BEIJING, Nov. 5, 2010 (GLOBE NEWSWIRE) -- ChinaCache International Holdings Ltd., ("ChinaCache" or the "Company") (Nasdaq:CCIH), the leading provider of Internet content and application delivery services in China, today announced its unaudited interim condensed consolidated financial results for the quarter ended September 30, 2010.
Highlights for Third Quarter 2010
- Net revenues increased 57.9% from the corresponding period in 2009 to RMB109.1 million (US$16.3 million)
- Net loss was RMB37.7 million (US$5.6 million), compared to net loss of RMB3.1 million in the corresponding period in 2009
- Adjusted net income (Non-GAAP), which excludes share-based compensation expenses, foreign exchange loss or gain, penalties on uncertain tax positions, post acquisition settlement consideration, impairment of goodwill and acquired intangible assets, was RMB14.8 million (US$2.2 million), compared to RMB65,000 in the corresponding period in 2009
- Adjusted EBITDA (Non-GAAP) was RMB35.1 million (US$5.2 million), a 84.6% increase from the corresponding period in 2009
"We had a record third quarter marked by significant growth particularly in our mobile Internet, media and entertainment, and enterprise and E-commerce verticals," said Mr. Song Wang, co-founder, chairman and chief executive officer of ChinaCache. "We saw healthy demand for our content and application delivery services for mobile data, media and enterprise applications and we continue to make progress in offering our value-added services with our solutions."
"During the quarter we further expanded our presence in the mobile Internet market by signing additional contracts with China Mobile subsidiaries," continued Mr. Wang. "We also recently announced our expansion into the cable TV industry, an important industry vertical, demonstrating the critical role for our solutions in China's network convergence market."
"Since 1998, ChinaCache has focused on providing solutions tailored for the Chinese market that enhance the reliability and scalability of customers' online services and applications and improve end-user experience," concluded Mr. Wang. "We will continue investing to strengthen our position as China's leading Internet content and application delivery services provider."
Mr. Robert Yong Sha, chief financial officer of ChinaCache, added, "ChinaCache saw strong top-line growth and continuous improvement in adjusted EBITDA and adjusted net income during the quarter. Looking ahead, managing for profitable growth remains a top priority. We are confident we will achieve our strategic goals while building value for our shareholders."
On October 1, 2010, the Company's American depository shares ("ADSs") started trading on the NASDAQ Global Market. The Company and selling shareholders raised US$96.9 million in gross proceeds from the initial public offering ("IPO") of 6,970,127 ADSs. The Company will use the IPO net proceeds to expand research and development efforts, fund capital expenditures for network and other equipment, as well as fund working capital and for other general corporate purposes.
Financial Results for the Third Quarter 2010
Net revenues for the third quarter 2010 were RMB109.1 million (US$16.3 million), representing a 57.9% increase from the corresponding period in 2009 and a 15.5% increase over second quarter 2010.
Cost of revenues for the quarter increased by 48.3% year-over-year to RMB77.3 million (US$11.5 million), primarily due to the purchase of more bandwidth and increased share-based compensation expenses. Cost of revenues as a percentage of net revenues was 70.8% compared to 75.4% in the corresponding period in 2009. Non-GAAP cost of revenues as a percentage of net revenues, which exclude the effects of share-based compensation expenses, was 64.2%, compared to 74.7% in the corresponding period in 2009.
Sales and marketing expenses for the quarter increased by 238.5% year-over-year to RMB28.1 million (US$4.2 million), primarily due to a significant increase in share-based compensation expenses. Non-GAAP sales and marketing expenses, which exclude the effects of share-based compensation expenses, were RMB10.1 million (US$1.5 million), a 46.8% increase from the corresponding period in 2009.
General and administrative expenses for the quarter increased by 248.0% year-over-year to RMB19.7 million (US$2.9 million), primarily due to an increase in share-based compensation expenses. Non-GAAP general and administrative expenses, which exclude the effects of share-based compensation expenses, were RMB5.4 million (US$0.8 million), a 1.7% increase from the corresponding period in 2009.
