Youku Tudou Announces Third Quarter 2015 Unaudited Financial Results

Nov 19, 2015, 19:00 ET from Youku Tudou Inc.

BEIJING, Nov. 19, 2015 /PRNewswire/ -- Youku Tudou Inc. (NYSE: YOKU), a leading multi-screen entertainment and media company in China ("Youku Tudou" or the "Company"), today announced its unaudited financial results for the third quarter 2015.

Third Quarter 2015 Highlights1

  • Net revenues were RMB1.85 billion (US$291.8 million), a 62% increase from the corresponding period in 20142. Non-GAAP3 net revenues were RMB1.70 billion (US$267.6 million) in the third quarter of 2015, a 54% increase from the corresponding period in 2014.
  • Gross profit was RMB311.5 million (US$49.0 million), a 36% increase from the corresponding period in 2014. Non-GAAP gross profit was RMB299.1 million (US$47.1 million) in the third quarter of 2015, a 19% increase from the corresponding period in 2014.
  • Net loss was RMB435.6 million (US$68.5 million), as compared to RMB197.6 million (US$31.1 million) from the corresponding period in 2014. Non-GAAP net loss was RMB316.5 million (US$49.8 million) in the third quarter of 2015, as compared to RMB111.2 million (US$17.5 million) from the corresponding period in 2014.
  • Basic and diluted loss per ADS, each representing 18 Class A ordinary shares of the Company, for the third quarter of 2015 amounted to RMB2.23 (US$0.35) and RMB2.23 (US$0.35), respectively. Non-GAAP basic and diluted loss per ADS for the third quarter of 2015 amounted to RMB1.62 (US$0.25) and RMB1.62 (US$0.25), respectively.
  • Cash, cash equivalents, restricted cash and short-term investments totaled RMB7.48 billion (US$1.18 billion) as of September 30, 2015.
  • Acquisition of property and equipment for the third quarter of 2015 was RMB93.9 million (US$14.8 million).
  • Acquisition of licensed copyright for the third quarter of 2015 was RMB516.0 million (US$81.2 million).

Third Quarter 2015 Results

Net revenues were RMB1.85 billion (US$291.8 million) in the third quarter of 2015, a 62% increase from the corresponding period in 2014. Non-GAAP net revenues were RMB1.70 billion (US$267.6 million) in the third quarter of 2015, a 54% increase from the corresponding period in 2014, meeting the non-GAAP net revenues guidance previously announced by the Company.

Advertising net revenues were RMB1.35 billion (US$212.2 million) in the third quarter of 2015, a 37% increase from the corresponding period in 2014, meeting the advertising net revenues guidance previously announced by the Company. The growth was primarily attributable to the increased use by brand advertisers of our advertising services as evidenced by an increase in the number of advertisers and the rising average spend per advertiser.

Consumer revenues, which are derived from our subscription-based service, interactive live entertainment and mobile game joint operation, were RMB256.2 million (US$40.3 million) in the third quarter of 2015, a 514% increase from the corresponding period in 2014. The growth was primarily attributable to the increasing user adoption of our consumer services as evidenced by expansion of subscriber base of our subscription-based service, and growing number of paying users and average spend per user of our interactive live entertainment service.

1 The reporting currency of the Company is Renminbi ("RMB"), but for the convenience of the reader, the amounts presented throughout the release are in US dollars ("US$"). Unless otherwise noted, all conversions from RMB to US$ are made at a rate of RMB6.3556 to US$1.00, the effective noon buying rate as of September 30, 2015 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.


2 As noted in the Company's annual report for fiscal year 2014 on Form 20-F (the "2014 Annual Report"), certain adjustments were made to the Company's historical consolidated financial statements reflecting certain revisions to its accounting treatment for (i) licensed copyrights and (ii) nonmonetary exchanges of licensed copyrights, as further described in the 2014 Annual Report. Accordingly, unaudited financial information in this release in relation to the third quarter of 2014 has been amended, where applicable, principally as a result of, and to reflect the adjustment caused by, such revisions of the Company's accounting treatment.


3 All non-GAAP measures exclude, as applicable, barter sublicensing revenues, amortization of licensed copyrights from nonmonetary content exchanges, share-based compensation expenses and amortization of intangible assets from business combination. For further details on non-GAAP measures, please refer to the reconciliation table and a detailed discussion of the Company's use of non-GAAP information set forth elsewhere in this press release.

