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China Finance Online Reports Fourth Quarter and Fiscal Year 2013 Unaudited Financial Results

- Net revenues increased 400% Y-O-Y in Q4 and 76% in full year -

BEIJING, April 3, 2014 /PRNewswire/ -- China Finance Online Co. Limited ("China Finance Online", or the "Company", "we", "us" or "our") (NASDAQ GS: JRJC), a technology-driven, and user-focused market leader in China providing vertically integrated financial information and services, today announced its unaudited financial results for the fourth quarter and fiscal year 2013 ended on December 31, 2013.

2013 Fourth Quarter Financial Summary

  • Net revenues were $25.8 million, representing a year-over-year increase of 400% from $5.2 million for the fourth quarter of 2012, and a quarter-over-quarter increase of 96% from $13.2 million for the third quarter of 2013;
  • Gross profit was $21.3 million, representing a year-over-year increase of 531% from $3.4 million for the fourth quarter of 2012, and a quarter-over-quarter increase of 88% from $11.4 million in the third quarter of 2013;
  • Net income attributable to China Finance Online was $1.6 million, compared with a net loss of $4.9 million for the fourth quarter of 2012 and a net loss of $1.6 million for the third quarter of 2013.

2013 Fiscal Year Financial Summary

  • Net revenues were $52.1 million, representing an increase of 76% from $29.6 million for fiscal year 2012;
  • Gross profit was $41.5 million, representing an increase of 93% from $21.5 million for fiscal year 2012;
  • Net loss attributable to China Finance Online was $8.8 million.

"We are very excited that our strategic transition has finally taken shape as we not only significantly grew our top line but also returned to profitability in the fourth quarter. In the past three years, we focused on improving our business fundamentals and maintaining relationships with our online audience, while exploring viable new business opportunities to monetize our large user base. Now that our business model has evolved from providing financial information to providing financial services, we look forward to continuing to serve an increasingly large group of affluent Chinese investors."

"We have accumulated significant experience and an invaluable customer base through directly servicing Chinese investors for more than ten years. Our regional offices cover all major investment centers in China, and our sales and marketing team is one of the most effective in the industry. With our new business model, we are equipping our seasoned customer specialists with new technology, tools and financial knowledge to better serve our clients."

"Against an inflationary macro environment where the stock market remains weak and the real estate market is policy-influenced, investors are increasingly looking for more diversified investment categories to help preserve and grow their personal wealth. We strive to provide a full suite of investment products to help clients achieve their financial goals. Through Yinglibao, an internet-based financial platform, we provide cash management solutions which generate higher returns than the current one-year bank demand deposit rate, while also enabling users to purchase mutual fund products. Our precious metal trading service enables investors to tap into alternative investment areas. We will continuously expand the types of investment products available to our clients so as to perfect our one-stop solution to clients."

2013 Fourth Quarter Results

Net revenues for the fourth quarter of 2013 increased by 400% year-over-year to $25.8 million from $5.2 million in the fourth quarter of 2012, and up 96% quarter-over-quarter from $13.2 million in the third quarter of 2013. The Company has re-categorized the components of its net revenues to better reflect the evolving nature of its businesses since the second quarter of 2013. The Company's net revenues have been re-categorized under: (a) revenues from financial information and advisory business, which include subscription fees from individual customers and institutional customers; (b) revenues from financial services, which include Hong Kong brokerage-related revenues and our precious metal trading service; and (c) advertising revenues. During the fourth quarter of 2013, revenues from financial services, revenues from financial information and advisory business and advertising revenues each contributed 76%, 11% and 10% of the total revenues, respectively, compared with 11%, 67% and 22%, respectively, for the fourth quarter in 2012.

Revenues from financial services were $19.7 million compared with $0.6 million in the fourth quarter of 2012, and up from $8.9 million in the third quarter of 2013, mainly driven by better operating performances in precious metal trading service. Revenues from the financial information and advisory business were $2.9 million compared with $3.5 million in the fourth quarter of 2012, but up from $2.8 million in the third quarter of 2013. Revenues from advertising were $2.5 million compared with $1.1 million in the fourth quarter of 2012, and up from $1.2 million in the third quarter of 2013.