Research and development expenses for the quarter increased by 175.2% year-over-year to RMB11.7 million (US$1.7 million), primarily due to an increase in share-based compensation expenses. Non-GAAP research and development expenses, which exclude the effects of share-based compensation expenses, were RMB3.7 million (US$0.6 million), a 3.3% increase from the corresponding period in 2009.
Total share-based compensation expenses, which were allocated to related costs of revenues and operating expense line items, were RMB47.5 million (US$7.1 million) in the third quarter of 2010, compared to RMB14.2 million in the previous quarter and RMB2.9 million in the corresponding period in 2009, as a result of a significant increase in the fair value of share options from July 1, 2010 to September 30, 2010.
Operating loss was RMB34.7 million (US$5.2 million), which reflected post acquisition settlement consideration expenses of RMB7.0 million (US$1.1 million) for the issuance of 1,030,215 ordinary shares to the original JNet selling shareholders based upon an IPO price of US$13.9 per ADS. The company experienced a negative operating margin for the quarter of 31.8%, compared to negative operating margins of 1.8% in the corresponding period in 2009. Non-GAAP operating profit, which excludes the effects of share-based compensation expenses and post acquisition settlement consideration, was RMB19.8 million (US$3.0 million), a significant increase from the corresponding period in 2009. Non-GAAP operating margin for the quarter was 18.1% compared to 2.4% in the corresponding period in 2009.
Income tax expense was RMB4.1 million (US$0.6 million), compared to income tax expense of RMB298,000 in the corresponding period in 2009. The effective tax rate for the third quarter of 2010 was negative 12.2% compared to negative 10.5% for the corresponding period in 2009.
Net loss was RMB37.7 million (US$5.6 million) compared to net loss of RMB3.1 million (US$0.5 million) in the corresponding period in 2009. Basic and diluted loss per ADS for the third quarter of 2010 amounted to RMB8.78 (US$1.31) and RMB8.78 (US$1.31), respectively. Basic and diluted loss per ADS based on a pro forma basis for the third quarter of 2010 amounted to RMB2.08 (US$0.31) and RMB2.08 (US$0.31), respectively.
Adjusted net income (Non-GAAP) defined as net income before share-based compensation expenses, foreign exchange loss or gain, penalties on uncertain tax positions, post acquisition settlement consideration, impairment of goodwill and acquired intangible assets, was RMB14.8 million (US$2.2 million), a significant increase from RMB65,000 in the corresponding period in 2009. Non-GAAP basic and diluted earnings per ADS for the third quarter of 2010 amounted to RMB2.81 (US$0.42) and RMB2.81 (US$0.42), respectively.
Adjusted EBITDA(Non-GAAP) defined as EBITDA plus share-based compensation expenses, foreign exchange loss or gain, penalties on uncertain tax positions, post acquisition settlement consideration, impairment of goodwill and acquired intangible assets, was RMB35.1 million (US$5.2 million), representing a 26.5% quarter-on-quarter growth or a 84.6% growth from the corresponding period in 2009.
As of September 30, 2010, the Company had cash and cash equivalents of RMB90.4 million (US$13.5 million). The capital expenditures for the third quarter of 2010 were RMB5.5 million (US$0.8 million).
Outlook for Fourth Quarter 2010
ChinaCache currently expects to generate total net revenues in an amount ranging from RMB119.0 million (US$17.8 million) to RMB122.0 million (US$18.2 million) for the fourth quarter of 2010, representing a 67.3% to 71.6% year-over-year increase. This forecast reflects ChinaCache's current and preliminary view, which is subject to change.
Conference Call Information
The Company has scheduled a conference call and live webcast to discuss the results at 8:30 PM Eastern Daylight Time (EDT) on November 4, 2010, which corresponds to 8:30 AM Beijing time on November 5, 2010.
