GUANGZHOU CITY, China, Aug. 17 /PRNewswire-Asia/ -- -- Third quarter revenues accelerated to 32.8% from 15.3% in 1st half of fiscal 2010 -- Q3 video showcase revenues increased 26.6% year-over-year; paying subscribers up 56.1% from Q2 to 34,382 -- Q3 Cloud computing revenues up 62.7% to $1.9 million; paying subscribers up 41.5% quarter-over-quarter to 7,344 -- $15.1 million in cash flow from continuing operations for first nine months -- Company reaffirms previously stated guidance of $38.3 million in revenue and net income from continuing operations of $12.5 million, or $1.77 per common share, for fiscal year 2010. Management is confident the stated guidance will be met but is also in the process of reviewing the Company's financial results against the previously stated guidance.
Subaye, Inc. (Nasdaq: SBAY) ("Subaye" or the "Company") announced its
financial results for the third quarter of the fiscal year ending
Third quarter Nine months Ended June 30, Ended June 30, 2010 2010 Revenue Growth from Continuing Ops 32.8% 21.5% Gross Margin 69.7% 74.4% Fully Diluted EPS from Continuing Ops $ 0.43 $ 1.43 Three Months Ended June 30, 2010
Revenues
Revenues for the three months ended
Third Quarter 2010 Revenue Breakdown By Business Unit (USD in thousands) (unaudited) (three months ended June 30,) 2010 2009 CHNAGE Video Showcase Product $7,164 $5,659 +26.6% % of Sales 79.0% 82.9% -- Cloud Computing Product $1,904 $1,170 +62.7% % of Sales 21.0% 17.1% --
"We saw healthy growth across our video showcase and cloud computing
products, driven by increased penetration in existing markets and entrance
into new markets such as
Cost of Sales
Cost of sales for the three months ended
Gross Margin
The Company's gross margin was 69.7% and 79.3%, respectively, for the
three months ended
Share Based Compensation
Share based compensation for the quarter increased 407.7% to
Amortization of Software & Hardware
Amortization of software and hardware for the quarter increased 112.5% to
Amortization of Websites
Amortization of websites for the quarter decreased 8.9% to
Operating Expenses
Operating expenses for the third quarter totaled
Provision for Income Taxes
Provision for income taxes was
Net Income
Net income for the three months ended
Net loss from discontinued operations was
Diluted Income per Share for Continuing Operations
The Company's diluted net income per share from continuing operations was
Diluted (Loss) Income per Share for Discontinued Operations
The Company's diluted net (loss) income per share from discontinued
operations was
Adjusted Net Income and Adjusted Net Income Margin for Continuing Operations
Adjusted net income from continuing operations excluding share based
compensation expenses and amortization of software & hardware, and websites
(non-GAAP) for the quarter increased 5.1% to
Adjusted Diluted EPS for Continuing Operations
Adjusted diluted earnings per share from continuing operations excluding
share based compensation expenses and amortization of software & hardware, and
websites (non-GAAP) for the quarter were
Nine months Ended
Revenues
Revenues for the nine months ended
Year-to-date 2010 Revenue Breakdown By Business Unit (USD in thousands) (unaudited) (nine months ended June 30,) 2010 2009 CHANGE Video Showcase Product $18,330 $15,716 +16.6% % of Sales 78.4% 81.7% -- Cloud Computing Product $5,038 $3,510 +43.5% % of Sales 21.6% 18.3% --
Cost of Sales
Cost of sales for the nine months ended
Gross Margin
The Company's gross margin was 74.4% and 77.9%, respectively, for the nine
months ended
Share Based Compensation
Share based compensation for the nine months ending
Amortization of Software & Hardware
Amortization of software and hardware for the quarter decreased 8.1% to
Amortization of Websites
Amortization of websites for the quarter decreased 1.8% to
Operating Expenses
Operating expenses for the nine months ended
Provision for Income Taxes
Provision for income taxes was
Net Income
Net income for the nine months ended
Diluted Income per Share for Continuing Operations
The Company's diluted net income per share from continuing operations was
Diluted (Loss) Income per Share for Discontinued Operations
The Company's diluted net (loss) income per share from discontinued
operations was
Adjusted Net Income and Adjusted Net Income Margin for Continuing Operations
Adjusted net income from continuing operations excluding share based
compensation expenses and amortization of software & hardware, and websites
(non-GAAP) for the nine months ending
Adjusted Diluted EPS for Continuing Operations
Adjusted diluted earnings per share from continuing operations excluding
share based compensation expenses and amortization of software & hardware, and
websites (non-GAAP) for the nine months ending
Liquidity and Capital Resources
As of
2010 and 2011 Guidance
Adjusting for the sale of its trade services and entertainment media
businesses as discontinued operations effective
Results From Continuing Operations FY2009 FY2010 FY2011 (On-line Video Advertising Business) (Actual) (Projected) (Projected) Revenue Growth 180.3% 43.5% 86.3% Net Income Growth 61.5% 126.1% 133.5% Gross Margin 77.6% 82.0% 80.3% Net Margin 32.2% 32.7% 41.0%
The preceding projections include assumptions based on the acquisition of
new members in various provinces within
Management is confident the stated guidance will be met but is also in the process of reviewing the Company's financial results against the previously stated guidance.
