BEIJING, March 7, 2011 (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 December 31, 2010.
Highlights for Fourth Quarter 2010
- Net revenues increased by 74.4% to RMB124.0 million (US$18.8 million) in the fourth quarter 2010 from the corresponding period in 2009
- Net income in the fourth quarter 2010 was RMB6.2 million (US$0.9 million), compared to a net loss of RMB13.9 million in the corresponding period in 2009
- Adjusted net income (Non-GAAP), which excluded 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 RMB17.5 million (US$2.7 million) in the fourth quarter 2010, compared to an adjusted net loss of RMB10.4 million in the corresponding period in 2009
- Operating profit in the fourth quarter 2010 was RMB6.9 million (US$1.0 million), compared to operating loss of RMB2.2 million in the corresponding period in 2009
- Non-GAAP operating profit, which excluded share-based compensation expenses and post acquisition settlement consideration, was RMB10.2 million (US$1.5 million) in the fourth quarter of 2010, compared to RMB1.3 million in the corresponding period in 2009
- Adjusted EBITDA (Non-GAAP) was RMB30.6 million (US$4.6 million), a 68.7% increase from the corresponding period in 2009
Highlights for Fiscal Year 2010
- Net revenues in 2010 increased 48.1% from 2009 to RMB403.4 million (US$61.1 million)
- Net loss in 2010 was RMB55.7 million (US$8.4 million), compared to a net loss of RMB39.2 million in 2009
- Adjusted net income (Non-GAAP) was RMB61.0 million (US$9.2 million) in 2010, compared to a loss of RMB16.1 million in 2009
- Operating loss in 2010 was RMB61.3 million (US$9.3 million), compared to operating loss of RMB12.7 million in 2009
- Non-GAAP operating profit was RMB48.7 million (US$7.4 million) in 2010, a significant increase from RMB1.7 million in 2009
- Adjusted EBITDA (Non-GAAP) in 2010 was RMB114.1 million (US$17.3 million), a 61.4% increase from 2009
- The number of active customers as at December 31, 2010 totaled 504, compared to 281 as at December 31, 2009
"We were pleased to achieve profitability in the fourth quarter as we recorded another period of revenue growth," said Mr. Song Wang, co-founder, chairman and chief executive officer of ChinaCache. "Our mobile Internet, media and entertainment, and enterprise and e-commerce verticals performed strongly as customers took advantage of our services to enhance end user experience. In particular, we were pleased to add contracts with new provincial subsidiaries of China Mobile and we saw exceptionally strong growth in the Internet video space. We also entered into a number of exciting content and application delivery service contracts with leading provincial television stations to improve the reliability of TV programs delivered across the Internet."
Mr. Wang continued, "Looking to the year ahead, we are optimistic that the rapid growth of content delivered over the Internet will continue to drive strong demand for ChinaCache's CDN solutions."
"During the quarter we saw continued improvement in adjusted net income even as we increased investment in our bandwidth, collocation and storage facilities to meet growing customer demand," added Mr. Robert Yong Sha, chief financial officer of ChinaCache. "2010 witnessed the healthy development of ChinaCache's business, as we expanded our industry leadership and improved profitability. In 2011, we look forward to building out our customer base further while managing for profitable growth."
Financial Results for the Fourth Quarter 2010
Net revenues for the fourth quarter 2010 were RMB124.0 million (US$18.8 million), representing a 74.4% increase from the corresponding period in 2009.
Cost of revenues for the quarter increased by 58.9% year-over-year to RMB84.0 million (US$12.7 million), primarily due to the purchase of more bandwidth, collocation and storage facilities and the increases in share-based compensation expenses. Cost of revenues as a percentage of net revenues was 67.8%, compared to 74.4% in the corresponding period in 2009. Non-GAAP cost of revenues as a percentage of net revenues, which excluded share-based compensation expenses, was 67.4%, compared to 73.3% in the corresponding period in 2009.
