Form 6-K ChinaCache International For: Dec 31

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the month of December 2015

 

 

Commission File Number: 001-34873

 

ChinaCache International Holdings Ltd.

 

Section A, Building 3, Dian Tong Creative Square

No. 7 Jiuxianqiao North Road, Chaoyang District

Beijing, 100015

The People’s Republic of China

+86 10 6437 3399

(Address, including zip code, and telephone number, including area code, of Registrant’s
principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F         x          Form 40-F         o          

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  o

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	ChinaCache International Holdings Ltd.
	By	:	/s/ Jing An
	Name:	:	Jing An
	Title:	:	Chief Financial Officer
Date: December 4, 2015

 

[Signature Page to Form 6-K]

 

2

 

Exhibit Index

 

Exhibit 99.1 — Press Release

Exhibit 99.2 — Press Release

 

3

Exhibit 99.1

 

ChinaCache Announces Definitive Agreements to Acquire ChinaCache Xin Run

 

Funding Launches Beijing’s Largest Data Center and China’s First Internet Exchange

 

BEIJING, December 2, 2015 - ChinaCache International Holdings Ltd. (“ChinaCache” or the “Company”) (Nasdaq: CCIH), the leading total solutions provider of Internet content and application delivery services in China, today announced that it has entered into definitive agreements for its subsidiary, ChinaCache Xin Run Technology (Beijing) Co., Limited (“Xin Run”), to sell 60% of Xin Run’s equity interest to three investors for a total consideration of RMB375.0 million. Xin Run owns and operates ChinaCache’s Atecsys Cloud Data Center (“Atecsys”) and is expected to build China’s first Internet Exchange.

 

Pursuant to the agreements, Tianjin Shuishan Technology Co., Ltd., KPIW (Beijing) Investment Fund Co., Ltd. and Tianjin Dingsheng Zhida Technology Co., Ltd. will subscribe for 36%, 22% and 2%, respectively, of the post-investment equity interest in Xin Run for a consideration of RMB225.0 million, RMB137.5 million and RMB12.5 million, respectively.  After the completion of the transaction, ChinaCache will, through a subsidiary, own 40% equity interest in Xin Run and will cease to consolidate the results of Xin Run and its subsidiaries. ChinaCache may recognize investment gains under the US GAAP as the result of this transaction.

 

ChinaCache also agrees not to engage in the data center business that competes with Xin Run until the completion of a qualified initial public offering of Xin Run.

 

Atecsys is located in Shunyi Tianzhu Tax Free Zone in Beijing, China and is expected to become the largest International T3+ Data Center in Beijing based on the total number of server racks, which will be approximately 15,000 when completed. Atecsys offers over 80,000 square meters of customer space and is comprised of ten buildings for the data centers and one for the Internet Exchange, which is expected to become China’s first Internet Exchange when completed. The Internet Exchange is designed to serve the Internet industry in China with effective interconnection and peering services through world-class technologies and a private backbone line across key cities from Beijing to Hangzhou.

 

“We are extremely excited to receive the support from investors to officially introduce Beijing’s largest Data Center and the first Internet Exchange in China, which marks a significant milestone for ChinaCache,” commented Song Wang, founder, Chairman and CEO of ChinaCache. “The rapid growth of China’s Internet industry is generating enormous demand for Cloud services and Big Data, which requires increased data storage and Internet infrastructure. By integrating our vast content delivery network (CDN) and profound technology resources, the state-of-the-art Atecsys International Data Center and Internet Exchange enable ChinaCache to establish a complete eco-system and comprehensive service platform. We can now provide Internet service providers, content providers, Cloud service providers and enterprises with an unparalleled total solution.”

 

“We believe the structure of this transaction provides a clear and substantial valuation for Xin Run and will significantly increase our shareholder value. We look forward to continuing our expansion into related areas, while further improving the Internet infrastructure in China,” concluded Mr. Wang.

 

Tianjin Shuishan Technology Co., Ltd. is owned by Mr. Song Wang, Chairman of the Board of Directors and Chief Executive Officer of ChinaCache. Mr. Wang will obtain a loan from KPIW (Beijing) Investment Fund Co., Ltd. to make this investment.

