EX-99.1 2 v378938_ex99-1.htm EXHIBIT 99.1

 

 

 

 

Dangdang Announces First Quarter 2014 Results

Net Income in Q1 2014 reached RMB2.0 million

Gross margin in Q1 2014 expanded quarter-over-quarter and year-over-year to 18.2%

Total net revenues in Q1 2014 rose 30.1% year-over-year

 

Beijing, China, May 15, 2014 -- E-Commerce China Dangdang Inc. ("Dangdang" or the "Company") (NYSE: DANG), a leading business-to-consumer e-commerce company in China, today announced its unaudited financial results for the first quarter ended March 31, 2014.

 

First Quarter 2014 Highlights

 

·Total net revenues for the first quarter of 2014 was RMB1,735.8 million ($279.2 million), a 30.1% increase from the corresponding period in 2013. Media product revenue for the first quarter of 2014 was RMB1,151.7 million ($185.3 million), representing a 33.3% increase from the corresponding period in 2013.
·Gross margin for the first quarter of 2014 was 18.2%, compared to 17.2% in the first quarter of 2013 and 17.6% in the fourth quarter of 2013.
·Operating income for the first quarter of 2014 was RMB10.1 million ($1.6 million) representing 0.6% of total net revenues, as compared with an operating loss of RMB80.4 million in the first quarter in 2013, representing negative 6.0% of total net revenues.
·Net Income for the first quarter of 2014 was RMB2.0 million ($0.3 million), representing 0.1% of total net revenues, as compared with a net loss of RMB72.7 million in the first quarter in 2013 representing negative 5.5% of total net revenues.
·Gross Merchants Value (“GMV”) of the market place in the first quarter of 2014 was RMB1,186.0 million ($190.8 million), a 103% increase from the corresponding period in 2013.
·Dangdang had approximately 8.6 million active customers including approximately 2.8 million new customers in the first quarter of 2014, representing 16% and 17% increases, respectively, from the corresponding period in 2013. Total orders for the first quarter of 2014 were approximately 16.4 million, an 11% increase from the corresponding period in 2013.

 

“Dangdang continued its path to profitability in the first quarter of 2014. We began the year on a positive note, achieving strong top line year-over-year growth, the highest gross margin since the second quarter of 2011 and a second consecutive quarter of profitability,” said Ms. Peggy Yu Yu, Executive Chairwoman of E-Commerce China Dangdang.

 

“We continue to make good progress in transforming Dangdang from an online bookstore into an integrated online shopping mall with prominent destination categories. Combined general merchandise sales of RMB1.7 billion from both principal business and marketplace surpassed books and media for the sixth consecutive quarter, growing at a rate of 71% year-over-year. Books and media revenue grew 33% year-over-year. Fashion and apparel accounted for nearly half of marketplace GMV and continued to outpace the growth of the overall marketplace.”

 

 
 

 

 

 

 

“Going forward, we remain committed to the healthy and sustainable growth of our business. We will continue to drive growth through both the marketplace and our principal business with a strong emphasis on our destination categories,” Ms. Yu Yu concluded.

 

First Quarter 2014 Results

 

Dangdang’s total net revenues in the first quarter of 2014 were RMB1,735.8 million ($279.2 million), a 30.1% increase from the corresponding period in 2013.

 

Media product revenue for the first quarter of 2014 was RMB1,151.7 million ($185.3 million), representing a 33.3% increase from the corresponding period in 2013. General merchandise revenue for the first quarter of 2014 was RMB516.7 million ($83.1 million), representing a 25.5% increase from the corresponding period in 2013. Other revenue including revenue from third-party merchants for the first quarter of 2014 was RMB67.4 million ($10.9 million), representing a 16.0% increase from the corresponding period in 2013.

 

Dangdang had about 8.6 million active customers including 2.8 million new customers in the first quarter of 2014, representing increases of 16% and 17%, respectively, from corresponding period in 2013. Total orders for the first quarter 2014 were approximately 16.4 million, an 11% increase from the corresponding period in 2013.