Sales and marketing expenses for the quarter decreased by 38.1% from the previous quarter to RMB17.4 million (US$2.6 million) and grew 85.5% year-over-year. Non-GAAP sales and marketing expenses, which excluded share-based compensation expenses, were RMB16.2 million (US$ 2.5 million), a 98.2% increase from the corresponding period in 2009.
General and administrative expenses for the quarter decreased by 54.7% over the previous quarter to RMB8.9 million (US$1.3 million) and increased by 24.7% year-over-year. Non-GAAP general and administrative expenses, which excluded the effects of share-based compensation expenses, were RMB8.0 million (US$1.2 million), a 29.3% increase from the corresponding period in 2009.
Research and development expenses for the quarter decreased by 43.3% over the previous quarter to RMB6.6 million (US$1.0 million) and increased by 72.0% year-over-year. Non-GAAP research and development expenses, which excluded the effects of share-based compensation expenses, were RMB6.1 million (US$0.9 million), an 83.5% 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 RMB3.2 million (US$0.5 million) in the fourth quarter of 2010, compared to RMB47.5 million in the previous quarter and RMB3.5 million in the corresponding period in 2009.
Operating profit was RMB6.9 million (US$1.0 million) in the fourth quarter of 2010, compared to an operating loss of RMB34.7 million in the previous quarter and an operating loss of RMB2.2 million in the corresponding period in 2009. Non-GAAP operating profit, which excluded the effects of share-based compensation expenses and post acquisition settlement consideration, was RMB10.2 million (US$1.5 million), a significant increase from the corresponding period in 2009. Non-GAAP operating margin for the quarter was 8.2%, compared to 1.9% in the corresponding period in 2009.
Income tax benefit was RMB3.7 million (US$0.6 million) in the fourth quarter of 2010, compared to income tax expense of RMB0.5 million in the corresponding period in 2009. The effective tax rate for the fourth quarter of 2010 was negative 146.8% compared to 3.9% for the corresponding period in 2009.
Net income was RMB6.2 million (US$0.9 million) in the fourth quarter of 2010, compared to net loss of RMB13.9 million in the corresponding period in 2009. Basic and diluted earnings per ADS for the fourth quarter of 2010 amounted to RMB0.26 (US$0.04) and RMB0.24 (US$0.04), respectively.
Adjusted net income (Non-GAAP), which is 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 RMB17.5 million (US$2.7 million), compared to an adjusted net loss of RMB10.4 million in the corresponding period in 2009. Non-GAAP basic and diluted earnings per ADS for the fourth quarter of 2010 amounted to RMB0.73 (US$0.11) and RMB0.69 (US$0.10), respectively.
Adjusted EBITDA (Non-GAAP), which is 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 RMB30.6 million (US$4.6 million), representing a 12.8% decrease from third quarter 2010, or a 68.7% increase from the corresponding period in 2009.
As of December 31, 2010, the Company had cash and cash equivalents of RMB592.7 million (US$89.8 million). The capital expenditures for the fourth quarter of 2010 were RMB57.6 million (US$8.7 million).
Financial Results for the Fiscal Year 2010
Net revenues in 2010 were RMB403.4 million (US$61.1 million), representing a 48.1% increase from 2009.
Cost of revenues in 2010 increased by 35.7% year-over-year to RMB279.7 million (US$42.4 million), primarily due to the purchase of more bandwidth, collocation and storage facilities and increased share-based compensation expenses. Cost of revenues as a percentage of net revenues was 69.3% compared to 75.7% in 2009. Non-GAAP cost of revenues as a percentage of net revenues, which excluded the effects of share-based compensation expenses, was 66.5% in 2010, compared to 74.8% in 2009.
Sales and marketing expenses in 2010 were RMB73.1 million (US$11.1 million), representing an increase of 98.8% from the previous year, mainly due to the increase in personnel related expenses and marketing expenses. Non-GAAP sales and marketing expenses, which excluded share-based compensation expenses, were RMB46.0 million (US$7.0 million), a 46.4% increase from the previous year.
