BEIJING, Aug. 1 /Xinhua-PRNewswire/ -- China Finance Online Co. Limited (Nasdaq:JRJC-News), a leading Chinese online financial information and listed company data provider, today announced its financial results for the quarter ended June 30, 2005:
* Net revenues grew by 38% compared to the same period in 2004 to
US$1.84 million for the quarter.
* Net income grew by 7% compared to the same period in 2004 to
US$1.01 million for the quarter. Basic and diluted income per ADS were
each US$0.05 for the quarter. Basic and diluted income per share were
each US$0.01 for the quarter.
* Gross margin for the quarter was 94%, compared to 93% for the same
period in 2004. Net income margin was 55% for the quarter, compared to
71% for the same period in 2004.
Financial Results
For the second quarter of 2005, China Finance Online reported net revenues of US$1.84 million, an increase of 38% from US$1.34 million for the same period in 2004 primarily due to the increase in advertising related business. Net revenues decreased by 4% from US$1.93 million in the first quarter of 2005, which is mainly attributable to the negative impact of the prolonged weak Chinese stock market. The Shanghai Stock Exchange Index reached the eight-year low on June 6, 2005. Revenue from our advertising related business for the quarter contributed US$335,000, representing 18% of net revenues for the second quarter of 2005.
Gross profit increased by 39% to US$1.73 million for the second quarter of 2005 from US$1.24 million for the same period in 2004 which is in line with the increase of net revenues. Gross margin was 94% in the second quarter of 2005 compared with 93% for the same period in 2004 or 94% for the first quarter of 2005.
Operating expenses for the second quarter of 2005 totalled US$1.01 million, an increase of 138% from US$424,000 reported for the same period in 2004. This increase is primarily the result of increases in our general and administrative expenses, sales and marketing expenses, and to a lesser extent, contributed from product development expenses. Total operating expenses were 55% of net revenues for the second quarter of 2005, compared with 32% for the same period in 2004.
* General and administrative expenses for the quarter were US$373,000, an
increase of 301% from US$93,000 for the same period in 2004, which is
mainly due to reporting and other related costs associated with our
becoming a public company in the U.S. The increase of the expense, to a
lesser extent is also due to the staff compensation as a result of the
increased number of employees.
* Sales and marketing expenses for the quarter increased by 120% from
US$221,000 for the same period in 2004 to US$486,000. This increase is
largely contributed from an online marketing campaign. We have signed
sponsorships and co-branding partnerships with many popular Chinese
portals this quarter to promote our brand name and attract more traffic
to our website. The marketing effort is part of the plan of the usage of
our IPO proceeds. It will help the distribution and sales for our
products.
* Product development expenses for the quarter were US$54,000, an increase
of 27% from US$43,000 for the same period in 2004, primarily due to
increases in the salary and compensation expenses of personnel engaged
in the research, development and implementation of our new products.
As a result of the foregoing, income from operations for the second quarter of 2005 was US$722,000, a decrease of 12% from US$820,000 for the same period in 2004 and a decrease by 34% from US$1.09 million in the first quarter of 2005. Net income for the second quarter of 2005 was US$1.01 million, representing an increase of 7% from US$942,000 for the same period in 2004 and a decrease of 21% from US$1.28 million in the previous quarter.
Net income margin for the second quarter of 2005 was 55%, compared to 71% for the same period in 2004 and 66% in the previous quarter. The total income tax expenses for the quarter were US$101,000 compared to the income tax benefit amounted to US$93,000 for the same period in 2004. The difference is attributable primarily to the fact that CFO Beijing was exempted from enterprise income tax in 2004 and will be subject to 12% enterprise income tax rate in 2005. Basic income per ADS was US$0.05, and basic income per share was US$0.01 for the second quarter of 2005. Diluted income per ADS was US$0.05, and diluted income per share was US$0.01 for the second quarter of 2005.
The number of new subscribers for the second quarter of 2005 was 2,567, representing a decrease of 63% from 7,032 for the same period in 2004. Repeat subscribers for the second quarter of 2005 were 2,515, representing a decrease of 22% from 3,218 for the same period in 2004. Decreases in number of new subscribers and in number of repeat subscribers were primarily due to further weakening in China's stock markets during the second quarter of 2005.
Average subscription fee per subscriber, or ASF, for new subscribers increased by 6% to US$165 for the second quarter of 2005 from US$156 for the same period in 2004 but decreased by 21% from US$208 in the previous quarter. ASF for repeat subscribers increased by 32% to US$246 for the second quarter of 2005 from US$186 for the same period in 2004 and increased by 3% from US$238 in the previous quarter. We believe that the decrease in our ASF quarter over quarter for new subscribers is primarily attributable to further weakening in China's stock markets during the second quarter of 2005, which has dampened the investors' interests in more expensive and more comprehensive products.
New Products
Personal Finance is our new proprietary financial service package which combines personal finance tools such as book keeping, financial report and payment alert with comprehensive real time personal wealth management product information and news. Open beta testing of this new service offering has just finished and we are expecting to formally launch it in August 2005.
Completed and New Stock Repurchase Program
During May and June of 2005, China Finance Online has repurchased a total of 1,659,442 American Depositary Shares, or ADSs, representing 8,297,210 ordinary shares, at an average cost of US$5.98. The repurchased shares of this program represent approximately 8.4% of the total shares outstanding.
