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 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-GAAP3net 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 toRMB111.2 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.

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.

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.

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 toRMB52.2 million (US$8.2 million) from the corresponding period in 2014. Non-GAAP general and administrative expenses wereRMB83.6 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. (Original Source)

Shares of Youku Tudou closed yesterday at $26.70. 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 $23.62 and its 200-day moving average is $21.99.

On the ratings front, Youku Tudou has been the subject of a number of recent research reports. In a report issued on August 20, Pacific Crest analyst Cheng Cheng maintained a Hold rating on YOKU, with a price target of $21, which represents a potential downside of 21.3% from where the stock is currently trading. Separately, on the same day, Brean Murray Carret’s Fawne Jiang maintained a Buy rating on the stock and has a price target of $26.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Cheng Cheng and Fawne Jiang have a total average return of 5.1% and 7.4% respectively. Cheng has a success rate of 44.7% and is ranked #1268 out of 3857 analysts, while Jiang has a success rate of 46.6% and is ranked #672.

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.