- Published: 18 August 2014
- Written by Editor
Sky-mobi Limited Announces Unaudited Financial Results for the Second Quarter 2014
HANGZHOU, China, Aug. 18, 2014 -- Sky-mobi Limited ("Sky-mobi" or the "Company") (MOBI), a leading mobile application platform in China, today announced its unaudited financial results for the second quarter ended June 30, 2014.
Second Quarter 2014 Highlights
- Total revenues increased 32.4% quarter-over-quarter to RMB170.2 million (US$27.4 million) from RMB128.6 million.
- Revenues from smartphone business increased 51.3% quarter-over-quarter to RMB132.5 million (US$21.4 million), or 77.8% of total revenues, from RMB87.5 million, or 68.1% of total revenues.
- Net profit increased 1268.7% quarter-over-quarter to RMB63.4 million (US$10.4 million) from RMB4.6 million.
- Non-IFRS net profit1 increased 644.2% quarter-over-quarter to RMB66.1 million (US$10.9 million) from RMB8.9 million.
- Basic and diluted earnings per common share ("EPS") were RMB0.26 (US$0.04) and RMB0.26 (US$0.04), respectively, which represents the equivalent of RMB2.12 (US$0.34) and RMB2.11 (US$0.34) per ADS2, respectively.
- Non-IFRS basic and diluted earnings per common share were RMB0.28 (US$0.04) and RMB0.27 (US$0.04), respectively, which represents the equivalent of RMB2.21 (US$0.36) RMB2.20 (US$0.35) per ADS, respectively.
Michael Tao Song, Chairman and Chief Executive Officer of Sky-mobi, stated, "We are excited with our robust second quarter financial and operational results, primarily due to the strong growth momentum of our smartphone business and further expansion into mobile game distribution. Driven by deep collaboration with telecom operators, we have expanded our offline presence to over 40,000 telecom stores nationwide. In addition, we continue to diversify our mobile content offering and selection of light casual games available on the Maopao platform. During the second quarter of 2014, we successfully extended our third-party game distribution channels to more than 100 partners, including Tencent, Baidu/91, Xiaomi and Qihoo 360. As affordable smartphones continue to be the fastest growing smartphone segment both in China and globally, we believe our strategic partnerships with handset manufacturers and telecom operators as well as third-party mobile game distribution channels will further entrench Sky-mobi in the ever accelerating mobile universe with a unique offline platform and the most innovative and diversified light casual games distribution platform."
Mr. Song continued, "As we continue to expand our international footprint, we have selected several games developed in China to be localized and distributed in Singapore, Malaysia, Thailand and Vietnam. By entering into direct partnerships with major local telecom operators to facilitate game distribution and monetization, we are able to create win-win situations for both the telecom operators and Sky-mobi. We are confident that our well-designed strategic initiatives and the growing demand from grassroots smartphone users in these markets will enable us to continue to drive long-term value for our shareholders."
John Bi, Chief Financial Officer of Sky-mobi, commented, "We are very proud to report the strong growth in our smartphone business and a sequential increase in total revenues that exceeded the high end of our prior guidance. By adding 450,000 new users per day on average, our smartphone business reached a historical high of RMB132.5 million in revenues, representing 77.8% of total revenues. The biggest contributor in revenue growth during the period was single player mobile games, which reached RMB93.1 million and an ARPU of RMB 8.8, accounting for 70.3% of our total smartphone revenues. In addition, we continued to strengthen our cost controls and effectively manage operational expenses, as reflected in the significant improvement in operating margin. Beginning this quarter, we will present revenue breakdown by mobile gaming types, to better reflect our focus on mobile gaming as well as provide more key operational metrics for improved transparency of our business model. Going forward, we aim to continue to grow our business intelligently and profitably and provide our shareholders long term value."
Second Quarter 2014 Financial Results
Total Revenues
Total revenues increased 32.4% quarter-over-quarter to RMB170.2 million (US$27.4 million), from RMB128.6 million in first quarter 2014 and an increase of 35.9% from RMB125.2 million in the prior year period.
