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Youku Tudou Announces First Quarter 2013 Unaudited Financial Results
Integration on Track; Multi-Screen Monetization Launched

BEIJING, May 15, 2013 /PRNewswire/ -- Youku Tudou Inc. (NYSE: YOKU, and formerly Youku Inc. or "Youku"), China's leading Internet television company ("Youku Tudou" or the "Company"), today announced its unaudited financial results for first quarter 2013.

Basis of Presentation

On August 23, 2012, the Company and Tudou Holdings Limited ("Tudou") announced the completion of the merger between Youku and Tudou. Following the completion of the merger, Tudou's financial results were consolidated into the Company from the date of the completion of the merger.

This press release includes the Company's selected unaudited pro forma combined financial information for the three months ended March 31, 2012 derived from the accompanying unaudited pro forma condensed combined statements of operations (the "Pro Forma Statement of Operations") for the three months ended March 31, 2012. The Pro Forma Statement of Operations combines the historical consolidated statements of operations of Youku and Tudou, giving effect to the merger as if it had been completed on January 1, 2012.

The Pro Forma Statement of Operations has been derived from the unaudited historical consolidated statement of operations of Youku and Tudou. Certain financial statement line items included in Tudou's historical presentation have been disaggregated or condensed to conform to corresponding financial statement line items included in Youku's historical presentation. These include: business taxes, value-added tax, share based compensation expenses, selling and general administrative expenses relating to product development, professional licensed content, and intangible assets related to purchased software.

Additionally, based on Youku's review with Tudou management of Tudou's publicly disclosed summary of significant accounting policies prior to the merger, the nature and amount of any adjustments to the historical statements of operations to conform its accounting policies to those of Youku's are not material.

First Quarter Highlights[1]

  • Consolidated net revenues were RMB516.0 million (US$83.1 million),a 21% increase from the pro forma combined net revenues for the corresponding period in 2012.
  • Consolidated gross profit was RMB14.2 million (US$2.3 million), as compared to the pro forma combined gross loss of RMB43.5 million (US$7.0 million) for the corresponding period in 2012. Consolidated or pro forma combined non-GAAP gross profit or loss is herein defined as consolidated or pro forma combined gross profit or loss excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content.  Consolidated non-GAAP gross profit was RMB28.2 million (US$4.5 million), as compared to the pro forma combined non-GAAP loss of RMB16.6 million (US$2.7 million) for the corresponding period in 2012.  
  • Consolidated net loss was RMB232.5 million (US$37.4 million), a 12% decrease from the pro forma combined net loss for the corresponding period in 2012. Consolidated or pro forma combined non-GAAP net loss is herein defined as consolidated or pro forma combined net loss excluding share-based compensation expenses, amortization of intangible assets from business combination and business combination related expenses. Consolidated non-GAAP net loss was RMB182.1 million (US$29.3 million), a decrease of 8% from the pro forma combined non-GAAP net loss for the corresponding period in 2012.
  • Consolidated basic and diluted loss per ADS, each representing 18 Class A ordinary shares, amounted to RMB1.42 (US$0.23) and RMB1.42 (US$0.23), respectively.
  • Consolidated cash, cash equivalents, restricted cash and short-term investments totaled RMB3.5 billion (US$569.5 million) as of March 31, 2013.
  • Consolidated acquisition of property and equipment was RMB27.4 million (US$4.4 million).
  • Consolidated acquisition of intangible assets was RMB238.9 million (US$38.5 million).

[1]

The reporting currency of the Company is Renminbi ("RMB"), but for the convenience of the reader, the amounts presented throughout the release are in US dollars ("US$"). Unless otherwise noted, all conversions from RMB to US$ are made at a rate of RMB6.2108 to US$1.00, the effective noon buying rate as of March 29, 2013 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.

"I am pleased with our progress. We are in the final phase of the merger integration process with Tudou and have completed the restructuring of our sales team in the first quarter. Our combined sales team is positively impacting demand and our increased scale is helping us to optimize our cost structure," said Victor Koo, Chairman and Chief Executive Officer of Youku Tudou. "The three key video mobile traffic metrics all recorded exciting growth in the first quarter and now we have over 100 million active monthly users, over 170 million daily video views and over 70 minutes average daily user time spent. We are emerging as the leading multi-screen online video platform in China as a result of this rapid rise in mobile traffic. Youku Tudou is developing product, content, marketing solutions and paid services across different screens to capitalize on the growing popularity of multi-screen video viewing behavior."

