity method investments


960,027


2,505,002


1,637,041








Income tax expense


(250,717)


(366,949)


(252,351)








Share of profit in equity method investments


250,642


113,437


215,250








Net income


959,952


2,251,490


1,599,940








Less: Net loss attributable to noncontrolling
interest


(1,663)


(1,376)


-








Net income attributable to holders of
   ordinary shares


$ 961,615


$ 2,252,866


$ 1,599,940

Earnings per ADS







-Basic


$ 0.03


$ 0.06


$ 0.04

-Diluted


$ 0.03


$ 0.06


$ 0.04

Weighted average number of shares used
    in calculation







- Basic


732,203,457


733,212,007


728,427,520

- Diluted


747,888,335


748,172,541


756,386,776









 

Taomee Holdings Limited - Unaudited Consolidated Statements of Comprehensive Income



In USD,

For three months ended


March 31,

2013


December 31,

2012


March 31,

2012

Net income

$ 959,952


$ 2,251,490


$ 1,599,940

Other comprehensive income, net of tax






Foreign currency translation adjustments

146,178


470,111


48,378







Comprehensive income

1,106,130


2,721,601


1,648,318

Comprehensive loss attributable to noncontrolling interest

(1,663)


(1,376)


-







Comprehensive income attributable to Taomee Holdings Limited

1,107,793


2,722,977


1,648,318

 

 

 

Taomee Holdings Limited - Reconciliation of Non-GAAP and GAAP Results




In USD, except for share data

For three months ended



March 31,


December 31,


March 31,



2013


2012


2012

Reconciliation from Non-GAAP measures to GAAP measures














Non-GAAP net income attributable to holders of ordinary shares


$ 1,561,627


$ 2,730,391


$ 2,166,858

Share-based compensation


(600,012)


(477,525)


(566,918)

GAAP net income attributable to holders of ordinary shares


$ 961,615


$ 2,252,866


$ 1,599,940








Non-GAAP diluted earnings per ADS







-Basic


$ 0.04


$ 0.07


$ 0.06

-Diluted


$ 0.04


$ 0.07


$ 0.06










SOURCE Taomee Holdings Limited



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