Youku Tudou Inc (ADR) (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 second quarter 2015.

Second Quarter 2015 Highlights

  • Net revenues were RMB1.61 billion (US$259.6 million), a 57% increase from the corresponding period in 2014[2]. Non-GAAP[3] net revenues were RMB1.51 billion (US$244.3 million) in the second quarter of 2015, a 58% increase from the corresponding period in 2014.
  • Gross profit was RMB254.1 million (US$41.0 million), an 11% increase from the corresponding period in 2014. Non-GAAP gross profit was RMB253.8 million (US$40.9 million) in the second quarter of 2015, a 14% increase from the corresponding period in 2014.
  • Net loss was RMB342.0 million (US$55.2 million), as compared to RMB142.3 million (US$23.0 million) from the corresponding period in 2014. Non-GAAP net loss was RMB220.7 million (US$35.6 million) in the second quarter of 2015, as compared toRMB76.9 million (US$12.4 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 second quarter of 2015 amounted to RMB1.76 (US$0.28) and RMB1.76 (US$0.28), respectively. Non-GAAP basic and diluted loss per ADS for the second quarter of 2015 amounted to RMB1.13 (US$0.18) and RMB1.13 (US$0.18), respectively.
  • Cash, cash equivalents, restricted cash and short-term investments totaled RMB8.33 billion (US$1.34 billion) as of June 30, 2015.
  • Acquisition of property and equipment for the second quarter of 2015 was RMB71.5 million (US$11.5 million).
  • Acquisition of licensed copyright for the second quarter of 2015 was RMB366.2 million (US$59.1 million).

“I am very pleased that once more we delivered accelerated and increasingly diversified topline growth in the second quarter, driven by robust consumer business development and supported by healthy advertising revenues. Our revenue diversification through consumer business is successful and based on progress driven by our business unit reorganizations and management team additions. Meanwhile, with nearly half of advertising revenues coming from mobile, we have achieved broad adoption of mobile advertising by domestic and international advertisers alike,” said Victor Koo, Chairman and Chief Executive Officer of Youku Tudou. “We expect these positive trends, reinforced by our clear growth strategy and improving business economics, to continue during the second half of this year.”

Dele Liu, President of Youku Tudou, added, “We continued to significantly increase web-native content, which is one of the key growth pillars driving our business development this year, in addition to accelerated topline growth and revenue diversification. More specifically, we are creating cross-domain synergy for high quality IPs taking the forms of web series, online game, and movies, leveraging our large and growing user base and high quality traffic as measured by user time spent and user engagement.”

Second Quarter 2015 Results

Net revenues were RMB1.61 billion (US$259.6 million) in the second quarter of 2015, a 57% increase from the corresponding period in 2014. Non-GAAP net revenues were RMB1.51 billion (US$244.3 million) in the second quarter of 2015, a 58% increase from the corresponding period in 2014, meeting the non-GAAP net revenues guidance previously announced by the Company.

Advertising net revenues were RMB1.28 billion (US$206.1 million) in the second quarter of 2015, a 40% 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 RMB174.5 million (US$28.1 million) in the second quarter of 2015, a 596% 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 RMB330.3 million (US$53.3 million)in the second quarter of 2015, representing 21% of net revenues, as compared to 21% of net revenues for the corresponding period in 2014.

Content costs as a component of cost of revenues were RMB744.4 million (US$120.1 million) in the second quarter of 2015, representing 46% of net revenues as compared to 45% of net revenues for the corresponding period in 2014. Non-GAAP content costs were RMB649.8 million (US$104.8 million) in the second quarter of 2015, representing 43% of non-GAAP net revenues, as compared to 42% 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 RMB254.1 million (US$41.0 million) in the second quarter of 2015, an 11% increase from the corresponding period in 2014. Non-GAAP gross profit was RMB253.8 million (US$40.9 million) in the second quarter of 2015, a 14% increase from the corresponding period in 2014.

Operating expenses were RMB645.9 million (US$104.2 million) in the second quarter of 2015, as compared to RMB384.2 million(US$62.0 million) for the corresponding period in 2014. Non-GAAP operating expenses were RMB524.4 million (US$84.6 million) in the second quarter of 2015, as compared to RMB312.1 million (US$50.3 million) for the corresponding period in 2014. Detailed discussion of each component of operating expenses is as follows:

Sales and marketing expenses were RMB354.3 million (US$57.1 million) in the second quarter of 2015, as compared toRMB212.0 million (US$34.2 million) for the corresponding period in 2014. Non-GAAP sales and marketing expenses wereRMB305.6 million (US$49.3 million) in the second quarter of 2015, as compared to RMB185.8 million (US$30.0 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 RMB181.9 million (US$29.3 million) in the second quarter of 2015, as compared toRMB98.6 million (US$15.9 million) for the corresponding period in 2014. Non-GAAP product development expenses wereRMB141.8 million (US$22.9 million) in the second quarter of 2015, as compared to RMB78.6 million (US$12.7 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 RMB109.8 million (US$17.7 million) in the second quarter of 2015, as compared toRMB73.7 million (US$11.9 million) from the corresponding period in 2014. Non-GAAP general and administrative expenses wereRMB77.0 million (US$12.4 million) in the second quarter of 2015, as compared to RMB47.6 million (US$7.7 million) from the corresponding period in 2014.

Net loss was RMB342.0 million (US$55.2 million) in the second quarter of 2015, as compared to RMB142.3 million (US$23.0 million) for the corresponding period in 2014. Non-GAAP net loss was RMB220.7 million (US$35.6 million) in the second quarter of 2015, as compared to RMB76.9 million (US$12.4 million) from the corresponding period in 2014.

Business Outlook

For the third quarter of 2015, the Company expects non-GAAP net revenues will be between RMB1.69 billion and RMB1.78 billion, with advertising net revenues contributing between RMB1.34 billion and RMB1.40 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 $17.75, down $0.90 or 4.83%. YOKU has a 1-year high of $31.50 and a 1-year low of $11.85. The stock’s 50-day moving average is $20.24 and its 200-day moving average is $20.03.

On the ratings front, Youku Tudou has been the subject of a number of recent research reports. In a report released yesterday, Tiger Hill Capital analyst Tian Hou upgraded YOKU to Buy, with a price target of $33, which implies an upside of 85.9% from current levels. Separately, on July 27, Pacific Crest’s Cheng Cheng maintained a Hold rating on the stock .

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Tian Hou and Cheng Cheng have a total average return of -7.2% and 3.7% respectively. Hou has a success rate of 30.8% and is ranked #3379 out of 3740 analysts, while Cheng has a success rate of 37.1% and is ranked #1643.

The street is mostly Bullish on YOKU stock. Out of 4 analysts who cover the stock, 2 suggest a Buy rating , 1 suggest a Sell and one recommends to Hold the stock. The 12-month average price target assigned to the stock is $22.00, which represents a potential upside of 23.9% from where the stock is currently trading.

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.