Tian Ge Interactive Holdings Limited ("Tian Ge" or the "Group", 1980.HK, TGRVY.US), the largest "many-to-many" live social communities platform in China, today announced the unaudited consolidated results for the three months ended March 31, 2015.
Financial Highlights of the First Quarter of 2015
Total revenues up 8.1% to RMB185.5 million year-on-year ("YoY") and 6.1% quarter-on-quarter ("QoQ") from RMB171.6 million and RMB174.8 million in the first quarter and fourth quarter of 2014 respectively, mainly driven by the success of our mobile games business. Excluding the VAT effect, revenue increased by 14.1% YoY, as our revenues are recorded as net off 6% VAT tax after June 1, 2014.
Revenue from games increased by 66.7% YoY to RMB20.9 million.
Gross profit increased by 8.4% YoY and 9.0% QoQ to RMB156.5 million from RMB144.3 million and RMB143.5 million in the first quarter and fourth quarter of 2014, respectively.
Adjusted EBITDA increased by 26.0% YoY and 20.9% QoQ to RMB96.7 million from RMB76.8 million and RMB80.0 million, respectively.
Adjusted EBITDA margin increased to 52.1% from 44.7% in the corresponding period of 2014.
Adjusted net profit increased by 19.1% YoY and 17.6% QoQ to RMB75.1 million from RMB63.1 million and RMB 63.9 million, respectively.
Adjusted net margin increased to 40.5% from 36.7% in the corresponding period of 2014.
Adjusted diluted earnings per share was RMB 0.056 per share, as compared to RMB0.048 per share in the previous quarter
Adjusted basic earnings per share was RMB 0.061 per share, as compared to RMB0.052 per share in the previous quarter.
Mr. Mike Fu, Chairman and CEO of Tian Ge, commented, "The first quarter signals an exciting start for 2015 highlighted by strong growth of our mobile game business and in mobile paying users. We also recently completed several investments and entered into new business, expanding our live social video platform communities and realizing our vertical integration strategy. We believe the significant performance achieved in the first quarter provide a solid foundation for us to achieve consistent financial performance and to sustain strong growth in active and paying mobile users."
Business Review
In the first quarter of 2015, we continued to make healthy progress in expanding and developing our overall business. Our MAU and QPU for the live social platforms in the first quarter of 2015 grew at 34.9% and 24.2% YoY, while game platform MAU continue to grow at a triple digit growth rate. Moreover, our mobile monthly active users ("MAU") in the first quarter of 2015 increased to 14.8% from 8.0% compared to the corresponding period of 2014.
The following is a summary of the comparative figures for the periods presented above:
MAU for Tian Ge's live social platforms was approximately 16.4 million in the first quarter of 2015, representing an increase of approximately 34.9% YoY and representing an increase of 4.1% QoQ.
Quarterly Paying Users ("QPU") for Tian Ge's live social platforms was approximately 769,000 in the first quarter of 2015, representing an increase of approximately 24.2% YoY and increase of 9.1% QoQ.
The Quarterly Average Revenue Per User ("QARPU") of Tian Ge's live social platforms decreased to RMB225 in the first quarter of 2015 from RMB277 in the corresponding period of 2014, mainly due to the increase in more frequently paying mobile users.
Number of hosts on the live social platforms grew to 39,102 at March 31, 2015, representing an increase of approximately 2.1% YoY and a decrease of 1.2% QoQ.
Number of rooms on the live social platforms grew to 29,187 as at March 31, 2015, representing an increase of approximately 2.7% YoY and 3.8% QoQ, mainly because we began consolidating rooms and increasing the average room size of popular rooms in recent quarters.
Number of users on air on our live social platforms increased to approximately 629,000 in the first quarter of 2015 from approximately 566,000 in the corresponding period of the year 2014.
The percentage users on air over total MAU on the live social platforms decreased to 3.8% in the first quarter of 2015, as compared to 4.0% in the immediately preceding quarter.
The total registered users of Tian Ge as at March 31, 2015 are 278.4 million, as compared to 268.5 million as at December 31, 2014.
Financial Review
Revenues
Revenue increased by 8.1% year-on-year to RMB185.5 million for the three months ended March 31, 2015 from the corresponding period in 2014, and by 6.1% quarter-on-quarter from the three months ended December 31, 2014, driven by the success of our mobile games. Excluding the VAT effect, our revenue for the three months ended March 31, 2015 increased approximately 14.1% year-on-year compared to the corresponding period of 2014 as our revenues are recorded as net off 6% VAT tax after June 1, 2014.
Gross Profit
Gross profit increased by 8.4% to RMB156.5 million for the three months ended March 31, 2015 from RMB144.3 million in the corresponding period of 2014, with a slight increase in gross margin to 84.3% from 84.1%.
Selling & Marketing Expenses
Selling and marketing expenses decreased by 2.3% year-on-year and 13.2% quarter-on-quarter to RMB48.9 million for the three months ended March 31, 2015 from the corresponding period in 2014 and the three months ended December 31, 2014, respectively, which mainly due to the adoption of our cost control policy in 2015.
Administrative Expenses
Administrative expense increased by 12.5% year-on-year to RMB 27.5 million for the three months ended March 31, 2015 from RMB24.4 million in the corresponding period in 2014, which is primarily due to an increase in share-based compensation of RMB14.6 million. The increase is partially offset by the decrease of professional and consultancy fees of RMB8.3 million and business tax and related surcharges of RMB4.6 million benefiting from the VAT reform effective from June 1, 2014.
Research & Development Expenses
Research and development expenses increase by 35.7% year-on-year to RMB20.5 million for the three months ended March 31, 2015 from RMB15.1 million in the corresponding period in 2014, primarily due to the increase in employee benefits and new research and development investment in mobile games.