Bandwidth costs as a component of cost of revenues were RMB331.4 million (US$52.1 million) in the third quarter of 2015, representing 18% of net revenues, as compared to 20% of  net revenues for the corresponding period in 2014.

Content costs as a component of cost of revenues were RMB896.1 million (US$141.0 million) in the third quarter of 2015, representing 48% of net revenues as compared to 48% of net revenues for the corresponding period in 2014. Non-GAAP content costs were RMB754.6 million (US$118.7 million) in the third quarter of 2015, representing 44% of non-GAAP net revenues, as compared to 44% of non-GAAP net revenues for the corresponding period in 2014. This increase was primarily due to expansion of our video content portfolio to support our new business growth initiatives.

Gross profit was RMB311.5 million (US$49.0 million)in the third quarter of 2015, a 36% increase from the corresponding period in 2014. Non-GAAP gross profit was RMB299.1 million (US$47.1 million) in the third quarter of 2015, a 19% increase from the corresponding period in 2014.

Operating expenses were RMB766.5 million (US$120.6 million) in the third quarter of 2015, as compared to RMB450.3 million (US$70.9 million) for the corresponding period in 2014. Non-GAAP operating expenses were RMB635.0 million (US$99.9 million) in the third quarter of 2015, as compared to RMB386.3 million (US$60.8 million) for the corresponding period in 2014. Detailed discussion of each component of operating expenses is as follows:

Sales and marketing expenses were RMB438.5 million (US$69.0 million) in the third quarter of 2015, as compared to RMB286.2 million (US$45.0 million) for the corresponding period in 2014. Non-GAAP sales and marketing expenses were RMB388.1 million (US$61.1 million) in the third quarter of 2015, as compared to RMB262.6 million (US$41.3 million) for the corresponding period in 2014. This increase was primarily due to increases in marketing expenses and commission paid to our sales force in line with our revenue growth.

Product development expenses were RMB205.4 million (US$32.3 million) in the third quarter of 2015, as compared to RMB111.9 million (US$17.6 million) for the corresponding period in 2014. Non-GAAP product development expenses were RMB163.3 million (US$25.7 million) in the third quarter of 2015, as compared to RMB93.3 million (US$14.7 million) for the corresponding period in 2014. This increase was primarily due to an increase in personnel related expenses for our product development in mobile, search, social, subscription and interactive live entertainment services.

General and administrative expenses were RMB122.6 million (US$19.3 million) in the third quarter of 2015, as compared to RMB52.2 million (US$8.2 million) from the corresponding period in 2014. Non-GAAP general and administrative expenses were RMB83.6 million (US$13.2 million) in the third quarter of 2015, as compared to RMB30.3 million (US$4.8 million) from the corresponding period in 2014.

Net loss was RMB435.6 million (US$68.5 million)in the third quarter of 2015, as compared to RMB197.6 million (US$31.1 million) for the corresponding period in 2014. Non-GAAP net loss was RMB316.5 million (US$49.8 million) in the third quarter of 2015, as compared to RMB111.2 million (US$17.5 million) from the corresponding period in 2014.

About Youku Tudou Inc.

Youku Tudou Inc. (NYSE: YOKU) is a leading multi-screen entertainment and media company in China. Youku Tudou is China's leading Internet television platform, enabling users to search, view and share high-quality video content quickly and easily across multiple devices. Its Youku brand and Tudou brand are among the most recognized online video brands in China. Youku Tudou's American depositary shares, each representing 18 of Youku Tudou's Class A ordinary shares, are traded on the NYSE under the symbol "YOKU."  