General and administrative expenses in 2010 were RMB45.3 million (US$6.9 million), representing an increase of 77.9% from the previous year. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, were RMB 23.6 million (US$3.6 million) in 2010, a 10.9% increase from the previous year.
Research and development expenses in 2010 were RMB28.7 million (US$4.3 million), representing an increase of 72.4% from the previous year. Non-GAAP research and development expenses, which excluded the effects of share-based compensation expenses, were RMB16.7 million (US$2.5 million), a 17.1% increase from the previous year.
Total share-based compensation expenses in 2010, which were allocated to related costs of revenues and operating expense line items, were RMB72.2 million (US$10.9 million), compared to RMB14.4 million in the previous year, as a result of a significant increase in the fair value of share options.
Operating loss in 2010 was RMB61.3 million (US$9.3 million), as compared to a loss of RMB12.7 million in 2009. Non-GAAP operating profit, which excluded share-based compensation expenses and post acquisition settlement consideration, was RMB48.7 million (US$7.4 million), compared to RMB1.7 million in 2009.
Income tax benefit in 2010 was RMB11.4 million (US$1.7 million), compared to income tax expense of RMB2.0 million in the previous year. The effective tax rate in 2010 was negative 16.9% compared to 5.5% in 2009.
Net loss in 2010 was RMB55.7 million (US$8.4 million), compared to net loss of RMB39.2 million in 2009. Basic and diluted loss per ADS for 2010 were RMB9.24 (US$1.40) and RMB9.24 (US$1.40), respectively.
Adjusted net income (Non-GAAP), which is 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 RMB61.0 million (US$9.2 million) in 2010, compared to an adjusted net loss of RMB16.1 million in 2009. Non-GAAP basic earnings per ADS for 2010 amounted to RMB6.11 (US$0.93).
Adjusted EBITDA (Non-GAAP), which is 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 RMB114.1 million (US$17.3 million) in 2010, representing a 61.4% increase from the previous year.
Outlook for First Quarter 2011
ChinaCache currently expects to generate total net revenues in an amount ranging from RMB128.0 million (US$19.3 million) to RMB133.0 million (US$20.2 million) for the first quarter of 2011, representing a 68.6% to 75.2% year-over-year increase from the corresponding period of 2010. This forecast reflects ChinaCache's current and preliminary view, which is subject to change.
Conference Call Information
The Company has scheduled a corresponding conference call and live webcast to discuss the results at 8:30 PM Eastern Standard Time (EST) on March 7, 2011, which corresponds to 9:30 AM Beijing time on March 8, 2011.
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: +61 (2) 8823-6760
- Conference ID: 4458-8923
A live and archived webcast of the conference call will be available on the Investors section of ChinaCache's website at .
A replay of the conference call will also be available until March 14, 2011 by dialing:
- International dial-in number: +61 (2) 8235-5000
- Conference ID: 4458-8923
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 .
Statement Regarding Unaudited Financial Information
The unaudited financial information set forth above is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been completed for the Company's year-end audit, which could result in significant differences from this preliminary unaudited financial information.
*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 gross profit, 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 gross profit, 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 6.6000 as of December 31, 2010.
FINANCIAL TABLES
- Unaudited Condensed Consolidated Balance Sheets
- Unaudited Condensed Consolidated Statements of Operations
- Supplementary Financial Data
- Supplementary Operating Metrics
- Reconciliations of Non-GAAP to GAAP Financial Measures
CONTACT: For investor and media inquiries please contact: Mr. Wei AN Vice President of Corporate Communications ChinaCache International Holdings Ltd. Tel: +86 (10) 6437-3399 Email: wei.an@chinacache.com Ms. Yue YU Brunswick Group LLP Tel: +86 (10) 6566-2256 Email: chinacache@brunswickgroup.com Ms. Cindy ZHENG Brunswick Group LLP Tel: +1 (212) 333-3810 Email: chinacache@brunswickgroup.com