Dele Liu, President of Youku Tudou, added, "We recently adjusted our organizational structure to encourage unity, flexibility, and innovation and to cement our leadership in the evolving Internet space. Under the new group structure, we can further differentiate the brands, content and products of our Youku and Tudou platforms to elevate the entire group's media value. Our content strategy is to decrease our dependence on premium licensed content while strengthening in-house production and user-generated content. We will take a balanced approach and continue to deliver high-impact self-produced content that strengthens brand identity for Youku and Tudou, enhances social media value and supports our content marketing solutions."

First Quarter 2013 Results

Consolidated net revenues were RMB516.0 million (US$83.1 million) in the first quarter of 2013, a 21% increase from the pro forma combined net revenues for the corresponding period in 2012 and meeting the consolidated net revenues guidance previously announced by the Company. Consolidated advertising net revenues were RMB429.1 million (US$69.1 million), meeting the consolidated advertising net revenues guidance previously announced by the Company. The growth was primarily attributable to the increased use by brand advertisers of our advertising services as evidenced by an increase in the number of advertisers and the rising average spend per advertiser.

Consolidated bandwidth costs as a component of consolidated cost of revenues were RMB161.0 million (US$25.9 million) in the first quarter of 2013, representing 31% of the consolidated net revenues, as compared to the pro forma combined bandwidth costs of RMB184.7 million (US$29.7 million), representing 43% of the pro forma combined net revenues for the corresponding period in 2012.

Consolidated content costs as a component of consolidated cost of revenues were RMB269.3 million (US$43.4 million) in the first quarter of 2013, representing 52% of the consolidated net revenues, as compared to the pro forma combined content costs representing 52% of the pro forma combined net revenues for the corresponding period in 2012. Consolidated non-GAAP content costs, which is herein defined as consolidated content costs excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content, were RMB255.3 million (US$41.1 million) in the first quarter of 2013, representing 49% of consolidated net revenues, as compared to the pro forma combined non-GAAP content costs of RMB195.1 (US$31.4 million), representing 46% of the pro forma combined net revenues for the corresponding period in 2012. Consolidated in-house content production cost and investment in TV serial dramas production was RMB46.6 million (US$7.5 million) in the first quarter of 2013, as compared to RMB40.9 million (US$6.6 million) of the pro forma combined in-house content production cost for the corresponding period in 2012.

Consolidated gross profit was RMB14.2 million (US$2.3 million)in the first quarter of 2013, as compared to the pro forma combined gross loss of RMB43.5 million (US$7.0 million) for the corresponding period in 2012.  Consolidated non-GAAP gross profit was RMB28.2 million (US$4.5 million) in the first quarter of 2013, representing 5% of consolidated net revenues, as compared to the pro forma combined non-GAAP gross loss of RMB16.6 million (US$2.7 million), representing negative 4% of the pro forma combined net revenues for the corresponding period in 2012.

Consolidated operating expenses were RMB267.8 million (US$43.1 million) in the first quarter of 2013, as compared to RMB230.5 million (US$37.1 million) of the pro forma combined operating expenses for the corresponding period in 2012. Consolidated non-GAAP operating expenses, which is herein defined as consolidated operating expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to customer relationship, technology and non-compete provisions, were RMB231.4 million (US$37.3 million) in the first quarter of 2013, an increase of 22% compared to RMB189.1 million (US$30.4 million) of the pro forma combined non-GAAP operating expenses for the corresponding period in 2012. Detailed discussion of each component of consolidated operating expenses is as follows:

Consolidated sales and marketing expenses were RMB127.6 million (US$20.5 million) in the first quarter of 2013, as compared to RMB110.7 million (US$17.8 million) of the pro forma combined sales and marketing expenses for the corresponding period in 2012. Consolidated non-GAAP sales and marketing expenses, which is herein defined as consolidated sales and marketing expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to customer relationship, were RMB115.5 million (US$18.6 million) in the first quarter of 2013, an increase of 10% compared to RMB104.5 million (US$16.8 million) of the pro forma combined non-GAAP sales and marketing expenses for the corresponding period in 2012. This increase was primarily due to higher commission expenses paid to our sales force in line with our revenue growth.

