AirMedia Group, Inc. News
AirMedia Reports Unaudited First Quarter 2008 Financial Results
Financial Highlights — Total revenues increased 162.4% year-over-year and 32.6% sequentially to US$21.6 million, exceeding company high-end guidance by US$0.6 million; — Revenues from digital frames in airports for the first quarter of 2008 grew 431.0% sequentially to US$6.7 million. Revenues from digital frames in airports was nil in the same period one year ago; — Net income increased 288.7% year-over-year and 18.8% sequentially to US$7.3 million. Basic and diluted income per ADS was US$0.11 and US$0.10, respectively; — Adjusted net income (non-GAAP), which excluded share-based compensation expenses and amortization of acquired intangible assets, increased 337.6% year-over-year and 21.5% sequentially to US$8.5 million. Adjusted basic and diluted net income per ADS (non-GAAP) was US$0.13 and US$0.12, respectively.
"AirMedia achieved record results despite the fact that the first quarter normally is the weakest quarter seasonally as advertisers spend less during the
Financial Results
Revenues
Total revenues by product line for the first quarter of 2008, the fourth quarter of 2007 and the first quarter of 2007 were as follows (numbers in US$ 000's except for percentage):
Quarter Quarter Ended % of Ended % of March 31, Total December Total 2008 Revenues 31, 2007 Revenues Digital TV screens in airports 9,981 46.2% 9,408 57.8% Digital TV screens on airplanes 3,881 18.0% 4,141 25.4% Digital frames in airports 6,706 31.1% 1,263 7.8% Other displays 1,028 4.7% 1,475 9.0% Total revenues 21,596 100.0% 16,287 100.0% Net revenues 20,419 15,606 Quarter Ended % of Y/Y Q/Q March 31, Total Growth Growth 2007 Revenues rate rate Digital TV screens in airports 5,625 68.3% 77.4% 6.1% Digital TV screens on airplanes 1,836 22.3% 111.4% -6.3% Digital frames in airports — — N/A 431.0% Other displays 769 9.4% 33.7% -30.3% Total revenues 8,230 100.0% 162.4% 32.6% Net revenues 7,835 160.6% 30.8%
Total revenues for the first quarter of 2008 reached
Revenues from digital TV screens in airports for the first quarter of 2008 grew 77.4% year-over-year and 6.1% sequentially to
Revenues from digital TV screens on airplanes for the first quarter of 2008 grew 111.4% year-over-year and decreased 6.3% sequentially to
Revenues from digital frames in airports for the first quarter of 2008 grew 431.0% sequentially to
Please refer to "Summary of Selected Operating Data" for more operating data.
Business tax and other sales tax for the first quarter of 2008 was
Net revenues for the first quarter of 2008 reached
Cost of Revenues
Cost of revenues for the first quarter of 2008 was
AirMedia incurs concession fees to airports for placing and operating digital TV screens, digital frames and other displays, and to airlines for placing programs on their digital TV screens. Most of the concession fees are fixed with an annual escalation. The total concession fee under each concession right agreement is charged to the consolidated statements of operations on a straight-line basis over the agreement periods, which are generally between three and five years. Concession fees for the first quarter of 2008 were
Gross Profit
Gross profit for the first quarter of 2008 was
Gross profit as a percentage of net revenues for the first quarter of 2008 was 52.3%, up from 42.9% in the same period one year ago and down from 54.4% in the previous quarter. The year-over-year increase of gross margin was because cost of revenues did not increase in line with the increase of net revenues as we gained economies of scale in our product lines. The sequential decrease of gross margin was because AirMedia obtained additional concession rights to further grow its revenues.
Operating Expenses
Operating expenses for the first quarter of 2008, the fourth quarter of 2007 and the first quarter of 2007 were as follows (numbers in US$ 000's except for percentage): Quarter Quarter Ended Ended March % of Net December % of Net 31, 2008 Revenues 31, 2007 Revenues Selling and marketing expenses 2,444 12.0% 1,823 11.7% General and administrative expenses 2,911 14.3% 2,000 12.8% Total operating expenses 5,355 26.2% 3,823 24.5% Total operating expenses excluding share-based compensation expenses and amortization of acquired intangible assets (a non-GAAP measure) 4,168 20.4% 2,983 19.1% Quarter Ended Y/Y Q/Q March % of Net Growth Growth 31, 2007 Revenues rate rate Selling and marketing expenses 903 11.5% 170.7% 34.1% General and administrative expenses 483 6.2% 502.7% 45.6% Total operating expenses 1,386 17.7% 286.4% 40.1% Total operating expenses excluding share-based compensation expenses and amortization of acquired intangible assets (a non-GAAP measure) 1,324 16.9% 214.8% 39.7%
Total operating expenses for the first quarter of 2008 were
Total operating expenses for the first quarter of 2008 included share- based compensation expenses of
Selling and marketing expenses for the first quarter of 2008 were
General and administrative expenses for the first quarter of 2008 were
Income from Operations
Income from operations for the first quarter of 2008 was
Income from operations excluding share-based compensation expenses and amortization of acquired intangible assets (non-GAAP) for the first quarter of 2008 was
Income Tax Expense/Benefit
Income tax benefit for the first quarter of 2008 was
Net Income
Net income for the first quarter of 2008 was
Adjusted net income (non-GAAP) for the first quarter of 2008, which excluded share-based compensation expenses and amortization of acquired intangible assets, was
Please refer to the attached table for a reconciliation of net income and basic and diluted net income per ADS under US GAAP to adjusted net income and basic and diluted adjusted income per ADS.