Gross profit increased by 531% year-over-year to $21.3 million from $3.4 million for the fourth quarter in 2012, and up 88% from $11.4 million in the third quarter of 2013. Gross margin for the fourth quarter of 2013 was 82.7% compared with 65.5% for the fourth quarter of 2012, and 86.4% in the third quarter of 2013. The decrease in gross margin on a sequential basis was mainly due to the increase in commission rebates paid to the sales agents of our precious metal trading business.

General and administrative ("G&A") expenses for the fourth quarter of 2013 were $5.3 million, or 20.4% of net revenues, compared with $3.1 million, or 59.8% of net revenues for the fourth quarter in 2012, and $3.9 million, or 29.6% of net revenues for the third quarter of 2013. The increase in G&A expenses in absolute value was mainly due to higher share based compensation expenses.

Sales and marketing expenses for the fourth quarter of 2013 were $15.5 million, or 60.1% of net revenues, compared with $3.2 million, or 61.6% in the fourth quarter of 2012 and $7.4 million, or 56.4% in the third quarter of 2013. The increase in sales and marketing expenses was mainly due to higher headcount related expenses and marketing expenses.

Product development expenses for the fourth quarter of 2013 were $2.2 million, or 8.6% of net revenues, compared with $2.2 million, or 42.7% of net revenues for the fourth quarter in 2012, and $2.4 million, or 18.1% of net revenues in the third quarter of 2013. The Company expects to continue to invest in its data, product and technical capabilities to achieve the Company's long term strategic plan.

Total operating expenses for the fourth quarter of 2013 were $23.0 million, compared with $8.5 million in the fourth quarter of 2012, and $13.7 million in the third quarter of 2013.

Net income attributable to China Finance Online for the fourth quarter of 2013 was $1.6 million, compared with a net loss of $4.9 million in the fourth quarter of 2012, and a net loss of $1.6 million in the third quarter of 2013. During the fourth quarter of 2013, the Company sold its investment in a real estate project at an investment gain of $2.8 million. Basic and diluted weighted average number of ordinary shares in the fourth quarter of 2013 were 109 million and 119 million, respectively. Each ADS represented five ordinary shares of the Company.

2013 Fiscal Year Financial Result

Total net revenues increased by 76% year-over-year to $52.1 million from $29.6 million in fiscal 2012. Gross profit increased by 93% year-over-year to $41.5 million from $21.5 million in fiscal 2012. Gross margin was 79.7% for the fiscal year of 2013. Net loss attributable to the Company for the fiscal year of 2013 was $8.8 million.

As of December 31, 2013, total cash and cash equivalents were $36.4 million. Accounts receivables from the non-margin related business were $15.4 million, while iSTAR Finance had margin-related accounts receivables of $6.0 million. iSTAR Finance continues to implement strict margin account screening and ongoing monitoring to ensure the safe return of capital.

The total shareholders' equity of China Finance Online was $75.6 million as of December 31, 2013.

Conference Call Information

The Company will host a conference call and a simultaneous webcast on April 3, 2014 at 8:00 p.m. Eastern Time/April 4, 2014 8:00 a.m. Beijing Time. Interested parties may participate in the conference call by dialing approximately five minutes before the call start time at U.S. +1-877-847-0047, Hong Kong +852-3006-8101, Singapore 8008-523-396, or China 800-876-5011, and the pass code for all regions is 705569.

A replay of the conference call will be available shortly after the conclusion of the event through 12:00 a.m. Eastern Time on April 11, 2014 (or 12:00 p.m. Beijing Time on April 11, 2014). The dial-in details for the replay: U.S. +1-866-572-7808, Hong Kong +852-3012-8000, Singapore 800-101-2157, China 800-876-5013. Access code: 705569.

The conference call will be available as a live webcast and replay at: http://www.media-server.com/m/p/7mpvivv5

About China Finance Online

China Finance Online Co. Limited is a technology-driven, user-focused market leader in China in providing vertically integrated financial information and services. The Company's two prominent flagship portal sites, www.jrj.com and www.stockstar.com, have attracted a large population of individual investors. The Company offers basic software, information services and securities investment advisory services to individual investors. Through its subsidiary, Genius, the Company provides financial database and analytics to institutional customers including domestic financial, research, academic and regulatory institutions. Leveraging on its robust internet capabilities and registered user base, China Finance Online is developing comprehensive financial services including securities and futures brokerage services in Hong Kong and precious metal trading services in China.

