Changyou Reports Fourth Quarter 2016 and Fiscal Year 2016 Unaudited Financial Results
BEIJING, Feb. 21, 2017 /PRNewswire/ -- Changyou.com Limited ("Changyou" or the "Company") (NASDAQ: CYOU), a leading online game developer and operator in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2016.
Fourth Quarter 2016 Highlights
- Total revenues were US$131 million[1], representing a decrease of 19% year-over-year and 4% quarter-over-quarter, exceeding guidance by $1 million.
- Online game revenues were US$95 million, representing a decrease of 25% year-over-year and 3% quarter-over-quarter, in line with the Company's guidance.
- GAAP net income attributable to Changyou.com Limited was US$41 million, or US$0.77 per fully-diluted ADS[2]. This compares with US$38 million, or $0.73 per fully-diluted ADS in the fourth quarter of 2015 and US$39 million, or $0.73 in the third quarter of 2016.
- Non-GAAP[3] net income attributable to Changyou.com Limited was US$40 million, exceeding the Company's guidance by US$5 million. This compares with US$46 million in the fourth quarter of 2015 and US$46 million in the third quarter of 2016.
- Non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS was US$0.75. This compares with US$0.85 in the fourth quarter of 2015 and US$0.85 in the third quarter of 2016.
| [1] For the fourth quarter of 2016, on a yearly basis, the depreciation of the RMB against the U.S. dollar impacted our reported financial results. Should the exchange rate be at RMB6.39=US$1.00 as the same of the fourth quarter of 2015, total revenues in the fourth quarter of 2016 would have been US$140 million, or US$9 million higher than the GAAP total revenue, or down 14% year-over-year. |
Fiscal Year 2016 Highlights
- Total revenues were US$525 million, compared with US$762 million in 2015.
- Online game revenues were US$396 million, compared with US$637 million in 2015.
- GAAP net income attributable to Changyou.com Limited was US$145 million, or US$2.72 per fully-diluted ADS. This compares with US$213 million, or US$4.02 per fully-diluted ADS in 2015.
- Non-GAAP net income attributable to Changyou.com Limited was US$153 million, compared with US$228 million in 2015.
- Non-GAAP net income attributable to Changyou.com Limited per fully-diluted ADS was US$2.85, compared with US$4.20 in 2015.
Mr. Dewen Chen, CEO, commented, "2016 was a year of building on our strengths and committing to developing high grossing games. At the beginning of 2016, we announced our 'Top games, Big IP and Mass marketing' strategy, and strictly executed it. After a year of hard work, we have now prepared a solid pipeline with a focus on MMORPG games, and supplemented by a number of advanced casual games. We are confident that our efforts will start to pay off in 2017 with many new exciting products in the pipeline. We will continue to focus on producing high quality games that will resonate with players. "
Mr. Qing Wei, Chief Games Development Officer added, "Our development of Legacy TLBB mobile is more or less complete. The testing results so far meet our standards for high quality games. As our team has higher expectations for the game, we will continue to make incremental improvements on the game. We plan to conduct a large-scale beta test in the first quarter and if the results meet our expectation, the game will be officially launched in the second quarter."
Ms. Jasmine Zhou, CFO of Changyou added, "We are pleased that we exceeded both our revenue guidance and non-GAAP net income guidance, and our online game revenues remained stable. We started to focus on producing high quality games at the beginning of 2016. This approach and higher testing standards have set the bar high for new games in pipeline, which had an impact on 2016 revenue. Nevertheless, we believe that focusing on the best is the only way to make a high quality and high grossing games possible."
Fourth Quarter 2016 Operational Results
- Total average monthly active accounts[4] of the Company's PC games were 2.5 million, representing a decrease of 31% year-over-year and 7% quarter-over-quarter. The year-over-year and quarter-over-quarter decreases reflected the natural declining life cycles of the Company's older PC games.
- Total average monthly active accounts of the Company's mobile games were 1.6 million, representing a decrease of 57% year-over-year and 43% quarter-over-quarter. The year-over-year and quarter-over-quarter decreases reflected the natural declining life cycles of the Company's older mobile games.
- Total quarterly aggregate active paying accounts[5] of the Company's PC games were 1.0 million, representing a decrease of 17% year-over-year and flat quarter-over-quarter. The year-over-year decrease reflected the natural declining life cycles of the Company's older PC games.
- Total quarterly aggregate active paying accounts of the Company's mobile games were 0.4 million, representing a decrease of 56% year-over-year and 43% quarter-over-quarter. The year-over-year and quarter-over-quarter decreases reflected the natural declining life cycles of the Company's older mobile games.
| [4] Average Monthly Active Accounts for a given period refers to the number of registered accounts that were logged in to these games at least once during the period. |
Fourth Quarter 2016 Unaudited Financial Results
Revenues
Total revenues were US$131 million, representing a decrease of 19% year-over-year and 4% quarter-over-quarter.
