Stock Update (NYSE:BITA): Bitauto Announces First Quarter 2015 Unaudited Financial Results


Bitauto Hld Ltd (ADR) (NYSE:BITA), a leading provider of internet content and marketing services for China’s fast-growing automotive industry, today announced its unaudited financial results for the first quarter 2015 ended March 31, 2015[1].

First Quarter 2015 Highlights

  • Revenue in the first quarter of 2015 was RMB701.3 million (US$113.1 million), a 98.4% increase from the corresponding period in 2014.
  • Gross profit in the first quarter of 2015 was RMB477.3 million (US$77.0 million), a 66.3% increase from the corresponding period in 2014.
  • Non-GAAP profit in the first quarter of 2015 was RMB18.0 million (US$2.9 million), a 60.3% decrease from the corresponding period in 2014.
  • Non-GAAP basic and diluted profit per ADS in the first quarter of 2015 was RMB0.29 (US$0.05) and RMB0.23(US$0.04), respectively.

Mr. William Li, chief executive officer and chairman of Bitauto commented, “For the first quarter of 2015, Bitauto saw strong top-line growth of 98.4% year-over-year. Our bottom line results also surpassed our previous guidance.”

“During the quarter, the Company generated over 25 million sales leads for our customers, with an increasingly large percentage of leads coming from the mobile end. We are excited to see consumers embrace the advantages of conducting automobile transactions throughBitauto’s online platforms and offline services, including Huimaiche and Yiche Mall. Following the January announcement of our strategic partnership with JD.com and Tencent, on April 15, we were delighted to launch JD.com automobile channel, operated exclusively byBitauto. Early market reaction has been very positive and we will work closely with JD.com to promote the future development of the automobile channel in the months and years ahead.”

“In the quarters ahead, we will continue to execute on our three core business strategies. First, we will expand the range of value-added services on our EP platform, including our automobile transaction, CRM and automotive financing services. Second, we will invest heavily in our online and offline service infrastructure to create an even better automobile buying experience. Third, we will continue to invest in the Bitauto brand, with an emphasis on our mobile offerings. We are confident that these strategies will further solidify our industry leadership.”

Mr. Andy Zhang, chief financial officer of Bitauto, said, “During the quarter we were pleased to see our core businesses remain robust as we made significant progress building out our new business areas, including automobile transaction services and mobile offerings. Starting from the second quarter, we will appoint PwC as our independent auditor. PwC is also the auditor for our partners JD.com andTencent. Having them on board will facilitate closer coordination among us and will pave the way to expand these relationships in the future. We appreciate Ernst & Young Hua Ming LLP’s high-quality service and their commitment over the past several years.”

First Quarter 2015 Results

Bitauto reported revenue of RMB701.3 million (US$113.1 million) for the first quarter of 2015, including advertising and subscription revenue of RMB605.5 million (US$97.7 million) and agent service revenue[2] of RMB95.8 million (US$15.5 million), representing a 98.4% increase from the corresponding period in 2014. The increase in revenue was primarily attributable to the growth of the EP platform business, the digital marketing solutions business, and the advertising business.

Cost of revenue for the first quarter of 2015 was RMB224.0 million (US$36.1 million), representing a year-over-year increase of 236.8% from RMB66.5 million (US$10.7 million). Cost of revenue as a percentage of revenue in the first quarter of 2015 was 31.9%, compared to 18.8% in the corresponding period in 2014. The increase in cost of revenue was mainly due to an increase in direct costs in new products and services on the EP platform and other higher-direct-cost services.

Gross profit for the first quarter of 2015 was RMB477.3 million (US$77.0 million), representing a 66.3% increase from the corresponding period in 2014.

Selling and administrative expenses were RMB434.0 million (US$70.0 million) for the first quarter of 2015, representing an increase of 111.3% from the corresponding period in 2014. This increase was primarily attributable to an increase in expenses relating to an increase in selling and administrative headcount and an increase in employee salaries and benefits, as well as the Company’s mobile marketing efforts.

Product development expenses were RMB60.5 million (US$9.8 million) for the first quarter of 2015, a 119.6% increase from the corresponding period in 2014. The increase was primarily due to an increase in product development headcount and related expenses.

Share-based payment expenses, which were allocated to related operating expense line items, were RMB37.1 million (US$6.0 million) in the first quarter of 2015, compared to RMB8.4 million (US$1.4 million) in the corresponding period in 2014. The increase was mainly due to the granting of restricted share units in 2014.