Business Outlook
Subaye's goal for 2010 is to rapidly expand its video advertising and
cloud computing businesses throughout
Cloud Computing is quickly becoming a second high margin source of growth
of Subaye. Since refocusing our sales and marketing efforts in
Adding to Subaye's opportunity in this segment is its recent acquisition
of 6 websites from CoCloud.com.cn (CIL) that provides the Company with 12,200
new members that are affiliated with the 6 largest wholesale distribution
centers in
About Subaye, Inc.
Subaye, Inc. is a leading outsourced marketing services provider in
Forward-Looking Statements
Certain statements contained herein constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are based on current expectations,
estimates and projections about Subaye, Inc.'s industry, management's beliefs
and certain assumptions made by management. Readers are cautioned that any
such forward-looking statements are not guarantees of future performance and
are subject to certain risks, uncertainties and assumptions that are difficult
to predict. Because such statements involve risks and uncertainties, the
actual results and performance of the Company may differ materially from the
results expressed or implied by such forward-looking statements. Given these
uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. Subaye, Inc.'s operations are conducted in
About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which statements are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: adjusted net income, adjusted net-income margin, and adjusted EPS. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses and expenditures that may not be indicative of our recurring core business operating results. These non-GAAP financial measures exclude from our operating performance not only non-cash charges, such as stock-based compensation, but also discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business. The accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.
For more information, please contact:
Company:
James Crane
Chief Financial Officer
P.R.C. Cell: +86-186-2136-3580
U.S. Office: +1-617-209-4199
Investor Relations:
Ted Haberfield
HC International, Inc.
Tel: +1-760-755-2716 (US)
Email: thaberfield@hcinternational.net
Web: http://www.hcinternational.net
Financial Statements Follow
SUBAYE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, September 30,
2010 2009
(In Thousands)
(Unaudited) (Audited)
Assets
Current Assets
Cash $2,082 $2
Accounts Receivable, Net of Allowance
for Doubtful
Accounts of $363 as of June 30, 2010
and September 30, 2009, Respectively 11,328 8,266
Prepaid Expenses 1,133 370
Deposit for Purchase of Inventoriable
Assets 6,254 8,152
Assets Held for Sale 23,170 29,360
Total Current Assets 43,967 46,150
Property and Equipment, Net of
Accumulated
Depreciation of $17,758 and $12,863
as of June 30, 2010 and September
30, 2009 26,099 10,580
Total Assets $70,066 $56,730
Liabilities and Equity
Current Liabilities
Accounts Payable and Accrued Expenses $2,884 $566
Taxes Payable 2,221 --
Liabilities Held for Sale 8 5,275
Total Current Liabilities 5,113 5,841
Total Liabilities 5,113 5,841
Commitments and Contingencies
Shareholders' Equity
Preferred Stock, $0.001 Par Value,
50,000,000 Shares Authorized, 0
Shares Issued and Outstanding as
of June 30, 2010 and September 30,
2009 -- --
Common Stock, $0.001 Par Value;
150,000,000 Shares Authorized;
7,444,931 and 2,479,243 Shares
Issued and Outstanding as of June
30, 2010 and September 30, 2009 7 3
Additional Paid in Capital 58,949 32,452
Deferred Stock Based Compensation (8,945) (2,908)
Accumulated Other Comprehensive
Income (149) 54
Retained Earnings 15,091 11,108
Total Shareholders' Equity 64,953 40,709
