Bitauto Hldg Ltd (ADR) (NYSE:BITA), a leading provider of internet content and marketing services for China’s fast-growing automotive industry, announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2015.

Fourth Quarter and Fiscal Year 2015 Highlights

  • Revenue in the fourth quarter of 2015 was RMB1.24 billion (US$191.3 million), a 27.1% increase from the corresponding period in 2014. Revenue in fiscal year 2015 was RMB4.01 billion (US$619.3 million), a 63.1% increase from 2014.
  • Gross profit in the fourth quarter of 2015 was RMB902.8 million (US$139.4 million), a 35.2% increase from the corresponding period in 2014. Gross profit in fiscal year 2015 was RMB2.78 billion (US$429.5 million), a 49.4% increase from 2014.
  • Non-GAAP profit in the fourth quarter of 2015 was RMB112.2 million (US$17.3 million), compared to a non-GAAP profit ofRMB197.4 million (US$30.5 million) in the corresponding period in 2014. Non-GAAP profit in fiscal year 2015 wasRMB367.7 million (US$56.8 million), compared to a non-GAAP profit of RMB510.9 million (US$78.9 million) in 2014.
  • Non-GAAP basic and diluted profit per ADS in the fourth quarter of 2015 was RMB1.68 (US$0.26) and RMB1.63(US$0.25), respectively. Non-GAAP basic and diluted profit per ADS in fiscal year 2015 was RMB5.86 (US$0.90) andRMB5.47 (US$0.84), respectively.

Mr. William Li, chief executive officer and chairman of Bitauto commented, “We are pleased to announce healthy results for the fourth quarter of 2015, with revenue growing 27.1% year-over-year. For the full year 2015, Bitauto made significant progress across our businesses and delivered strong growth. Our top-line grew 63.1% year-over-year, with revenue from our EP platform growing 122.3% year-over-year in 2015.”

“In 2015, Bitauto generated over 100 million sales leads for our automobile customers, with approximately 70% of leads generated from mobile. Our EP platform maintained its industry leading position with peak paid customers exceeding 24,900 in 2015. We continued to make strategic investments and expanded our automobile transaction services offering in order to optimize consumers’ automobile buying experience online and offline. We have successfully developed various growth initiatives in Bitauto’s automobile transaction services business which have been well received by the market.”

“Looking to 2016, we will continue to execute on Bitauto’s core business strategies to strengthen our industry leadership. First, we will continue to optimize our offline service infrastructure, further develop our transaction services, including automobile transactions, CRM and automotive financing services, and improve the overall efficiency of our transaction services. Second, we will strive to further improve the automobile buying experience for customers and enhance Bitauto’s brand in the automobile transaction market. Third, we will continue to increase our mobile monetization capability from core businesses, such as advertising and transaction services, through tighter integration with our mobile offerings.”

Mr. Andy Zhang, chief operating officer and chief financial officer of Bitauto, said, “Over the past year, Bitauto continued to invest in building our brand and expanding our core businesses, especially the automobile transaction services business. In 2016, we will focus on maintaining growth while enhancing our operating efficiency and solidifying our long-term competitiveness. Beginning from the first quarter of 2016, Bitauto will change its accounting standards from International Financial Reporting Standards (IFRS) to accounting principles generally accepted in the United States of America (U.S. GAAP). In addition, in order to better reflect Bitauto’s business structure and provide more clarity regarding its operating performance, beginning from the first quarter of 2016, the company will report financial results across three business segments: advertising and subscription business, transaction services business and digital marketing solutions business.”

Fourth Quarter 2015 Results

Bitauto reported revenue of RMB1.24 billion (US$191.3 million) for the fourth quarter of 2015, including advertising and subscription revenue of RMB1.06 billion (US$163.6 million) and agent service revenue2 of RMB179.6 million (US$27.7 million), representing a 27.1% increase from the corresponding period in 2014. The increase in revenue was primarily attributable to the growth of the Company’s EP platform business and advertising business.

