Youku Tudou Q2 Loss Narrows, Sees Sequential Revenues Growth In Q3; Shares Down

(RTTNews) - Chinese Internet television company Youku Tudou, Inc. (YOKU) reported Thursday a loss for the second quarter that narrowed from last year, on improved gross margins and double-digit revenue growth. The company also forecast revenues for the third quarter to grow in double-digits sequentially. The company's shares lost nearly six percent in extended trade.

On August 23, 2012, the company and Tudou Holdings Ltd. announced the completion of their merger. Following the merger, Tudou's financial results were consolidated into the company from the date of the completion of the merger. The company was formerly Youku Inc.

"We made solid financial and operational progress across-the-board in the second quarter. Revenue growth reaccelerated due to more effective sales execution while cost synergies further materialized as the integration between Youku and Tudou was completed, resulting in significant margin improvement," President Dele Liu said in a statement.

Beijing, China-based Youku Tudou reported a net loss of RMB 105.05 million or $17.12 million for the second quarter, narrower than pro forma combined net loss of RMB 176.28 million or $28.7 million in the prior-year quarter. Loss per ADS also narrowed to RMB 0.63 or $0.10 from Last year's RMB 1.09 per ADS.

Excluding items, adjusted loss for the quarter was RMB 44.63 million or $7.27 million, compared to pro forma combined net loss of RMB 120.09 million or $19.6 million in the year-ago quarter.

Net revenue for the quarter grew 30 percent to RMB 753.45 million or $122.77 million from pro forma combined net revenues of RMB 578.31 million in the same quarter last year.

"Multi-screen video consumption is a game changer for Internet television as it offers video anytime, anywhere on any device. We are leveraging our top-of-mind video brand awareness, comprehensive content library and cross-screen product functionalities to extend our leading presence across different screens. With users watching Internet videos on multiple screens becoming the standard in China, Youku Tudou is at the center of exciting growth opportunities for the long term," Chairman and CEO Victor Koo stated.

Consolidated advertising net revenues were RMB 726.6 million or $118.4 million, primarily due to the increased use by brand advertisers of the company's advertising services as evidenced by an increase in the number of advertisers and the rising average spend per advertiser.

Adjusted gross profit margin for the quarter expanded 700 basis points to 27 percent from last year's 20 percent.

Total operating expenses for the quarter grew to RMB 306.82 million from RMB 296.84 million in the same period last year.

Looking ahead to the third quarter, Youku Tudou forecast net revenues in a range of RMB 830 million to RMB 870 million, with consolidated advertising net revenues contributing between RMB 740 million and RMB 770 million. "We remain committed to building our user-generated content ecosystem and leveraging our original content production capabilities to differentiate Youku Tudou and support our content marketing solutions." Liu Added.

YOKU closed Thursday's regular trading session at $25.40, up $1.46 or 6.10% on a volume of 5.07 million shares. However, the stock pared most of the gains by losing $1.40 or 5.51% in after-hours trading.