Renren Announces Unaudited Second Quarter 2015 Financial Results

BEIJING, Aug. 20, 2015 /PRNewswire/ -- Renren Inc. (NYSE: RENN) ("Renren" or the "Company"), a leading real-name social networking internet platform in China, today announced its unaudited financial results for the second quarter ended June 30, 2015. 

Second Quarter 2015 Highlights

• Total net revenues were US$15.1 million, a 34.0% decrease from the corresponding period in 2014.
  
  • Renren net revenues were US$10.3 million, a 21.1% decrease from the 
    corresponding period in 2014.
    
  • Games net revenues were US$4.8 million, a 51.1% decrease from the
    corresponding period in 2014.
    
• Gross profit was US$5.2 million, a 53.6% decrease from the corresponding period in 2014.
• Operating loss was US$24.3 million, compared to an operating loss of US$25.6 million in the corresponding period in 2014.
• Net loss attributable to the Company was US$78.1 million, compared to a net income of US$31.3 million in the corresponding period in 2014.
• Adjusted net loss ⁽¹⁾ (non-GAAP) was US$71.9 million, compared to an adjusted net income ⁽¹⁾ (non-GAAP) of US$37.4 million in the corresponding period in 2014.

Second Quarter 2015 Results

Total net revenues for the second quarter of 2015 were US$15.1 million, representing a 34.0% decrease from the corresponding period in 2014.

Renren net revenues were US$10.3 million, representing a 21.1% decrease from the corresponding period of 2014. Within Renren net revenues, online advertising revenues were US$3.9 million for the second quarter of 2015, a 60.1% decrease from the corresponding period of 2014. The decrease was due to increasing competition and the continuing migration of our traffic to mobile. Internet Value-Added Services (IVAS) revenues were US$6.4 million, representing a 90.8% increase from the corresponding period in 2014, primarily due to the increase in revenue from the social video platform "Woxiu". Monthly unique log-in users increased from approximately 44 million in June 2014 to approximately 45 million in June 2015.

Games net revenues were US$4.8 million for the second quarter of 2015, a 51.1% decrease from the corresponding period of 2014.  The decrease was due to the previously launched games having reached their mature stages. 

Cost of revenues was US$9.9 million, a 15.4% decrease from the corresponding period of 2014.

Operating expenses were US$29.5 million, a 20.0% decrease from the corresponding period of 2014.

Selling and marketing expenses were US$9.2 million, a 9.3% decrease from the corresponding period of 2014. The decrease was primarily due to the decrease in advertising and promotions for online games and Renren branding campaigns.

Research and development expenses were US$8.8 million, a 31.8% decrease from the corresponding period in 2014. The decrease was primarily due to headcount reduction and the resulting decrease in personnel related expense.

General and administrative expenses were US$11.5 million, a 14.1% decrease from the corresponding period in 2014. The decrease was primarily due to the decrease in bad debt expenses.

Share-based compensation expenses, all of which were included in operating expenses, were US$6.2 million, compared to US$5.3 million in the corresponding period in 2014. 

Operating loss was US$24.3 million, compared to an operating loss of US$25.6 million in the corresponding period in 2014.

Net loss attributable to the Company was US$78.1 million, compared to a net income of US$31.3 million in the corresponding period in 2014.  In the second quarter of 2014 the Company recognized a US$86.0 million gain from the disposal of available-for-sales marketable securities.

Adjusted net loss (non-GAAP) was US$71.9 million, compared to an adjusted net income of US$37.4 million in the corresponding period in 2014.

Share Repurchase Program

Renren repurchased approximately 16.8 million ADSs for an aggregate amount of approximately US$52.2 million under the share repurchase program which expired on June 27, 2015.

Business Outlook

The Company expects to generate revenues in an amount ranging from US$11 million to US$13 million in the third quarter of 2015, representing a 33.4% to 43.7% year-over-year decline. This forecast reflects Renren's current and preliminary view, which is subject to change.

Receipt of Non-Binding Proposal to Acquire the Company

On June 10, 2015, the Company announced that its Board of Directors (the "Board") has received a non-binding proposal letter, dated June 10, 2015, from Mr. Joseph Chen, Chairman of the Board and Chief Executive Officer of the Company, and Mr. James Jian Liu, a member of the Board and Chief Operating Officer of the Company, proposing a "going-private" transaction (the "Transaction") to acquire all of the outstanding ordinary shares of the Company not already owned by Mr. Chen or Mr. Liu for US$4.20 in cash per American depositary share ("ADS"), or US$1.40 per ordinary share, which represents approximately 22% above the average closing price of the Company's ADSs over the last 30 trading days up to and including June 9, 2015.

The Board intends to form a special committee consisting of independent directors to consider this proposal. The Board cautions the Company's shareholders and others considering trading in its securities that the Board just received the non-binding proposal letter from Mr. Chen and Mr. Liu and no decisions have been made with respect to the Company's response to the proposed Transaction. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated.  The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable law.

Conference Call Information

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

About Renren Inc.

Renren Inc. (NYSE: RENN) operates a leading real name social networking internet platform in China. It enables users to connect and communicate with each other, share information and user generated content, play online games, watch videos and enjoy a wide range of other features and services. Renren's businesses primarily include the main social networking website renren.com and the game operating platform Renren Games. Renren.com had approximately 227 million activated users as of June 30, 2015. Renren's American depositary shares, each of which represents three Class A ordinary shares, trade on NYSE under the symbol "RENN".

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook for the third quarter of 2015 and quotations from management in this announcement, as well as Renren's strategic and operational plans, contain forward-looking statements. Renren may also make written or oral forward-looking statements in its filings with the U.S. Securities and Exchange Commission ("SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Renren's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our goals and strategies; our future business development, financial condition and results of operations; the expected growth of the social networking site market in China; our expectations regarding demand for and market acceptance of our services; our expectations regarding the retention and strengthening of our relationships with key advertisers and customers; our plans to enhance user experience, infrastructure and service offerings; competition in our industry in China; and relevant government policies and regulations relating to our industry. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Renren does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Renren's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Renren uses "adjusted net income (loss)" which is defined as "a non-GAAP financial measure" by the SEC, in evaluating its business. We define adjusted net income (loss) as net income (loss) excluding share-based compensation expenses, amortization of intangible assets and impairment of intangible assets and goodwill. We present adjusted net income (loss) because it is used by our management to evaluate our operating performance. We also believe that this non-GAAP financial measure provide useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies.

The presentation of this non-GAAP financial measure is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliation of non-GAAP results of operations measures to the comparable GAAP financial measures" at the end of this release.

For more information, please contact:

Cynthia Liu
Investor Relations Department
Renren Inc.
Tel: (86 10) 8448 1818 ext 1300
Email: [email protected]

SOURCE Renren Inc.