Online game revenues were US$95 million, representing a decrease of 25% year-over-year and 3% quarter-over-quarter. The year-over-year and quarter-over-quarter decreases were mainly due to the natural decline in revenues of the Company's older games.
Online advertising revenues were US$8 million, representing a decrease of 44% year-over-year and 28% quarter-over-quarter. The year-over-year and quarter-over-quarter decreases were mainly due to fewer games being marketed on the 17173 Website.
Cinema advertising revenues[6] were US$20 million, representing an increase of 53% year-over-year and a decrease of 3% quarter-over-quarter. The year-over-year increase reflected the strong growth of China's movie and cinema industry in general and was also a result of an active approach we took in acquiring more advertising resources.
Internet value-added services ("IVAS") revenues were US$6 million, representing a decrease of 6% year-over-year and an increase of 40% quarter-over-quarter. The year-over-year decrease was a result of lower revenues from mobile internet products in the fourth quarter of 2016. The quarter-over-quarter increase was a result of higher revenues from PC internet products.
| [6] The Company's Cinema advertising business revenue was previously presented as Other revenues as it was not significant enough to be presented as a separate line item under revenue. During the year of 2016, the cinema advertising business has experienced strong growth and become a more significant part of Changyou's overall business. In order to provide investors with a better foundation for understanding of Changyou's performance of the cinema advertising business, revenues generated from cinema advertising business are presented separately going forward. |
Gross profit
GAAP and non-GAAP gross profit were both US$90 million, representing a decrease of 25% year-over-year and 6% quarter-over-quarter. GAAP and non-GAAP gross margins were both 69%, compared with 74% for both in the fourth quarter of 2015, and 70% for both in the third quarter of 2016.
GAAP and non-GAAP gross profit of the online games business were both US$74 million, representing a decrease of 25% year-over-year and flat quarter-over-quarter. GAAP and non-GAAP gross margin of the online games business were both 78%, compared with 78% in the fourth quarter of 2015 and 76% in the third quarter of 2016.
GAAP and non-GAAP gross profit of the online advertising business were both US$6 million, representing a decrease of 56% year-over-year and 38% quarter-over-quarter. GAAP and non-GAAP gross margin of the online advertising business were both 66%, compared with 84% in the fourth quarter of 2015 and 76% in the third quarter of 2016. The year-over-year and quarter-over-quarter decreases in gross margin were due to a decrease in online advertising revenues, while costs remained relatively flat.
GAAP and non-GAAP gross profit of the cinema advertising business were both US$7 million, compared with US$5 million in the fourth quarter of 2015 and US$9 million in the third quarter of 2016.GAAP and non-GAAP gross margin of the cinema advertising business were both 34%, compared with 38% in the fourth quarter of 2015 and 43% in the third quarter of 2016. The quarter-over-quarter decrease in gross margin was mainly due to an increase in cinema advertising costs as we partnered with more cinemas in the fourth quarter of 2016.
GAAP and non-GAAP gross profit of the IVAS business were both US$3 million, compared with a gross profit of US$3 million in the fourth quarter of 2015 and a gross profit of US$2 million in the third quarter of 2016.
Operating expenses
Total operating expenses were US$52 million, representing a decrease of 35% year-over-year and 21% quarter-over-quarter.
Product development expenses were US$31 million, representing a decrease of 30% year-over-year and an increase of 2% quarter-over-quarter. The year-over-year decrease was due to a decrease in salary and benefit expenses as a result of a reduction in bonus expenses and workforce.
Sales and marketing expenses were US$12 million, representing a decrease of 22% year-over-year and 36% quarter-over-quarter. The year-over-year and quarter-over-quarter decreases were mainly due to a decrease in marketing spending to promote new games and expansion packs.
General and administrative expenses were US$9 million, representing a decrease of 53% year-over-year and 45% quarter-over-quarter. The year-over-year decrease was mainly due to a decrease in salary and benefit expenses as a result of a reduction in bonus expenses, as well as a decrease in share-based compensation expense[7] compared with the fourth quarter of 2015. The quarter-over-quarter decrease was mainly due to a decrease in share-based compensation expense[8] compared with the third quarter of 2016.
| [7] The decrease in share-based compensation expense was triggered by a decrease in the market price for the Company's ADSs in the fourth quarter of 2016 compared to the fourth quarter of 2015. |
Operating profit
Operating profit was US$38 million, compared with US$40 million in the fourth quarter of 2015 and US$29 million in the third quarter of 2016.
Non-GAAP operating profit was US$37 million, compared with US$48 million in the fourth quarter of 2015 and US$37 million in the third quarter of 2016.
Other Income
Other income was US$5 million, compared with US$1 million in the fourth quarter of 2015 and US$3 million in the third quarter of 2016.
