chinadotcom corporation Announces Q1 2000 Revenue Exceeds US$20 Million, Achieving 84% Growth over Previous Quarter
Gross Margin increases from 33 to 35%, EBITDA loss decreases by 11% from Q4,Cash on hand increases from US$125 million to US$561 million,#1 Fastest growing portal in China
Hong Kong, May 17th, 2000 - chinadotcom corporation [Nasdaq: CHINA; website: www.corp.china.com], today announced its financial results for the first quarter ended March 31, 2000. The company reported total revenues for the quarter ended March 31, 2000 of US$20 million, an 84 percent increase from total revenues of US$11 million for the quarter ended December 31, 1999. The gross margin was US$7 million, or 35 percent of total revenues, increasing from 33 percent gross margin during the previous quarter. The company's cash on hand and other cash equivalents at the end of the first quarter was US$561 million, a significant increase from US$125 million in the previous quarter. Due to non-operating gains during the quarter, chinadotcom is reporting a first quarter net profit of US$109 million.
Peter Yip, Chief Executive Officer of chinadotcom corporation, stated, "Each dimension of our core businesses - e-business solutions, on-line advertising and our integrated portal network - is realizing continued rapid growth and increasing gross margins, and decreasing operating cash losses. The effective execution of our focused business plan has once again produced results ahead of internal and external projections, demonstrating that we are growing strong and are well down the path to profitability."
Mr. Yip added, "Our first quarter of the year 2000 was a great success in that we increased revenue growth through regional expansion and successfully improved gross margins through utilization of a scalable network, shifting resources to lower cost locations, and building reusable development tools. We are already ahead of our internal plans for margin improvements for the current year."
Mr. Peter Hamilton, Chief Operating Officer of chinadotcom corporation, stated, "Due to the explosive growth of our registered user base and page views, chinadotcom has the number one, fastest growing portal network in the Greater China region. We are well positioned to quickly become the number one China portal in the near future." Mr. Hamilton added "This milestone validates the success of our portal strategy, and also positions us for the future, because the portals' valuable user database is the foundation for future portal revenues. We see the number of registered users as an important figure because it is from these users that lucrative direct marketing-driven e-commerce revenues will arise."
chinadotcom corporation's integrated portal network has attained 4.5 million registered users, a 104 percent increase over the 2.2 million registered users at the end of the quarter ended December 31, 1999. The portal network's daily page views reached 16 million in April, representing 280 percent growth from the previous quarter. During the first quarter, chinadotcom invested significant time and money in the expansion of its portals' technology platform, and added high quality content and e-commerce capabilities to its four portal sites. Free mail services and other community tools on the company's Chinese portal were the most frequently utilized services by its users. Users entering the china.com portal remain on an average of twenty page clicks, demonstrating that the portal's content, community and commerce are creating portal stickiness.
Advertising revenue for the quarter was US$9.3 million, representing a 105 percent increase from the previous quarter. chinadotcom corporation has further strengthened its leadership position in the online advertising market with the number of affiliates growing to 500 web sites with impressions served on these sites growing to 50 million impressions per day from 39 million impressions per day in the previous quarter. Gross margins for the company's online advertising network grew to 35 percent, reflecting an 11 percent improvement over the last quarter. This reflects the company's successful efforts toward building rate card integrity and improving the quality of its affiliates.
E-business revenue for the quarter ended March 31, 2000 was US$10.2 million, representing an 88 percent increase from the previous quarter. This revenue growth largely reflects the expansion of chinadotcom's e-business solutions throughout the region, as well as growth from The Web Connection based on added value services, including its continued expansion into supply chain management focused industry services ("SCM"). The e-business solutions operations continue to develop its SCM industry services throughout the region. The gross margin for e-business solutions services increased to 34.2 percent in the first quarter, 2000, compared to 33.7 percent for the previous quarter. The Web Connection has followed business approaches that allow growth in high-quality revenues while maintaining lower related costs. It does this, in part, by shifting resources to lower cost locations and building reusable development tools.
"As the figures indicate, chinadotcom corporation has completed its first quarter of the year 2000 with very positive results. While we have increased growth of all of our business lines, we have also focused on deepening our integrated business model in each country where we operate, as well as strengthening the relationship with clients and users," added Peter Hamilton. "As a result, our gross margins for this quarter have posted an increase from our fourth quarter last year."