Revenues from the smartphone business increased 51.3% quarter-over-quarter to RMB132.5 million (US$21.4 million), from RMB87.5 million in first quarter 2014, and represented 77.8% of the Company's total revenues in second quarter 2014. The sequential increase was mainly attributable to our the Company's strong growth in publishing single-player games and multiplayer games on the Maopao smartphone platform as well as through third-party distribution channels.
Smartphone revenues can be further broken down into three categories: "revenues from single-player games", "revenues from multiplayer games" and "advertising revenues". Revenues from single-player games increased 63.3% quarter-over-quarter to RMB93.1 million (US$15.0 million), from RMB57.0 million in first quarter 2014. Average revenue per paying user ("ARPU") for single-player games was RMB8.8. Revenues from multiplayer games increased 27.2% quarter-over-quarter to RMB26.1 million (US$4.2 million), from RMB20.5 million in first quarter 2014. ARPU for multiplayer games was RMB161.4. Advertising revenues increased 32.1% quarter-over-quarter to RMB13.2 million (US$2.1 million), from RMB10.0 million in first quarter 2014.
Cost of Revenues and Gross Profit
Total cost of revenues was RMB127.1 million (US$20.5 million), an increase of 32.4% from RMB96.0 million in first quarter 2014 and an increase of 39.8% from RMB91.0 million in the prior year period.
The discussion and analysis below focuses on non-IFRS cost of revenues, which the Company believes more accurately reflects the Company's operating performance than the IFRS cost of revenues.
Total non-IFRS cost of revenues was RMB127.0 million (US$20.5 million), an increase of 32.7% from RMB95.8 million in first quarter 2014 and an increase of 39.7% from RMB90.9 million in the prior year period.
Non-IFRS cost associated with payments to industry participants was RMB120.2 million (US$19.4 million), an increase of 34.8% from RMB89.2 million in first quarter 2014 and an increase of 44.3% from RMB83.3 million in the prior year period. The increase was primarily due to the increased channel cost, which was largely in line with the increase in revenues, and the increased content provider costs due to the higher revenue sharing with smartphone content providers.
Non-IFRS direct cost was RMB6.8 million (US$1.1 million), an increase of 3.8% from RMB6.6 million in first quarter 2014 and a decrease of 10.6% from RMB7.6 million in the prior year period. Non-IFRS direct cost included salaries and benefits, depreciation, office expenses and utilities directly related to the operation of Maopao application stores for smartphones and feature phones. The year-over-year decrease in Non-IFRS direct cost was attributed to the Company's initiatives to focus on the smartphone market.
Non-IFRS gross profit increased 31.6% quarter-over-quarter to RMB43.2 million (US$7.0 million), compared to non-IFRS gross profit of RMB32.8 million in first quarter 2014 and RMB34.3 million the prior year period. Non-IFRS gross margin was 25.4%, compared to 25.5% in first quarter 2014 and 27.4% in the prior year period. This year-over-year decrease was principally due to the general decline of the Company's feature phone business.
Operating Expenses and Profit (Loss) from Operations
Total operating expenses, primarily consisting of employee salaries and benefits, training expenses, travel, entertainment and office related expenses, were RMB35.3 million (US$5.7 million), an increase of 10.9% from RMB31.8 in first quarter 2014 and a decrease of 7.3% from RMB38.1 million in the prior year period.
Total non-IFRS operating expenses were RMB32.6 million (US$5.3 million), an increase of 17.4% from RMB27.8 million in first quarter 2014 and an increase of 5.3% from RMB31.0 million in the prior year period. The increase was mainly due to the increased marketing and promotion expense to promote our platform and products.
Profit from operations increased significantly to RMB7.8 million (US$1.3 million), from RMB0.8 million in first quarter 2014 and a loss from operations of RMB3.8 million in the prior year period.
Non-IFRS profit from operations increased 110.7% to RMB10.5 million (US$1.7 million), from RMB5.0 million in first quarter 2014 and non-IFRS profit from operations of RMB3.3 million in the prior year period.