"We are very pleased with AirMedia's better than expected financial results this quarter. Our top line growth of 162.4% year-on-year and 32.6% sequentially outperformed our mean guidance in total revenues by 8.0%," remarked
Other Recent Developments
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Business Outlook
As a result of current business visibility, AirMedia currently expects the following financial results for the second quarter of 2008:
— Total revenues will be in an amount ranging from US$26.0 million to US$28.0 million, representing a year-over-year increase of 207.0% to 230.6% from the same period of 2007; — Concession fees in the second quarter of 2008 will be at least US$11.4 million, mainly due to the full-quarter impact of concession fees for Terminal 3 of Beijing Capital International Airport and new concession rights contracts to install large size digital frames in other airports.
The above forecast reflects AirMedia's current and preliminary view and is therefore subject to change. Please refer to our Safe Harbor Statement for the factors which could cause actual results to differ materially from those contained in any forward-looking statement.
Summary of Selected Operating Data Quarter Quarter Quarter Ended Ended Ended March 31, December March 31, 2008 31, 2007 2007 Digital TV screens in airports Number of airports in operation 39 39 30 Number of time slots available for sale (1) 24,700 22,557 17,767 Number of time slots sold (3) 5,501 9,198 7,013 Utilization rate (4) 22.3% 40.8% 39.5% Average advertising revenue per time slot sold (5) US$1,815 US$1,023 US$802 Digital TV screens on airplanes Number of airlines in operation 9 9 9 Number of time slots available for sale (1) 456 450 432 Number of time slots sold (3) 245 277 189 Utilization rate (4) 53.7% 61.6% 43.8% Average advertising revenue per time slot sold (5) US$15,873 US$14,957 US$9,722 Digital frames in airports Number of airports in operation 1 1 — Number of time slots available for sale (2) 1,223 354 — Number of time slots sold (3) 425 128 — Utilization rate (4) 34.8% 36.2% — Average advertising revenue per time slot sold (5) 15,769 9,841 — YOY Growth Rate QOQ Growth Rate Digital TV screens in airports Number of airports in operation 30.0% — Number of time slots available for sale (1) 39.0% 9.5% Number of time slots sold (3) -21.6% -40.2% Utilization rate (4) -17.2% -18.5% Average advertising revenue per time slot sold (5) 126.3% 77.4% Digital TV screens on airplanes Number of airlines in operation — — Number of time slots available for sale (1) 5.6% 1.3% Number of time slots sold (3) 29.6% -11.6% Utilization rate (4) 9.9% -7.9% Average advertising revenue per time slot sold (5) 63.3% 6.1% Digital frames in airports Number of airports in operation — — Number of time slots available for sale (2) — 245.5% Number of time slots sold (3) — 232.0% Utilization rate (4) — -1.4% Average advertising revenue per time slot sold (5) — 60.2% Notes: (1) We define a time slot as a 30-second equivalent advertising time unit for digital TV screens in airports and digital TV screens on airplanes, which is shown during each advertising cycle on a weekly basis in a given airport or on a monthly basis on the routes of a given airline, respectively. Our airport advertising programs are shown repeatedly on a daily basis during a given week in one-hour cycles and each hour of programming includes 25 minutes of advertising content, which allows us to sell a maximum of 50 time slots per week. The number of time slots available for our digital TV screens in airports during the period presented is calculated by multiplying the time slots per week per airport by the number of weeks during the period presented when we had operations in each airport and then calculating the sum of all the time slots available for each of our network airports. The length of our in-flight programs typically ranges from approximately 45 minutes to an hour per flight, approximately five to 13 minutes of which consist of advertising content. The number of time slots available for our digital TV screens on airplanes during the period presented is calculated by multiplying the time slots per airline per month by the number of months during the period presented when we had operations on each airline and then calculating the sum of all the time slots for each of our network airlines. (2) We define a 15-second equivalent advertising time unit for digital frames in airports, which is shown during each advertising cycle on a weekly basis in a given airport. Our airport advertising programs are shown repeatedly on a daily basis during a given week in 20-minute cycles for 46-inch digital frames in Beijing Capital International Airport and in 10-minute cycles for 70-inch digital frames in Beijing Capital International Airport, which allows us to sell a maximum of 80 time slots for 46-inch or a maximum of 40 time slots for 70-inch digital frames per week. The number of time slots available for our digital frames in airports during the period presented is calculated by multiplying the time slots per week per airport by the number of weeks during the period presented when we had operations in each airport and then calculating the sum of all the time slots available for each of our network airports. (3) Number of time slots sold refers to the number of 30-second equivalent advertising time units for digital TV screens in airports and digital TV screens on airplanes or 15-second equivalent advertising time units for digital frames in airports sold during the period presented. (4) Utilization rate refers to total time slots sold as a percentage of total time slots available for sale during the relevant period. (5) Average advertising revenue per time slot sold for digital TV screens in airports, digital TV screens on airplanes and digital frames in airports is calculated by dividing our revenues derived from digital TV screens in airports, digital TV screens on airplanes and digital frames in airports by its own number of time slots sold, respectively.