Noncontrolling Interest in
Subsidiaries -- 10,180
Total Equity 64,953 50,889
Total Liabilities and Equity $70,066 $56,730
SUBAYE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE INCOME
For the Three Months For the Nine Months
Ended Ended
June 30, June 30,
2010 2009 2010 2009
In Thousands, Except per Share Amounts
Net Sales $9,068 $6,829 $23,368 $19,226
Cost of Sales 2,745 1,415 5,971 4,258
Gross Profit 6,323 5,414 17,397 14,968
Operating Expenses
Advertising 1,003 110 2,031 7,123
Other Selling, General and
Administrative 1,269 712 3,652 2,257
Total Operating Expenses 2,272 822 5,683 9,380
Income From Continuing
Operations Before
Income Tax Expense 4,051 4,592 11,714 5,588
Income Tax Expense (772) -- (2,221) --
Income From Continuing
Operations 3,279 4,592 9,493 5,588
(Loss) Income From
Discontinued
Operations (1,411) (326) (5,038) 1,807
Net Income 1,868 4,266 4,455 7,395
Net Income Attributable to the
Noncontrolling Interest -- (1,525) (472) (1,388)
Net Income Attributable to
Subaye $1,868 $2,741 $3,983 $6,007
Net Income From Continuing
Operations
Per Common Share:
Basic $0.44 $2.58 $1.45 $3.28
Diluted $0.43 $2.58 $1.43 $3.28
Net (Loss) Income From
Discontinued
Operations Per Common Share:
Basic $(0.19) $(0.18) $(0.77) $1.06
Diluted * $(0.19) $(0.18) $(0.77) $1.06
Net Income Per Common Share:
Basic $0.25 $2.40 $0.68 $4.34
Diluted * $0.25 $2.40 $0.67 $4.34
Weighted Average Common Shares
Outstanding:
Basic 7,444,931 1,781,089 6,561,121 1,702,010
Diluted 7,615,131 1,781,089 6,646,013 1,702,010
Comprehensive Income:
Net Income $1,868 $4,266 $4,455 $7,395
Foreign Currency Translation
Adjustment,
Net of Tax (88) 2 (203) 23
Comprehensive Income 1,780 4,268 4,252 7,418
Comprehensive Income
Attributable to the
Noncontrolling Interest -- (1,525) (436) (1,395)
Comprehensive Income
Attributable to
Subaye $1,780 $2,743 3,816 $6,023
SUBAYE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASHFLOWS
For the Nine Months
Ended June 30,
2010 2009
(In Thousands)
Cash Flows From Operating Activities
of Continuing
Operations:
Net Income $4,455 $7,395
Adjustments to Reconcile Net Income
to Net Cash Provided by
Operating Activities-
Depreciation and Amortization 4,021 4,247
Amortization of Stock Based
Compensation 4,053 949
Bad Debt Expense -- 332
(Increase) Decrease in Assets-
Accounts Receivable (3,062) (880)
Prepaid Expenses (763) (1,672)
Deposits on Inventoriable Assets 1,882 (8,152)
Increase in Liabilities -
Accounts Payable and Accrued Expenses 2,323 492
Income Taxes Payable 2,221 --
Net Cash Provided By Operating
Activities 15,130 2,711
Cash Flows From Investing Activities
of Continuing
Operations:
Purchase of Property and Equipment (13,803) --
Net Cash Used in Investing Activities (13,803) --
Cash Flows From Financing Activities
of Continuing
Operations:
Cash Proceeds From Sale of Common
Stock -- 394
Net Cash Provided by Financing
Activities -- 394
Cash Flows From Discontinued
Operations:
Net Cash Provided By (Used in)
Operating Activities 956 (2,598)
Net Cash Provided By (Used in)
Discontinued Operations 956 (2,598)
Effect of Exchange Rate Changes in
Cash
(203) (55)
Increase in Cash
2,080 452
Cash, Beginning of Period
2 49
Cash, End of Period $2,082 $501
Supplemental Cash Flow Information:
Cash Paid During the Period for
Interest, Net of Amounts Capitalized $-- $--
Income Taxes $-- $--
Supplemental Schedule of Noncash
Investing and Financing
Activities:
Issuance of Stock for Services,
Deferred Compensation $10,115 $1,180
Issuance of Stock for Acquisition of
Websites and Related
Assets $5,760 $--
Adjustment of additional paid-in-
capital and non-controlling interests
from investment in Subaye Inc, by
non-controlling interests $10,652 $--
SOURCE Subaye, Inc.