Cost of revenue for the fourth quarter of 2015 was RMB336.6 million (US$52.0 million), representing a year-over-year increase of 9.4% from RMB307.7 million (US$47.5 million). Cost of revenue as a percentage of revenue in the fourth quarter of 2015 was 27.2%, compared to 31.6% in the corresponding period in 2014.

Gross profit for the fourth quarter of 2015 was RMB902.8 million (US$139.4 million), representing a 35.2% increase from the corresponding period in 2014.

Selling and administrative expenses were RMB1.17 billion (US$181.0 million) for the fourth quarter of 2015, representing an increase of 178.1% from the corresponding period in 2014. This increase was primarily attributable to the increase in headcount and related expenses, mobile marketing efforts, amortization of intangible assets relating to the strategic cooperation with JD.com as well as write-down of assets.

Product development expenses were RMB88.8 million (US$13.7 million) for the fourth quarter of 2015, a 74.7% 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 RMB27.6 million (US$4.3 million) in the fourth quarter of 2015, compared to RMB34.0 million (US$5.2 million) in the corresponding period in 2014.

IFRS operating loss in the fourth quarter of 2015 was RMB364.1 million (US$56.2 million), compared to an operating profit of RMB194.2 million (US$30.0 million) in the corresponding period in 2014. This was primarily attributable to increased compensation expense resulting from an increase in both headcount and the level of salaries and benefits, marketing expense, amortization of intangible assets related to the strategic cooperation with JD.com, as well as write-down of assets.

Non-GAAP operating profit in the fourth quarter of 2015 was RMB108.7 million (US$16.8 million), compared to a non-GAAP operating profit of RMB239.4 million (US$37.0 million) in the corresponding period in 2014.

Income tax expense in the fourth quarter of 2015 was RMB7.3 million (US$1.1 million), compared to RMB38.5 million (US$5.9 million) in the corresponding period in 2014.

IFRS loss in the fourth quarter of 2015 was RMB314.3 million (US$48.5 million), compared to an IFRS profit of RMB150.0 million(US$23.2 million) in the corresponding period in 2014. Basic and diluted loss per ADS, each representing one ordinary share, in the fourth quarter of 2015 amounted to RMB5.30 (US$0.82) and RMB5.30 (US$0.82), respectively.

Non-GAAP profit in the fourth quarter of 2015 was RMB112.2 million (US$17.3 million), compared to a non-GAAP profit of RMB197.4 million (US$30.5 million) in the corresponding period in 2014. Non-GAAP basic and diluted profit per ADS in the fourth quarter of 2015 amounted to RMB1.68 (US$0.26) and RMB1.63 (US$0.25), respectively.

Fourth Quarter 2015 Business Segment Results

Revenue from the advertising business for the fourth quarter of 2015 was RMB455.2 million (US$70.3 million), representing a 1.4% increase from the corresponding period in 2014.

Cost of revenue for the advertising business for the fourth quarter of 2015 was RMB83.3 million (US$12.9 million), compared toRMB109.9 million (US$17.0 million) for the corresponding period in 2014. Cost of revenue as a percentage of revenue in the fourth quarter of 2015 was 18.3%, compared to 24.5% in the corresponding period in 2014.

Gross profit from the advertising business for the fourth quarter of 2015 was RMB371.9 million (US$57.4 million), representing a 9.7% increase from the corresponding period in 2014.

Operating profit from the advertising business for the fourth quarter of 2015 was RMB134.6 million (US$20.8 million), representing a 19.7% increase from the corresponding period in 2014.

Revenue from the EP platform business for the fourth quarter of 2015 was RMB604.5 million (US$93.3 million), representing a 78.0% increase from the corresponding period in 2014. The increase was attributable to an increase in transaction services including automobile transactions, customer relationship management and automotive financing services, as well as an increase in the number of paid customers.