Income tax (expense) / benefit
Income tax expense was US$9 million, compared with an income tax expense of US$8 million in the fourth quarter of 2015 and an income tax benefit[9] of US$1 million in the third quarter of 2016, respectively.
| [9] The income tax benefit in the third quarter of 2016 was mainly due to recognition of a tax benefit for the preferential tax rate of one of the Company's subsidiaries as a "2015 Key National Software Enterprise" in the third quarter of 2016. |
Net income
Net income was US$42 million, which compares with US$38 million in the fourth quarter of 2015 and US$39 million in the third quarter of 2016.
Non-GAAP net income was US$41 million, which compares with US$46 million in the fourth quarter of 2015 and US$46 million in the third quarter of 2016.
Net income/ (loss) attributable to non-controlling interests
Both GAAP and non-GAAP net income attributable to non-controlling interests was US$0.9 million. This compares with a GAAP net loss of US$ 0.2 million and non-GAAP net loss of US$0.3 million in the fourth quarter of 2015, and a GAAP and a non-GAAP net income of US$0.3 million in the third quarter of 2016. Non-controlling interests include the non-controlling interests in RaidCall, which provides online music and entertainment services primarily in Taiwan, and in MoboTap, the developer of the Dolphin Browser.
Net income attributable to Changyou.com Limited
Net income attributable to Changyou.com Limited was US$41 million, compared with US$38 million in the fourth quarter of 2015 and US$39 million in the third quarter of 2016. Fully-diluted net income attributable to Changyou.com Limited per ADS was US$0.77. This compares with US$0.73 in the fourth quarter of 2015 and US$0.73 in the third quarter of 2016.
Non-GAAP net income attributable to Changyou.com Limited was US$40 million. This compares with US$46 million in the fourth quarter of 2015 and US$46 million in the third quarter of 2016. Non-GAAP fully-diluted net income attributable to Changyou.com Limited per ADS was US$0.75. This compares with US$0.85 in the fourth quarter of 2015 and US$0.85 in the third quarter of 2016.
Liquidity
As of December 31, 2016, Changyou had net cash[10] of US$831 million, compared with US$755 million as of December 31, 2015.
Operating cash flow for the fourth quarter of 2016 was a net inflow of US$62 million.
| [10] Net cash is calculated as the sum of cash and cash equivalents, short-term investments, current and non-current restricted time deposits, minus short-term bank loans. |
Fiscal Year 2016 Unaudited Financial Results
Revenues
Total revenues in 2016 were US$525 million, compared with US$762 million in 2015.
Online game revenues were US$396 million, down 38% from US$637 million in 2015. The year-over-year decrease was mainly due to the natural decline in revenues of older games, and a decrease in Web game revenues upon the completion of the sale of the 7Road business in 2015.
Online advertising revenues were US$39 million, compared with US$58 million in 2015. The year-over-year decrease was mainly due to fewer games being marketed on the 17173 Website.
Cinema advertising revenues increased 61% year-over-year to US$69 million. The year-over-year increase reflected the strong growth of China's movie and cinema industry in general, and improvements made to the Company's advertising sales function, as well as an active approach we took in acquiring more advertising resources.
IVAS revenues decreased 11% year-over-year to US$22 million. The decrease was a result of lower revenues from mobile internet products.
Gross profit
GAAP and non-GAAP gross profit were US$360 million, down 34% from US$545 million in 2015. GAAP and non-GAAP gross margin were 68%, compared with 72% in 2015.
GAAP and non-GAAP gross profit of the online games business were US$300 million, down 38% from 2015. GAAP and non-GAAP gross margin of the online games business were 76%, compared with 75% in 2015.
GAAP and non-GAAP gross profit of the online advertising business decreased to US$29 million, down 37% from 2015. GAAP and non-GAAP gross margin of the online advertising business were 74%, compared with 80% in 2015. The year-over-year decrease in gross margins was due to a reduction in revenues of online advertising business, while costs remained relatively flat.
GAAP and non-GAAP gross profit of the cinema advertising business were US$23 million, compared with US$13 million in 2015. GAAP and non-GAAP gross margin of the cinema advertising business were 33%, compared with 31% in 2015.
GAAP and non-GAAP gross profit of IVAS were US$8 million, compared with a gross profit of US$5 million in 2015.
Operating expenses
Total operating expenses were US$229 million, down 40% from 2015.
Product development expenses were US$122 million, down 29% from 2015. The decrease was due to a decrease in salary and benefit expenses in 2016 as a result of a reduction in the workforce as well as a reduction in bonus expenses.
Sales and marketing expenses were US$57 million, down 39% from 2015. The decrease was due to a reduction in marketing and promotional spending for new games in 2016.
General and administrative expenses were US$51 million, down 37% from 2015. The decrease was due to a decrease in salary and benefit expenses in 2016 as a result of a reduction in the workforce and bonus expenses.
Operating profit
Operating profit was US$131 million, compared with an operating profit of US$161 million in 2015.