IFRS Operating loss in the first quarter of 2015 was RMB17.1 million (US$2.8 million), compared to an operating profit of RMB54.0 million (US$8.7 million) in the corresponding period in 2014. This was primarily attributable to the increase in expenses relating to the increase in headcount and employee salaries and benefits, marketing efforts, as well as direct costs in new products and services on the EP platform and higher-direct-cost services.

Non-GAAP Operating profit in the first quarter of 2015 was RMB30.8 million (US$5.0 million), compared to a non-GAAP operating profit of RMB62.4 million (US$10.1 million) in the corresponding period in 2014.

Income tax expense in the first quarter of 2015 was RMB16.1 million (US$2.6 million), compared to an income tax expense of RMB10.0 million (US$1.6 million) in the corresponding period in 2014.

IFRS loss in the first quarter of 2015 was RMB4.8 million (US$0.8 million), compared to an IFRS profit of RMB36.9 million (US$6.0 million) in the corresponding period in 2014. Basic and diluted loss per ADS, each representing one ordinary share, in the first quarter of 2015 amounted to RMB0.05 (US$0.01) and RMB0.10 (US$0.02), respectively.

Non-GAAP profit in the first quarter of 2015 was RMB18.0 million (US$2.9 million), a 60.3% decrease from the corresponding period in 2014. This was primarily attributable to the increase in expenses relating to the increase in headcount and employee salaries and benefits, marketing efforts, as well as direct costs in new products and services on the EP platform and higher-direct-cost services. Non-GAAP basic and diluted profit per ADS in the first quarter of 2015 amounted to RMB0.29 (US$0.05) and RMB0.23 (US$0.04), respectively.

First Quarter 2015 Business Segment Results

Revenue from the advertising business for the first quarter of 2015 was RMB314.5 million (US$50.7 million), representing an 84.0% increase from the corresponding period in 2014. The increase was attributable to better brand recognition of the bitauto.com website thanks to its leading position as one of the most effective auto vertical destinations in China as well as an increase in advertising spending by automaker customers.

Cost of revenue for the advertising business for the first quarter of 2015 was RMB73.1 million (US$11.8 million), representing a year-over-year increase of 233.3% from RMB21.9 million (US$3.5 million) for the corresponding period in 2014. This was mainly due to an increase in higher-direct-cost services. Cost of revenue as a percentage of revenue in the first quarter of 2015 was 23.2%, compared to 12.8% in the corresponding period in 2014.

Gross profit from the advertising business for the first quarter of 2015 was RMB241.4 million (US$38.9 million), representing a 62.0% increase from the corresponding period in 2014.

Operating profit from the advertising business for the first quarter of 2015 was RMB38.3 million (US$6.2 million), representing a 6.9% increase from the corresponding period in 2014.

Revenue from the EP platform business for the first quarter of 2015 was RMB291.1 million (US$47.0 million), representing a 111.1% increase from the corresponding period in 2014. The increase was attributable to an increase in the number of paid customers and an increase in value-added services including automobile transactions, customer relationship management and automotive financing services.

Cost of revenue for the EP platform business for the first quarter of 2015 was RMB108.6 million (US$17.5 million), representing a year-over-year increase of 487.2% from RMB18.5 million (US$3.0 million) for the corresponding period in 2014. This was mainly due to an increase in direct costs in new products and services on the EP platform. Cost of revenue as a percentage of revenue in the first quarter of 2015 was 37.3%, compared to 13.4% in the corresponding period in 2014.

Gross profit from the EP platform business for the first quarter of 2015 was RMB182.4 million (US$29.4 million), representing a 52.8% increase from the corresponding period in 2014.

Operating loss from the EP platform business for the first quarter of 2015 was RMB75.3 million (US$12.2 million), compared to an operating profit of RMB27.5 million (US$4.4 million) in the corresponding period in 2014. This was primarily attributable to the increased investment in new products and services on the EP platform.

Revenue from the digital marketing solutions business for the first quarter of 2015 was RMB95.8 million (US$15.5 million), representing a 114.5% increase from the corresponding period in 2014, which reflects an increase in the number of advertising customers.

Cost of revenue for the digital marketing solutions business for the first quarter of 2015 was RMB42.2 million (US$6.8 million), representing a year-over-year increase of 62.0% from RMB26.1 million (US$4.2 million) for the corresponding period in 2014. The increase was mainly due to an increase in direct costs for the customer support services such as marketing activities and website design and maintenance for our customers.