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 and quotations from management in this announcement, as well as Youku Tudou's strategic and operational plans, contain forward-looking statements. Youku Tudou 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 Youku Tudou'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 online video 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 Youku Tudou does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Youku Tudou's financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Youku Tudou uses the following measures defined as non-GAAP financial measures by the SEC in evaluating its business: non-GAAP net revenues, non-GAAP content costs, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP sales and marketing expenses, non-GAAP product development expenses, non-GAAP general and administrative expenses, non-GAAP profit or loss from operations and non-GAAP net profit or loss and non-GAAP adjusted EBITDA profit or loss. We define non-GAAP net revenues as net revenues excluding barter sublicensing revenues. We define non-GAAP content costs as content costs excluding amortization of licensed copyrights from nonmonetary content exchanges, share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content. We define non-GAAP gross profit or loss as the respective nearest comparable GAAP financial measure to exclude barter sublicensing revenues, amortization of licensed copyrights from nonmonetary content exchanges, share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content. We define non-GAAP operating expenses as operating expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to customer relationship, technology and non-compete provisions. We define non-GAAP sales and marketing expenses as sales and marketing expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to customer relationship. We define non-GAAP product development expense as product development expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to technology. We define non-GAAP general and administrative expenses as general and administrative expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to non-compete provisions. We define non-GAAP profit or loss from operations as profit or loss from operations excluding barter sublicensing revenues, amortization of licensed copyrights from nonmonetary content exchanges , share-based compensation expenses, amortization of intangible assets from business combination and business combination related expenses. We define non-GAAP net profit or loss as net loss excluding barter sublicensing revenues, amortization of licensed copyrights from nonmonetary content exchanges , share-based compensation expenses, amortization of intangible assets from business combination and business combination related expenses. We define non-GAAP adjusted EBITDA profit or loss as net profit or loss before income taxes, interest expenses, interest income, depreciation and amortization (excluding amortization of acquired content), further adjusted for barter sublicensing revenues, amortization of licensed copyrights from nonmonetary content exchanges, share-based compensation expenses, amortization of intangible assets from business combination, business combination related expenses and other non-operating items.

We present non-GAAP financial measures because they are used by our management to evaluate our operating performance. We also believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our 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. A limitation of using non-GAAP financial measures is that non-GAAP measures exclude share-based compensation charges that have been and will continue to be significant recurring expenses in Youku Tudou's business for the foreseeable future.

The presentation of these non-GAAP financial measures 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 "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP financial measures" at the end of this release.

For more information, please contact:

Chang You
Youku Tudou Inc.
Tel: (+8610) 5890-6883 x 8056
Email: changyou@youku.com

 

 YOUKU TUDOU INC. 

 CONSOLIDATED BALANCE SHEETS 


(Amounts in thousands, except for number of shares)

As of

December 31, 2014


September 30, 2015


September 30, 2015



RMB


RMB


US$

ASSETS

(Audited)


(Unaudited)


(Unaudited)








Current assets:







 Cash and cash equivalents 

3,820,742


2,523,301


397,020


 Restricted cash 

617,586


829,691


130,545


 Short-term investments 

4,021,199


4,130,942


649,969


 Accounts receivable   

1,719,760


2,315,902


364,387


 Licensed copyrights, net 

220,152


292,582


46,035


 Amounts due from related parties 

125,204


45,441


7,150


 Deferred tax assets, net 

2,283


2,283


359


 Prepayments and other assets 

117,716


362,933


57,104

Total current assets

10,644,642


10,503,075


1,652,569








Non-current assets:







 Property and equipment, net 

293,027


365,442


57,499


 Long-term investments 

67,293


203,939


32,088


 Available-for-sale financial assets 

-


21,233


3,341


 Licensed copyrights, net 

505,173


671,033


105,581


 Intangible assets, net 

875,502


866,600


136,352


 Capitalized content production costs 

1,678


10,456


1,645


 Film assets 

-


91,843


14,451


 Prepayments and other assets 

431,377


453,054


71,284


 Goodwill 

4,262,569


4,262,569


670,679

 Total non-current assets 

6,436,619


6,946,169


1,092,920








TOTAL ASSETS

17,081,261


17,449,244


2,745,489








LIABILITIES AND SHAREHOLDERS' EQUITY













Current liabilities:







 Accounts payable 

563,009


638,734


100,499


 Advances from customers and deferred revenue  

36,232


154,645


24,332


 Amounts due to related parties 

4


2,345


369


 Accrued expenses and other liabilities 

1,668,122


2,126,698


334,618


 Short-term bank loans 

500,000


819,637


128,963

Total current liabilities

2,767,367


3,742,059


588,781








Non-current liabilities:







 Deferred tax liabilities 

213,608


213,608


33,609


 Other liabilities 

6,570


43,403


6,829

Total non-current liabilities

220,178


257,011


40,438








Total liabilities

2,987,545


3,999,070


629,219








Commitments and contingencies













Shareholders' equity:







Class A Ordinary Shares (US$0.00001 par value,
9,340,238,793 authorized, 3,123,742,699
and 3,165,590,881 issued as of December 31, 2014 and
September 30, 2015, respectively, 2,834,270,299
and 2,876,118,481 outstanding as of December 31,
2014 and September 30, 2015, respectively)

201


204


32


Class B Ordinary Shares (US$0.00001 par value,
659,761,207 authorized, 645,691,903 and
645,691,903 issued and outstanding as of 
December 31, 2014 and September 30, 2015,
respectively)

48


48


8


Additional paid-in capital

18,878,497


19,293,943


3,035,739


Treasury stock (at cost, 289,472,400 and
289,472,400 as of  December 31, 2014 and
September 30, 2015, respectively)

(1,845,892)


(1,845,892)


(290,436)


Statutory reserves

13,146


13,146


2,068


Accumulated deficit

(2,681,658)


(3,976,699)


(625,700)


Accumulated other comprehensive loss

(270,626)


(35,532)


(5,591)

Total shareholders' equity

14,093,716


13,449,218


2,116,120


Non-controlling interest

-


956


150

Total  equity

14,093,716


13,450,174


2,116,270








TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

17,081,261


17,449,244


2,745,489

 

 

 YOUKU TUDOU INC. 

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) 



 For the Three Months Ended 


For the Nine Months Ended

(Amounts in thousands, except for  number of shares and
ADS and per share and per ADS data)










September 30, 2014


June 30, 2015


September 30, 2015


September 30, 2015


September 30, 2014


September 30, 2015


September 30, 2015


RMB


RMB


RMB


US$


RMB


RMB


US$


(Unaudited-As revised)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited-As revised)


(Unaudited)


(Unaudited)















Net revenues (including advertising net revenues
from related parties amounting to RMB47,339 and
RMB56,147 for the three months ended June 30,
2015 and September 30, 2015, respectively, and
RMB151,496 for the nine months ended September
30, 2015)

1,143,000


1,609,687


1,854,841


291,844


2,941,025


4,603,986


724,398















Cost of revenues (Note 1)

(914,630)


(1,355,570)


(1,543,339)


(242,831)


(2,351,961)


(4,036,896)


(635,172)















Gross profit

228,370


254,117


311,502


49,013


589,064


567,090


89,226















Operating expenses:














       Product development

(111,862)


(181,856)


(205,446)


(32,325)


(290,551)


(526,875)


(82,899)

       Sales and marketing

(286,186)


(354,259)


(438,475)


(68,990)


(683,861)


(1,113,167)


(175,147)

       General and administrative

(52,206)


(109,830)


(122,626)


(19,294)


(172,005)


(316,514)


(49,801)















Total operating expenses

(450,254)


(645,945)


(766,547)


(120,609)


(1,146,417)


(1,956,556)


(307,847)

Government grant income

1,110


11,075


379


60


1,990


11,577


1,822















Loss from operations

(220,774)


(380,753)


(454,666)


(71,536)


(555,363)


(1,377,889)


(216,799)

Interest income

22,694


34,265


28,678


4,512


38,670


92,754


14,594

Interest expenses

-


(17,126)


(14,580)


(2,294)


-


(42,449)


(6,679)

Share of net loss of equity investee

-


(1,459)


(1,978)


(311)


-


(4,684)


(737)

Other income, net

431


1,781


27,281


4,292


734


36,414


5,730















Loss before income taxes

(197,649)


(363,292)


(415,265)


(65,337)


(515,959)


(1,295,854)


(203,891)

Income tax expense

-


21,273


(20,316)


(3,197)


(12)


813


128















Net loss

(197,649)


(342,019)


(435,581)


(68,534)


(515,971)


(1,295,041)


(203,763)

Net loss attributable to non-controlling interest

-


-


-


-


-


-


-

Net loss attributable to ordinary shareholders

(197,649)


(342,019)


(435,581)


(68,534)


(515,971)


(1,295,041)


(203,763)















Other comprehensive income (loss), before tax














            Foreign currency translation adjustments

214


(27,165)


225,672


35,508


7,528


235,094


36,990

Other comprehensive income (loss), net of tax

214


(27,165)


225,672


35,508


7,528


235,094


36,990















Comprehensive loss attributable to ordinary shareholders

(197,435)


(369,184)


(209,909)


(33,026)


(508,443)


(1,059,947)


(166,773)