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in 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, this release contains the following forward-looking statements regarding:

  • our product upgrade and strategic transformation initiative;
  • our prospect on the newly launched internet-based financial platform "Yinglibao";
  • our prospect on the growth of our precious metals trading services;
  • our prospect on stabilization in cash attrition and improvement of our financial position;
  • our initiatives to address customers' demand for intuitive online investment platforms and alternative investment opportunities; and
  • the market prospect of the business of securities investment advisory and wealth management.

Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which risks and uncertainties include, among others, the following:

  • the changing customer needs, regulatory environment and market condition that we are subject to;
  • the uneven condition of the world and Chinese economy that could lead to volatility in the equity markets and affect our operating results in the coming quarters;​
  • the impact of the changing conditions of the Chinese stock market, Hong Kong stock market and global financial market on our future performance;
  • the unpredictability of our strategic transformation and growth of new businesses, including our precious metal trading service;
  • the prospect of our margin-related business and the degree to which our implementation of margin account screening and ongoing monitoring will yield successful outcome;
  • the degree to which our strategic collaborations with partners will yield successful outcome;
  • the prospect for China's high-net-worth and middle-class households;
  • the prospect of equipping our customer specialists with new technology, tools and financial knowledge;
  • the competition we are facing in the new business of securities investment advisory and wealth management, including cash management solutions and mutual fund distribution, such as Yinglibao;
  • the unpredictability of our investment in the real estate project in Langfang City of Hebei Province;
  • wavering investor confidence that could impact our business; and​
  • possible non-cash goodwill, intangible assets and investment impairment may adversely affect our net income.​

Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F under "Forward-Looking Information" and "Risk Factors". The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

Contact:

Julie Zhu
China Finance Online Co. Limited
+86-10-5832-5288
[email protected]

Shiwei Yin
Grayling
646-284-9474
[email protected]

Tables follow

 

China Finance Online Co. Limited

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars)


Dec. 31, 2013

Dec. 31, 2012

Assets



Current assets:



Cash and cash equivalents

36,371

40,906

Restricted cash

4

28,874

Trust bank balances held on behalf of customers

9,999

8,812

Accounts receivable, net - Others

15,398

4,971

Accounts receivable, net - Margin clients

5,977

15,054

Loan receivable

-

1,206

Short-term investments

-

2,640

Prepaid expenses and other current assets

27,090

2,780

Advances to employees

-

1,056

Deferred tax assets, current

1,284

392

Total current assets

96,123

106,691

Cost method investment

1,139

802

Property and equipment, net

3,868

4,914

Acquired intangible assets, net

7,545

4,676

Rental deposits

1,115

752

Goodwill

16,974

3,049

Deferred tax assets, non-current

94

201

Guarantee fund deposits

6,877

287

Total assets

133,735

121,372

Liabilities and equity



Current liabilities:



Deferred revenue, current (including

deferred revenue, current of the consolidated

variable interest entities without recourse

to China Finance Online Co. Limited $3,808 and

$3,793 as of December 31,2013 and December

31,2012, respectively)

6,150

7,551

Accrued expenses and other current

liabilities (including accrued expenses and

other current liabilities of the consolidated

variable interest entities without recourse

to China Finance Online Co. Limited $7,460 and

$2,731 as of December 31,2013 and December 31,

2012, respectively)

9,696

5,391

Short-term loan(including short-term loan of

the consolidated variable interest entities

without recourse to China Finance Online Co.

Limited nil and nil as of December 31,2013 and

December 31, 2012, respectively)

-

13,546

Amount due to customers for trust bank

balances held on behalf of

customers (including amount due to customers

for trust bank balances held on behalf of

customers of the consolidated variable

interest entities without recourse to China

Finance Online Co. Limited $648 and nil as of

December 31,2013 and December 31, 2012,

respectively)

9,999

8,812

Accounts payable (including accounts payable

of the consolidated variable interest

entities without recourse to China Finance

Online Co. Limited $6,272 and $141 as of

December 31,2013 and December 31, 2012,

respectively)

13,324

805

Deferred tax liability, current (including

deferred tax liability, current of the

consolidated variable interest entities

without recourse to China Finance Online Co.

Limited $325 and $140 as of December 31,2013

and December 31, 2012, respectively)

325

140

Income taxes payable (including income taxes

payable of the consolidated variable interest

entities without recourse to China Finance

Online Co. Limited $414 and $8 as of December

31,2013 and December 31,2012, respectively)

459

88

Total current liabilities

39,953

36,333

Deferred tax liability, non-current

(including deferred tax liabilities,

non-current of the consolidated variable

interest entities without recourse to China

Finance Online Co. Limited $1,886 and $1,169

as of December 31,2013 and December 31, 2012,

respectively)

1,886

1,169

Deferred revenue, non-current (including

deferred revenue, non-current of the

consolidated variable interest entities

without recourse to China Finance Online Co.