Earnings Conference Call Details
AirMedia will hold a conference call to discuss the first quarter 2008 earnings at
AirMedia's management team will be on the call to discuss the financial results and highlights and to answer questions. The toll-free number for U.S. participants is +1-800-295-4740. The toll number for UK participants is +44- 207-365-8426. The toll number for
A replay of the call will be available for 1 week between
Additionally, a live and archived web cast of this call will be available on the Investor Relations section of the AirMedia corporate website at http://ir.airmedia.net.cn .
Use of Non-GAAP Financial Measures
AirMedia's management uses non-GAAP financial measures to gain an understanding of AirMedia's comparative operating performance and future prospects. AirMedia's non-GAAP financial measures exclude certain special items, including (1) amortization of non-cash stock-based compensation expense, and (2) amortization of acquired intangible assets. Non-GAAP financial measures are used by AirMedia's management in their financial and operating decision-making because management believes they reflect AirMedia's ongoing business in a manner that allows meaningful period-to-period comparisons. AirMedia's management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating AirMedia's current operating performance and future prospects in the same manner as management does, if they so choose. Specifically, AirMedia believes the non-GAAP financial measures provide useful information to both management and investors by excluding certain charges that we believe are not indicative of our core operating results.
The non-GAAP financial measures have limitations. They do not include all items of income and expense that affect AirMedia's income from operations. Specifically, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and, with respect to the non-GAAP financial measures that exclude certain items under GAAP, do not reflect any benefit that such items may confer to AirMedia. Management compensates for these limitations by also considering AirMedia's financial results as determined in accordance with GAAP. The presentation of this additional information is not meant to be considered superior to, in isolation from or as a substitute for results prepared in accordance with US GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliation of GAAP Income/(Loss) and EPS and non-GAAP Adjusted Income/(Loss) and EPS" set forth at the end of this release.
About AirMedia Group Inc.
AirMedia Group Inc. (Nasdaq: AMCN) operates the largest digital media network in
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," "expect," "anticipate," "future," "intend," "plan," "believe," "estimate," "confident" and similar statements. Among other things, the quotations from management in this announcement, as well as AirMedia Group Inc.'s strategic and operational plans, contain forward-looking statements. AirMedia may also make written or oral forward- looking statements in its periodic reports to the U.S. Securities and Exchange Commission on Forms 20-F and 6-K, etc., 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 AirMedia's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward- looking statement. Potential risks and uncertainties include, but are not limited to, if advertisers or the viewing public do not accept, or lose interest in, our air travel digital media network, we may be unable to generate sufficient cash flow from our operating activities and our prospects and results of operations could be negatively affected; we derive substantially all of our revenues from the provision of air travel advertising services, and if there is a downturn in the air travel advertising industry, we may not be able to diversify our revenue sources; if we are unable to retain existing concession rights contracts or obtain new concession rights contracts on commercially advantageous terms that allow us to place or operate the digital TV screens in airports or on airplanes, we may be unable to maintain or expand our network coverage and our business and prospects may be harmed; a substantial majority of our revenues are currently concentrated in the five largest airports and three largest airlines in