The dial-in details for the live conference call are as follows:
- U.S. Toll Free Number: +1 (866) 242-1388
- International dial-in number: +65 6722-6342
- Conference ID: 1886-2341
A live and archived webcast of the conference call will be available on the Investors section of ChinaCache's website at www.ChinaCache.com.
A replay of the conference call will also be available until November 11, 2010 by dialing:
- International dial-in number: +1 (866) 214-5335
- Conference ID: 1886-2341
About ChinaCache International Holdings Ltd.
ChinaCache International Holdings Ltd. (Nasdaq:CCIH) is the leading provider of Internet content and application delivery services in China. As a carrier-neutral service provider, ChinaCache's network in China is interconnected with networks operated by all telecom carriers, major non-carriers and local Internet service providers. With more than a decade of experience in developing solutions tailored to China's complex internet infrastructure, ChinaCache is a partner of choice for businesses, government agencies and other enterprises to enhance the reliability and scalability of online services and applications and improve end-user experience. For more information on ChinaCache, please visit .
*Use of Non-GAAP Financial Measures
In evaluating its business, ChinaCache considers and uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC as supplemental measure to review and assess its operating performance: non-GAAP cost of revenues, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP research and development expenses, non-GAAP operating profit, non-GAAP adjusted net income, non-GAAP EBITDA and non-GAAP adjusted EBITDA. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of GAAP and non-GAAP results" set forth at the end of this press release.
To present non-GAAP cost of revenues, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses and non-GAAP research and development expenses, the Company excludes share-based compensation expenses.
To present non-GAAP operating profit, the Company excludes share-based compensation expenses and post acquisition settlement consideration.
The Company defines adjusted net income as net income (loss) before share-based compensation expenses, foreign exchange loss or gain, penalties on uncertain tax positions, post acquisition settlement consideration and impairment of goodwill and acquired intangible assets.
The Company uses EBITDA to assist in reconciliation to adjusted EBITDA. The Company defines EBITDA as net income (loss) before interest expense, interest income, income tax expense, depreciation and amortization. The Company defines adjusted EBITDA as EBITDA plus share-based compensation expenses, foreign exchange loss or gain, penalties on uncertain tax positions, post acquisition settlement consideration, impairment of goodwill and acquired intangible assets and other expenses that the Company does not consider reflective of its ongoing operations. The Company believes that the use of adjusted EBITDA facilitates investors' use of operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in items such as capital structures (affecting relative interest expense and share-based compensation expense), the book amortization of intangibles (affecting relative amortization expense), the age and book value of facilities and equipment (affecting relative depreciation expense) and other non-cash expenses. The Company also presents adjusted EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of the financial performance of companies in its industry.
Those non-GAAP financial measures are not defined under U.S. GAAP and are not measures presented in accordance with U.S. GAAP. Those non-GAAP financial measures have limitations as analytical tools, and when assessing the Company's operating performance, investors should not consider them in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP. Some of these limitations include, but are not limited to:
- Adjusted net income, EBITDA and Adjusted EBITDA do not reflect the Company's cash expenditures or future requirements for capital expenditures or contractual commitments;
- they do not reflect changes in, or cash requirements for, the Company's working capital needs;
- they do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on the Company's debt;
- they do not reflect income taxes or the cash requirements for any tax payments;
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted net income, EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;
- while share-based compensation is a component of cost of revenues and operating expenses, the impact on the Company's financial statements compared to other companies can vary significantly due to such factors as assumed life of the options and assumed volatility of the Company's ordinary shares; and
- other companies may calculate Adjusted net income, EBITDA and Adjusted EBITDA differently than the Company does, limiting their usefulness as comparative measures.
This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollar are based on the effective exchange rate of 6.7011 as of September 30, 2010.
CONTACT: ChinaCache International Holdings Ltd. Mr. Wei An, Vice President of Corporate Communications +86 (10) 6437-3399 wei.an@chinacache.com Brunswick Group LLP Ms. Yue YU +86 (10) 6566-2256 Ms. Susan Stillings Ms. Cindy Zheng +1 (212) 333-3810 chinacache@brunswickgroup.com