0






0

Net loss per share, basic and diluted

(0.05)


(0.10)


(0.12)


(0.02)


(0.15)


(0.37)


(0.06)

Net loss per ADS (each ADS represents 18 class A
ordinary shares), basic and diluted

(0.96)


(1.76)


(2.23)


(0.35)


(2.76)


(6.66)


(1.05)

Shares used in computation, basic and diluted

3,724,534,275


3,500,437,718


3,518,532,468


3,518,532,468


3,369,848,757


3,501,670,935


3,501,670,935

ADSs used in computation, basic and diluted

206,918,571


194,468,762


195,474,026


195,474,026


187,213,819


194,537,274


194,537,274

 

 

Note 1. Cost of Revenues

 For the Three Months Ended 


For the Nine Months Ended












September 30, 2014


June 30, 2015


September 30, 2015


September 30, 2015


September 30, 2014


September 30, 2015


September 30, 2015


RMB


RMB


RMB


US$


RMB


RMB


US$

(Amounts in thousands)

(Unaudited-As revised)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited-As revised)


(Unaudited)


(Unaudited)

 Cost of revenues: 














 Value added, business taxes and surcharges 

97,760


138,329


143,998


22,657


250,268


380,715


59,903

 Bandwidth costs 

229,714


330,258


331,358


52,136


645,141


968,451


152,378

 Depreciation of servers and other equipment 

25,888


38,479


41,948


6,600


70,505


114,776


18,059

 Interactive live entertainment revenue sharing fees 

10,170


70,017


105,838


16,653


14,509


199,942


31,459

 Cost of goods sold 

-


34,073


24,122


3,795


-


63,532


9,997

 Content costs 

551,098


744,414


896,075


140,990


1,371,538


2,309,480


363,376

 Total Cost of Revenues 

914,630


1,355,570


1,543,339


242,831


2,351,961


4,036,896


635,172

 


 

 YOUKU TUDOU INC. 

 CONSOLIDATED STATEMENTS OF CASH FLOWS 



For the Three Months Ended


For the Nine Months Ended

(Amounts in thousands)









September 30, 2014


June 30, 2015


September 30, 2015


September 30, 2015


September 30, 2014


September 30, 2015


September 30, 2015



RMB


RMB


 RMB 


 US$ 


 RMB 


 RMB 


 US$ 



(Unaudited-As revised)


(Unaudited)


 (Unaudited) 


 (Unaudited) 


(Unaudited-As revised)


 (Unaudited) 


 (Unaudited) 

Cash flows from operating activities:














Net loss

(197,649)


(342,019)


(435,581)


(68,534)


(515,971)


(1,295,041)


(203,763)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities















Depreciation of fixed assets

32,081


45,212


51,207


8,057


89,286


137,095


21,571


Bad debt expense

(12,546)


1,862


22,133


3,482


(13,772)


38,795


6,104


Amortization of licensed copyrights

334,857


478,480


575,590


90,564


812,048


1,504,935


236,789


Amortization and impairment of intangible assets
and capitalized content production costs

16,571


17,493


14,148


2,226


29,838


45,571


7,170


Barter sublicensing revenues

(36,359)


(94,891)


(153,921)


(24,218)


(175,291)


(332,051)


(52,245)


Loss (Gain) on disposal of  property and
equipment

10


135


830


131


228


918


144


Foreign exchange loss (gain)

(58)


21,755


(25,715)


(4,045)


2,952


(24,030)


(3,780)


Share-based compensation

72,372


144,364


154,350


24,286


224,723


378,486


59,551


Deferred government grant income

-


(167)


(83)


(13)


-


(250)


(39)


Share of net loss of equity investee

-


1,459


1,979


311


-


4,685


737


Changes in operating assets and liabilities, net of
acquisition:















         Restricted cash

(555,636)


6,044


(542)


(85)


(555,639)


(5)


(1)


        Accounts receivable

(171,241)


(330,939)


(202,671)


(31,889)


(236,144)


(634,936)


(99,902)


        Amounts due from related parties

(9,420)


93,213


39,966


6,288


(72,040)


79,762


12,550


        Prepayments and other assets

21,958


(49,712)


7,149


1,125


(9,777)


(145,666)


(22,919)


        Capitalized content production costs

(17,511)


(51,805)


(58,140)


(9,148)


(26,854)