Limited $633 and $1,062 as of December 31,2013

and December 31,2012, respectively)

1,986

3,155

Total liabilities

43,825

40,657

Noncontrolling interests

14,358

751

Total China Finance Online Co. Limited Shareholders' equity

75,552

79,964

Total liabilities and equity

133,735

121,372

 

China Finance Online Co. Limited

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands of U.S. dollars, except share and ADS related data)


Three months ended

The year ended


Dec. 31,
2013

Dec. 31,
2012

Sep. 30,
2013

Dec. 31,
2013

Dec. 31,
2012

Net revenues

25,807

5,162

13,162

52,064

29,599

Cost of revenues

(4,476)

(1,779)

(1,794)

(10,570)

(8,090)

Gross profit

21,331

3,383

11,368

41,494

21,509

Operating expenses






General and administrative(includes

share-based compensation expenses

of $2,120, $196,$535,$2,985 and

$765, respectively)

(5,259)

(3,086)

(3,901)

(15,210)

(11,387)

Sales and marketing (includes

share-based compensation expenses

of $6, $6, $4, $10 and $26,

respectively)

(15,519)

(3,179)

(7,422)

(30,588)

(13,072)

Product development (includes

share-based compensation expenses

of $22, $3, $18, $40 and $12,

respectively)

(2,228)

(2,202)

(2,382)

(9,033)

(10,736)







Total operating expenses

(23,006)

(8,467)

(13,705)

(54,831)

(35,195)

Government subsidies

-

2

11

11

75

Loss from operations

(1,675)

(5,082)

(2,326)

(13,326)

(13,611)

Interest income

424

516

335

1,341

3,176

Interest expense

(1)

(87)

(135)

(196)

(517)

Investment gain, net

2,855

25

89

2,906

434

Other income(loss), net

337

(651)

(209)

(29)

(634)

Exchange gain, net

148

248

85

557

73







Income (loss) before income tax

(expenses)

2,088

(5,031)

(2,161)

(8,747)

(11,079)

Income tax benefits (expenses)

546

77

243

68

(884)







Net income (loss)

2,634

(4,954)

(1,918)

(8,679)

(11,963)

Less: Net income (loss)

attributable to the noncontrolling

interest

994

(88)

(340)

111

(104)

Net income (loss) attributable to

China Finance Online Co. Limited

1,640

(4,866)

(1,578)

(8,790)

(11,859)







Net income (loss)

2,634

(4,954)

(1,918)

(8,679)

(11,963)

Changes in foreign currency

translation adjustment

382

534

468

1,193

131

Net unrealized gain (loss) on

available-for-sale securities, net

of tax effects of $(4), nil, nil,

nil and $6, respectively

(11)

-

-

-

32

Other comprehensive income, net of

tax

371

534

468

1,193

163

Comprehensive income (loss)

3,005

(4,420)

(1,450)

(7,486)

(11,800)

Less: comprehensive income (loss)

attributable to non-controlling

interest

994

(88)

(340)

111

(104)

Comprehensive income (loss)

attributable to China Finance

Online Co. Limited

2,011

(4,332)

(1,110)

(7,597)

(11,696)







Net income (loss)per share

attributable to China Finance

Online Co. Limited






Basic

0.02

(0.04)

(0.01)

(0.08)

(0.11)

Diluted

0.01

(0.04)

(0.01)

(0.08)

(0.11)

Net income (loss) per ADS

attributable to China Finance

Online Co. Limited






Basic

0.08

(0.22)

(0.07)

(0.40)

(0.54)

Diluted

0.07

(0.22)

(0.07)

(0.40)

(0.54)

Weighted average ordinary shares






Basic

109,060,617

108,986,666

109,006,101

109,019,513

108,983,249

Diluted

118,921,336

108,986,666

109,006,101

109,019,513

108,983,249

Weighted average ADSs






Basic

21,812,123

21,797,333

21,801,220

21,803,903

21,796,650

Diluted

23,784,267

21,797,333

21,801,220

21,803,903

21,796,650

 

SOURCE China Finance Online Co. Limited

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