 

Cost of revenues was RMB1,419.1 million ($228.3 million), representing 81.8% of total net revenues, as compared to 82.8% in the corresponding period in 2013. The slight decrease in cost of revenues as a percentage of total net revenues was primarily due to the execution of strategic category mapping, where certain categories were moved to the marketplace as well as economies-of-scale in some categories in Dangdang’s principal business. Gross margin in the first quarter of 2014 was 18.2%, as compared to 17.2% in the first quarter of 2013 and 17.6% in the fourth quarter of 2013. The year-over-year and quarter-over-quarter increases resulted from strong gross margin contribution from books and media products and the increase in other revenue, representing the sustained scaling of the marketplace.

 

Fulfillment expenses which include warehousing and shipping expenses, were RMB170.8 million ($27.5 million), representing 9.8% of total net revenues, compared to 13.8% in the corresponding period in 2013 and 9.4% in the fourth quarter of 2013. The year-over-year decrease in fulfilment expenses as a percentage of total net revenues was primarily due to more efficient warehouse operation and lower shipping costs. The quarter-over-quarter increase as a percentage of total net revenues was the result of a seasonal decline in revenue in the first quarter, which is traditionally an off-peak season for e-commerce in China.

 

 
 

 

 

 

 

Marketing expenses were RMB66.9 million ($10.8 million), representing 3.9% of total net revenues, compared to 3.2% in the corresponding period in 2013 and 4.2% in the fourth quarter of 2013. The year-over-year increase in marketing expenses as a percentage of total net revenues was due to increased investment in marketing programs to build awareness of Dangdang's fashion and apparel destination category. The quarter-over-quarter decrease as a percentage of total net revenues was the result of lower expenditures for marketing programs relative to the fourth quarter, which is typically the peak season for e-commerce in China.

 

Technology and content expenses were RMB43.6 million ($7.0 million), representing 2.5% of total net revenues, compared to 3.7% in the corresponding period in 2013 and 2.0% in the fourth quarter of 2013. The year-over-year decrease in technology and content expenses as a percentage of total net revenues was primarily due to operating leverage and a reduction in IT headcount. The quarter-over-quarter increase as a percentage of total net revenues was primarily due to higher IT staff cost and a seasonal decline in revenue in the first quarter, which is traditionally an off-peak season for e-commerce in China.

 

General and administrative expenses were RMB37.6 million ($6.1 million), representing 2.2% of total net revenues, compared to 2.4% in the corresponding period in 2013 and 2.3% in the fourth quarter of 2013. The year-over-year decrease in general and administrative expenses as a percentage of total net revenues was primarily due to larger scale and improved management efficiency. The quarter-over-quarter decrease in general and administrative expenses as a percentage of total net revenues was primarily due to year-end bonuses accrued in the fourth quarter of 2013.

 

Share-based compensation expenses, which were allocated to related expense line items, were RMB3.2 million ($0.5 million) in the first quarter of 2014, compared to RMB2.6 million in the corresponding period in 2013, representing a 23.1% increase.

 

Dangdang recorded operating income of RMB10.1 million ($1.6 million) in the first quarter of 2014, as compared with an operating loss of RMB80.4 million in the corresponding period in 2013, primarily due to strong execution on margin expansion and operating leverage.

 

Operating income excluding share-based compensation expenses (non-GAAP) was RMB13.3 million ($2.1 million), as compared with an operating loss excluding share-based compensation expenses (non-GAAP) of RMB77.8 million in the corresponding period in 2013.

 

 
 

 

 

 

 

Foreign exchange loss and the loss of forward foreign currency contracts was RMB17.4 million ($2.8 million), compared to a foreign exchange gain of RMB2.7 million in the corresponding period in 2013 and RMB17.4 million in the fourth quarter of 2013, which was largely attributable to the rapid depreciation of the Chinese RMB against the US dollar in the first quarter in 2014.

 

Net income was RMB2.0 million ($0.3 million), as compared with a net loss of RMB72.7 million in the corresponding period in 2013, primarily due to the increase in gross profit and operating leverage.

 

Net margin was 0.1%, as compared with a net margin of negative 5.5% in the corresponding period in 2013.

 

Net income excluding share-based compensation expenses (non-GAAP) was RMB5.2 million ($0.8 million), as compared with a net loss excluding share-based compensation expenses (non-GAAP) of RMB70.1 million in the corresponding period in 2013.