(131,919)


(20,756)


        Accounts payable

17,079


(10,033)


(679)


(107)


30,284


61,124


9,617


        Advances from customers and deferred
revenue

1,783


(3,788)


5,122


806


370


38,267


6,021


        Accrued expenses and other liabilities

249,911


246,747


94,849


14,923


263,236


430,020


67,660


        Amount due to related parties

48


(4)


2,344


369


118


2,341


368

Net cash provided (used in) by operating activities

(253,750)


173,406


92,335


14,529


(152,405)


158,101


24,877
















Cash flows from investing activities:















Acquisition of property and equipment

(41,295)


(71,508)


(93,883)


(14,772)


(154,454)


(238,381)


(37,507)


Purchase of available-for-sale financial assets

-


-


-


-


-


(21,267)


(3,346)


Proceeds received from maturity of short-term
investments

1,363,276


20,000


3,143,969


494,677


2,561,772


3,163,969


497,824


Short-term investments placed with financial
institutions

(2,859,798)


-


(2,906,449)


(457,305)


(4,255,735)


(3,186,757)


(501,409)


Proceeds from disposal of property and equipment

88


15


6


1


278


68


11


Collection of loans to third parties

-


3,000


-


-


-


3,000


472


Loans to third parties

-


-


-


-


-


(3,000)


(472)


Acquisition of shares of investees

(50,000)


(77,250)


(19,697)


(3,099)


(50,000)


(96,947)


(15,254)


Acquisition of licensed copyrights

(343,886)


(366,228)


(515,959)


(81,182)


(755,167)


(1,377,434)


(216,728)


Acquisition of intangible assets

(256)


-


(188)


(30)


(1,186)


(188)


(30)

Net cash used in investing activities

(1,931,871)


(491,971)


(392,201)


(61,710)


(2,654,492)


(1,756,937)


(276,439)
















Cash flows from financing activities:















Exercise of employee stock options

6,086


29,754


2,681


422


25,250


36,964


5,816


Increase in restricted cash 

-


(154,000)


611,900


96,277


-


(212,100)


(33,372)


Proceeds from short-term bank loans

(1,293,644)


148,247


-


-


(1,293,644)


818,500


128,784


Principal repayments on short-term loan

-


-


(500,000)


(78,671)


-


(500,000)


(78,671)


Proceeds from non-controlling interests

-


-


956


150


-


956


150


Proceeds from Ali investment, net of issuance costs

(7,504)


-


-


-


7,380,016


-


-

Net cash provided by financing activities

(1,295,062)


24,001


115,537


18,178


6,111,622


144,320


22,707

Effect of exchange rate changes on cash and cash equivalents

272


(30,473)


145,855


22,949


4,576


157,075


24,714

Net (decrease) increase in cash and cash equivalents

(3,480,411)


(325,037)


(38,474)


(6,054)


3,309,301


(1,297,441)


(204,141)

Cash and cash equivalents at the beginning of the period

8,553,933


2,886,812


2,561,775


403,074


1,764,221


3,820,742


601,161

Cash and cash equivalents at the end of the period

5,073,522


2,561,775


2,523,301


397,020


5,073,522


2,523,301


397,020

 

 

Reconciliations of Non-GAAP results of operations measures to the nearest comparable GAAP financial measures (1) (Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"), unaudited)

