Non-GAAP operating profit was US$139 million, compared with an operating profit of US$176 million in 2015.
Other Income
Other income was US$16 million, compared with US$65 million in 2015. The year-over-year decrease was due to a reduction in a gain that was recognized upon the divestment of 7Road and certain overseas assets in 2015.
Income tax expense
Income tax expense was US$22 million in 2016, compared with US$54 million in 2015.
Net income
Net income was US$147 million, compared with a net income of US$191 million in 2015.
Non-GAAP income was US$155 million, compared with a non-GAAP net income of US$206 million in 2015.
Net income/ (loss) attributable to non-controlling interests
Both GAAP and non-GAAP net income attributable to non-controlling interests were US$2 million, compared with a net loss of US$22 million in 2015. Non-controlling interests include the non-controlling interests in RaidCall, which provides online music and entertainment services primarily in Taiwan, and in MoboTap, the developer of the Dolphin Browser.
Net income attributable to Changyou.com Limited
Net income attributable to Changyou.com Limited was US$145 million, compared with a net income of US$213 million in 2015. Fully-diluted net income attributable to Changyou.com Limited per ADS was US$2.72 compared with a fully-diluted net income per ADS of US$4.02 in 2015.
Non-GAAP net income attributable to Changyou.com Limited was US$153 million, compared with US$228 million in 2015. Non-GAAP fully-diluted net income attributable to Changyou.com Limited per ADS was US$2.85, compared with US$4.20 in 2015.
Business Outlook
For the first quarter of 2017, Changyou expects:
- Total revenues to be between US$110 million and US$120 million, including online game revenues of US$80 million to US$90 million;
- Non-GAAP net income attributable to Chanyou.com Inc. to be between US$30 million and US$35 million, and non-GAAP income per fully-diluted share to be between US$0.56 and US$0.65. Assuming no new grants of share-based awards and that the market price of our shares is unchanged; we estimate that compensation expense relating to share-based awards will be between US$1 million and US$2 million. Considering eliminating the impact of these share-based awards, GAAP net income attributable to Changyou.com to be between US$28 million and US$34 million, and GAAP income per fully-diluted share to be between US$0.52 and US$0.64.
For the first quarter 2017 guidance, the Company has adopted a presumed exchange rate of RMB7.00 = US$1.00, as compared with the actual exchange rate of approximately RMB6.53 = US$1.00 for the first quarter 2016, and RMB6.83=US$ 1.00 for the fourth quarter 2016.
Non-GAAP Disclosure
To supplement the unaudited consolidated financial information prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"), Changyou's management uses non-GAAP measures of gross profit, operating profit, net income, net income attributable to Changyou.com Limited and diluted net income attributable to Changyou.com Limited per ADS, which are adjusted from results based on GAAP to exclude the compensation cost of share-based awards granted, non-cash tax benefits from excess tax deductions related to share-based awards and income/expense from the adjustment of contingent consideration previously recorded for acquisitions. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.
Changyou's management believes that excluding share-based compensation expense, non-cash tax benefits from excess tax deductions related to share-based awards and income/expense from the adjustment of contingent consideration previously recorded for acquisitions from its non-GAAP financial measures is useful for itself and investors. Further, the amount of share-based compensation expense, non-cash tax benefits from excess tax deductions related to share-based awards and income/expense from the adjustment of contingent consideration previously recorded for acquisitions cannot be anticipated by management, and these expenses are not built into the Company's annual budgets and quarterly forecasts, which generally will be the basis for information Changyou provides to analysts and investors as guidance for future operating performance. As share-based compensation expense, non-cash tax benefits from excess tax deductions related to share-based awards and income/expense from the adjustment of contingent consideration previously recorded for acquisitions does not involve subsequent cash outflow, Changyou does not factor this in when evaluating and approving expenditures or when determining the allocation of its resources to its business operations. As a result, in general, the monthly financial results for internal reporting and any performance measure for commissions and bonuses are based on non-GAAP financial measures that exclude share-based compensation expense, non-cash tax benefits from excess tax deductions related to share-based awards and income/expense from the adjustment of contingent consideration previously recorded for acquisitions.
The non-GAAP financial measures are provided to enhance investors' overall understanding of Changyou's current financial performance and prospects for the future. A limitation of using non-GAAP gross profit, operating profit, net income, net income attributable to Changyou.com Limited and diluted net income attributable to Changyou.com Limited per ADS, excluding share-based compensation expense, non-cash tax benefits from excess tax deductions related to share-based awards and income/expense from the adjustment of contingent consideration previously recorded for acquisitions, is that the share-based compensation charge has been and will continue to be a significant recurring expense in the Company's business for the foreseeable future, non-cash tax benefits from excess tax deductions related to share-based awards and income/expense from the adjustment of contingent consideration previously recorded for acquisitions may recur in the future. In order to mitigate these limitations the Company has provided specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables include details on the reconciliation between GAAP financial measures that are most directly comparable to the non-GAAP financial measures the Company has presented.