Gross profit from the digital marketing solutions business for the first quarter of 2015 was RMB53.5 million (US$8.6 million), representing a 188.0% increase from the corresponding period in 2014.

Operating profit from the digital marketing solutions business for the first quarter of 2015 was RMB19.9 million (US$3.2 million), compared to an operating loss of RMB9.4 million (US$1.5 million) in the corresponding period in 2014.

As of March 31, 2015, the Company had cash and cash equivalents and time deposits of RMB5.81 billion (US$936.7 million). Cash used in operating activities, cash used in investing activities such as capital expenditures, and cash from financing activities in the first quarter of 2015 were RMB84.9 million (US$13.7 million), RMB2.51 billion (US$404.5 million), and RMB4.88 billion (US$787.2 million), respectively.

Gross billings[3] in the first quarter of 2015 was RMB978.8 million (US$157.9 million), compared to RMB480.1 million (US$77.5 million) in the corresponding period in 2014.

Bills receivables, representing short-term notes receivable issued by financial institutions that entitle the Company to receive the full face amount from the financial institutions at maturity, which generally range from three to six months from the date of issuance, was RMB43.0 million (US$6.9 million) as of March 31, 2015, compared to RMB104.7 million (US$16.9 million) as of December 31, 2014.

Trade receivables was RMB1.56 billion (US$251.1 million) as of March 31, 2015, compared to RMB1.34 billion (US$216.7 million) as ofDecember 31, 2014. This increase was in line with gross billings growth.

The number of employees totaled 3,460 as of March 31, 2015, representing a 50.2% increase from the same period in 2014. This was primarily due to higher headcount in Bitauto’s customer support service teams as the Company expands its offline service infrastructure to enhance the automobile buying experience, as well as increased headcount in Bitauto’s mobile product development team.

Recent Updates

As of March 31, 2015, the Company had a total of 63,311,294 ordinary shares, with 31,888,244 ADSs issued and outstanding. Each ADS represents one ordinary share of the Company. Non-GAAP Basic and diluted per ADS figures for the first quarter of 2015 were calculated using a weighted average of 50,965,579 and 53,419,779 ADSs, respectively.

Change in Certifying Accountant

Bitauto announced that it has appointed PricewaterhouseCoopers Zhong Tian LLP as the Company’s independent registered public accounting firm, to replace Ernst & Young Hua Ming LLP (“E&Y”), effective from May 9, 2015. The change of Bitauto’s independent registered public accounting firm was approved by the audit committee of the board. The decision was not made due to any disagreements between the Company and E&Y. E&Y’s audit reports on the Company’s consolidated financial statements for the years ended December 31, 2014, 2013 and 2012 do not contain any adverse opinion.

Additional information on this announcement can be found in the Company’s Form 6-K furnished with the Securities and Exchange Commission today.

Second Quarter 2015 Outlook

Bitauto currently expects to generate revenue in the range of RMB970.0 million (US$156.5 million) to RMB1.0 billion (US$161.3 million) in the second quarter of 2015, representing a 85.7% to 91.5% year-over-year increase. Bitauto currently expects non-GAAP profit attributable to ordinary shareholders of the parent in the range of RMB80.0 million (US$12.9 million) to RMB100.0 million (US$16.1 million) in the second quarter of 2015, representing a 19.5% to 35.6% year-over-year decrease.

This forecast takes into consideration seasonality factors in Bitauto’s business, and excludes any impact of foreign currency fluctuation. It reflects management’s current and preliminary view, which is subject to change. (Original Source)

Shares of Bitauto closed yesterday at $60.74 . BITA has a 1-year high of $98.28 and a 1-year low of $33.21. The stock’s 50-day moving average is $55.62 and its 200-day moving average is $66.88.

On the ratings front, Bitauto has been the subject of a number of recent research reports. In a report issued on March 10, Brean Murray Carret analyst Fawne Jiang downgraded BITA to Hold. Separately, on January 11, Oppenheimer’s Ella Ji reiterated a Buy rating on the stock and has a price target of $95.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Fawne Jiang and Ella Ji have a total average return of 2.4% and 4.1% respectively. Jiang has a success rate of 47.8% and is ranked #1626 out of 3596 analysts, while Ji has a success rate of 45.0% and is ranked #1244.

Bitauto Holdings Ltd is engaged in the provision of Internet content and marketing services in the automobile industry, including advertising services, subscription services, listing services and one-stop digital marketing services in the PRC.