Net Profit
Net profit increased 1268.7% quarter-over-quarter to RMB63.4 million (US$10.4 million) from RMB4.6 million in first quarter 2014. Basic and diluted EPS was RMB0.26 (US$0.04) and RMB0.26 (US$0.04), respectively, which represents the equivalent of RMB2.12 (US$0.34) and RMB2.11 (US$0.34) per ADS, respectively.
Non-IFRS net profit increased 644.2% quarter-over-quarter to RMB66.1 million (US$10.9 million) from RMB8.9 million. Non-IFRS basic and diluted earnings per common share were RMB0.28 (US$0.04) and RMB0.27 (US$0.04), respectively, which represents the equivalent of RMB2.21 (US$0.36) RMB2.20 (US$0.35) per ADS, respectively.
The weighted average number of ADSs used to calculate basic and diluted earnings per ADS for second quarter 2014 was 29,631,757 and 29,788,088, respectively.
Common Shares
Sky-mobi had approximately 239.6 million common shares outstanding as of June 30, 2014, or the equivalent of approximately 30.0 million ADSs outstanding.
Other Operating Data
For the three months ended | ||
In '000 | March 31, 2014 | Jun 30, 2014 |
Maopao Platform3 | ||
Average DNU4 | 414 | 450 |
Average MAU5 | 25,000 | 30,000 |
Game Distribution | ||
Paying ratio6 | 10.2% | 11.9% |
Single-player games | ||
Average MPU7 | 2,514 | 3,513 |
Average ARPU (RMB)8 | 7.6 | 8.8 |
Multiplayer games | ||
Average MPU | 41 | 54 |
Average ARPU (RMB) | 158.2 | 161.4 |
Business Outlook
For the third quarter ending September 30, 2014, Sky-mobi expects its total revenues to be in the range of RMB 200 million to RMB 210 million.
The above represents Sky-mobi's current projections, which are subject to change.
Conference Call and Webcast
The Company will hold a conference call on Monday, August 18, 2014 at 8:00 am Eastern Time, or 8:00 pm Beijing Time to discuss the financial results. Participants may access the call by dialing the following numbers:
United States: | +1-845-675-0438 |
International Toll Free: | +1-855-500-8701 |
China Domestic: | 400-1200654 |
Hong Kong: | +852-3051-2745 |
Conference ID: | # 82904001 |
The replay will be accessible through August 25, 2014 by dialing the following numbers:
United States Toll Free: | +1-855-452-5696 |
International: | +61-2-9003-4211 |
Conference ID: | # 82904001 |
A live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.sky-mobi.com
About Non-IFRS Financial Measures
To supplement its consolidated financial statements prepared in accordance with International Financial Reporting Standards, or IFRS, Sky-mobi uses several non-IFRS financial measures defined below. The Company believes management and investors benefit from non-IFRS financial measures in assessing the Company's performance and prospects. Specifically, the Company believes that non-IFRS financial measures provide meaningful supplemental information regarding its performance by excluding certain items that may not be indicative of the Company's operating performance.
The presentation of this additional information is not meant to be considered superior to, in isolation from or as a substitute for results prepared in accordance with IFRS. A limitation of using non-IFRS cost of revenues, gross profit, operating expenses, profit from operations, net profit and net profit per share is that these non-IFRS measures exclude share-based compensation expenses that have been and will continue to be for the foreseeable future a significant recurring expense. Management provides specific information regarding the IFRS amounts excluded from each non-IFRS measure. For more information on these non-IFRS financial measures, please see the tables containing reconciliations of non-IFRS financial measures to comparable IFRS measures in this release.
Definitions of Non-IFRS Measures
Non-IFRS cost of revenues is defined as cost of revenues excluding share-based compensation expenses.
Non-IFRS gross profit is defined as revenues less non-IFRS cost of revenues.
Non-IFRS operating expenses are defined as operating expenses excluding share-based compensation expenses.
Non-IFRS profit (loss) from operations is defined as Non-IFRS gross profit less non-IFRS operating expenses.
Non-IFRS net profit is defined as non-IFRS profit from operations plus/minus other gains or losses, impairment loss on investments in associates, share of results of associates and gain on disposal of an associate, less income tax.
Non-IFRS basic and diluted earnings per common share/ADS are defined as non-IFRS net profit attributable to owners of the Company divided by weighted average outstanding shares/ADSs during the period.
