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China Finance Online Reports Third Quarter 2004 Financial Results
Highlights for the third quarter of 2004:
- Net revenues grew by 183% year-on-year and 25% quarter-on-quarter
to US$1.67 million.
- Net income grew by 262% year-on-year and 36% quarter-on-quarter
to US$1.28 million. Diluted earnings per ADS were US$0.07 for the
quarter and diluted earnings per ordinary share were US$0.01 for
the quarter.
- Gross margin was 94%, compared to 87% for the same period in 2003
or 93% for the previous quarter. Net income margin increased to
77% from 60% for the same period in 2003 or 71% in the previous
quarter.
"We are very pleased with our third quarter results," said Jun Ning,
Chairman and CEO of the Company. "Despite the fact that the Chinese
stock market reached a five year low in Q3, we continued to expand
our subscription business. We are satisfied with our achievement in
increasing our average annual subscription fee per subscriber, which
indicates that we continue to achieve our strategy of migrating subscribers
to our more comprehensive services and products. We are pleased to
see our advertising related revenue reach 12% of net revenue in Q3,
which underscores our objective of expanding our online advertising
business."
Financial Results
For the third quarter of 2004, China Finance Online reported net
revenues of US$1.67 million, an increase of 183% from US$592,000
for the same period in 2003 or 25% from US$1.34 million in the previous
quarter, primarily due to continued growth in average subscription
fee per subscriber. Revenue from our advertising business contributed
US$195,000 to, and represented 12% of, net revenues for the third
quarter of 2004.
Gross profit increased by 204% to US$1.57 million for the third
quarter of 2004 from US$517, 000 for the same period in 2003, as
cost of revenues decreased as a percentage of net revenues. Gross
margin was 94% in the third quarter of 2004 compared to 87% for
the same period in 2003 or 93% in the previous quarter.
Total operating expenses for the third quarter of 2004 were US$423,000,
an increase of 143% from US$174,000 for the same period in 2003.
This increase is primarily the result of an increase in our sales
and marketing expenses and, to a lesser extent, an increase in our
general and administrative expenses and stock-based compensation
expenses. Total operating expenses were 25% of net revenues for
the third quarter of 2004 compared to 29% for the same period in
2003, due to the faster rate of increase in revenues relative to
these expenses.
- Sales and marketing expenses for the third quarter of 2004 increased
by 163% from US$80,000 in the third quarter of 2003 to US$210,000.
This increase is largely attributable to an increase in our advertising
expenditures starting early this year and an increase in the number
of our customer service and sales personnel to address increased
subscription demand.
- General and administrative expenses for the third quarter of
2004 were US$104,000, an increase of 73% from US$60,000 for the
same period in 2003, primarily due to an increase in compensation
and, to a lesser extent, an increase in office expenses partially
as a result of the public offering.
As a result of the foregoing, income from operations for the third
quarter of 2004 was US$1.15 million, an increase of 235% from US$343,000
for the same period in 2003 and an increase of 40% from US$820,000
for the previous quarter. Net income for the third quarter of 2004
was US$1.3 million, representing an increase of 262% from US$355,000
for the same period in 2003, or 36% from US$942,000 in the previous
quarter.
Net income margin was 77%, compared to 60% for the same period
in 2003, or 71% in the previous quarter. Our net income for the
third quarter includes an income tax benefit of US$102,000, which
mainly resulted from the deferred tax assets recorded for the tax
effect of the difference between the income for financial reporting
purpose and for PRC tax reporting purpose, which tax benefit will
continue until the end of the 2004 fiscal year. Diluted earnings
per ADS were US$0.07, and diluted earnings per ordinary share were
US$0.01 for the third quarter of 2004.
New subscribers for the third quarter of 2004 were 4,069, a slight
reduction from 4,202 for the same period in 2003, primarily attributable
to the fact that the Chinese stock exchanges reached a five year
low during the quarter that the company believes has dampened investors'
interests in China's stock exchanges, which was partially offset
by our marketing efforts. Repeat subscribers for the third quarter
of 2004 were 2,372, an increase of 0.5% from 2,360 for the same
period in 2003. This increase is primarily due to the stickiness
of our products that was partially offset by the weak Chinese stock
markets.
Average subscription fee per subscriber, or ASF, for new subscribers
increased by 123% to US$219 for the third quarter of 2004 from US$98
for the same period in 2003. Average ASF for repeat subscribers
increased by 171% to US$268 for the third quarter of 2004 from US$99
for the same period in 2003. The increase in our ASF for both new
and repeat subscribers reflects the company's continued efforts
in migrate its subscribers to more comprehensive and higher priced
service packages.
Business Highlights
Following the end of the quarter, we completed our initial public
offering of American depositary shares on October 21, 2004. We received
proceeds of approximately US$60,242,500 from the offering, after
deducting underwriting expenses and estimated offering expenses.
In October 2004, we launched a new service package named Stock-Market-Sidekick
X. The package aggregates our comprehensive news and financial information
data with research tools that give subscribers detailed analysis
of related transactions and their stock and mutual fund holding
information. Our annual subscription fee for this new package will
be RMB100 or US$12.
Conference Call
China Finance Online's management team will host a
conference call at 8:00PM Eastern Standard Time on November 9, 2004
(or 9:00AM on November 10, 2004 in the Beijing/HK time zone) following
the announcement.
The conference call will be available on Webcast live and for replay
at: http://www.jrj.com/englishver3/investor/earning_releases.asp.
The call will be archived for 12 months at this website.