 1. Non-GAAP Net Revenues



 For the Three Months Ended 


For the Nine Months Ended
















September 30, 2014


June 30, 2015


September 30, 2015


September 30, 2015


September 30, 2014


September 30, 2015


September 30, 2015




RMB


RMB


RMB


US$


RMB


RMB


US$

Net Revenues



1,143,000


1,609,687


1,854,841


291,844


2,941,025


4,603,986


724,398

 Deduct: barter sublicensing revenues 



36,359


94,891


153,921


24,218


175,291


332,051


52,245

Non-GAAP Net Revenues



1,106,641


1,514,796


1,700,920


267,626


2,765,734


4,271,935


672,153

















 2. Non-GAAP Content Costs



 For the Three Months Ended 


For the Nine Months Ended
















September 30, 2014


June 30, 2015


September 30, 2015


September 30, 2015


September 30, 2014


September 30, 2015


September 30, 2015




RMB


RMB


RMB


US$


RMB


RMB


US$

Content costs



551,098


744,414


896,075


140,990


1,371,538


2,309,480


363,376

 Deduct: amortization of licensed copyrights from nonmonetary content exchanges 

45,815


69,121


116,175


18,279


107,514


221,741


34,889

 Deduct: share-based compensation  



11,077


25,473


25,314


3,983


35,994


63,194


9,943

 Deduct: amortization of intangible assets from business combination 

1,898


-


-


-


5,728


-


-

Non-GAAP content costs



492,308


649,820


754,586


118,728


1,222,302


2,024,545


318,544

















3. Non-GAAP Gross Profit



 For the Three Months Ended 


For the Nine Months Ended
















September 30, 2014


June 30, 2015


September 30, 2015


September 30, 2015


September 30, 2014


September 30, 2015


September 30, 2015




RMB


RMB


RMB


US$


RMB


RMB


US$

Gross profit 



228,370


254,117


311,502


49,013


589,064


567,090


89,226

 Deduct: barter sublicensing revenues



36,359


94,891


153,921


24,218


175,291


332,051


52,245

 Add back: amortization of licensed copyrights from nonmonetary content exchanges 

45,815


69,121


116,175


18,279


107,514


221,741


34,889

 Add back: share-based compensation  



11,077


25,473


25,314


3,983


35,994


63,194


9,943

 Add back: amortization of intangible assets from business combination 

1,898


-


-


-


5,728


-


-

Non-GAAP gross profit (loss)



250,801


253,820


299,070


47,057


563,009


519,974


81,813

































4. Non-GAAP Operating Expenses



 For the Three Months Ended 


For the Nine Months Ended
















September 30, 2014


June 30, 2015


September 30, 2015


September 30, 2015


September 30, 2014


September 30, 2015


September 30, 2015




RMB


RMB


RMB


US$


RMB


RMB


US$

Operating expenses



450,254


645,945


766,547


120,609


1,146,417


1,956,556


307,847

 Deduct: share-based compensation  



61,295


118,891


129,036


20,303


188,729


315,292


49,608

 Deduct: amortization of intangible assets from business combination 

2,691


2,689


2,505


394


8,073


7,885


1,241

Non-GAAP  operating expenses



386,268


524,365


635,006


99,912


949,615


1,633,379


256,998

































5. Non-GAAP Sales and Marketing Expenses



 For the Three Months Ended 


For the Nine Months Ended
















September 30, 2014


June 30, 2015


September 30, 2015


September 30, 2015


September 30, 2014


September 30, 2015


September 30, 2015




RMB


RMB


RMB


US$


RMB


RMB


US$

Sales and marketing expenses



286,186


354,259


438,475


68,990


683,861


1,113,167


175,147

 Deduct: share-based compensation  



22,256


47,305


49,054


7,718


68,252


128,710


20,251

 Deduct: amortization of intangible assets from business combination 

1,344


1,344


1,344


211


4,032


4,032


634

Non-GAAP  sales and marketing expenses



262,586


305,610


388,077


61,061


611,577


980,425


154,262

































6. Non-GAAP Product Development Expenses



 For the Three Months Ended 


For the Nine Months Ended
















September 30, 2014


June 30, 2015


September 30, 2015


September 30, 2015


September 30, 2014


September 30, 2015


September 30, 2015




RMB


RMB


RMB


US$


RMB


RMB


US$

Product development expenses



111,862


181,856


205,446


32,325


290,551


526,875


82,899

 Deduct: share-based compensation  



17,624


39,159


41,207


6,484


53,836


99,074


15,588

 Deduct: amortization of intangible assets from business combination 

905


903


903


142


2,715


2,711


427

Non-GAAP  product development expenses



93,333


141,794


163,336


25,699


234,000


425,090


66,884

 

7. Non-GAAP General and Administrative Expenses



 For the Three Months Ended 



For the Nine Months Ended

















September 30, 2014


June 30, 2015


September 30, 2015


September 30, 2015



September 30, 2014


September 30, 2015


September 30, 2015




RMB


RMB


RMB


US$



RMB


RMB


US$

General and administrative expenses



52,206


109,830


122,626


19,294



172,005


316,514


49,801

 Deduct: share-based compensation  



21,415


32,427


38,775


6,101



66,641


87,508


13,769

 Deduct: amortization of intangible assets from business combination 

442


442


258


41



1,326


1,142


180

Non-GAAP  general and administrative expenses



30,349


76,961


83,593


13,152



104,038


227,864


35,852



































8. Non-GAAP Loss from Operations



 For the Three Months Ended 



For the Nine Months Ended



















September 30, 2014


June 30, 2015


September 30, 2015


September 30, 2015



September 30, 2014


September 30, 2015


September 30, 2015




RMB


RMB


RMB


US$



RMB


RMB


US$

Loss from operations



(220,774)


