E COMMERCE CHINA DANGDANG INC (ADR) BEIJING, May 28, 2015 /PRNewswire/ -- E-Commerce China Dangdang Inc. ("Dangdang" or the "Company") (NYSE: DANG), a leading business-to-consumer e-commerce company in China, today announced its unaudited financial results for the first quarter ended March 31, 2015.
First Quarter 2015 Highlights
-- Total net revenues for the first quarter of 2015 were RMB2,217.3 million
($357.7 million), a 27.7% increase from the corresponding period in
2014. Gross Merchandise Value ("GMV") from the marketplace in the first
quarter of 2015 was RMB1,771.5 million ($285.8 million), a 49.4%
increase from the corresponding period in 2014. The combination of
product revenue from principal business and GMV from the marketplace
reached RMB3,920.2 million ($632.4 million) and grew 37.3%
year-over-year.
-- Dangdang had approximately 10.2 million active customers including
approximately 4.1 million new customers, in the first quarter of 2015,
representing increases of 18% and 46%, respectively, from the
corresponding period in 2014. Total orders for the first quarter of 2015
were approximately 21.3 million, a 29% increase from the corresponding
period in 2014.
-- Mobile orders accounted for 41% of total orders for the first quarter of
2015, compared to 14% for the corresponding period in 2014.
-- Net loss for the first quarter of 2015 was RMB60.2 million ($9.7
million), or negative 2.7% of total net revenues, compared to net income
of RMB2.0 million in the first quarter of 2014, or 0.1% of total net
revenues.
"Dangdang successfully delivered on our guidance for the quarter, achieving strong top line growth. We further entrenched Dangdang as the market leader in China's books and media market. Although we posted a loss for the quarter, it was primarily the result of marketing and technology initiatives and expenditures related to e-books, mobile and content that we believe set the stage for the future healthy development of our business," said Ms. Peggy Yu Yu, Executive Chairwoman of Dangdang.
"Our investments in mobile Dangdang resulted in mobile orders reaching a record 41% of total orders, driven by significant growth in new and active users and higher conversion rates. We are making good progress in the digital reading market, offering more content and achieving rapid growth in e-book downloads and monthly active users. We are confident our current expenditures will yield positive returns to Dangdang and our shareholders in the future," Ms. Peggy Yu Yu concluded.
First Quarter 2015 Results
Dangdang's total net revenues in the first quarter of 2015 were RMB2,217.3 million ($357.7 million), a 27.7% increase from the corresponding period in 2014.
Media product revenue for the first quarter of 2015 was RMB1,260.9 million ($203.4 million), representing a 9.5% increase from the corresponding period in 2014. General merchandise revenue for the first quarter of 2015 was RMB887.8 million ($143.2 million), representing a 71.8% increase from the corresponding period in 2014. Other revenue including revenue from third-party merchants for the first quarter of 2015 was RMB68.7 million ($11.1 million), representing a 1.9% increase from the corresponding period in 2014.
Dangdang had approximately 10.2 million active customers including approximately 4.1 million new customers in the first quarter of 2015, representing increases of 18% and 46%, respectively, from the corresponding period in 2014. Total orders for the first quarter of 2015 were approximately 21.3 million, a 29% increase from the corresponding period in 2014.
Gross margin in the first quarter of 2015 was 15.2%, compared to 18.2% in the first quarter of 2014 and 17.1% in the fourth quarter of 2014. The year-over-year and quarter-over-quarter decreases in gross margin were due to a larger contribution of general merchandise sales as a percentage of total net revenues and a decline in logistics revenue from third-party merchants.
Fulfillment expenses which include warehousing, shipping and customer service expenses, were RMB202.3 million ($32.6 million), representing 9.1% of total net revenues, compared to 9.8% in the corresponding period in 2014 and 8.8% in the fourth quarter of 2014. The year-over-year decrease in fulfillment expenses as a percentage of total net revenues was primarily due to larger order size. The quarter-over-quarter increase as a percentage of total net revenues was the result of a seasonal decline in revenue in the first quarter, which is traditionally an off-peak season for e-commerce in China, and an increase in headcount.
Marketing expenses were RMB95.4 million ($15.4 million), representing 4.3% of total net revenues, compared to 3.9% in the corresponding period in 2014 and 4.8% in the fourth quarter of 2014. The year-over-year increase in marketing expenses as a percentage of total net revenues reflected the Company's investments to promote mobile Dangdang as well as advertising and marketing programs to build awareness of Dangdang's new destination categories and e-books. The quarter-over-quarter decrease as a percentage of total net revenues was the result of lower expenditures for marketing programs relative to the fourth quarter, which is typically the peak season for e-commerce in China.