Consolidated product development expenses were RMB56.8 million (US$9.2 million) in the first quarter of 2013, as compared to RMB48.1 million (US$7.7 million) of the pro forma combined product development expenses for the corresponding period in 2012. Consolidated non-GAAP product development expenses, which is herein defined as consolidated product development expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to technology, were RMB48.5 million (US$7.8 million) in the first quarter of 2013, an increase of 11% compared to RMB43.7 million (US$7.0 million) of the pro forma combined non-GAAP product development expenses for the corresponding period in 2012. This increase was primarily due to higher personnel related expenses for our product development in mobile, search, social and paid-services.

Consolidated general and administrative expenses were RMB83.4 million (US$13.4 million) in the first quarter of 2013, as compared to RMB71.8 million (US$11.6 million) of the pro forma combined general and administrative expenses for the corresponding period in 2012. Consolidated non-GAAP general and administrative expenses, which is herein defined as consolidated general and administrative expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to non-compete provisions, were RMB67.5 million (US$10.9 million) in the first quarter of 2013, an increase of 65% compared to RMB41.0 million (US$6.6 million) of the pro forma combined non-GAAP general and administrative expenses for the corresponding period in 2012. This increase was primarily due to additional rental and depreciation expenses relating to the relocation of our offices due to the merger. 

Consolidated net loss was RMB232.5 million (US$37.4 million) in the first quarter of 2013, a decrease of 12% compared to RMB265.5 million (US$42.7 million) of the pro forma combined net loss for the corresponding period in 2012. Consolidated non-GAAP net loss was RMB182.1 million (US$29.3 million) in the first quarter of 2013, a decrease of 8% compared to RMB197.2 million (US$31.8 million) of the pro forma combined non-GAAP net loss for the corresponding period in 2012.

Consolidated non-GAAP adjusted EBITDA loss, which is herein defined as consolidated or pro forma combined net loss before income taxes, interest expenses, interest income, depreciation and amortization (excluding amortization of acquired content), further adjusted for share-based compensation expenses, amortization of intangible assets from business combination, business combination related expenses and other non-operating items, was RMB176.4 million (US$28.4 million) in the first quarter of 2013, a decrease of 3% compared to RMB182.1 million (US$29.3 million) of the pro forma combined non-GAAP adjusted EBITDA loss for the corresponding period in 2012.

Business Outlook

For the second quarter of 2013, the Company expects consolidated net revenues will be between RMB720 million and RMB770 million, with consolidated advertising net revenues contributing between RMB700 million and RMB740 million. This forecast reflects the Company's current and preliminary view, which is subject to change.

Conference Call Information

Youku Tudou's management will host an earnings conference call at 9:00 p.m. U.S. Eastern Time on May 15, 2013 (9:00 a.m. Beijing/Hong Kong Time on May 16, 2013).

Interested parties may participate in the conference call by dialing one of the following numbers below and entering passcode Youku# (i.e., 96858#) starting 10-15 minutes prior to the beginning of the call.

US Toll Free Dial In: +1-866-519-4004
International Dial In: +65-6723-9381
Mainland China Dial In: +86-400-620-8038 / +86-800-819-0121
Hong Kong Dial In: +852-2475-0994

A replay of the call will be available by dialing +1-855-452-5696 and entering passcode 70542361#. The replay will be available through May 23, 2013.

This call will be webcast live and the replay will be available for 12 months. Both will be available on the Investor Relations section of Youku Tudou's corporate website at http://ir.youku.com.

About Youku Tudou Inc.

Youku Tudou Inc. (NYSE: YOKU) is China's leading Internet television company. Its Youku and Tudou Internet television platforms enable users to search, view and share high-quality video content quickly and easily across multiple devices. Its Youku brand and Tudou brand are among the most recognized online video brands in China. Youku Tudou's American depositary shares, each representing 18 of Youku Tudou's Class A ordinary shares, are traded on the NYSE under the symbol "YOKU."