Other Gains
Other gains increased by 154.6% year-on-year to RMB15.3 million for the three months ended March 31, 2015 from RMB6.0 million for the corresponding period in 2014 which mainly caused by the increase of interest income and fair value gains of RMB8.6 million and RMB0.9 million respectively from the structured deposits.
Impact of Convertible Redeemable Preferred Shares
Upon completion of the global offering of the Company on July 9, 2014, the convertible redeemable preferred shares were automatically converted into ordinary shares on a one-to-one basis and there is no fair value gain or loss associated with these shares to be recognized in periods afterwards.
Adjusted EBITDA
Adjusted EBITDA increased by 26.0% year-on-year to RMB96.7 million for the three months ended March 31, 2015 from the corresponding period of 2014. Adjusted EBITDA margin was 52.1% for the three months ended March 31, 2015, compared to 44.7% for the corresponding period of 2014. Adjusted EBITDA represents operating profit adjusted to exclude non-cash share-based compensation expenses, listing expenses, depreciation and amortization.
Adjusted Net Income and Earnings Per Share
Adjusted net profit increased by 19.1% to RMB75.1 million for the three months ended March 31, 2015 from RMB63.1 million for the corresponding period of 2014. Adjusted diluted earnings per share is RMB0.056 for the three months ended March 31, 2015.
Adjusted net profit is not defined under IFRS, and eliminates the effect of non-cash fair value changes of convertible redeemable preferred shares, gains on repurchase of preferred shares, dividends related to redeemable preferred shares, listing expenses and non-cash share based compensation expenses.
Balance Sheet
As of March 31, 2015, the Company had cash and cash equivalents, term deposits with initial terms over 3 months, principal-protected structured deposits (recorded under current available-for-sale financial assets and current financial assets at fair value through profit or loss) in the aggregate amount of RMB1,666.5 million. The Company adopts conservative treasure policies in cash and financial management, and does not use any financial instruments for hedging purposes. All bank borrowings had been repaid before March 31, 2015.
Capital Expenditures
For the three months ended March 31, 2015, our capital expenditures were approximately RMB32.0 million, mainly related to the purchase of our new office space located in Beijing, renovation expenses, office supplies, and purchase of other network equipment. The aforementioned new office purchase transferred to our fixed assets in February 2015 with total amount of approximately RMB46.2 million.
Other Events
In March 2015, the Group announced its establishment of sponsored Level 1 ADR program in the United States. The ADRs can be traded on the US over-the counter ("OTC") market effective as of March 26, 2015 under the ticker symbol TGRVY.
In March 2015, the Group acquired 34.47% equity interest of Xi He, a company specialized in online health information services.
In March 2015, the Company issued and fully paid a special dividend of HK0.06 per ordinary share or HK$75,209,715 in total out of the Company's share premium account.
During the three months ended March 31, 2015, the Company has repurchased a total of 5,944,000 ordinary shares listed on The Stock Exchange of Hong Kong Limited with an aggregate amount of HK$20,302,780 in January 2015. All the repurchased ordinary shares had been cancelled as of March 31, 2015.
In January 2015, the Group acquired 80% of the equity interests of Jinhua Shixun, an independent third party company specialized in online live social video related technologies.
Conference Call Information
The Company will host a conference call at 9:30 p.m. ET on May 25, 2015 (9:30 a.m. Beijing Time on May 26, 2015) to review the Company's financial results and answer questions. You may access the live interactive call via:
1-888-346-8982 (U.S. Toll Free)
1-412-902-4272 (International)
852-301-84992 (Hong Kong-Local Toll)
86-105-357-3132 (Beijing-Local Toll)
4001-201203 (China Toll Free)
800-905945 (Hong Kong Toll Free)
Please dial-in approximately 5 minutes in advance to facilitate a timely start.
A replay will be available until 9:30 p.m. ET on June 2, 2015 and may be accessed via:
1-877-344-7529 (US Toll Free)
1-412-317-0088 (International Toll)
855-669-9658 (Canada Toll Free)
Replay access code: 10065387
A live and archived webcast of the call will be available on the Company's website at http://www.tiange.com/enInvestor/Index.aspx
About Tian Ge
Tian Ge (1980.HK) is one of the largest live social online video community platforms in China. The Company was founded in Hangzhou, China in 2008 and went public on the main board of the stock exchange of Hong Kong in July 2014. It currently operate eight "many-to-many" live social video communities on both mobile and PC, including 9158 and Sina Show, the two largest communities; and one "one-to-many" community, Sina Showcase.
Our communities offer diverse selection of user-generated content in the live social online video community industry. Through our "many-to-many" ecosystem where multiple users can simultaneously stream to other viewers in the same real-time video room, Tian Ge enables users to interact, socialize, share interest, send virtual items & gifts, and encourages our users to showcase their talents or knowledge for open and public exposure. Recently, we expanded our ecosystem to the online-to-offline (O2O) karaoke, live social games and emerging healthcare mobile applications.
For more information, please visit www.tiange.com
To visit our communities:
9158: www.9158.com; Sina Show: http://show.sina.com.cn/; Sina Showcase: http://ok.sina.com.cn/
For media inquiries, please feel free to contact:
LBS Communications Consulting Limited
Joanne Chan (852-9616 2676), Janice Liu (852-9859 0513), Ian Fok (852-9348 4484)
Tel : (852) 3679 3671 / (852) 3752 0428 / (852) 3752 0432
Fax : (852) 3753 2899
Email: jchan@lbs-comm.com / jliu@lbs-comm.com / ifok@lbs-comm.com
For investor inquiries, please contact:
Kenneth Ke
Tel: +86 (571) 88108686 Ext. 8103
Email: kenneth@9158.com
SOURCE Tian Ge Interactive Holdings Limited
