Focus Media Reports First Quarter Results.docx
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FocusMediaReportsFirstQuarterResults
FocusMediaReportsFirstQuarter2007Results
FirstQuarterRevenueIncreasedby75.4%andNetIncome
Increasedby72.7%Year-over-year
SHANGHAI,China,May17/Xinhua-PRNewswire/--FocusMediaHoldingLimited(Nasdaq:
FMCN),China'slargestout-of-homemulti-platformlife-stylemediacompany,todayannounceditsunauditedfinancialresultsforthefirstquarterendedMarch31,2007.
Highlightsforfirstquarter2007:
--Totalrevenuesgrew75.4%year-over-yearto$58.1million.
--Netincomeforthefirstquarterwas$16.3millioncomparedto$9.4
millionforthethreemonthsendedMarch31,2006,growing72.7%year-
over-year.FullydilutednetincomeperADSforthefirstquarterof
2007was$0.15.FocusMediaalsoprovidesoperatingmargin,netincome
andearningsperADSonanon-GAAPbasisthatexcludenon-cashshare-
basedcompensationexpenseandacquiredintangibleassetsamortization
expensetoenableinvestorstobetterassesstheCompany'soperating
performance.Thenon-GAAPmeasuresaredescribedbelowandreconciled
tothecorrespondingGAAPmeasureinthesectionbelowtitled"Useof
non-GAAPFinancialMeasures".Netincome,excludingnon-cashshare-
basedcompensationexpensesandamortizationofacquiredintangible
assetsresultingfromacquisitions(non-GAAP)forthefirstquarterwas
$22.7millionor$0.21perfullydilutedADS.,aboveourguidancerange
of$20millionto$21million.
--OurCommercialLocationNetwork
--Advertisingservicerevenuefromourcommerciallocationnetwork,
includingrevenuefromouroutdoorLEDnetwork(alsoreferredtoas
ouriStreetNetwork)andmovietheateradvertisingnetwork,grew
50.8%year-over-yearto$32.4million.
--ForourPremierOfficeBuildingChannelA("PremierChannelA"),
averageadvertisingrevenueper30-secondequivalenttimeslot
("ASP")inFocusMedia'sTier-ICities(Beijing,Shanghai,
GuangzhouandShenzhen)was$12,092inthefirstquarter2007,down
from$13,507inthefourthquarterof2006,ascertaintimeslots
weresoldatahigherdiscountduetotheless-favorableaudience
trafficduringtheholidayseason.
--OurIn-storeNetwork
--Advertisingservicerevenuefromourin-storenetworkgrew26.1%
year-over-yearto$6.7millioninthefirstquarterof2007.
--Thetotalnumberofhypermarketscoveredbyourin-storenetworkas
ofMarch31,2007increasedto1,196from1,100asofDecember31,
2006.Substantiallyalloftherevenuefromourin-storenetwork
duringthisperiodwasderivedfromourLCDnetworkinhypermarkets.
--OurIn-elevatorPosterFrameNetwork
--Advertisingservicerevenuefromourin-elevatorposterframe
networkgrew108.8%year-over-yearto$12.7millioninthefirst
quarter2007.
--Thetotalnumberofframesavailableforsalewas124,542asof
March31,2007,ascomparedto99,784asofDecember31,2006.
--FocusMediaWireless
--AdvertisingservicerevenuefromFocusMediaWirelesswas$6.0
millioninthefirstquarter2007,ascomparedto$3.5millionin
thefourthquarter2006.
--Otherrevenues
--Inthefirstquarter2007,wederived$0.4millioninthe
advertisingequipmentsalesrevenuesfromsalestoourregional
distributorsandlicensingfeefromourpartnerinMalaysia.
Commentingonthefirstquarter2007results,ChiefExecutiveOfficerJasonJiangsaid,"Asexpected,ourbusinesseswereimpactedbytheChineseNewYearholidayinthefirstquarterof2007.However,allofourbusinesseshaspostedsolidgrowthyear-over-year.Wehavealsoseenasolidsalesreboundinsalesintothesecondquarter.Mostimportantlyduringthefirstquarterof2007,wecompletedtheacquisitionofAllyes,China'slargestinternetadvertisingagencyandtherefore,establishedasolidpositioninChina'sfastgrowingInternetadvertisingmarket.WeexpectAllyestocontributesignificantlytoourfuturegrowth."
FirstQuarterFinancialResults
Forthefirstquarterof2007,FocusMediareportedtotalrevenuesof$58.1million,anincreaseof75.4%comparedto$33.1millionforthefirstquarterof2006,butadecreaseof14.9%comparedto$68.3millionforthefourthquarterof2006,duetoindustryseasonalityandtheChineseNewYearholidayduringthefirstquarter.
CommercialLocationNetwork
Forthecommerciallocationnetwork,advertisingservicerevenue,includingrevenuefromouroutdoorLEDnetworkandmovietheateradvertisingnetwork,was$32.4millioninthefirstquarterof2007,anincreaseof50.8%from$21.5millioninthefirstquarterof2006.
Thetotalnumberofdisplaysinstalledonourcommerciallocationnetworkinourdirectlyoperatedcitieswas83,256asofMarch31,2007,increasingfrom80,263asofDecember31,2006,whilethenumberofdisplaysinnetworksoperatedbyourregionaldistributorswas4,010asofMarch31,2007.