During the first quarter, 2000, chinadotcom corporation strengthened its balance sheet through capital markets activities. On January 21, the company successfully completed a secondary offering on Nasdaq, raising US$282 million. On March 10, the company listed its subsidiary hongkong.com on the Growth Enterprise Market in Hong Kong, raising US$172 million. Due to this partial sale of an operating entity, and to other minority investment transactions executed during the first quarter, chinadotcom corporation has recognized other non-operating gain in excess of US$120 million.
Consolidated earnings before interest, tax, depreciation and amortization improved from negative US$12 million in the fourth quarter, 1999, to negative US$11 million in the first quarter, 2000, before considering the other non-operating gains. Selling, general and administrative expenses as a percentage of revenues decreased to 88 percent in the first quarter from 131 percent the previous quarter. While SG&A expenses continue to increase as operations expand, these expenses are growing at a slower pace. The only expense items to increase significantly during the first quarter were personnel and premises related expenses due to an increase in head-count to over 1,600 employees during the quarter.
In the first quarter, chinadotcom continued to develop partnerships with established Internet players. One such partnership commenced in the first quarter was a 50/50 joint venture with Softbank Investment Strategic, to provide business and e-consulting services. The joint venture is expected to advise and assist Internet companies that seek to expand in Asia through strategic partnership or joint venture. This alliance is expected to extend chinadotcom's operations, including technology consulting services, with unparalleled reach and access to the Japanese market.
Mr. Yip stated, "We will continue to expand all dimensions of the e-business solutions, online advertising, and portal operations throughout Mainland China and the Asia-Pacific region. Now that we have truly established a regional presence, our goal is to augment our investment and operational capabilities in each of our markets, thus further reinforcing our integrated approach to Internet development across the region. Furthermore, we believe we are ideally positioned to capitalize on the wealth of business opportunities that will be created by Mainland China's eventual accession to the World Trade Organization."
Mr. Yip added, "We will continue to increase our revenue base through the implementation of solid strategies - deepening our content, consolidating our portal communities, and promoting more e-commerce opportunities to our users. In addition, the continued erosion of losses before interest and depreciation demonstrates our progress on the road to profitability. We are confident of our business vision, our management team, our consistent execution of strategy, and our sound financial base, and believe that these factors will add significant value to our shareholders."
Safe Harbor Statement
The statements in this news release, other than the historical financial information, may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ from anticipated results. Further information on risk factors that could affect chinadotcom corporation's result of operation is detailed in chinadotcom corporation's registration statements, as filed with the Securities and Exchange Commission.
About chinadotcom corporation
chinadotcom corporation (Nasdaq: CHINA) is a leading pan-Asian Internet company offering web solutions, portal and online advertising services. Through its three business units, chinadotcom is able to provide a full range of Internet services around the Asia Pacific region that; 1) build e-business strategies and solutions (Web Connection), 2) distribute content via its portal network (china.com, cww.com, hongkong.com, and taiwan.com), and 3) sell services through online advertising (24/7 Media Asia).
Fuelling the growth of each of these three business units is a synergistic investment strategy that leverages on chinadotcom's existing operational and cost infrastructure.
chinadotcom corporation is committed to enabling digital communities to realize their full potential, thereby facilitating the development of the Internet in China and across Asia. The company has over 1600 employees in 24 offices across 10 Asian markets, including Australia, Hong Kong, Japan, Korea, Malaysia, Singapore and Taiwan. In Mainland China, the company has 12 offices and over 500 employees. For more information about chinadotcom corporation, please visit www.corp.china.com.
Attached
Consolidated Statement of Operations and Consolidated Balance Sheets
first quarter 2000 statement
first quarter 2000 balance sheet
For further information, please contact:
Susan Chan
chinadotcom corporation
Tel: (852) 2961 2739
Fax: (852) 2571 0410
E-mail: susan.chan@hk.china.com
Megan Ross
Burson-Marsteller
Tel: (852) 2963 6753
Fax: (852) 2856 1101
E-mail: megan_ross@bm.com |
