Youku Tudou Inc (ADR) (NYSE:YOKU), China’s leading Internet television company, announced its unaudited financial results for the first quarter 2015.

First Quarter 2015 Highlights

  • Net revenues were RMB1.14 billion (US$183.8 million), a 47% increase from the corresponding period in 2014[2]. Non-GAAP[3] net revenues were RMB1.06 billion (US$170.4 million) in the first quarter of 2015, a 51% increase from the corresponding period in 2014.
  • Gross profit was RMB1.5 million (US$0.2 million), as compared to RMB132.1 million (US$21.3 million) from the corresponding period in 2014. Non-GAAP gross loss was RMB32.9 million (US$5.3 million) in the first quarter of 2015, as compared to non-GAAP gross profit of RMB90.4 million (US$14.6 million) from the corresponding period in 2014.
  • Net loss was RMB517.4 million (US$83.5 million), as compared to RMB176.0 million (US$28.4 million) from the corresponding period in 2014. Non-GAAP net loss was RMB481.8 million (US$77.7 million) in the first quarter of 2015, as compared toRMB157.1 million (US$25.3 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 first quarter of 2015 amounted to RMB2.67 (US$0.43) and RMB2.67 (US$0.43), respectively. Non-GAAP basic and diluted loss per ADS for the first quarter of 2015 amounted to RMB2.49 (US$0.40) and RMB2.49 (US$0.40), respectively.
  • Cash, cash equivalents, restricted cash and short-term investments totaled RMB8.52 billion (US$1.37 billion) as of March 31, 2015.
  • Acquisition of property and equipment for the first quarter of 2015 was RMB73.0 million (US$11.8 million).
  • Acquisition of licensed copyright for the first quarter of 2015 was RMB495.2 million (US$79.9 million).

“The first quarter was marked by solid progress in the three key growth pillars that drive our business development for this year: accelerated topline growth, revenue diversification, and significant ramp up of web-native content. We believe this clear growth strategy will improve our business economics going forward,” said Victor Koo, Chairman and Chief Executive Officer of Youku Tudou. “From a more strategic perspective we note that multi-screen video has converged with neighboring industries, notably the pan-entertainment and media sectors, making us a strategic property and partner and positioning us amidst a much bigger growth opportunity going forward.”

Dele Liu, President of Youku Tudou, added, “We have aggressively stepped up our investments in content this year across all categories, especially in original content, PGC and UGC, to enhance our web-based content eco-system. Leveraging synergy among our various business units, we are working towards a more balanced and sustainable content mix in which proprietary web-native content will be the foremost category driving our revenue and traffic growth over time.”

First Quarter 2015 Results

Net revenues were RMB1.14 billion (US$183.8 million) in the first quarter of 2015, a 47% increase from the corresponding period in 2014. Non-GAAP net revenues, which is herein defined as net revenues excluding barter sublicensing revenues, were RMB1.06 billion (US$170.4 million) in the first quarter of 2015, a 51% increase from the corresponding period in 2014, exceeded the high end of the non-GAAP net revenues guidance previously announced by the Company.

Advertising net revenues were RMB892.7 million (US$144.0 million) in the first quarter of 2015, a 43% increase from the corresponding period in 2014, exceeded the high end of 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 mainly derived from our subscription-based service, mobile game joint operation and interactive live entertainment, were RMB120.8 million (US$19.5 million) in the first quarter of 2015, a 706% 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, growing paying users and average spend per user of our interactive live entertainment service, and increasing number of mobile game distributions.

Bandwidth costs as a component of cost of revenues were RMB306.8 million (US$49.5 million)in the first quarter of 2015, representing 29% of non-GAAP net revenues, as compared to 29% of non-GAAP net revenues for the corresponding period in 2014. This increase was primarily attributable to the increase in traffic and higher resolution quality of our video content.