(380,753)


(454,666)


(71,536)



(555,363)


(1,377,889)


(216,799)

 Deduct: barter sublicensing revenues



36,359


94,891


153,921


24,218



175,291


332,051


52,245

 Add back: amortization of licensed copyrights from nonmonetary content exchanges 

45,815


69,121


116,175


18,279



107,514


221,741


34,889

 Add back: share-based compensation  



72,372


144,364


154,350


24,286



224,723


378,486


59,551

 Add back: amortization of intangible assets from business combination 

4,589


2,689


2,505


394



13,801


7,885


1,241

Non-GAAP  loss from operations



(134,357)


(259,470)


(335,557)


(52,795)



(384,616)


(1,101,828)


(173,363)



































9. Non-GAAP Net Loss



 For the Three Months Ended 



For the Nine Months Ended

















September 30, 2014


June 30, 2015


September 30, 2015


September 30, 2015



September 30, 2014


September 30, 2015


September 30, 2015




RMB


RMB


RMB


US$



RMB


RMB


US$

 Net loss 



(197,649)


(342,019)


(435,581)


(68,534)



(515,971)


(1,295,041)


(203,763)

 Deduct: barter sublicensing revenues



36,359


94,891


153,921


24,218



175,291


332,051


52,245

 Add back: amortization of licensed copyrights from nonmonetary content exchanges 

45,815


69,121


116,175


18,279



107,514


221,741


34,889

 Add back: share-based compensation  



72,372


144,364


154,350


24,286



224,723


378,486


59,551

 Add back: amortization of intangible assets from business combination 

4,589


2,689


2,505


394



13,801


7,885


1,241

 Non-GAAP net loss 



(111,232)


(220,736)


(316,472)


(49,793)



(345,224)


(1,018,980)


(160,327)



































10.  Non-GAAP adjusted EBITDA Loss



 For the Three Months Ended 



For the Nine Months Ended

















September 30, 2014


June 30, 2015


September 30, 2015


September 30, 2015



September 30, 2014


September 30, 2015


September 30, 2015




RMB


RMB


RMB


US$



RMB


RMB


US$

 Net loss 



(197,649)


(342,019)


(435,581)


(68,534)



(515,971)


(1,295,041)


(203,763)

 Add back: 

















 Depreciation and amortization (excluding amortization of acquired content) (2)

32,091


45,223


51,217


8,059



89,316


137,126


21,576

 Interest income 



(22,694)


(34,265)


(28,678)


(4,512)



(38,670)


(92,754)


(14,594)

 Interest expenses 



-


17,126


14,580


2,294



-


42,449


6,679

 Income taxes 



-


(21,273)


20,316


3,197



12


(813)


(128)

 EBITDA loss 



(188,252)


(335,208)


(378,146)


(59,496)



(465,313)


(1,209,033)


(190,230)


















 Adjustments: 

















 Barter sublicensing revenues



(36,359)


(94,891)


(153,921)


(24,218)



(175,291)


(332,051)


(52,245)

 Amortization of licensed copyrights from nonmonetary content exchanges 

45,815


69,121


116,175


18,279



107,514


221,741


34,889

 Share-based compensation  



72,372


144,364


154,350


24,286



224,723


378,486


59,551

 Amortization of intangible assets from business combination 


4,589


2,689


2,505


394



13,801


7,885


1,241

 Others, net 



(431)


(1,781)


(27,281)


(4,292)



(734)


(36,414)


(5,730)

Non-GAAP adjusted EBITDA loss 



(102,266)


(215,706)


(286,318)


(45,047)



(295,300)


(969,386)


(152,524)



































(1) For more information on the Non-GAAP financial measures, please see the section captioned "About Non-GAAP Financial Measures" in this earnings release.

(2) The amortization expense was related to an advertising license acquired in April 2010. The amortization of acquired content was not treated as a Non-GAAP adjustment.

 

SOURCE Youku Tudou Inc.