Notes to Financial Information
Financial information in this press release other than the information indicated as being non-GAAP is derived from Changyou's unaudited financial statements prepared in accordance with GAAP.
Safe Harbor Statement
It is currently expected that the Business Outlook will not be updated until the release of Changyou's next quarterly earnings announcement; however, Changyou reserves the right to update its Business Outlook at any time for any reason.
This announcement contains forward-looking statements. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. The Company cautions that 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, continuing volatility in global financial and credit markets and its potential impact on the Chinese economy; exchange rate fluctuations in general and possible continued valuation of the RMB in particular, including their potential impact on the Chinese economy and on the Company's reported U.S. dollar results; slowing growth in the Chinese economy; the uncertain regulatory landscape in the People's Republic of China; fluctuations in Changyou's quarterly operating results; the possibility that Changyou will be unable to develop a series of successful games for mobile platforms or successfully monetize mobile games it develops or acquires; the possibility that the Company's margins will decline as a result of the need for revenue-sharing with mobile game platform operators; and the Company's reliance on TLBB as its major revenue source. Further information regarding these and other risks is included in Changyou's Annual Report on Form 20-F filed on February 26, 2016, and other filings with the Securities and Exchange Commission.
Conference Call Information
Changyou's management team will host an earnings conference call today at 7 a.m. U.S. Eastern Time, February 21, 2017 (8 p.m. Beijing/Hong Kong, February 21, 2017).
The dial-in details for the live conference call are:
| US: |
+1-855-298-3404 |
| Hong Kong: |
+852-5808-3202 |
| China Mainland: |
+86-400-1200-539 |
| International: |
+1-631-514-2526 |
| Passcode: |
CYOU |
Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call.
A telephone replay of the call will be available after the conclusion of the conference call at 10: 00 a.m. Eastern Time on February 21, 2017 through February 28, 2017. The dial-in details for the telephone replay are:
| International: |
+1- 866-846-0868 |
| Passcode: |
7470977 |
The live Webcast and archive of the conference call will be available on the Investor Relations section of Changyou's Website at http://ir.changyou.com/.
About Changyou
Changyou.com Limited (NASDAQ: CYOU) is a leading developer and operator of online games in China with a diverse portfolio of popular online games , such as Tian Long Ba Bu ("TLBB"), one of the most popular PC games in China, as well as a number of mobile games. Changyou also owns and operates the 17173.com Website, a leading game information portal in China. Changyou began operations as a business unit within Sohu.com Inc. (NASDAQ: SOHU) in 2003, and was carved out as a separate, stand-alone company in December 2007. It completed an initial public offering on April 7, 2009. Changyou has an advanced technology platform that includes advanced 2.5D and 3D graphics engines, a uniform game development platform, effective anti-cheating and anti-hacking technologies, proprietary cross-networking technology and advanced data protection technology. For more information, please visit http://ir.changyou.com.
For investor and media inquiries, please contact:
In China:
Ms. Margaret Shi
Investor Relations
Tel: +86 (10) 6192-0800
E-mail: [email protected]
In the United States:
Ms. Linda Bergkamp
Christensen
Phone: +1-480-614-3004
Email: [email protected]
| CHANGYOU.COM LIMITED |
||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||
| (UNAUDITED, IN THOUSANDS EXCEPT PER ADS AMOUNTS) |
||||||||||
| Three Months Ended |
Twelve Months Ended |
|||||||||
| Dec. 31, 2016 |
Sep. 30, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
||||||
| Revenues: |
||||||||||
| Online game |
$ |
95,400 |
$ |
98,553 |
$ |
127,001 |
$ |
395,708 |
$ |
636,846 |
| Online advertising |
8,332 |
11,651 |