Cost of revenue for the EP platform business for the fourth quarter of 2015 was RMB167.0 million (US$25.8 million), representing a year-over-year increase of 17.8% from RMB141.7 million (US$21.9 million) for the corresponding period in 2014. Cost of revenue as a percentage of revenue in the fourth quarter of 2015 was 27.6%, compared to 41.7% in the corresponding period in 2014.

Gross profit from the EP platform business for the fourth quarter of 2015 was RMB437.5 million (US$67.5 million), representing a 121.1% increase from the corresponding period in 2014.

Operating loss from the EP platform business for the fourth quarter of 2015 was RMB502.5 million (US$77.6 million), compared to an operating profit of RMB12.2 million (US$1.9 million) in the corresponding period in 2014. This was primarily attributable to the increased investment in transaction services on the EP platform, an increase in amortization of intangible assets relating to the strategic cooperation with JD.com as well as write-down of assets.

Revenue from the digital marketing solutions business for the fourth quarter of 2015 was RMB179.6 million (US$27.7 million), compared to RMB186.6 million (US$28.8 million) for the corresponding period in 2014.

Cost of revenue for the digital marketing solutions business for the fourth quarter of 2015 was RMB86.3million (US$13.3 million), representing a year-over-year increase of 53.9% from RMB56.1 million (US$8.7 million) for the corresponding period in 2014. The increase was mainly due to an increase in personnel expenses of employees directly engaged in revenue-generating activities.

Gross profit from the digital marketing solutions business for the fourth quarter of 2015 was RMB93.3 million (US$14.4 million), compared to a gross profit of RMB130.5 million (US$20.2 million) for the corresponding period in 2014.

Operating profit from the digital marketing solutions business for the fourth quarter of 2015 was RMB3.8 million (US$0.6 million), compared to RMB69.5 million (US$10.7 million) for the corresponding period in 2014. This 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, and personnel expenses of employees.

As of December 31, 2015, the Company had cash and cash equivalents, time deposits and restricted cash of RMB3.39 billion(US$523.6 million). Cash used in operating activities, cash from investing activities, and cash from financing activities in the fourth quarter of 2015 were RMB500.5 million (US$77.3 million), RMB141.0 million (US$21.8 million), and RMB84.5 million (US$13.0 million), respectively.

Gross billings3 in the fourth quarter of 2015 was RMB1.68 billion (US$259.8 million), compared to RMB1.30 billion (US$201.2 million) in the corresponding period in 2014.

Fiscal Year 2015 Results

Revenue in 2015 was RMB4.01 billion (US$619.3 million), including advertising and subscription revenue of RMB3.56 billion(US$548.8 million) and agent service revenue of RMB456.5 million (US$70.5 million), representing a 63.1% increase from 2014. The increase was mainly attributed to the growth of the EP platform business, the advertising business and the digital marketing solutions business.

Cost of revenue in 2015 was RMB1.23 billion (US$189.8 million), representing a year-over-year increase of 106.0% from RMB597.0 million (US$92.2 million) in 2014. Cost of revenue as a percentage of revenue in 2015 was 30.7%, compared to 24.3% in 2014. The increase was mainly due to an increase in direct costs in transaction services on the EP platform and other higher-direct-cost services.

Gross profit in 2015 was RMB2.78 billion (US$429.5 million), representing a 49.4% increase from 2014.

Selling and administrative expenses in 2015 were RMB2.99 billion (US$462.0 million), representing an increase of 154.5% from 2014. This increase was primarily attributable to the increase in headcount and related expenses, mobile marketing efforts, amortization of intangible assets relating to the strategic cooperation with JD.com as well as write-down of assets.

Product development expenses in 2015 were RMB312.1 million (US$48.2 million), a 110.8% increase from 2014. The increase was primarily due to an increase in product development headcount and related expenses.