Junling Cai
China Finance Online Co. Limited
Tel: (+86-10) 5835-5288
Email: cjl@jrj.com
The dial-in details for the live conference call: U.S. toll free
number +1-877-847-0047, United Kingdom toll free number +0800-559-3276,
Hong Kong toll free number +852-3006-8191, Singapore toll free number
+8008-532-396; passcode for all regions: 1422.
A telephone replay of the call will be available for 72 hours after
the conclusion of the conference call. The dial-in details for the
replay: U.S. toll free number +1-877-847-0047, United Kingdom toll
free number +0800-559-3276, Hong Kong toll free number +852-3006-8191,
Singapore toll free number +8008-532-396; passcode for all regions:
1422.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the Business Highlights section and quotations from management in this press release, as well as China Finance Online's strategic and operational plans, contain forward looking statements. China Finance Online may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about China Finance Online's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, China Finance Online's historical losses, its limited operating history, declines or disruptions in the online financial industry, the recurrence of SARS, China Finance Online's reliance on relationships with Chinese stock exchanges and raw data providers, fluctuations in quarterly operating results, failure to successfully compete against new and existing competitors, and other risks outlined in China Finance Online's filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1, as amended. China Finance Online does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
About China Finance Online Co. Limited
China Finance Online Co. Limited specializes in providing online
financial and listed company data and information in China. Through
its website, www.jrj.com, the company offers subscription-based
service packages that integrate financial and listed company data
and information from multiple sources with features and functions
such as data and information search, retrieval, delivery, storage
and analysis. These features and functions are delivered through
proprietary software that is available by download.
For further information please contact:
Junling Cai
China Finance Online Co. Limited
Tel: (+86-10) 5832-5288
Email: cjl@jrj.com
- Financial tables to follow -
China Finance Online Co. Limited
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE DATA)
|
| |
Year ended December 31, |
| |
Sept 30,2003
(unaudited) |
Sept 30,2004
(unaudited) |
June 30,2004
(unaudited) |
| Gross revenues |
$ 611 |
$ 1,682 |
$ 1,340 |
| Business tax |
(19) |
(9) |
(5) |
| |
----------------- |
--------------- |
---------------- |
| Net revenues |
592 |
1,673 |
1,335 |
| |
----------------- |
------------------ |
---------------- |
| Cost of revenues |
(75) |
(102) |
(91) |
| Gross profit |
517 |
1,571 |
1,244 |
| Operating expenses: |
|
|
|
| General and administrative |
(60) |
(104) |
(93) |
| Product development |
(34) |
(42) |
(43) |
| Sales and marketing |
(80) |
(210) |
(221) |
| Stock-based compensation |
-- |
(66) |
(67) |
| Total operating expenses |
(174) |
(422) |
(424) |
| |
---------------- |
--------------- |
--------------- |
| Income from operations |
343 |
1,149 |
820 |
| Interest income |
12 |
33 |
30 |
| Other income (expense) |
--- |
--- |
(1) |
| |
---------------- |
--------------- |
--------------- |
| Income before income taxes |
355 |
1,182 |
849 |
| Income tax |
--- |
102 |
93 |
| |
---------------- |
--------------- |
--------------- |
| Net income |
355 |
1,284 |
942 |
| Other comprehensive income: |
|
|
|
| Foreign currency |
|
|
|
| translation adjustment |
(2) |
--- |
--- |
| Comprehensive income |
353 |
1,284 |
942 |
| Earning per ordinary share: |
|
|
|
| Basic |
0.02 |
0.06 |
0.04 |
| Diluted |
0.00 |
0.01 |
0.01 |
| Earning per ADS: |
|
|
|
| Basic |
0.08 |
0.28 |
0.21 |
| Diluted |
0.02 |
0.07 |
0.06 |
| Weighted average ordinary shares: |
|
|
|
| Basic |
21,596,525 |
22,853,600 |
2,612,941 |
| Diluted |
73,599,933 |
85,960,343 |
4,183,477 |
| Weighted average ADSs: |
|
|
|
| Basic |
4,319,305 |
4,570,720 |
4,522,588 |
| Diluted |
14,719,987 |
17,192,069 |
6,836,695 |
China Finance Online Co. Limited
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
|
| |
Sept 30,2004 |
Dec 31,2003 |
| |
(unaudited) |
(unaudited) |
| Assets |
|
|
| |
|
|
| Current assets: |
|
|
| Cash and cash equivalents |
9,914 |
5,806 |
| Accounts receivable |
34 |
--- |
| Income tax recoverable |
--- |
283 |
| Prepaid expenses and other current assets |
553 |
92 |
| Total current assets |
10,501 |
6,181 |
| Property and equipment, net |
413 |
351 |
| Rental deposit |
31 |
24 |
| Goodwill, net |
51 |
51 |
| Deferred tax assets |
202 |
--- |
| Total assets |
11,198 |
6,606 |
| |
---------------- |
---------------- |
Liabilities and shareholders'equity
Current liabilities: |
|
|
| |
|
|
| Deferred revenue |
3,435 |
1,278 |
| Accrued expenses and other current liabilities |
125 |
94 |
| Dividend payable |
--- |
503 |
| Total current liabilities |
3,560 |
1,875 |
| Shareholders'equity |
|
|
| Paid in capital |
9 |
9 |
| Capital surplus |
5,257 |
5,094 |
| Retained earnings |
2,372 |
(372) |
| Total shareholders'equity |
7,638 |
4,731 |
| Total liabilities and shareholders'equity |
11,198 |
6,606 |
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