On July 26, 2005, the Board of Directors of the Company has authorized a new repurchase program pursuant to which the company expects to purchase from time to time up to US$10 million worth of its American Depositary Shares, or ADSs, over a period of six months. The timing of these repurchases will depend on market conditions and other requirements.
Conference Call
China Finance Online's management team will host a conference call at 9:00PM Eastern Time on August 1, 2005 (or 9:00AM on August 2, 2005 in the Beijing/HK time zone) following the announcement.
The conference call will be available on Webcast live and for replay at: http://www.chinafinanceonline.com/investor/earning_releases.asp. The call will be archived for 12 months at this website.
The dial-in details for the live conference call: U.S. toll free number +1-877-847-0047, Hong Kong toll free number +852-3006-8101, Singapore toll free number +800-852-3396; Password for all regions: 5510.
A replay of the call will be available from approximately 10:00PM Eastern Time on August 1, 2005 (or 10:00AM August 2, 2005 in the Beijing/HK time zone) to 10:00PM Eastern Time on August 16, 2005(or 10:00AM August 17, 2005 in the Beijing/HK time zone). The dial-in details for the replay: U.S. Toll Free Number +1-877-847-0047, HK Toll Free Number +852-3006-8101, Singapore Toll Free Number 800-852-3396, Passcode: 534719.
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.
Safe Harbor Statements
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.
Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that 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 and possible future losses, limited operating history, uncertain regulatory landscape in the People's Republic of China, fluctuations in quarterly operating results, failure to successfully compete against new and existing competitors, and the company's reliance on China Finance Online's reliance on relationships with Chinese stock exchanges and raw data providers. Further information regarding these and other risks is included in China Finance Online's annual report on Form 20-F for the year ended December 31, 2004, and other filings with the Securities and Exchange Commission. China Finance Online does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
For further information please contact:
Jing Wu
China Finance Online Co. Limited
Tel: (86-10) 5832-5288
Email: ir@jrj.com
China Finance Online Co. Limited
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands of U.S. dollars, except per share data)
For the three months ended Six Months ended
Jun. 30, Jun. 30, Mar. 31, Jun. 30, Jun. 30,
2005 2004 2005 2005 2004
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Gross
revenues $1,875 $1,340 $1,940 $3,815 $2,285
Business
tax (33) (5) (15) (48) (16)
---------- ----------- --------- --------- --------
Net revenues 1,842 1,335 1,925 3,767 2,269
Cost of
revenues (111) (91) (111) (222) (188)
---------- ---------- ----------- --------- --------
Gross
profit 1,731 1,244 1,814 3,545 2,081
Operating
expenses
General and
administrative (373) (93) (357) (730) (165)
Product
development (54) (43) (58) (112) (80)
Sales and
marketing (486) (221) (226) (712) (346)
Stock-based
compensation (96) (67) (80) (176) (157)
---------- ---------- --------- -------- --------
Total
operating
expenses (1,009) (424) (721) (1,730) (747)
Income from
operations 722 820 1,093 1,815 1,334
Interest
income 388 30 343 731 43
Other
expenses - (1) - - -
---------- ---------- ---------- ------ -------
Income before
income taxes 1,110 849 1,436 2,546 1,377
Income tax
benefit
(expenses) (101) 93 (160) (261) 83
----------- ---------- ----------- ------- ------
Net income $1,009 $942 $1,276 $2,285 $1,461
Income
attributable
to
ordinary
shareholders 1,009 942 1,276 2,285 1,461
Income
per
share
Basic 0.01 0.04 0.01 0.02 0.07
Diluted 0.01 0.01 0.01 0.02 0.02
Income per
ADS
Basic 0.05 0.20 0.06 0.12 0.33
Diluted 0.05 0.06 0.06 0.11 0.09
Weighted
average
ordinary
shares
Basic 95,534,474 22,612,941 99,329,933 97,432,203 22,369,622
Diluted 106,128,111 84,385,755 110,899,696 108,513,904 83,940,159
Weighed
average
ADSs
Basic 19,106,895 4,522,588 19,865,987 19,486,441 4,473,924
Diluted 21,225,622 16,877,151 22,179,939 21,702,781 16,788,032
China Finance Online Co. Limited
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands of U.S. dollars)
Jun. 30 2005 Dec. 31 2004
(unaudited) (note)
Assets
Current assets:
Cash and cash equivalents 61,834 70,596
Account receivable 18 34
Income tax recoverable - 14
Prepaid expenses and other
current assets 1,581 332
Deferred tax assets 207 386
Total current assets 63,640 71,362
Property and equipment, net 360 417
Rental deposit 40 31
Goodwill, net 51 51
Total assets 64,091 71,861
----------------- ----------------
Liabilities and shareholders' equity
Current liabilities:
Deferred revenue 3,393 3,487
Accrued expenses and other
current liabilities 145 286
Income tax payable - -
Total current liabilities 3,538 3,773
Shareholders' equity
Ordinary shares 13 13
Additional paid in capital 64,224 64,175
Treasury stock (10,000) -
Retained earnings 6,511 4,225
Deferred stock compensation (195) (325)
Total shareholders' equity 60,553 68,088
Total liabilities and
shareholders' equity 64,091 71,861
Note: the information for the year ended December 31, 2004, is derived from the audited financial statements.
