chinadotcom Announces Q2 2000 Revenue in Excess of US$30 Million, Achieving 52% Growth Over Previous Quarter
First Asian Internet Company to Reach Scale in Excess of US$120 Million In Revenue, Last Quarter Annualized
HONG KONG, Aug. 9 /PRNewswire/ -- chinadotcom corporation (Nasdaq: CHINA - news; Website: www.corp.china.com) today announced its financial results for the quarter ended June 30th, 2000.
The company reported total revenue for the quarter ended June 30th, 2000 of US$30.3 million, a 52 percent increase from total revenue of $20 million for the quarter ended March 31st, 2000. The gross profit was $11.3 million, 37 percent of total revenue, an increase of 63% from the previous quarter. The company reported a cash operating loss* of $10.6 million and a loss per share of $0.149. The company's cash on hand and other cash equivalents at the end of the second quarter totaled $516 million.
chinadotcom is the first Asian Internet company to surpass the $120 million, Last Quarter Annualized, milestone.
Said Peter Yip, Chief Executive Officer of chinadotcom corporation, ``We continue to stride towards profitability. Our three-dimensional business model -- combining e-business solutions, interactive advertising and our Greater China portal network -- has delivered revenues that now provide us with a scale to accelerate our operating leverage. We recently celebrated our one-year IPO anniversary and have made tremendous progress since our public listing; in this quarter recording a revenue increase of 1,163 percent over the second quarter of 1999. In testing times for the Internet industry in Asia -- as consolidation of the industry begins to quicken -- we continue to prove that we have the right business model to capitalize on the potential of the world's fastest growing Internet market. Through our existing cost and operations infrastructure across the ten most lucrative Asia-Pacific Internet markets, we are now able to leverage economies of scale that will accelerate our growth and extend our position as the leading Internet company in the region. Through this acceleration we expect to see revenues continuing to increase and -- through milking the value of the synergies across our multiple-country, three dimensional strategy -- look forward to continued improvements in gross margins, derived in part from increasingly effective management of costs.''
As a reinforcement of the value of its three dimensional business model, chinadotcom announced that it's e-business solutions revenues accounted for 52 percent of total revenues, with interactive advertising accounting for 44 percent. In excess of 40 percent of the company's revenues were derived from markets outside Greater China. Japan and Korea alone accounted for close to one third of the company's revenues, while South-East Asia contributed 15 percent.
``While China remains very much in our focus, as it is predicted to be the world's largest Internet market by the end of the decade, we have become the region's leading Internet company by successfully creating a business that taps into the increased spending in the region's more mature Internet markets, such as Japan, Korea, Australia, Singapore and Hong Kong. This in turn has helped to strengthen our position in China, where we continue to invest in content production, technology development and creative services to build a platform that will drive sustainable growth as the Chinese market really begins to flourish.
``In the Mainland itself, we continue to develop stronger ties with multiple Chinese Ministries. We recently announced a planned joint venture with a subsidiary of the Ministry Of Information Industry, and a majority investment in a company with the exclusive franchise to deliver online travel products of the state-owned China Travel Services. In addition, Xinhua, the state news agency of China, continues to be our valued strategic shareholder,'' commented Mr. Yip.
With cash reserves in excess of $500 million, the company is well positioned to take advantage of the current Internet industry consolidation.
``We are constantly looking for investments which will help to strengthen our business and drive greater shareholder value,'' added Mr. Yip. ``We have a very thorough due diligence process under the leadership of former Senior Vice President of Templeton's worldwide Emerging Markets group, Jack Lin. We will only invest in those companies where we believe we can add value to the relationship and from which we can derive healthy revenue streams. We look for strategic investments that will add strength to our three-dimensional e-business solutions, interactive advertising and portal network businesses. We plan to use our substantial cash reserves to take advantage of the current Internet industry consolidation. We believe this consolidation will present us with great opportunities for strengthening our dominant market position in Asia, which in turn will strengthen those businesses in which we invest.''
The company reported significant developments in each of its three main business units.
Revenue from e-business solutions was $15.7 million, an increase of 53 percent over the previous quarter. The gross margin for e-business solutions for the quarter was 38 percent. Average revenue (annualized) per top ten customer grew from $944,000 in the first quarter to $1.2 million in the second quarter. Repeat customers now account for 53 percent of revenues. Of particular note during the quarter was the growth of the e-business solutions regional client base, which now includes HSBC and Procter & Gamble across several key Asian markets, Ford in China, David Jones, the leading retailer in Australia, Epson and Cisco in Taiwan, Mandarin Oriental Hotel Group in Hong Kong and Omron in Japan. The company reinforced its broad geographical reach across the region with the acquisition of XT3, one of Australia's leading e-business solutions companies.
Interactive advertising revenue for the quarter was $13.4 million, representing a 44 percent increase from the previous quarter. The gross margin for interactive advertising for the quarter was 32%. chinadotcom's network now has over 1,000 advertising clients across the region, with new advertisers accounting for 43 percent of revenues. The average CPM across the company's advertising network in the second quarter increased to $15.4, up from $15.0 in the first quarter. An extended senior management team was announced in May with three Managing Directors being appointed to drive the business, reflecting the broad geography that the company now covers. The company also took a minority interest in BMCMedia, Australia's leading online advertising network to reinforce its existing presence in that market.