 

As of March 31, 2014, Dangdang had cash and cash equivalents, restricted cash, short-term time deposits, available for sale investments and held-to-maturity investments of RMB1,389.8 million ($223.6 million), as compared to RMB1,213.5 million as of December 31, 2013. As of March 31, 2014, Dangdang had no short-term bank loans.

 

Capital expenditures for the first quarter of 2014 were RMB35.8 million ($5.8 million).

 

Outlook for Second Quarter 2014

 

Dangdang expects total net revenues in the second quarter of 2014 to be around RMB1,942 million, representing year-over-year growth of around 30%. The Company also expects GMV from its marketplace to grow at a rate of 80% year-over-year in the second quarter of 2014. This forecast reflects Dangdang's current and preliminary view, which is subject to change.

 

Conference Call Information

 

Dangdang's management will host an earnings conference call on May 15, 2014 at 8:00 AM U.S. Eastern Time (or 8:00 PM on May 15, 2014 Beijing/Hong Kong time).

 

Dial-in details for the earnings conference call are as follows:

 

US: +1-845-675-0437
China, Domestic: +400-620-8038
Hong Kong: +852-2475-0994
International: +65-6723-9381

 

 
 

 

 

 

 

Please dial in 10 minutes before the call is scheduled to begin and provide the pass code to join the call. The pass code is "Dangdang earnings call."

 

A replay of the conference call may be accessed by phone at the following number through May 23, 2014:

 

International: +61-2-8199-0299

 

Conference ID: 31012103

 

A live and archived webcast of this conference call will be available at http://ir.dangdang.com through May 15, 2015.

 

About Dangdang

 

E-Commerce China Dangdang Inc. is a leading business-to-consumer e-commerce company in China. On its website dangdang.com, the Company offers books and media products as well as selected general merchandise products including fashion and apparel, baby, children and maternity and home and lifestyle products. It also operates the dangdang.com marketplace program, which allows third-party merchants to sell their products alongside products sourced by the Company. Dangdang is transforming itself into an integrated online shopping mall with prominent destination categories. Dangdang's nationwide fulfilment and delivery capabilities, high-quality customer service support and scalable technology infrastructure enable it to provide a compelling online shopping experience to customers. For more information, please visit ir.dangdang.com.

 

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," "confident" and similar statements. Among other things, the outlook for the second quarter 2014 and quotations from management in this announcement, as well as Dangdang's strategic and operational plans, contain forward-looking statements. Dangdang may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, 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 Dangdang'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: Dangdang’s growth strategies; its future business development, results of operations and financial condition; its ability to attract and retain new customers and to increase revenues generated from repeat customers; its expectations regarding demand for and market acceptance of our products and services; trends and competition in China’s business-to-consumer e-commerce market; changes in its revenues and certain cost or expense items; the expected growth of the Chinese business-to-consumer e-commerce market; Chinese governmental policies relating to Dangdang’s industry and general economic conditions in China. Further information regarding these and other risks is included in Dangdang’s annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. Dangdang does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of this press release, and Dangdang undertakes no duty to update such information, except as required under applicable law.

 

 
 

 

 

 

 

About Non-GAAP Financial Measures

 

To supplement Dangdang’s consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles (“GAAP”), we use the following measures as the non-GAAP financial measures: non-GAAP operating (loss) income, non-GAAP operating margin, non-GAAP net (loss) income and adjusted EBITDA (collectively referred to as the “Non-GAAP Financial Measures” thereafter). We define non-GAAP operating (loss) income, non-GAAP operating margin and non-GAAP net (loss) income as operating (loss) income, operating margin and net (loss) income excluding the impact of share-based compensation expenses respectively; we define adjusted EBITDA as (loss) income before interest, taxes, depreciation, amortization, other non-operating income, and share-based compensation expenses. We review the Non-GAAP Financial Measures together with net (loss) income to obtain a better understanding of our operating performance. We believe that these Non-GAAP Financial Measures provide meaningful supplemental information regarding the Company’s performance and liquidity. However, a limitation of using the Non-GAAP Financial Measures as an analytical tool is that they do not include all items that impact our net (loss) income for the period. In addition, because they are not calculated in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider the Non-GAAP Financial Measures in isolation from or as an alternative to net (loss) income prepared in accordance with U.S. GAAP.