14,798 |
39,409 |
57,832 |
|||||
| Cinema advertising |
20,371 |
21,058 |
13,315 |
68,542 |
42,573 |
|||||
| IVAS |
6,420 |
4,600 |
6,796 |
21,726 |
24,385 |
|||||
| Total revenues |
130,523 |
135,862 |
161,910 |
525,385 |
761,636 |
|||||
| Cost of revenues: |
||||||||||
| Online game(includes share-based compensation expense |
20,936 |
23,719 |
28,266 |
96,171 |
156,318 |
|||||
| Online advertising |
2,799 |
2,761 |
2,315 |
10,104 |
11,565 |
|||||
| Cinema advertising |
13,452 |
11,906 |
8,203 |
45,959 |
29,231 |
|||||
| IVAS(includes share-based compensation expense of $0, $0, |
3,792 |
2,711 |
3,963 |
13,576 |
19,647 |
|||||
| Total cost of revenues |
40,979 |
41,097 |
42,747 |
165,810 |
216,761 |
|||||
| Gross profit |
89,544 |
94,765 |
119,163 |
359,575 |
544,875 |
|||||
| Operating expenses: |
||||||||||
| Product development (includes share-based |
30,516 |
29,934 |
43,841 |
121,619 |
170,605 |
|||||
| Sales and marketing (includes share-based |
11,989 |
18,748 |
15,456 |
56,543 |
92,355 |
|||||
| General and administrative (includes share-based |
9,222 |
16,647 |
19,791 |
50,560 |
80,269 |
|||||
| Goodwill impairment and impairment of |
- |
- |
- |
- |
40,324 |
|||||
| Total operating expenses |
51,727 |
65,329 |
79,088 |
228,722 |
383,553 |
|||||
| Operating profit |
37,817 |
29,436 |
40,075 |
130,853 |
161,322 |
|||||
| Interest income |
5,217 |
5,879 |
4,432 |
17,169 |
15,444 |
|||||
| Foreign currency exchange gain |
2,747 |
518 |
963 |
5,108 |
2,954 |
|||||
| Other income |
5,463 |
2,691 |
1,064 |
15,523 |
64,962 |
|||||
| Income before income tax expense |
51,244 |
38,524 |
46,534 |
168,653 |
244,682 |
|||||
| Income tax (expense)/ benefit |
(9,356) |
519 |
(8,317) |
(21,583) |
(54,055) |
|||||
| Net income |
41,888 |
39,043 |
38,217 |
147,070 |
190,627 |
|||||
| Less: Net income/(loss) attributable to non-controlling |
869 |
339 |
(248) |
2,123 |
(22,157) |
|||||
| Net income attributable to Changyou.com Limited |
$ |
41,019 |
$ |
38,704 |
$ |
38,465 |
$ |
144,947 |
$ |
212,784 |
| Basic net income attributable to Changyou.com Limited per ADS |
$ |
0.78 |
$ |
0.74 |
$ |
0.74 |
$ |
2.78 |
$ |
4.06 |
| ADSs used in computing basic net income attributable to |
52,331 |
52,292 |
52,164 |
52,280 |
52,462 |
|||||
| Diluted net income attributable to Changyou.com Limited per |
$ |
0.77 |
$ |
0.73 |
$ |
0.73 |
$ |
2.72 |
$ |
4.02 |
| ADSs used in computing diluted net income attributable to |
53,346 |
53,219 |
52,846 |
53,139 |
52,881 |
|||||
| CHANGYOU.COM LIMITED |
||||
| CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
| (UNAUDITED, IN THOUSANDS) |
||||
| As of Dec. 31, 2016 |
As of Dec. 31, 2015 |
|||
| ASSETS |
||||
| Current assets: |
||||
| Cash and cash equivalents |
$ |
597,188 |
$ |
569,917 |
| Accounts receivable, net |
47,150 |
67,959 |
||
| Short-term investments |
233,491 |
174,515 |
||
| Restricted time deposits11 |
- |
227,285 |
||
| Prepaid and other current assets |
484,995 |
227,719 |
||
| Assets held for sale12 |
103,079 |
- |
||
| Total current assets |
1,465,903 |
1,267,395 |
||
| Non-current assets: |
||||
| Fixed assets, net |
189,770 |
214,306 |
||
| Goodwill12 |
26,502 |
111,082 |
||
| Intangible assets, net |
12,335 |
25,139 |
||
| Restricted time deposits11 |
- |
127,454 |
||
| Deferred tax assets13 |
7,952 |
17,402 |
||
| Other assets, net |
5,575 |
16,728 |
||
| Total non-current assets |
242,134 |
512,111 |
||
| TOTAL ASSETS |
$ |
1,708,037 |
$ |
1,779,506 |
| LIABILITIES |
||||
| Current liabilities: |
||||
| Receipts in advance and deferred revenue |
$ |
43,541 |
$ |
42,166 |
| Accounts payable and accrued liabilities |
460,674 |
275,926 |
||
| Short-term bank loans11 |
- |
344,500 |
||
| Tax payables |
8,381 |
27,423 |
||
| Liabilities held for sale12 |
3,902 |
- |
||
| Total current Liabilities |
516,498 |
690,015 |
||
| Long-term liabilities: |
||||
| Long-term deferred tax liabilities13 |
29,336 |
28,500 |
||
| Long-term accounts payable |
- |
1,004 |
||
| Long-term tax payable |
13,295 |
- |
||
| Other long-term liabilities |
744 |
738 |
||
| Total long-term liabilities |
43,375 |
30,242 |
||
| Total liabilities |
559,873 |
720,257 |
||
| SHAREHOLDERS' EQUITY |
||||
| Changyou.com Limited shareholders' equity |
