China IDC circle reported on August 21 that Lanxun Communication (Nasdaq: CCIH) today released its unaudited financial report for the second quarter of fiscal year 2015 as of June 30, 2015. Lanxun Communication's net revenue in the second quarter was 353.3 million yuan (about 57 million dollars), up 2.0 percent over the same period last year
Main performance in the second quarter of 2015:
Lanxun Communication's net revenue in the second quarter was 353.3 million yuan (about $57 million), an increase of 2.0% over the same period last year. Lanxun Communication's gross profit in the second quarter was 96.8 million yuan (about $15.6 million), a decrease of 6.8% over the same period last year. Lanxun Communication's adjusted profit before interest, tax, depreciation and amortization in the second quarter (not calculated according to the U.S. GAAP) It was 41.8 million yuan (about 6.7 million dollars), an increase of 46.6% over the same period of last year. In the second quarter of 2014, the adjusted profit before interest, tax, depreciation and amortization (not calculated according to the U.S. GAAP) was 28.5 million yuan. The adjusted net profit in the second quarter (not calculated according to the U.S. GAAP) was 4 million yuan (about 600000 dollars), and the adjusted net profit in the second quarter of 2014 (not calculated according to the U.S. GAAP) was 11.6 million yuan. In the second quarter, the basic and diluted profits of each ADS of LanXun Communication (not calculated according to the U.S. GAAP) were 0.15 yuan (about 0.02 dollars).
Wang Song, the founder, chairman and CEO of Lanxun Communication, commented, "During the first half of 2015, our company made important progress in customer expansion, infrastructure upgrading and mobile Internet, and further improved operational efficiency. With the continuous development of the company's CDN business, we must continue to upgrade infrastructure and optimize services. Although some of the platform problems we are facing have a certain impact on the company's revenue in the near future, we are confident that LanXun's continuous strategic investment in innovative solutions will create unique value for customers, ensure the best service and bandwidth optimization, and consolidate the company's leading position in the CDN service industry. We will try our best to make continuous progress and continue to be reliable partners for customers, shareholders and employees.
Financial analysis of the second quarter
Lanxun Communication's net revenue in the second quarter was 353.3 million yuan (about 57 million dollars), down 2.9% from the previous quarter and up 2.0% from the same period in 2014
Lanxun Communication's revenue cost in the second quarter was 255.5 million yuan (about 41.4 million U.S. dollars), basically the same as that in the previous quarter, with an increase of 5.8 percent over the same period in 2014
The gross profit rate of Lanxun Communication in the second quarter was 27.4%, lower than 29.5% in the previous quarter, and 30.0% in the same period of 2014. The gross profit rate of Lanxun Communication in the second quarter was 27.7%, while the gross profit rate of the previous quarter was 29.9%, In the same period of 2014, it was 30.1%. The decrease in gross profit margin was mainly due to the expenditure on purchasing consumable hardware equipment required for platform upgrading.
The sales and marketing expenses of LanXun Communication in the second quarter were 25.5 million yuan (about 4.1 million dollars), accounting for 7.2% of the net revenue, down 19.8% from the previous quarter and 27.8% from the same period in 2014. The decrease in sales and marketing expenses was mainly due to the improvement of operating efficiency and effective cost control.
In the second quarter, Lanxun Communications spent 54.5 million yuan (about 8.8 million dollars) on management and administration, accounting for 15.4 percent of its net revenue, up 9.7 percent from the previous quarter and 45.5 percent from the same period in 2014
The R&D expenditure of Lanxun Communication in the second quarter was 26.8 million yuan (about 4.3 million dollars), accounting for 7.6% of the net revenue, basically the same as the previous quarter, down 10.7% from the same period in 2014. The decrease in R&D expenditure from the same period in 2014 was mainly due to increased investment in infrastructure development in 2014.
Not in accordance with the general accounting standards of the United States, and not included in equity incentive expenses and exchange gains and losses, the adjusted EBITDA (profit before interest, tax, depreciation and amortization) of Lanxun Communication in the second quarter was 41.8 million yuan (about 6.7 million dollars), down 15.8% from the previous quarter, which was 49.7 million yuan. Compared with the same period last year, it increased by 46.6% to 28.5 million yuan in 2014.
The operating loss of LanXun Communication in the second quarter was 10 million yuan (about 1.6 million dollars), the operating loss in the last quarter was 1.1 million yuan, and the operating profit in the same period of 2014 was 1 million yuan. Not following the U.S. GAAP and excluding the impact of equity incentive expenses, Lanxun Communication's operating profit in the second quarter was 1.5 million yuan (about 200000 dollars), down 89.1% from the previous quarter and 62.8% from the same period last year
The income tax income of LanXun Communication in the second quarter was 3 million yuan (about 500000 dollars), the income tax expense in the previous quarter was 500000 yuan, and the income tax income in the same period of 2014 was 3.6 million yuan.
The net loss of LanXun Communication in the second quarter of 2015 was 7.3 million yuan (about 1.2 million dollars), the net loss in the previous quarter was 5.2 million yuan, and the net profit in the same period of 2014 was 6.9 million yuan. The basic and diluted net value of each ADR is 0.28 yuan (about 0.05 dollars). Each ADR is equal to 16 ordinary shares.
Not in accordance with the general accounting standards of the United States, not included in equity incentive expenses and exchange gains and losses, and uncertain tax obligations, Lanxun Communication's adjusted net profit in the second quarter of 2014 was 4 million yuan (about 600000 dollars), which was 61.3% lower than the previous quarter and 65.1% lower than the same period in 2014
In the second quarter of 2015, the basic and diluted net profit per ADS not adjusted in accordance with the U.S. GAAP was 0.15 yuan (about 0.02 U.S. dollars).
Balance sheet
As of June 30, 2015, the total amount of cash and cash equivalents held by LanXun Communication was 649.5 million yuan (about 104.8 million dollars), compared with 375.9 million yuan as of December 31, 2014. The capital expenditure in the second quarter of 2015 was 2520 yuan (about 4.1 million dollars).
2015 Annual Performance Expectation
Lanxun Communications estimates that the annual net revenue in fiscal year 2015 will be 1.40 billion yuan to 1.47 billion yuan.
This expectation reflects the current view of the company and may change.
Teleconferencing
After the release of the financial report, Lanxun Communication is scheduled to hold a teleconference at 20:00 on August 20 (8:00 on August 21, Beijing time). The management of LanXun Communication will attend the conference call, interpret the key points of the financial report, and answer the questions of analysts and investors. To listen to Lan Xun's telephone conference call, American investors can call+1 (845) 675-0438, Hong Kong investors can call+852 3018-6776, international investors can call+65 6713-5440, and Chinese investors can call 400-1200-654. The passwords are "4554880".
Investors can also log on to the investor relations channel of the LanXun communication website en.chinacache.com to listen to the webcast and recording of the teleconference.
Before August 26, EST, American investors can call+1 (855) 452-5696, international investors can call+61 (2) 9003 4211, and Chinese investors can call 400-632-2162 to listen to the recording of Lan Xun's telephone conference. The passwords are "4554880".