AirMedia Group Inc. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In U.S. dollars in thousands) Mar. 31, 2008 Dec. 31, 2007 Assets Current assets: Cash 210,002 210,915 Accounts receivable, net 21,154 13,478 Prepaid concession fees 15,115 13,130 Amount due from related parties 124 — Other current assets 1,747 2,393 Deferred tax assets - current 133 95 Total current assets 248,275 240,011 Acquired intangible assets, net 5,096 4,862 Property and equipment, net 21,149 15,985 Long-term deposits 4,902 4,706 Long-term investment 1,731 788 Deferred tax assets - non-current 525 507 TOTAL ASSETS 281,678 266,859 Liabilities Current liabilities: Accounts payable 6,675 4,666 Accrued expenses and other current liabilities 1,895 1,309 Deferred revenue 2,126 1,712 Income tax payable 11 32 Amounts due to related parties — 11 Total current liabilities 10,707 7,730 Non-current liabilities: Deferred tax liability - non-current 1,682 1,527 Total liabilities 12,389 9,257 Minority interest (5) (3) Shareholders' equity Ordinary shares 133 133 Additional paid-in capital 264,249 263,130 Statutory reserve 1,782 1,782 Accumulated deficiency (3,040) (10,317) Accumulated other comprehensive income 6,170 2,877 Total shareholders' equity 269,294 257,605 TOTAL LIABILITIES, MINORITY INTEREST, AND SHAREHOLDERS' EQUITY 281,678 266,859 AirMedia Group Inc. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In U.S. dollars in thousands, except share related data) Three Months Ended Mar. 31, Dec. 31, Mar. 31, 2008 2007 2007 Revenues 21,596 16,287 8,230 Business tax and other sales tax (1,177) (681) (395) Net revenues 20,419 15,606 7,835 Cost of revenues 9,730 7,117 4,470 Gross profit 10,689 8,489 3,365 Operating expenses: Selling and marketing * 2,444 1,823 903 General and administrative * 2,911 2,000 483 Total operating expenses 5,355 3,823 1,386 Income from operations 5,334 4,666 1,979 Interest income 1,822 1,369 23 Other income, net 135 90 — Income before income taxes and minority interest 7,291 6,125 2,002 Income tax expense/ (benefit) (77) (181) 56 Net income before minority interest 7,368 6,306 1,946 Minority interest 2 (4) 1 Loss of equity accounting investment (93) (174) (75) Net income 7,277 6,128 1,872 Deemed dividend on series A convertible redeemable preferred shares- Accretion of redemption premium — (127) (355) Deemed dividend on series B convertible redeemable preferred shares- Accretion of redemption premium — (523) — Net income attributable to holders of ordinary shares 7,277 5,478 1,517 Net Income allocated for computing EPS Ordinary shares - Basic 7,277 4,689 947 Net Income allocated for computing EPS preferred A shares - Basic — 655 925 Net Income allocated for computing EPS preferred B shares - Basic — 783 — Net income used in calculating Income per ordinary share-diluted — 4,689 947 Net income per ordinary share - basic $0.05 $0.04 $0.02 - diluted $0.05 $0.04 $0.02 Net income per ADS - basic $0.11 $0.09 $0.03 - diluted $0.10 $0.09 $0.03 Net income per Series A preferred share — $0.05 $0.02 Net income per Series B preferred share — $0.12 — Weighted average ordinary shares outstanding used in computing net income per ordinary share - basic 133,425,925 106,154,347 62,400,000 Weighted average ordinary shares outstanding used in computing net income per ordinary share - diluted 139,317,264 108,713,868 62,400,000 share used in calculating net income per Series A preferred share-basic — 13,465,217 37,600,000 share used in calculating net income per Series B preferred share-basic — 6,608,696 — * share-based compensation charges included are as follow: Selling and marketing 259 174 — General and administrative 860 600 — AirMedia Group Inc. RECONCILIATION OF GAAP NET INCOME AND EPS TO NON-GAAP ADJUSTED NET INCOME AND EPS (In U.S. dollars in thousands, except share related data) Three Months Ended Mar. 31, Dec. 31, Mar. 31, 2008 2007 2007 GAAP net income attributable to shareholders 7,277 6,128 1,872 Amortization of acquired intangible assets 68 66 62 Share-based compensation 1,119 774 — Adjusted net income 8,464 6,968 1,934 Basic adjusted net income per share $0.06 $0.07 $0.03 Diluted adjusted net income per share $0.06 $0.06 $0.03 Basic adjusted net income per ADS $0.13 $0.14 $0.06 Diluted adjusted net income per ADS $0.12 $0.12 $0.06 Shares used in computing adjusted basic net income per share 133,425,925 106,154,347 62,400,000 Shares used in computing adjusted diluted net income per share 139,317,264 108,713,868 62,400,000 Note: The Non-GAAP adjusted net income per share and per ADS are computed using Non-GAAP net adjusted income and number of shares and ADS used in GAAP basic and diluted EPS calculation, where the number of shares and ADS is adjusted for dilution due to share-based compensation plan. For more information, please contact: Investor Contact: Raymond Huang Investor Relations Director Tel: +86-10-8460-8678 Email: ir@airmedia.net.cn FD Beijing Julian Wilson Tel: +86-10-8591-1951 Email: julian.wilson@fd.com
SOURCE AirMedia Group, Inc.
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