EX-99.1 2 a15-23823_1ex99d1.htm EX-99.1

Exhibit 99.1

 

Youku Tudou Announces Third Quarter 2015 Unaudited Financial Results

 

BEIJING, China, November 20, 2015 — 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.

 

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.

 


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.

 

1



 

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.

 

2



 

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

 

3



 

YOUKU TUDOU INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

As of

 

(Amounts in thousands, except for number of shares)

 

December 31, 2014

 

September 30, 2015

 

September 30, 2015

 

 

 

RMB

 

RMB

 

US$

 

 

 

(Audited)

 

(Unaudited)

 

(Unaudited)

 

ASSETS

 

 

 

 

 

 

 

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

 

 

4



 

YOUKU TUDOU INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 

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

 

For the Three Months Ended

 

For the Nine Months Ended

 

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

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

5



 

The accompanying notes are an integral part of the press release.

 

Note 1. Cost of Revenues

 

 

 

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)

 

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

 

 

6



 

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

 

 

7



 

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

 

 

8



 

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.

 

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