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Youku Tudou's strategic and operational plans, contain forward-looking statements. Youku may also make written or oral forward-looking statements in its filings with the U.S. Securities and Exchange Commission ("SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Youku Tudou's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our goals and strategies; our future business development, financial condition and results of operations; the expected growth of the online video market in China; our expectations regarding demand for and market acceptance of our services; our expectations regarding the retention and strengthening of our relationships with key advertisers and customers; our plans to enhance user experience, infrastructure and service offerings; competition in our industry in China; and relevant government policies and regulations relating to our industry. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Youku does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Youku Tudou's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Youku Tudou uses the following measures defined as non-GAAP financial measures by the SEC in evaluating its business: consolidated non-GAAP content costs, consolidated non-GAAP gross profit or loss, consolidated non-GAAP operating expenses, consolidated non-GAAP sales and marketing expense, consolidated non-GAAP product development expenses, consolidated non-GAAP general and administrative expenses, consolidated non- GAAP profit or loss from operations, consolidated non-GAAP net profit or loss and consolidated non-GAAP adjusted EBITDA profit or loss. We define consolidated non-GAAP content costs as consolidated content costs excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content. We define consolidated non-GAAP gross profit or loss as the respective nearest comparable GAAP financial measure to exclude share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content. We define consolidated non-GAAP operating expenses as operating expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to customer relationship, technology and non-compete provisions. We define consolidated non-GAAP sales and marketing expenses as consolidated sales and marketing expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to customer relationship. We define consolidated non-GAAP product development expense as consolidated product development expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to technology. We define consolidated non-GAAP general and administrative expenses as consolidated general and administrative expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to non-compete provisions. We define consolidated non-GAAP profit or loss from operations as consolidated profit or loss from operations excluding share-based compensation expenses, amortization of intangible assets from business combination and business combination related expenses. We define consolidated non-GAAP net profit or loss as consolidated net loss excluding share-based compensation expenses, amortization of intangible assets from business combination and business combination related expenses. We define consolidated non-GAAP adjusted EBITDA profit or loss as consolidated net profit or loss before income taxes, interest expenses, interest income, depreciation and amortization (excluding amortization of acquired content), further adjusted for share-based compensation expenses, amortization of intangible assets from business combination, business combination related expenses and other non-operating items.

We present non-GAAP financial measures because they are used by our management to evaluate our operating performance. We also believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies. A limitation of using non-GAAP financial measures is that non-GAAP measures exclude share-based compensation charges that have been and will continue to be significant recurring expenses in Youku Tudou's business for the foreseeable future. In addition, in this press release we also included unaudited pro forma combined non-GAAP measures for the three months ended March 31, 2012, after giving effect to the merger between Youku and Tudou as if the merger had been completed on January 1, 2012 to provide comparative reference of the corresponding consolidated non-GAAP measures of the Company for the three months ended March 31, 2012. The pro forma data is presented for informational purposes only and does not purport to be indicative of the results of future operations, or of the results that would have occurred had the merger taken place at the beginning of 2012.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP financial measures" at the end of this release.

For more information, please contact:
Ryan Cheung
Corporate Finance Director
Youku Tudou Inc.
Tel: (+8610) 5885-1881 x6090
Email: ryan.cheung@youku.com

 

 YOUKU TUDOU INC. 

 CONSOLIDATED BALANCE SHEETS 










(Amounts in thousands, except for number of shares)



For the Three Months Ended             



12/31/2012


3/31/2013





RMB


RMB


US$

ASSETS





(Unaudited)


(Unaudited)










Current assets:









 Cash and cash equivalents 



1,655,857


1,264,090


203,531


 Restricted cash 



9,003


9,013


1,451


 Short-term investments 



2,110,073


2,264,195


364,558


 Accounts receivable, net 



932,796


964,362


155,272


 Intangible assets, net 



19,607


33,190


5,344


 Deferred tax assets 



10,470


10,470


1,686


 Prepayments and other assets 



64,909


34,608


5,572

Total current assets



4,802,715


4,579,928


737,414










Non-current assets:









 Property and equipment, net 



200,681


205,385


33,069


 Intangible assets, net 



1,304,923


1,318,822


212,343


 Capitalized content production costs 



-


546


88


 Prepayments and other assets 



229,185


318,877


51,342


 Goodwill 



4,255,570


4,255,570


685,189

 Total non-current assets 



5,990,359


6,099,200


982,031










TOTAL ASSETS



10,793,074


10,679,128


1,719,445










LIABILITIES AND SHAREHOLDERS' EQUITY

















Current liabilities:









 Accounts payable 



181,878


205,556


33,097


 Advances from customers 



21,603


60,060


9,670


 Accrued expenses and other liabilities 



981,353


993,291


159,932


 Current portion of long-term debt 



7,441


4,393


707

Total current liabilities



1,192,275


1,263,300


203,406










Non-current liabilities









 Deferred tax liability 



224,374


224,374


36,126


 Other liabilities 



19,552


4,212


678

Total non-current liabilities



243,926


228,586


36,804










Total liabilities



1,436,201


1,491,886


240,210










Commitments and contingencies

















Shareholders' equity









Class A Ordinary Shares (US$0.00001 par value, 9,340,238,793 authorized, 2,286,643,502 and 2,308,183,759 issued and outstanding as of December 31, 2012 and March 31, 2013, respectively)



149


151


24


Class B Ordinary Shares (US$0.00001 par value, 659,761,207 authorized, 659,561,893 and 659,561,893 issued and outstanding as of December 31, 2012 and  March 31, 2013, respectively)



49


49


8


 Additional paid-in capital 



10,768,204


10,837,011


1,744,866


 Statutory reserves 



1,500


1,500


242


 Accumulated deficit 



(1,297,147)


(1,529,621)


(246,286)


 Accumulated other comprehensive loss 



(115,882)


(121,848)


(19,619)

Total shareholders' equity



9,356,873


9,187,242


1,479,235










TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY



10,793,074


10,679,128


1,719,445

 

 


YOUKU TUDOU INC. 
 CONSOLIDATED STATEMENTS OF OPERATIONS  



For the Three Months Ended

(Amounts in thousands, except for  number of shares and ADS and per share and per ADS data)








Pro Forma

March 31, 2012


December 31, 2012


March 31, 2013


March 31, 2013



RMB


RMB


RMB


US$



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)










Net revenues


425,441


635,831


515,997


83,080










Cost of revenues (Note 1)


(468,898)


(519,544)


(501,766)


(80,789)










Gross profit


(43,457)


116,287


14,231


2,291










Operating expenses:









       Product development


(48,064)


(64,099)


(56,828)


(9,150)

       Sales and marketing


(110,702)


(107,787)


(127,600)


(20,545)

       General and administrative


(71,780)


(73,084)


(83,350)


(13,420)

Total operating expenses


(230,546)


(244,970)


(267,778)


(43,115)










Loss from operations


(274,003)


(128,683)


(253,547)


(40,824)










Interest income


12,242


9,988


7,179


1,156

Interest expenses


(2,669)


(830)


(387)


(62)

Other, net


2,499


1,043


14,281


2,299

Total other income, net


12,072


10,201


21,073


3,393










Loss before income taxes


(261,931)


(118,482)


(232,474)


(37,431)

Income taxes


(3,576)


4,912


-


-










Net loss


(265,507)


(113,570)


(232,474)


(37,431)










Net loss per share, basic and diluted


(0.09)


(0.04)


(0.08)


(0.01)

Net loss per ADS (each ADS represents 18 class A ordinary shares),
        basic and diluted


(1.65)


(0.70)


(1.42)


(0.23)

Shares used in computation, basic and diluted


2,900,796,659


2,940,407,144


2,953,267,696


2,953,267,696

ADSs used in computation, basic and diluted


161,155,369


163,355,952


164,070,427


164,070,427

 

The accompanying notes are an integral part of the press release.




























Note 1. Cost of Revenues


 For the Three Months Ended 



Pro Forma







March 31, 2012


December 31, 2012


March 31, 2013


March 31, 2013



RMB


RMB


RMB


US$

(Amounts in thousands)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)

 Cost of revenues: 









 Value added, business taxes and surcharges 


42,835


59,337


48,925


7,877

 Bandwidth costs 


184,651


162,959


161,045


25,930

 Depreciation of servers and other equipment 


19,502


26,303


22,470


3,618

 Content costs 


221,910


270,945


269,326


43,364

 Total Cost of Revenues 


468,898


519,544


501,766


80,789

 

 

 YOUKU TUDOU INC. 