 

For information on the reconciliation between the Non-GAAP Financial Measures and the GAAP financial measures presented in accordance with U.S. GAAP for the periods presented, please see the tables captioned “Non-GAAP operating (loss) income, operating margin and net (loss) income” and “Adjusted EBITDA” at the end of this release.

 

For investor and media inquiries, please contact:

 

Sophia Zhou
Investor Relations Director
E-Commerce China Dangdang Inc.
Phone: +86-10-5799-2306
E-mail: ir@dangdang.com

 

Elaine Ketchmere, CFA 
Compass Investor Relations
+1 310-528-3031 
Email: eketchmere@compass-ir.com 

 

- Financial Tables Follow

 

 
 

 

 

 

 

E-Commerce China Dangdang Inc.                     

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS                       6.2164

(In thousands, except share related data)

 

 

   As of December 31,
2013		   As of March 31,
2014		 
    RMB    RMB    US$ 
    (Audited)    (Unaudited)    (Unaudited) 
ASSETS               
Current assets:               
Cash and cash equivalents   353,273    352,419    56,692 
Restricted cash   6,964    554    89 
Time deposits with original maturities
exceeding three months		   853,222    856,328    137,753 
                
Available for sale investments   -    100,515    16,169 
Held-to-maturity investments   -    80,000    12,869 
Inventories   1,760,904    1,860,094    299,224 
Accounts receivable, net   37,446    49,984    8,041 
Prepaid expenses and other current assets   328,887    269,008    43,274 
Amounts due from related parties   2,691    419    67 
Total current assets   3,343,387    3,569,321    574,178 
                
Fixed assets, net   241,805    238,006    38,287 
Prepaid land lease payments   43,316    43,093    6,932 
Prepaid expenses and deposits   5,949    6,148    989 
Total assets   3,634,457    3,856,568    620,386 
                
LIABILITIES AND SHAREHOLDERS' EQUITY          
Current liabilities:               
Accounts payable   1,970,651    2,352,228    378,391 
Deferred revenue   407,794    296,356    47,673 
Accrued expenses and other current liabilities   650,413    586,856    94,404 
Amounts due to related parties   3,182    2,238    360 
Total current liabilities   3,032,040    3,237,678    520,828 
Non-current liabilities   32,724    30,810    4,957 
Total liabilities   3,064,764    3,268,488    525,785 
                
Shareholders’ equity:               
Class A common shares (par value of US$0.0001 per share;
686,505,790 shares authorized; 270,466,820 and
271,284,105 shares issued and outstanding as of December
31, 2013 and March 31, 2014, respectively)		   201    201    32 
                
Class B common shares (par value of US$0.0001 per share;
313,494,210 shares authorized; 131,876,660 and
131,876,660 shares issued and outstanding as of December
31, 2013 and March 31, 2014, respectively)		   103    103    17 
                
Additional paid-in capital   1,871,095    1,874,291    301,507 
Accumulated other comprehensive loss   (134,939)   (121,703)   (19,578)
Accumulated deficit   (1,166,767)   (1,164,812)   (187,377)
Total shareholders' equity   569,693    588,080    94,601 
Total liabilities and shareholders' equity   3,634,457    3,856,568    620,386 

 

 
 

 

 

 

 

E-Commerce China Dangdang Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME                        6.2164

(In thousands, except share related data)      

 

   Three Months Ended 
   March 31,
2013		   March 31,
2014		 
   RMB   RMB   US$ 
   (Unaudited)   (Unaudited)   (Unaudited) 
Net revenues            
  Product revenue   1,275,610    1,668,334    268,376 
    Media   863,898    1,151,673    185,264 
    General merchandise   411,712    516,661    83,112 
  Other revenue   58,144    67,445    10,850 
Total net revenues   1,333,754    1,735,779    279,226 
Cost of revenues   (1,104,891)   (1,419,122)   (228,287)
Gross profit   228,863    316,657    50,939 
                