Technology and content expenses were RMB61.5 million ($9.9 million), representing 2.8% of total net revenues, compared to 2.5% in thecorresponding period in 2014 and 2.6% in the fourth quarter of 2014. The year-over-year and quarter-over-quarter increases in technology and content expenses as a percentage of total net revenues were primarily due to an increase in headcount and expenditures to support the Company's mobile, e-book and other growth initiatives.
General and administrative expenses were RMB50.3 million ($8.1 million), representing 2.3% of total net revenues, compared to 2.2% in the corresponding period in 2014 and 1.9% in the fourth quarter of 2014. The year-over-year and quarter-over-quarter increases in general and administrative expenses as a percentage of total net revenues were primarily due to expansion in headcount to support the Company's mobile, e-book and other growth initiatives.
Government grants and value-added tax refunds were RMB1.0 million ($0.2 million) representing 0.0% of total net revenues, compared to 0.7% in the corresponding period in 2014 and 1.7% in the fourth quarter of 2014. The year-over-year and quarter-over-quarter decreases as a percentage of total net revenues were primarily due to a limited amount of government grants and tax refunds.
Share-based compensation expenses, which were allocated to related expense line items, were RMB2.2 million ($0.4 million) in the first quarter of 2015, compared to RMB3.2 million in the corresponding period in 2014,representing a 30.8% decrease.
Dangdang recorded an operating loss of RMB70.6 million ($11.4 million) in the first quarter of 2015, compared to operating income of RMB10.1 million in the corresponding period in 2014.
Operating loss excluding share-based compensation expenses (non-GAAP) was RMB68.4 million ($11.0 million), compared to operating income excluding share-based compensation (non-GAAP) of RMB13.3 million in the corresponding period in 2014.
Net loss was RMB60.2 million ($9.7 million), compared to net income of RMB2.0 million in the corresponding period in 2014.
Net loss excluding share-based compensation expenses (non-GAAP) was RMB58.0 million ($9.3 million), compared to net income excluding share-based compensation (non-GAAP) of RMB5.2 million in the corresponding period in 2014.
Net margin was negative 2.7%, compared to 0.1% in the corresponding period in 2014. Non-GAAP net margin was negative 2.6%, compared to a non-GAAP net margin of 0.3% in the corresponding period in 2014.
Diluted loss per ADS was RMB0.74 ($0.12), compared to diluted earnings per ADS of RMB0.02 in the corresponding period in 2014.
As of March 31, 2015, Dangdang had cash and cash equivalents, restricted cash, short-term time deposits, held-to-maturity and available for sale investments of RMB1,655.9 million ($267.1 million), compared to RMB1,399.0 million as of December 31, 2014. As of March 31, 2015, Dangdang had no bank loans.
Capital expenditures for the first quarter of 2015 were RMB27.8 million ($4.5 million).
Outlook for Second Quarter 2015
Dangdang expects total net revenues in the second quarter of 2015 to be approximately RMB2.3 billion, representing year-over-year growth of approximately 30%. The Company also expects GMV from its marketplace to grow at a rate of 32% year-over-year to approximately RMB1.9 billion in the second quarter of 2015. This forecast reflects Dangdang's current and preliminary view, which is subject to change.
Conference Call Information
Dangdang's management will host an earnings conference call on May 28, 2015 at 8:00 AM U.S. Eastern Time (or 8:00 PM on May 28, 2015 Beijing/Hong Kong time).
Dial-in details for the earnings conference call are as follows:
US: +1-845-675-0437
China, Domestic: +400-620-8038
Hong Kong: +852-3018-6771
International: +65-6723-9381
Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is "Dangdang earnings call."
A replay of the conference call may be accessed by phone at the following number through June 5, 2015:
International: +61-2-8199-0299
Conference ID: 47987541
A live and archived webcast of this conference call will be available at http://ir.dangdang.com through May 28, 2016.
About Dangdang
E-Commerce China Dangdang Inc. is a leading business-to-consumer e-commerce company in China. On its website dangdang.com and through mobile Dangdang, the Company offers books and media products as well as selected general merchandise products including fashion and apparel, baby, children and maternity and home and lifestyle products, among others. It also operates the dangdang.com marketplace program, which allows third-party merchants to sell their products alongside products sourced by the Company. Dangdang is transforming itself into an integrated online shopping experience with prominent destination categories. Dangdang's nationwide fulfilment and delivery capabilities, high-quality customer service support and scalable technology infrastructure enable it to provide a compelling online shopping experience to customers. For more information, please visit http://ir.dangdang.com .