ForourPremierChannelA,whichconsistsprimarilyoftheofficebuildinglocationsonFocusMedia'scommerciallocationnetworkpriortotheTargetMediaacquisition,thetotalnumberof30-secondequivalenttimeslotssold("SlotsSold")inthefirstquarterof2007was6,414,ascomparedto8,533inthepreviousquarter.Thenumberof30-secondequivalenttimeslotsavailableforsale("NetworkCapacity")inthefirstquarterwas16,320ascomparedto15,939inthefourthquarterof2006.SlotsSoldinTier-ICitieswere1,117inthefirstquarter2007whichimpliesasell-outrate,orSlotsSoldexpressedasapercentageofNetworkCapacity,of89.6%inthefirstquarter2007.ASPintheTier-ICitieswas$12,029inthefirstquarter2007,downfrom$13,507inthefourthquarterof2006,ascertaintimeslotsweresoldatahigherdiscountduringtheholidayperiod.AdvertisingrevenuefromTier-ICitiesforourPremierChannelAaccountsforapproximately60.2%ofthetotalPremierChannelArevenues.SlotsSoldinTier-IICitieswereto5,298inthefirstquarter2007,whichindicatesasell-outrateof35.1%.ThePremierChannelAaccountedforapproximately70%oftotalcommerciallocationadvertisingservicerevenuesinthequarterwhileotherchannels,ouroutdoorLEDnetworkandmovietheateradvertisingbusinesscontributedtheremaining30%.
Otherrevenueinthefirstquarterwas$0.4million,whichincludeadvertisingequipmentsalestoourregionaldistributorsandlicensingfeefromourpartnerinMalaysia
In-storeNetwork
Advertisingservicerevenuefromourin-storenetworkinthefirstquarter2007was$6.7million,anincreaseof26.1%from$5.3millioninthefirstquarter2006.Inthefirstquarter2007,wecontinuedtoexpandtheinstalledbaseofourhypermarketsto1,196storesfrom1,100hypermarketsasofDecember31,2006.Theinstalledbaseofsupermarketsandconveniencestoreswas842and1,897,respectively,asofMarch31,2007.Thenumberofdisplaysinstalledinourin-storenetworkincreasedto40,736asofMarch31,2007comparedto38,742asofDecember31,2006.
Forthein-storenetwork,thetotalnumberof30-secondequivalenttimeslots(onaperweekperstorebasis)soldinthefirstquarterof2007was100,322,ascomparedto97,774inthepreviousquarter.Thenumberof30-secondequivalenttimeslotsavailableforsale,ornetworkcapacity,was360,309,ascomparedto318,342inthepreviousquarter.Thenetworksell-outratewas27.8%basedontheincreasedcapacity.Averageadvertisingrevenueper30-secondequivalenttimeslotperweekperstorewas$67forthein-storenetworkinthefirstquarterof2007,ascomparedto$80asinthefourthquarterof2006duetoseasonality.
PosterFrameNetwork
Advertisingservicerevenuefromourposterframenetworkplacedprimarilyintheelevatorsofresidentialcomplexeswas$12.7millioninthefirstquarterof2007,108.8%from$6.1millioninthefirstquarterof2006.Thetotalnumberofframesavailableforsalewas124,542asofMarch31,2007,ascomparedto99,784asofDecember31,2006.Thenumberofframeslots(onamonthlybasis)soldinthefirstquarter2007increase17.2%to195,603,ascomparedto166,825inthepreviousquarter.Thenetworkcapacitycalculatedbasedonthenumberofframeslots(onamonthlybasis)availableforsaleinthefirstquarterof2007was375,346,ascomparedto294,294inthepreviousquarter.Thenetworksell-outratewas52.1%basedontheincreasedcapacity.Averageadvertisingrevenueperframeslotwas$65permonthinthefirstquarterof2007ascomparedto$83permonthinthefourthquarterof2006duetoseasonality.
AdvertisingonWirelessNetwork
AdvertisingservicerevenuefromFocusMediaWirelessinthefirstquarterof2007was$6.0million,ascomparedto$3.5millioninthefourthquarterof2006.
Inthefirstquarterof2007,forourcommerciallocationandin-storebusinesses,weaddedapproximately187newadvertisingclients,bringingthecumulativenumberofadvertisersontheFocusMediacommerciallocationnetworkandin-storenetworktoapproximately2,800.
Grossprofitforthefirstquarterof2007was$33.7million,representinganincreaseof82.1%comparedto$18.5millionforthecorrespondingperiodayearago.Grossmarginforthefirstquarterwas58.0%,ascomparedto55.8%inthefirstquarterof2006.Inthefirstquarter2007,grossmarginforthecommerciallocationnetwork(includingouroutdoorLEDnetworkandmovietheateradvertisingbusiness)was61.7%;thein-storenetworkgrossmarginwas24.7%;theposterframenetworkgrossmarginwas66.9%;FocusMediawirelessgrossmarginwas56.5%.
Inthefirst-quarterof2007,operatingexpensestotaled$20.5million,including$1.9millioninacquiredintangibleassetamortizationresultingfromacquisitionsandnon-cashshare-basedcompensationexpenseof$4.5milli