1,117,767 |
1,029,479 |
||
| Non-controlling interests |
30,397 |
29,770 |
||
| Total shareholders' equity |
1,148,164 |
1,059,249 |
||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
1,708,037 |
$ |
1,779,506 |
| 11 Changyou repaid all of the remaining bank loans of $345 million, and restricted time deposits of $355 million that secured these loans were released during the first quarter of 2016. |
| 12 Changyou management had an intention to divest the Company's interest in MoboTap in the third quarter of 2016. Therefore, the assets and liabilities of MoboTap were recognized as "Assets held for sale" and "Liabilities held for sale," respectively, since the third quarter of 2016. |
| 13 The Company early adopted the Accounting Standards Update 2015-17, Balance Sheet Classification of Deferred Taxes, retrospectively from the fourth quarter of 2016. The guidance requires current deferred income tax assets and liabilities to be classified as non-current assets and liabilities in balance sheet. As a result of the adoption of this guidance, $4.7 million of current deferred tax assets recorded in prepaid and other current assets, and $24.9 million of deferred tax liabilities were reclassified to non-current as of December 31, 2015. |
| CHANGYOU.COM LIMITED |
||||||
| RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES |
||||||
| (UNAUDITED, IN THOUSANDS, EXCEPT PER ADS AMOUNTS) |
||||||
| Three Months Ended Dec. 31, 2016 |
||||||
| Non-GAAP adjustments |
||||||
| GAAP |
Share-based |
Non-GAAP |
||||
| Online game gross profit |
$ |
74,464 |
(5) |
74,459 |
||
| Online advertising gross profit |
5,533 |
0 |
5,533 |
|||
| Cinema advertising gross profit |
6,919 |
0 |
6,919 |
|||
| IVAS gross profit |
2,628 |
0 |
2,628 |
|||
| Gross profit |
$ |
89,544 |
(5) |
89,539 |
||
| Gross margin |
69% |
69% |
||||
| Operating expenses |
51,727 |
933 |
52,660 |
|||
| Operating profit |
$ |
37,817 |
(938) |
36,879 |
||
| Operating margin |
29% |
28% |
||||
| Income tax expense |
(9,356) |
0 |
(9,356) |
|||
| Net income |
$ |
41,888 |
(938) |
40,950 |
||
| Less: Net income attributable to non-controlling interests |
869 |
8 |
877 |
|||
| Net income attributable to Changyou.com Limited |
$ |
41,019 |
(946) |
40,073 |
||
| Net margin attributable to Changyou.com Limited |
31% |
31% |
||||
| Diluted net income attributable to Changyou.com Limited per ADS |
$ |
0.77 |
0.75 |
|||
| ADSs used in computing diluted net income attributable to |
53,346 |
53,785 |
||||
| Note: |
||||||
| (a) To eliminate share-based compensation expense measured using the fair value method. The downward adjustment of share-based compensation expense in the current period was a result of fluctuation in the market price for the Company's ADS. |
||||||
| CHANGYOU.COM LIMITED |
||||||
| RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES |
||||||
| (UNAUDITED, IN THOUSANDS, EXCEPT PER ADS AMOUNTS) |
||||||
| Three Months Ended Sep. 30, 2016 |
||||||
| Non-GAAP adjustments |
||||||
| GAAP |
Share-based |
Non-GAAP |
||||
| Online game gross profit |
$ |
74,834 |
26 |
74,860 |
||
| Online advertising gross profit |
8,890 |
0 |
8,890 |
|||
| Cinema advertising gross profit |
9,152 |
0 |
9,152 |
|||
| IVAS gross profit |
1,889 |
0 |
1,889 |
|||
| Gross profit |
$ |
94,765 |
26 |
94,791 |
||
| Gross margin |
70% |
70% |
||||
| Operating expenses |
65,329 |
(7,176) |
58,153 |
|||
| Operating profit |
$ |
29,436 |
7,202 |
36,638 |
||
| Operating margin |
22% |
27% |
||||
| Income tax benefit |
519 |
0 |
519 |
|||
| Net income |
$ |
39,043 |
7,202 |
46,245 |
||
| Less: Net income attributable to non-controlling interests |
339 |
8 |
347 |
|||
| Net income attributable to Changyou.com Limited |
$ |
38,704 |
7,194 |
45,898 |
||
| Net margin attributable to Changyou.com Limited |
28% |
34% |
||||
| Diluted net income attributable to Changyou.com Limited per ADS |
$ |
0.73 |
0.85 |
|||
| ADSs used in computing diluted net income attributable to |
53,219 |
53,796 |
||||
| Note: |
||||||
| (a) To eliminate share-based compensation expense measured using the fair value method. |
||||||
| CHANGYOU.COM LIMITED |
||||||
| RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES |
||||||