 CONSOLIDATED STATEMENTS OF CASH FLOWS 












 For the Three Months Ended 

(Amounts in thousands)









March 31, 2012


December 31, 2012


March 31, 2013


March 31, 2013






RMB


RMB


RMB


US$






(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)

Cash flows from operating activities:











Net loss




(156,125)


(113,570)


(232,474)


(37,431)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:












Depreciation




14,001


31,249


26,795


4,314


Bad debt expense




658


(1,828)


7,076


1,139


Amortization of intangible assets and capitalized content production costs




91,183


135,508


138,991


22,379


Amortization of long-term debt discounts




616


336


221


36


Gain on disposal of  property and equipment




-


-


695


112


Foreign exchange loss




189


826


325


52


Share-based compensation




23,067


38,779


37,850


6,095


Gain from remeasurement of previously held investment in acquired subsidiary




(3,344)


-


-


-


Deferred income tax benefits




-


(7,675)


-


-


Change in operating assets and liabilities:












         Restricted cash




-


(9,003)


(10)


(2)


        Accounts receivable




(2,048)


73,149


(33,644)


(5,417)


        Prepayments and other assets




11,165


(22,427)


1,347


217


        Capitalized content production costs




(5,025)


5,761


15,961


2,570


        Accounts payable




13


(22,506)


(9,864)


(1,588)


        Advances from customers




28,986


(10,812)


38,457


6,192


        Accrued expenses and other liabilities




9,349


60,886


12,468


2,008

Net cash (used in) provided by  operating activities




12,685


158,673


4,194


676













Cash flows from investing activities:












Acquisition of property and equipment




(10,069)


(24,364)


(27,364)


(4,406)


Proceeds received from maturity of short-term investments




253,673


1,170,519


36,703


5,910


Short-term investments placed with financial institutions




(254,474)


(2,113,464)


(185,590)


(29,882)


Proceeds from disposal of property and equipment




-


1


-


-


Cash acquired, net of cash paid for acquired subsidiaries




(25,778)


-


-


-


Acquisition of intangible assets from related party




-


7,200


-


-


Acquisition of intangible assets




(50,420)


(118,256)


(238,921)


(38,469)

Net cash (used in) provided by investing activities




(87,068)


(1,078,364)


(415,172)


(66,847)













Cash flows from financing activities:












Exercise of employee stock options




5,844


3,561


28,740


4,627


Proceeds from restricted cash




-


25,364


-


-


Principal repayments on long-term debt




(1,987)


(23,685)


(3,236)


(521)

Net cash (used in) provided by financing activities




3,857


5,240


25,504


4,106

Effect of exchange rate changes on cash and cash equivalents




(2,477)


(21,474)


(6,293)


(1,013)

Net (decrease) increase in cash and cash equivalents




(73,003)


(935,925)


(391,767)


(63,078)

Cash and cash equivalents at the beginning of the period




2,292,538


2,591,782


1,655,857


266,609

Cash and cash equivalents at the end of the period




2,219,535


1,655,857


1,264,090


203,531

 

 



















Reconciliations of Non-GAAP results of operations measures to the nearest comparable GAAP financial measures (1)(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"), unaudited)










 1. Non-GAAP Content Cost


 For the Three Months Ended 



Pro Forma







March 31, 2012


December 31, 2012


March 31, 2013


March 31, 2013



RMB


RMB


RMB


US$

Content cost


221,910


270,945


269,326


43,364

 Deduct: share-based compensation  


3,344


4,536


5,663


912

 Deduct: amortization of intangible assets from business combination 


23,494


8,235


8,331


1,341

Non-GAAP content cost


195,072


258,174


255,332


41,111










2. Non-GAAP Gross Profit


 For the Three Months Ended 



Pro Forma







March 31, 2012


December 31, 2012


March 31, 2013


March 31, 2013



RMB


RMB


RMB


US$

Gross profit


(43,457)


116,287


14,231


2,291

 Add back: share-based compensation  


3,344


4,536


5,663


912

 Add back: amortization of intangible assets from business combination 


23,494


8,235


8,331


1,341

Non-GAAP gross profit


(16,619)