Exchange Rate
This announcement contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.2036 to US$1.00, the exchange rate at June 30, 2014 as set forth in the H.10 statistical release of the Federal Reserve Board.
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by such terms as "may," "will," ''believes,'' ''expects,'' ''anticipates,'' ''intends,'' ''estimates,'' "plans," "continues" or other similar expressions, the negative of these terms, or other comparable terminology. Such statements, including statements relating to the Company's business outlook, are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These forward-looking statements are based on current expectations, assumptions, estimates and projections about the Company and its industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law.
About Sky-mobi Limited
Sky-mobi Limited is a leading mobile application platform in China. The Company works with handset companies to pre-install its Maopao App Store and other Maopao applications on handsets and with content providers to provide users with applications and content titles. Users of Maopao App Store can browse, download and enjoy a range of applications and content, such as single-player games, mobile music and books on various mobile handsets with different hardware and operating system configurations. The Company's mobile social network community in China, the Maopao Community, offers mobile social games as well as applications and content with social networking functions to its registered users. The Company is based in Hangzhou, China. For more information, please visit: www.sky-mobi.com.
1 An explanation of the Company's non-IFRS financial measures is included in the section entitled "Use of Non-GAAP Financial Measures" below, and the related reconciliations to IFRS financial measures are presented in the accompanying "Unaudited reconciliations of non-IFRS financial measures to comparable IFRS financial measures".
2 American Depositary Shares ("ADSs") are traded on the NASDAQ Global Market, each of which represents eight common shares of the Company.
3 "Maopao Platform" refers to Sky-mobi's Maopao-branded smartphone products and services, including but not limited to Maopao App Store, Maopao Game Center, Maopao Community, Maopao Browser, Maopao Assistant, and Maopao Desktop.
4 "DNU" stands for daily new users. When calculating the number of users, Sky-mobi considers an individual that uses Maopao products or services on one handset and with one SIM card as one user. By this calculation method, an individual who uses Maopao on one handset with two different SIM cards, or on two different handsets with one SIM card would be counted as two individual users.
5 "MAU" stands for monthly active users. It refers to the number of users that visit Maopao Platform in a particular month. Average MAUs for a particular period is the average of the MAU during that period.
6 "Paying ratio" equals to average MPU divided by average MAU for a particular period.
7 "MPU" stands for monthly paying user. It represents the number of users that have purchased in-app virtual items or other contents in a particular month, adjusted to eliminate double-counting of the same user. Average MPU for a particular period is the average of the MPU during that period.
8 "ARPU" stands for average revenue per paying user.
FINANCIAL TABLES FOLLOW
Sky-mobi Limited | |||||||
Unaudited Consolidated Statements of Profit or Loss and Other Comprehensive Income (IFRS) | |||||||
For the three months ended | For the six months ended | ||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | |
2013 | 2014 | 2014 | 2014 | 2013 | 2014 | 2014 | |
In thousands | (RMB) | (RMB) | (RMB) | (US$) | (RMB) | (RMB) | (US$) |
(Except for share and per share data) | |||||||
Revenues | 125,217 | 128,564 | 170,220 | 27,439 | 286,222 | 298,784 | 48,163 |
Cost of revenues | (90,970) | (96,006) | (127,140) | (20,495) | (191,588) | (223,146) | (35,970) |
Gross profit | 34,247 | 32,558 | 43,080 | 6,944 | 94,634 | 75,638 | 12,193 |
Research and development expenses | (11,788) | (9,119) | (9,035) | (1,456) | (17,837) | (18,154) | (2,926) |
Sales and marketing expenses | (10,764) | (9,994) | (10,192) | (1,643) | (19,948) | (20,186) | (3,254) |
General and administrative expenses | (15,464) | (14,492) | (17,064) | (2,751) | (32,731) | (31,556) | (5,087) |
Other income and expense | (39) | 1,799 | 1,017 | 164 | 1,784 | 2,816 | 454 |
Total operating expenses | (38,055) | (31,806) | (35,274) | (5,686) | (68,732) | (67,080) | (10,813) |
(Loss) profit from operations | (3,808) | 752 | 7,806 | 1,258 | 25,902 | 8,558 | 1,380 |
Other gains and losses | 2,845 | 5,910 | 5,319 | 857 | 6,541 | 11,229 | 1,810 |
Impairment loss on investments in associates | -- | -- | (765) | (123) | (1,367) | (765) | (123) |
Share of results of associates | 1,456 | (962) | (288) | (46) | 1,950 | (1,250) | (201) |
Gain on disposal of an associate | -- | -- | 56,351 | 9,084 | -- | 56,351 | 9,084 |
Profit before tax | 493 | 5,700 | 68,423 | 11,030 | 33,026 | 74,123 | 11,950 |
Income tax expenses | (824) | (1,071) | (5,067) | (817) | (3,166) | (6,138) | (989) |
(Loss) profit for the period | (331) | 4,629 | 63,356 | 10,213 | 29,860 | 67,985 | 10,961 |
Total comprehensive (loss) profit for the period | (331) | 4,629 | 63,356 | 10,213 | 29,860 | 67,985 | 10,961 |
Loss (profit) and total comprehensive (loss) income attributable to: | |||||||
- Owners of the Company | (454) | 4,765 | 63,667 | 10,263 | 29,778 | 68,432 | 11,033 |
- Non-controlling interests | 123 | (136) | (311) | (50) | 82 | (447) | (72) |
(331) | 4,629 | 63,356 | 10,213 | 29,860 | 67,985 | 10,961 | |
Earnings per common share | |||||||
Basic | (0.00) | 0.02 | 0.26 | 0.04 | 0.12 | 0.29 | 0.05 |
Diluted | (0.00) | 0.02 | 0.26 | 0.04 | 0.12 | 0.28 | 0.05 |
Weight average number of ADS | |||||||
Basic | 30,275,080 | 29,392,071 | 29,631,757 | 31,457,954 | 29,512,576 | ||
Diluted | 30,275,080 | 29,656,888 | 29,788,088 | 31,457,954 | 29,721,468 | ||
Weight average number of shares | |||||||
Basic | 242,200,638 | 235,136,572 | 237,054,058 | 251,663,630 | 236,100,612 | ||
Diluted | 242,200,638 | 237,255,104 | 238,304,704 | 251,663,630 | 237,771,740 |
Unaudited Reconciliations of non-IFRS financial measures | |||||||
to comparable IFRS financial measures | |||||||
For the three months ended | For the six months ended | ||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | |
2013 | 2014 | 2014 | 2014 | 2013 | 2014 | 2014 | |
In thousands | (RMB) | (RMB) | (RMB) | (US$) | (RMB) | (RMB) | (US$) |
(Except for share and per share data) | |||||||
IFRS cost of revenues | (90,970) | (96,006) | (127,140) | (20,495) | (191,588) | (223,146) | (35,970) |
Less: share-based compensation expenses | 43 | 243 | 98 | 16 | 255 | 341 | 55 |
Non-IFRS cost of revenues | (90,927) | (95,763) | (127,042) | (20,479) | (191,333) | (222,805) | (35,915) |
IFRS gross profit | 34,247 | 32,558 | 43,080 | 6,944 | 94,634 | 75,638 | 12,193 |
Add: share-based compensation expenses | 43 | 243 | 98 | 16 | 255 | 341 | 55 |
Non-IFRS gross profit | 34,290 | 32,801 | 43,178 | 6,960 | 94,889 | 75,979 | 12,248 |