Content costs as a component of cost of revenues were RMB669.0 million (US$107.9 million) in the first quarter of 2015, representing 59% of net revenues as compared to 46% of net revenues for the corresponding period in 2014. Non-GAAP content costs were RMB620.1 million (US$100.0 million) in the first quarter of 2015, representing 59% of non-GAAP net revenues, as compared to 46% 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 RMB1.5 million (US$0.2 million)in the first quarter of 2015, as compared to RMB132.1 million (US$21.3 million) from the corresponding period in 2014. Non-GAAP gross loss was RMB32.9 million (US$5.3 million) in the first quarter of 2015, as compared to non-GAAP gross profit of RMB90.4 million (US$14.6 million) from the corresponding period in 2014.

Operating expenses were RMB544.1 million (US$87.8 million) in the first quarter of 2015, as compared to RMB312.0 million(US$50.3 million) for the corresponding period in 2014. Non-GAAP operating expenses were RMB474.0 million (US$76.5 million) in the first quarter of 2015, as compared to RMB251.3 million (US$40.5 million) for the corresponding period in 2014. Detailed discussion of each component of operating expenses is as follows:

Sales and marketing expenses were RMB320.4 million (US$51.7 million) in the first quarter of 2015, as compared to RMB185.7 million (US$30.0 million) for the corresponding period in 2014. Non-GAAP sales and marketing expenses were RMB286.7 million(US$46.3 million) in the first quarter of 2015, as compared to RMB163.2 million (US$26.3 million) for the corresponding period in 2014. This increase was primarily due to increases in marketing expenses and commission expenses paid to our sales force in line with our revenue growth.

Product development expenses were RMB139.6 million (US$22.5 million) in the first quarter of 2015, as compared to RMB80.1 million (US$12.9 million) for the corresponding period in 2014. Non-GAAP product development expenses were RMB120.0 million (US$19.4 million) in the first quarter of 2015, as compared to RMB62.0 million (US$10.0 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 RMB84.1 million (US$13.6 million) in the first quarter of 2015, as compared toRMB46.1 million (US$7.4 million) from the corresponding period in 2014. Non-GAAP general and administrative expenses wereRMB67.3 million (US$10.9 million) in the first quarter of 2015, as compared to RMB26.1 million (US$4.2 million) from the corresponding period in 2014. This increase was primarily due to increases in the personnel related expense and professional service fees.

Net loss was RMB517.4 million (US$83.5 million)in the first quarter of 2015, as compared to RMB176.0 million (US$28.4 million) for the corresponding period in 2014. Non-GAAP net loss was RMB481.8 million (US$77.7 million) in the first quarter of 2015, as compared to RMB157.1 million (US$25.3 million) from the corresponding period in 2014.

Business Outlook

For the second quarter of 2015, the Company expects non-GAAP net revenues will be between RMB1.47 billion and RMB1.52 billion, which with advertising net revenues contributing between RMB1.25 billion and RMB1.30 billion. This forecast reflects the Company’s current and preliminary view, which is subject to change. (Original Source)

Shares of Youku Tudou closed today at $23.02, $0.05 or 0.22%. YOKU has a 1-year high of $24.60 and a 1-year low of $11.85. The stock’s 50-day moving average is $17.62 and its 200-day moving average is $17.46.

On the ratings front, Youku Tudou has been the subject of a number of recent research reports. In a report issued on April 20, Summit Research analyst Henry Guo initiated coverage with a Hold rating on YOKU and a price target of $16, which implies a downside of 30.5% from current levels. Separately, on March 23, Nomura’s Chao Wang reiterated a Buy rating on the stock and has a price target of $24.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Henry Guo and Chao Wang have a total average return of 10.9% and 12.0% respectively. Guo has a success rate of 47.6% and is ranked #1155 out of 3606 analysts, while Wang has a success rate of 55.6% and is ranked #1136.

Overall, one research analyst has rated the stock with a Sell rating, one research analyst has assigned a Hold rating and 2 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $23.02 which is -23.0% under where the stock opened today.

Youku Tudou Inc is an Internet television company in china. Its internet television platform enables consumers to search, view and share high-quality video content quickly and easily across multiple devices.