Operating expenses:               
  Fulfillment   (184,590)   (170,775)   (27,472)
  Marketing   (43,232)   (66,883)   (10,759)
  Technology and content   (49,320)   (43,562)   (7,007)
  General and administrative   (32,414)   (37,635)   (6,054)
  Government grants   329    12,268    1,973 
Total operating expenses, net   (309,227)   (306,587)   (49,319)
(Loss) income from operations   (80,364)   10,070    1,620 
Interest income   8,859    8,004    1,288 
Interest expense   (4,480)   -    - 
Other income (expenses), net   3,275    (16,119)   (2,593)
(Loss) income before income taxes   (72,710)   1,955    315 
Income tax expense   -    -    - 
Net (loss) income   (72,710)   1,955    315 
                
Net (loss) income attributable to common shareholders   (72,710)   1,955    315 
                
(Loss) income per common share:               
- Basic   (0.18)   0.00    0.00 
- Diluted   (0.18)   0.00    0.00 
                
(Loss) income per ADS:               
 - Basic   (0.91)   0.02    0.00 
 - Diluted   (0.91)   0.02    0.00 
                
(Loss) income allocated to common shareholders used in (loss)
income per share/ADS calculation:		               
- Basic   (72,710)   1,955    315 
- Diluted   (72,710)   1,955    315 
Shares used in (loss) income per common share computation:               
                
Class A common shares:               
- Basic   268,924,378    270,715,907    270,715,907 
- Diluted   400,841,038    416,345,987    416,345,987 
                
Class B common shares:               
- Basic   131,916,660    131,876,660    131,876,660 
- Diluted   131,916,660    131,876,660    131,876,660 
                
ADSs used in (loss) income per ADS calculation:               
- Basic   80,168,208    80,518,513    80,518,513 
- Diluted   80,168,208    83,269,197    83,269,197 
                
Other comprehensive (loss) income               
Foreign currency translation adjustment, net of taxes   (3,697)   12,721    2,046 
Unrealized gain on available-for-sale investments, net of taxes   -    515    83 
                
Comprehensive (loss) income attributable to common shareholders   (76,407)   15,191    2,444 

 

 
 

 

 

 

 

Share-based compensation 　

(In thousands, except share related data)

 

   Three Months Ended 
   March 31,
2013		   March 31,
2014		 
   RMB   RMB   US$ 
   (Unaudited)   (Unaudited)   (Unaudited) 
Share-based compensation expenses included are as follows:
Operating expenses:               
Fulfillment   424    585    94 
Marketing   81    120    19 
Technology and content   262    185    30 
General and administrative   1,830    2,306    371 
Total   2,597    3,196    514 

 

(1) This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB6.2164 to US$1.00, the noon buying rate on March 31, 2014 in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York.

 

(2) Each ADS represents five common shares of the Company.

 

Non-GAAP operating (loss) income, operating margin and net (loss) income
(In thousands)            
   Three Months Ended 
   March 31,
2013		   March 31,
2014		 
   RMB   RMB   US$ 
   (Unaudited)   (Unaudited)   (Unaudited) 
             
(Loss) income from operations   (80,364)   10,070    1,620 
Share-based compensation expenses   2,597    3,196    514 
Non-GAAP operating (loss) income   (77,767)   13,266    2,134 
                
Operating margin   -6.0%   0.6%   0.6%
Share-based compensation expenses   0.2%   0.2%   0.2%
Non-GAAP operating margin   -5.8%   0.8%   0.8%
                
Net (loss) income   (72,710)   1,955    315 
Share-based compensation expenses   2,597    3,196    514 
Non-GAAP net (loss) income   (70,113)   5,151    829 

 

 
 

 

 

 

 

Adjusted EBITDA    
(In thousands)            
   Three Months Ended 
   March 31,
2013		   March 31,
2014		 
   RMB   RMB   US$ 
   (Unaudited)   (Unaudited)   (Unaudited) 
             
(Loss) income from operations   (80,364)   10,070    1,620 
Add back:               
 Depreciation and amortization   12,626    12,840    2,066 
 Share-based compensation expenses   2,597    3,196    514 
                
 Adjusted EBITDA   (65,141)   26,106    4,200