129,058


28,225


4,544



















 3. Non-GAAP Operating Expenses


 For the Three Months Ended 



Pro Forma







March 31, 2012


December 31, 2012


March 31, 2013


March 31, 2013



RMB


RMB


RMB


US$

Operating expenses


230,546


244,970


267,778


43,115

 Deduct: share-based compensation  


19,623


34,243


32,187


5,183

 Deduct: business combination related expenses 


17,634


127


-


-

 Deduct: amortization of intangible assets from business combination 


4,176


4,176


4,155


669

Non-GAAP  operating expenses


189,113


206,424


231,436


37,263



















4. Non-GAAP Sales and Marketing Expenses


 For the Three Months Ended 



Pro Forma







March 31, 2012


December 31, 2012


March 31, 2013


March 31, 2013



RMB


RMB


RMB


US$

Sales and marketing expenses


110,702


107,787


127,600


20,545

 Deduct: share-based compensation  


4,117


10,606


10,061


1,620

 Deduct: amortization of intangible assets from business combination 


2,087


2,087


2,077


334

Non-GAAP  sales and marketing expenses


104,498


95,094


115,462


18,591



















5. Non-GAAP Product Development Expenses


 For the Three Months Ended 



Pro Forma







March 31, 2012


December 31, 2012


March 31, 2013


March 31, 2013



RMB


RMB


RMB


US$

Product development expenses


48,064


64,099


56,828


9,150

 Deduct: share-based compensation  


3,006


8,408


6,967


1,122

 Deduct: amortization of intangible assets from business combination 


1,402


1,402


1,395


225

Non-GAAP  product development expenses


43,656


54,289


48,466


7,803



















6. Non-GAAP General and Administrative Expenses


 For the Three Months Ended 



Pro Forma







March 31, 2012


December 31, 2012


March 31, 2013


March 31, 2013



RMB


RMB


RMB


US$

General and administrative expenses


71,780


73,084


83,350


13,420

 Deduct: share-based compensation  


12,500


15,229


15,159


2,441

 Deduct: business combination related expenses 


17,634


127


-


-

 Deduct: amortization of intangible assets from business combination 


687


687


683


110

Non-GAAP  general and administrative expenses


40,959


57,041


67,508


10,869










7. Non-GAAP Loss from Operations


 For the Three Months Ended 



Pro Forma







March 31, 2012


December 31, 2012


March 31, 2013


March 31, 2013



RMB


RMB


RMB


US$

Loss from operations


(274,003)


(128,683)


(253,547)


(40,824)

 Add back: share-based compensation  


22,967


38,779


37,850


6,095

 Add back: business combination related expenses 


17,634


127


-


-

 Add back: amortization of intangible assets from business combination 


27,670


12,411


12,486


2,010

Non-GAAP  loss from operations


(205,732)


(77,366)


(203,211)


(32,719)



















8. Non-GAAP  Net Loss 


 For the Three Months Ended 



Pro Forma







March 31, 2012


December 31, 2012


March 31, 2013


March 31, 2013



RMB


RMB


RMB


US$

 Net loss 


(265,507)


(113,570)


(232,474)


(37,431)

 Add back: share-based compensation  


22,967


38,779


37,850


6,095

 Add back: business combination related expenses 


17,634


127


-


-

 Add back: amortization of intangible assets from business combination 


27,670


12,411


12,486


2,010

 Non-GAAP net loss 


(197,236)


(62,253)


(182,138)


(29,326)



















9.  Non-GAAP EBITDA Loss


 For the Three Months Ended 



Pro Forma







March 31, 2012


December 31, 2012


March 31, 2013


March 31, 2013



RMB


RMB


RMB


US$

 Net loss 


(265,507)


(113,570)


(232,474)


(37,431)

 Add back: 









 Depreciation and amortization (excluding amortization 









      of acquired content ) (2)


23,653


31,263


26,810


4,317

 Interest income 


(12,242)


(9,988)


(7,179)


(1,156)

 Interest expenses 


2,669


830


387


62

 Income taxes 


3,576


(4,912)


-


-

 EBITDA loss 


(247,851)


(96,377)


(212,456)


(34,208)










 Adjustments: 









 Share-based compensation  


22,967


38,779


37,850


6,095

 Business combination related expenses 


17,634


127


-


-

 Amortization of intangible assets from business combination 


27,670


12,411


12,486


2,010

 Others, net 


(2,499)


(1,043)


(14,281)


(2,299)

Non-GAAP EBITDA loss


(182,079)


(46,103)


(176,401)


(28,402)



















(1)     For more information on the Non-GAAP financial measures, please see the section captioned "About Non-GAAP Financial Measures" in this earnings
release.

(2)    The amortization expense was related to an advertising license acquired in April 2010. The amortization of acquired content was not treated as a Non-GAAP adjustment.

 

SOURCE Youku Tudou Inc.