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," "confident" and similar statements. Among other things, the outlook for the second quarter 2015 and quotations from management in this announcement, as well as Dangdang's strategic and operational plans, contain forward-looking statements. Dangdang may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, 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 Dangdang's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Dangdang's growth strategies; its future business development, results of operations and financial condition; its ability to attract and retain new customers and to increase revenues generated from repeat customers; its expectations regarding demand for and market acceptance of its products and services; trends and competition in China's business-to-consumer e-commerce market; changes in its revenues and certain cost or expense items; the expected growth of the Chinese business-to-consumer e-commerce market; Chinese governmental policies relating to Dangdang's industry and general economic conditions in China. Further information regarding these and other risks is included in Dangdang's annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. Dangdang does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of this press release, and Dangdang undertakes no duty to update such information, except as required under applicable law.
About Non-GAAP Financial Measures
To supplement Dangdang's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), the Company uses the following measures as non-GAAP financial measures: non-GAAP operating (loss) income, non-GAAP operating margin, non-GAAP net (loss) income, non-GAAP net margin and adjusted EBITDA (collectively referred to as the "Non-GAAP Financial Measures" hereafter). The Company defines non-GAAP operating (loss) income, non-GAAP operating margin, non-GAAP net (loss) income and non-GAAP net margin as operating (loss) income, operating margin, net (loss) income and net margin excluding the impact of share-based compensation expenses respectively. The Company defines adjusted EBITDA as (loss) income before interest, taxes, depreciation, amortization, other non-operating income and share-based compensation expenses. The Company reviews the Non-GAAP Financial Measures together with operating (loss) income, operating margin, net (loss) income and net margin to obtain a better understanding of its operating performance. The Company believes that these Non-GAAP Financial Measures provide meaningful supplemental information regarding the Company's performance and liquidity. However, a limitation of using the Non-GAAP Financial Measures as an analytical tool is that they do not include all items that impact operating (loss) income, operating margin, net (loss) income and net margin for the period. In addition, because they are not calculated in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider the Non-GAAP Financial Measures in isolation from or as an alternative to operating (loss) income, operating margin, net (loss) income and net margin prepared in accordance with U.S. GAAP.
For information on the reconciliation between the Non-GAAP Financial Measures and the GAAP financial measures presented in accordance with U.S. GAAP for the periods presented, please see the tables captioned "Non-GAAP operating income (loss), operating margin and net income (loss)" and "Adjusted EBITDA" at the end of this release.
Investor Contacts:
Tony Hung
Senior Investor Relations Director
E-Commerce China Dangdang Inc.
Phone: +86-10-5799-2301
E-mail: ir@dangdang.com
Elaine Ketchmere, CFA
Compass Investor Relations
+1-310-528-3031
Email: eketchmere@compass-ir.com
- Financial Tables Follow -
E-Commerce China Dangdang Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share related data)
As of December 31, As of
2014
March 31,
2015
----
RMB RMB US$
(Audited) (Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents 350,946 319,617 51,560
Restricted cash 23,726 12,517 2,019
Time deposits 674,363 892,787 144,021
Held-to-maturity investments 350,000 50,000 8,066
Available-for-sale investments - 381,004 61,462
Inventories 2,201,170 2,140,628 345,318
Accounts receivable, net 28,763 44,250 7,138
Prepaid expenses and other current assets 575,646 429,940 69,357
Amounts due from related parties 375 378 61
Total current assets 4,204,989 4,271,121 689,002
--------- --------- -------
Fixed assets, net 252,966 249,622 40,268
Prepaid land lease payments 42,423 42,199 6,807
Prepaid expenses and deposits 14,589 16,277 2,626
Total assets 4,514,967 4,579,219 738,703
========= ========= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts and notes payable 2,479,314 2,786,768 449,551
Deferred revenue 627,122 496,546 80,101
Accrued expenses and other current liabilities 704,483 643,895 103,871
Amounts due to related parties 2,237 2,237 361
Total current liabilities 3,813,156 3,929,446 633,884
Non-current liabilities 24,227 23,644 3,814
Total liabilities 3,837,383 3,953,090 637,698
--------- --------- -------
Shareholders' equity:
Class A common shares (par value of US$0.0001 per share; 686,505,790
shares authorized; 272,092,590 and 272,204,580 shares issued and
outstanding as of December 31, 2014 and March 31, 2015, respectively) 201 201 32
Class B common shares (par value of US$0.0001 per share; 313,494,210
shares authorized; 131,876,660 shares issued and outstanding) 103 103 17
Additional paid-in capital 1,885,878 1,888,091 304,580
Accumulated other comprehensive loss (129,948) (123,447) (19,914)
Accumulated deficit (1,078,650) (1,138,819) (183,710)
Total shareholders' equity 677,584 626,129 101,005
------- ------- -------
Total liabilities and shareholders' equity 4,514,967 4,579,219 738,703
========= ========= =======
E-Commerce China Dangdang Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, except share related data)
Three Months Ended
------------------
March 31, March 31,
2014 2015
---- ----
RMB RMB US$
(Unaudited) (Unaudited) (Unaudited)
Net revenues
Product revenue 1,668,334 2,148,635 346,610
Media 1,151,673 1,260,870 203,399
General merchandise 516,661 887,765 143,211
Other revenue 67,445 68,699 11,082
------ ------ ------
Total net revenues 1,735,779 2,217,334 357,692
Cost of revenues
Total cost of revenues (1,419,122) (1,879,478) (303,190)
---------- ---------- --------
Gross profit 316,657 337,856 54,502
------- ------- ------
Operating expenses:
Fulfillment (170,775) (202,298) (32,634)
Marketing (66,883) (95,379) (15,386)
Technology and content (43,562) (61,522) (9,925)
General and administrative (37,635) (50,266) (8,109)
Government grants and value-added tax refunds 12,268 983 159
------ --- ---
Total operating expenses, net (306,587) (408,482) (65,895)
-------- -------- -------
Income (loss) from operations 10,070 (70,626) (11,393)
Interest income 8,004 10,569 1,705
Other expenses, net (16,119) (112) (18)
------- ---- ---
Income (loss) before income taxes 1,955 (60,169) (9,706)
Income tax expense - - -
--- --- ---
Net income (loss) 1,955 (60,169) (9,706)
===== ======= ======
Net income (loss) attributable to common shareholders 1,955 (60,169) (9,706)
===== ======= ======
Income (loss) per common share:
- Basic 0.00 (0.15) (0.02)
- Diluted 0.00 (0.15) (0.02)
Income (loss) per ADS:
- Basic 0.02 (0.74) (0.12)
- Diluted 0.02 (0.74) (0.12)
Income (loss) allocated to common shareholders used in
income (loss) per share/ADS calculation:
- Basic 1,955 (60,169) (9,706)
- Diluted 1,955 (60,169) (9,706)
Shares used in income (loss) per common share computation:
Class A common shares:
- Basic 270,715,907 272,118,538 43,897,167
- Diluted 416,345,987 403,995,198 65,171,027
Class B common shares:
- Basic 131,876,660 131,876,660 21,273,860
- Diluted 131,876,660 131,876,660 21,273,860
ADSs used in income (loss) per ADS calculation:
- Basic 80,518,513 80,799,040 13,034,205
- Diluted 83,269,197 80,799,040 13,034,205
Other comprehensive income (loss)
Foreign currency translation adjustment, net of taxes 12,721 5,497 887
Unrealized gain on available-for-sale investments, net of 515 1,004 162
taxes
Comprehensive income (loss) attributable to common 15,191 (53,668) (8,657)
shareholders
Share-based compensation
Share-based compensation expenses included are as follows:
(In thousands, except share related data)
Three Months Ended
------------------
March 31, March 31,
2014 2015
---- ----
RMB RMB US$
(Unaudited) (Unaudited) (Unaudited)
Operating expenses:
Fulfillment 585 573 93
Marketing 120 124 20
Technology and content 185 297 48
General and
administrative 2,306 1,218 196
Total 3,196 2,212 357
===== ===== ===
(1) This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the
convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB6.1990 to
US$1.00, the noon buying rate on March 31, 2014 in The City of New York for cable transfers of RMB as certified for
customs purposes by the Federal Reserve Bank of New York.
(2) Each ADS represents five common shares of the Company.
Non-GAAP operating income (loss), operating margin and net income (loss)
(In thousands)
Three Months Ended
------------------
March 31, March 31,
2014 2015
---- ----
RMB RMB US$
(Unaudited) (Unaudited) (Unaudited)
Income (loss) from
operations 10,070 (70,626) (11,393)
Share-based
compensation
expenses 3,196 2,212 357
Non-GAAP
operating income
(loss) 13,266 (68,414) (11,036)
====== ======= =======
Operating margin 0.6% -3.2% -3.2%
Share-based
compensation
expenses 0.2% 0.1% 0.1%
Non-GAAP
operating margin 0.8% -3.1% -3.1%
=== ==== ====
Net income (loss) 1,955 (60,169) (9,706)
Share-based
compensation
expenses 3,196 2,212 357
Non-GAAP net
income (loss) 5,151 (57,957) (9,349)
===== ======= ======
Adjusted EBITDA
(In thousands)
Three Months Ended
------------------
March 31, March 31,
2014 2015
---- ----
RMB RMB US$
(Unaudited) (Unaudited) (Unaudited)
Income (loss) from operations 10,070 (70,626) (11,393)
Add back?
Depreciation and amortization 12,840 21,311 3,438
Share-based compensation expenses 3,196 2,212 357
----- ----- ---
Adjusted EBITDA 26,106 (47,103) (7,598)
====== ======= ======
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SOURCE E-Commerce China Dangdang Inc.