The company's portal network continued to be a pioneer as it became the first in China to publish an independent page-view audit, undertaken by PriceWaterhouseCoopers. This was a move designed to lead the industry in China into accepting conservative and common definitions for ``page-views'', as well as providing advertisers with reassurance of the validity of the company's stated page-view numbers. The portal network's daily page-views reached 21 million in July 2000, representing a 31 percent growth from the previous quarter. Numbers of registered users were 6.3 million, up 40 percent from the first quarter.
``Much of the growth in page-view and registered user numbers can be attributed to the common technology platform which has been established across our three portals, hongkong.com, china.com and taiwan.com. This has enabled us to introduce more than twenty '4U' products that will ultimately be accessed using a single registration for all services on all portals within the network. This is a highly scaleable platform and has been one of the contributing factors behind yesterday's announcement that hongkong.com achieved early profitability in its first post-IPO quarter. We look forward to rolling out more of the '4U' services across china.com and taiwan.com in the coming months,'' commented Peter Hamilton, Chief Operating Officer and Chief Financial Officer of chinadotcom.
``Leveraging the value of integrated services -- be they human, technology, investment, creative, strategy or marketing-based -- for the benefit of the whole organization has increasingly characterized our business development over the last quarter and we will continue to see more synergies derived from our region-wide operations going forward,'' added Mr. Hamilton.
* Operating loss excluding depreciation, amortization of intangibles,
non-cash compensation expenses and non-recurring items.
About chinadotcom corporation
chinadotcom corporation is a leading pan-Asian integrated Internet company offering web solutions, portal and online advertising services. Through its three business units, chinadotcom provides 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 platform (china.com, cww.com, hongkong.com, and taiwan.com), and 3) sell services through online marketing (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.
By partnering with companies that have proven and successful track records, such as America Online, Softbank, Trans Cosmos and Agence France Presse, chinadotcom is well-positioned to create long term shareholder value through its investments.
The company has 28 offices across more than 10 markets, including Japan, Korea, Australia, China, Hong Kong, Taiwan, Singapore, Thailand, Malaysia, and USA. For more information about chinadotcom corporation, please visit www.corp.china.com .
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 results of operations is detailed in chinadotcom corporation's registration statements, as filed with the United States Securities and Exchange Commission.
chinadotcom corporation
Consolidated Statements of Operations
Three months Three months
Ended Ended
Jun 30, 2000 Mar 31, 2000
(Unaudited) (Unaudited)
(US$'000) (US$'000)
Revenues (a)
e-business Solutions $15,682 $10,237
Advertising 13,393 9,283
Other income 1,267 488
30,342 20,008
Cost of revenues
e-business Solutions (9,678) (6,733)
Advertising (9,041) (6,024)
Others (287) (288)
(19,006) (13,045)
Gross margin 11,336 6,963
Selling, general and
administrative expenses (24,931) (17,684)
Depreciation and amortization (8,856) (5,951)
Stock compensation expenses (684) (1,423)
(34,471) (25,058)
Operating loss (23,135) (18,095)
Interest income 8,396 5,242
Gain on disposal of marketable securities -- 1,795
Other non-operating gains (net) 2,022 120,031
Equity in losses of affiliates (1,590) (233)
(Loss) Profit before income taxes (14,307) 108,740
Provision for income taxes (128) --
(Loss) Profit before minority interests (14,435) 108,740
Minority interests in profits of
consolidated subsidiaries (148) (201)
Net (loss) profit $(14,583) $108,539
(a) Revenues from related parties $7,596 $3,991
chinadotcom corporation
Consolidated Balance Sheets
Jun 30, 2000 Mar 31, 2000
(Unaudited) (Unaudited)
(US$'000) (US$'000)
Assets
Current assets:
Cash and cash equivalents $60,087 $65,899
Accounts receivable 24,643 17,794
Deposits, prepayments and
other receivables 22,190 19,328
Marketable securities 455,740 495,330
Due from a related party 15,074 6,566
Total current assets 577,734 604,917
Fixed assets 20,918 12,158
Goodwill 60,351 55,976
Intangible assets 898 789
Investments in affiliates 6,478 7,356
Investments 28,560 11,959
Marketable securities 22,098 21,558
Other assets 4,002 1,702
Total assets $721,039 $716,415
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $15,172 $16,234
Other payables 8,070 7,716
Accrued liabilities 7,870 3,026
Bank loan 3,260 3,019
Promissory note payable 19,464 11,186
Deferred revenue 2,820 2,757
Taxation 332 --
Total current liabilities 56,988 43,938
Minority interests 39,331 36,731
Shareholders' equity:
Share capital 24 24
Additional paid-in capital 578,274 564,612
Accumulated other comprehensive income (15,535) (5,430)
Retained earnings (deficit) 61,957 76,540
Total shareholders' equity 624,720 635,746
Total liabilities and
shareholders' equity $721,039 $716,415
SOURCE: chinadotcom corporation
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