Share-based payment expenses in 2015, which were allocated to related operating expense line items, were RMB120.0 million(US$18.5 million), compared to RMB57.1 million (US$8.8 million) in 2014. The increase was mainly due to the granting of restricted share units in 2014 and 2015.

IFRS operating loss in 2015 was RMB479.6 million (US$74.0 million), compared to an operating profit of RMB527.3 million (US$81.4 million) in 2014. This was primarily attributable to increased compensation expense resulting from an increase in both headcount and the level of salaries and benefits, marketing expense, direct costs in transaction services on the EP platform, amortization of intangible assets related to the strategic cooperation with JD.com as well as write-down of assets.

Non-GAAP operating profit in 2015 was RMB410.3 million (US$63.3 million), compared to a non-GAAP operating profit of RMB599.5 million (US$92.6 million) in 2014.

Income tax expense in 2015 was RMB64.5 million (US$10.0 million), compared to RMB97.6 million (US$15.1 million) in 2014.

IFRS loss in 2015 was RMB416.5 million (US$64.3 million), compared to an IFRS profit of RMB489.1 million (US$75.5 million) in 2014. Basic and diluted loss per ADS, each representing one ordinary share, in fiscal year 2015 amounted to RMB7.30 (US$1.13) andRMB7.30 (US$1.13), respectively.

Non-GAAP profit in 2015 was RMB367.7 million (US$56.8 million), compared to a non-GAAP profit of RMB510.9 million (US$78.9 million) in 2014. Non-GAAP basic and diluted profit per ADS in fiscal year 2015 amounted to RMB5.86 (US$0.90) and RMB5.47(US$0.84), respectively.

Fiscal Year 2015 Business Segment Results

Revenue from the advertising business in 2015 was RMB1.62 billion (US$250.0 million), representing a 31.3% increase from 2014. The increase was attributable to better brand recognition of the bitauto.com website due 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 in 2015 was RMB321.8 million (US$49.7 million), representing a year-over-year increase of 45.5% from RMB221.2 million (US$34.1 million) in 2014. This was mainly due to an increase in higher-direct-cost services, as well as an increase in fees paid to partners’ websites to distribute dealer customers’ automobile pricing and promotional information. Cost of revenue as a percentage of revenue in 2015 was 19.9%, compared to 17.9% in 2014.

Gross profit from the advertising business in 2015 was RMB1.30 billion (US$200.3 million), representing a 28.2% increase from 2014.

Operating profit from the advertising business in 2015 was RMB390.0 million (US$60.2 million), representing a 18.0% increase from 2014.

Revenue from the EP platform business in 2015 was RMB1.94 billion (US$298.8 million), representing a 122.3% increase from 2014, primarily due to an increase in transaction services including automobile transactions, customer relationship management and automotive financing services, as well as an increase in the number of paying customers.

Cost of revenue for the EP platform business in 2015 was RMB672.3 million (US$103.8 million), representing a year-over-year increase of 197.9% from RMB225.7 million (US$34.8 million) in 2014. This was mainly due to an increase in direct costs in transaction services on the EP platform. Cost of revenue as a percentage of revenue in 2015 was 34.7%, compared to 25.9% in 2014.

Gross profit from the EP platform business in 2015 was RMB1.26 billion (US$195.0 million), representing a 95.8% increase from 2014.

Operating loss from the EP platform business in 2015 was RMB907.4 million (US$140.1 million), compared to an operating profit ofRMB135.4 million (US$20.9 million) in 2014. This was primarily attributable to the increased investment in transaction services on the EP platform and an increase in amortization of intangible assets relating to the strategic cooperation with JD.com as well as write-down of assets.

Revenue from the digital marketing solutions business in 2015 was RMB456.5 million (US$70.5 million), representing a 28.6% increase from 2014, which was primarily due to an increase in the number of advertising customers.