| (UNAUDITED, IN THOUSANDS, EXCEPT PER ADS AMOUNTS) |
||||||
| Three Months Ended Dec. 31, 2015 |
||||||
| Non-GAAP adjustments |
||||||
| GAAP |
Share-based |
Non-GAAP |
||||
| Online game gross profit |
$ |
98,735 |
47 |
98,782 |
||
| Online advertising gross profit |
12,483 |
0 |
12,483 |
|||
| Cinema advertising gross profit |
5,112 |
0 |
5,112 |
|||
| IVAS gross profit |
2,833 |
(2) |
2,831 |
|||
| Gross profit |
$ |
119,163 |
45 |
119,208 |
||
| Gross margin |
74% |
74% |
||||
| Operating expenses |
79,088 |
(7,449) |
71,639 |
|||
| Operating profit |
$ |
40,075 |
7,494 |
47,569 |
||
| Operating margin |
25% |
29% |
||||
| Income tax expense |
(8,317) |
0 |
(8,317) |
|||
| Net income |
$ |
38,217 |
7,494 |
45,711 |
||
| Less: Net loss attributable to non-controlling interests |
(248) |
(43) |
(291) |
|||
| Net income attributable to Changyou.com Limited |
$ |
38,465 |
7,537 |
46,002 |
||
| Net margin attributable to Changyou.com Limited |
24% |
28% |
||||
| Diluted net income attributable to Changyou.com Limited per ADS |
$ |
0.73 |
0.85 |
|||
| ADSs used in computing diluted net income attributable to |
52,846 |
53,928 |
||||
| Note: |
||||||
| (a) To eliminate share-based compensation expense measured using the fair value method. |
||||||
| CHANGYOU.COM LIMITED |
||||||
| RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES |
||||||
| (UNAUDITED, IN THOUSANDS, EXCEPT PER ADS AMOUNTS) |
||||||
| Twelve Months Ended Dec. 31, 2016 |
||||||
| Non-GAAP adjustments |
||||||
| GAAP |
Share-based |
Non-GAAP |
||||
| Online game gross profit |
$ |
299,537 |
31 |
299,568 |
||
| Online advertising gross profit |
29,305 |
0 |
29,305 |
|||
| Cinema advertising gross profit |
22,583 |
0 |
22,583 |
|||
| IVAS gross profit |
8,150 |
0 |
8,150 |
|||
| Gross profit |
$ |
359,575 |
31 |
359,606 |
||
| Gross margin |
68% |
68% |
||||
| Operating expenses |
228,722 |
(8,371) |
220,351 |
|||
| Operating profit |
$ |
130,853 |
8,402 |
139,255 |
||
| Operating margin |
25% |
27% |
||||
| Income tax expense |
(21,583) |
0 |
(21,583) |
|||
| Net income |
$ |
147,070 |
8,402 |
155,472 |
||
| Less: Net income attributable to non-controlling interests |
2,123 |
33 |
2,156 |
|||
| Net income attributable to Changyou.com Limited |
$ |
144,947 |
8,369 |
153,316 |
||
| Net margin attributable to Changyou.com Limited |
28% |
29% |
||||
| Diluted net income per ADS attributable to Changyou.com Limited |
$ |
2.72 |
2.85 |
|||
| ADSs used in computing diluted net income per ADS attributable to |
53,139 |
53,803 |
||||
| Note: |
||||||
| (a) To eliminate share-based compensation expense measured using the fair value method. |
||||||
| CHANGYOU.COM LIMITED |
||||||
| RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATIONS MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES |
||||||
| (UNAUDITED, IN THOUSANDS, EXCEPT PER ADS AMOUNTS) |
||||||
| Twelve Months Ended Dec. 31, 2015 |
||||||
| Non-GAAP adjustments |
||||||
| GAAP |
Share-based |
Non-GAAP |
||||
| Online game gross profit |
$ |
480,528 |
37 |
480,565 |
||
| Online advertising gross profit |
46,267 |
0 |
46,267 |
|||
| IVAS gross profit |
4,738 |
(2) |
4,736 |
|||
| Other gross profit |
13,342 |
0 |
13,342 |
|||
| Gross profit |
$ |
544,875 |
35 |
544,910 |
||
| Gross margin |
72% |
72% |
||||
| Operating expenses |
383,553 |
(14,989) |
368,564 |
|||
| Operating profit |
$ |
161,322 |
15,024 |
176,346 |
||
| Operating margin |
21% |
23% |
||||
| Income tax expense |
(54,055) |
0 |
(54,055) |
|||
| Net income |
$ |
190,627 |
15,024 |
205,651 |
||
| Less: Net loss attributable to non-controlling interests |
(22,157) |
14 |
(22,143) |
|||
| Net income attributable to Changyou.com Limited |
$ |
212,784 |
15,010 |
227,794 |
||
| Net margin attributable to Changyou.com Limited |
28% |
30% |
||||
| Diluted net income per ADS attributable to Changyou.com Limited |
$ |
4.02 |
4.20 |
|||
| ADSs used in computing diluted net income per ADS attributable to |
52,881 |
54,280 |
||||
| Note: |
||||||
| (a) To eliminate share-based compensation expense measured using the fair value method. |
||||||
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SOURCE Changyou.com Limited
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