Total IFRS operating expenses | (38,055) | (31,806) | (35,274) | (5,686) | (68,732) | (67,080) | (10,813) |
Less: share-based compensation expenses | 7,048 | 4,008 | 2,635 | 425 | 10,529 | 6,643 | 1,071 |
Total non-IFRS operating expenses | (31,007) | (27,798) | (32,639) | (5,261) | (58,203) | (60,437) | (9,742) |
IFRS (loss) profit from operations | (3,808) | 752 | 7,806 | 1,258 | 25,902 | 8,558 | 1,380 |
Add: share-based compensation expenses | 7,091 | 4,251 | 2,733 | 441 | 10,784 | 6,984 | 1,126 |
Non-IFRS profit from operations | 3,283 | 5,003 | 10,539 | 1,699 | 36,686 | 15,542 | 2,506 |
IFRS net (loss) profit for the period | (331) | 4,629 | 63,356 | 10,213 | 29,860 | 67,985 | 10,961 |
Add: share-based compensation expenses | 7,091 | 4,251 | 2,733 | 441 | 10,784 | 6,984 | 1,126 |
Non-IFRS net profit for the period | 6,760 | 8,880 | 66,089 | 10,654 | 40,644 | 74,969 | 12,087 |
Non-IFRS earnings per common share | |||||||
Basic | 0.02 | 0.04 | 0.28 | 0.04 | 0.16 | 0.31 | 0.05 |
Diluted | 0.02 | 0.04 | 0.27 | 0.04 | 0.16 | 0.31 | 0.05 |
Weight average number of shares | |||||||
Basic | 242,200,638 | 235,136,572 | 237,054,058 | 251,663,630 | 236,100,612 | ||
Diluted | 242,200,638 | 237,255,104 | 238,304,333 | 251,663,630 | 237,771,558 |
Sky-mobi Limited | |||
Unaudited Consolidated Statements of Financial Position (IFRS) | |||
As of | As of | ||
March 31, | June 30, | June 30, | |
2014 | 2014 | ||
In thousands | (RMB) | (RMB) | (US$) |
ASSETS | |||
Current assets | |||
Cash and cash equivalents | 79,057 | 39,203 | 6,319 |
Term deposits | 295,804 | 415,369 | 66,956 |
Short-term investment | 52,569 | -- | -- |
Investment at fair value through profit or loss | 166,073 | 185,682 | 29,931 |
Trade and other receivables | 95,499 | 144,241 | 23,251 |
Amounts due from related parties | 160 | 2,662 | 429 |
Total current assets | 689,162 | 787,157 | 126,886 |
Non-current assets | |||
Property and equipment | 7,605 | 8,709 | 1,404 |
Investments in associates | 41,339 | 43,797 | 7,060 |
Investments in funds | 6,150 | 34,177 | 5,510 |
Available-for-sale investments | 100 | -- | 1,488 |
Non-current assets held for sale | 35,274 | -- | -- |
Prepayment for investment | 675 | 2,050 | 330 |
Other non-current assets | 3,380 | 3,029 | 488 |
Deferred tax assets | 1,968 | 1,968 | 317 |
Total non-current assets | 96,491 | 93,730 | 15,109 |
Total assets | 785,653 | 880,887 | 141,995 |
EQUITY AND LIABILITIES | |||
Current liabilities | |||
Trade and other payables | 153,474 | 172,776 | 27,851 |
Income tax liabilities | 10,699 | 10,162 | 1,638 |
Amounts due to related parties | 11,201 | 18,146 | 2,925 |
Deferred revenue | 6,350 | 13,058 | 2,105 |
Total current liabilities | 181,724 | 214,142 | 34,519 |
Total liabilities | 181,724 | 214,142 | 34,519 |
Equity | |||
Share capital | 86 | 87 | 14 |
Share premium | 637,451 | 636,285 | 102,567 |
Reserves | 155,326 | 157,417 | 25,375 |
Treasury stock | (1) | (1) | (0) |
Deficit | (192,644) | (131,098) | (21,133) |
Equity attributable to owners of the Company | 600,218 | 662,690 | 106,823 |
Non-controlling interests | 3,711 | 4,055 | 653 |
Total equity | 603,929 | 666,745 | 107,476 |
Total equity and liabilities | 785,653 | 880,887 | 141,995 |
Investor Relations Contact: Sky-mobi Limited Mr. John Bi, Chief Financial Officer Phone: + (86) 571-8777 0978 (Hangzhou, China) Email: This email address is being protected from spambots. You need JavaScript enabled to view it. ICR, Inc. Ms. Chenjiazi Zhong Phone: + (1) (646) -915-1615 (US) Email: This email address is being protected from spambots. You need JavaScript enabled to view it.