Cost of revenue for the digital marketing solutions business in 2015 was RMB235.5 million (US$36.4 million), representing a year-over-year increase of 56.9% from RMB150.2 million (US$23.2 million) in 2014. The increase was mainly due to an increase in direct costs of the customer support services such as marketing activities and website design and maintenance for our customers.

Gross profit from the digital marketing solutions business in 2015 was RMB221.0 million (US$34.1 million), compared to a gross profit of RMB204.9 million (US$31.6 million) in 2014.

Operating profit from the digital marketing solutions business in 2015 was RMB37.9 million (US$5.8 million), compared to an operating profit of RMB61.4 million (US$9.5 million) in 2014. This was mainly due to an increase in direct costs of the customer support services and personnel expenses of employees.

Cash used in operating activities, cash used in investing activities such as capital expenditures, and cash from financing activitiesin 2015 were RMB2.15 billion (US$332.3 million), RMB1.40 billion (US$216.0 million), and RMB5.27 billion (US$813.8 million), respectively.

Gross billings in 2015 was RMB5.39 billion (US$831.8 million), compared to RMB3.45 billion (US$533.0 million) 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, wasRMB147.7 million (US$22.8 million) as of December 31, 2015, compared to RMB104.7 million (US$16.2 million) as of December 31, 2014.

Trade receivables was RMB1.90 billion (US$293.3 million) as of December 31, 2015, compared to RMB1.34 billion (US$207.4 million) as of December 31, 2014. This increase was in line with gross billings growth.

The number of employees totaled 5,282 as of December 31, 2015, including employees of the entities in which Bitauto acquired and holds controlling interests. This represented an 81.6% increase from the same period in 2014, which 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.

Days sales outstanding (“DSO”)4 were approximately 115 days in 2015, compared to 105 days in 2014.

As of December 31, 2015, the Company had a total of 63,311,294 ordinary shares, with 34,388,244 ADSs issued and outstanding. Each ADS represents one ordinary share of the Company. Non-GAAP basic and diluted per ADS figures for the fourth quarter of 2015 were calculated using a weighted average of 60,568,015 and 62,477,303 ADSs, respectively. Non-GAAP basic and diluted per ADS figures for fiscal year 2015 were calculated using a weighted average of 58,142,432 and 60,300,058 ADSs, respectively.

Changes in Accounting Standards and Segment Reporting Disclosure

Bitauto announced that beginning from the first quarter of 2016, it will change the Company’s accounting standards from International Financial Reporting Standards (IFRS) to accounting principles generally accepted in the United States of America (U.S. GAAP).

In addition, in order to better reflect Bitauto’s business structure and provide more clarity regarding its operating performance, beginning from the first quarter of 2016 the Company will report financial results across three business segments: advertising and subscription business, transaction services business and digital marketing solutions business.

First Quarter 2016 Outlook

Bitauto currently expects to generate revenue in the range of RMB1.05 billion (US$162.4 million) to RMB1.09 billion (US$167.8 million) in the first quarter of 2016. Bitauto currently expects non-GAAP profit attributable to ordinary shareholders of the parent to be in the range of RMB58.0 million (US$9.0 million) to RMB68.0 million (US$10.5 million) in the first quarter of 2016.

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 $23.55. BITA has a 1-year high of $67.73 and a 1-year low of $16.09. The stock’s 50-day moving average is $19.70 and its 200-day moving average is $25.99.

On the ratings front, Bitauto has been the subject of a number of recent research reports. In a report released yesterday, Brean Murray Carret analyst Anne Shih reiterated a Hold rating on BITA. Separately, on February 23, J.P. Morgan’s Vivian Hao initiated coverage with a Hold rating on the stock and has a price target of $22.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Anne Shih and Vivian Hao have a total average return of 4.5% and 2.4% respectively. Shih has a success rate of 59.4% and is ranked #938 out of 3698 analysts, while Hao has a success rate of 57.1% and is ranked #1272.

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.