 

The completion of the transaction is subject to customary closing conditions, including the obtain of requisite governmental approvals. The transaction has been approved by the audit committee of the Board of Directors of the Company.

 

 

About ChinaCache International Holdings Ltd.

 

ChinaCache International Holdings Ltd. (Nasdaq: CCIH) is the leading total solutions provider of Internet content and application delivery services in China. As a carrier-neutral service provider, ChinaCache’s network in China is interconnected with networks operated by all telecom carriers, major non-carriers and local Internet service providers. With more than a decade of experience in developing solutions tailored to China’s complex Internet infrastructure, ChinaCache is a partner of choice for businesses, government agencies and other enterprises to enhance the reliability and scalability of online services and applications and improve end-user experience. For more information on ChinaCache, please visit ir.chinacache.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” and similar statements.  ChinaCache may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. 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 statements, including but not limited to the following: the Company’s goals and strategies, expansion plans, the expected growth of the content and application delivery services market, the Company’s expectations regarding keeping and strengthening its relationships with its customers, and the general economic and business conditions in the regions where the Company provides its solutions and services. Further information regarding these and other risks is included in the Company’s filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and ChinaCache undertakes no duty to update such information, except as required under applicable law.

 

For investor and media inquiries please contact:

 

Investor Relations Department

ChinaCache International Holdings

Tel: +86 (10) 6408 5307

Email: [email protected]

 

Don Markley

The Piacente Group | Investor Relations

Tel: +1 212-481 2050

Email: [email protected]

 

2

Exhibit 99.2

 

ChinaCache International Holdings Ltd. Announces

Third Quarter 2015 Financial Results

 

BEIJING — December 2, 2015 — ChinaCache International Holdings Ltd. (“ChinaCache” or the “Company”) (NASDAQ: CCIH), the leading total solutions provider of Internet content and application delivery services in China, today announced its unaudited condensed consolidated financial results for the third quarter ended September 30, 2015.

 

Highlights for the Third Quarter of 2015

 

·                  Net revenues in the third quarter were RMB325.1 million (US$51.2 million), a decrease of 13.4% year-over-year.

·                  Gross profit in the third quarter was RMB63.8 million (US$10.0 million), a decrease of 43.9% year-over-year.

·                  Adjusted EBITDA (non-GAAP) in the third quarter was RMB2.5 million (US$0.4 million), compared with RMB36.9 million in the third quarter of 2014.

·                  Net loss attributable to ordinary shareholders was RMB39.4 million (US$6.2 million) in the third quarter of 2015, compared with net income of RMB0.6 million in the third quarter of 2014.

 

“During the third quarter, we continued to focus on optimizing our platforms and the company-wide performance improvement for our CDN business. We are seeing tangible results including providing full-course acceleration services for the Beijing military parade on September 3, offering differentiated services to several automotive enterprises and establishing the cooperation with Youku Router,” commented Mr. Song Wang, Founder, Chairman and Chief Executive Officer of ChinaCache. “In addition, subsequent to the close of the quarter, we officially introduced our Atecsys Data Center, which is expected to be the largest in Beijing, and our Internet Exchange, which we believe to be the first of its kind in China. As our business continues to grow, we will continue to improve our infrastructure and services to support future expansion. With a keen focus on strengthened execution, our team is working diligently to drive operational enhancements that we believe will yield both revenue growth and long-term shareholder value.”

 

Third Quarter 2015 Financial Results

 

Net revenues for the third quarter of 2015 were RMB325.1 million (US$51.2 million), an 8.0% decrease from the previous quarter and a 13.4% decrease from the corresponding period in 2014. The decrease in net revenues was mainly due to reduced customer traffic as the Company continued to optimize and advance its platform operation.

 

Cost of revenues for the third quarter of 2015 was RMB261.3 million (US$41.1 million), representing a 1.8% increase from the previous quarter and remaining flat compared with the corresponding period in 2014.

 

Gross margin for the third quarter of 2015 was 19.6%, compared with 27.4% for the previous quarter and 30.3% for the corresponding period in 2014. Non-GAAP gross margin for the third quarter of 2015, which excludes share-based compensation, was 19.8%, compared with 27.7% in the previous quarter and 30.4% for the corresponding period in 2014. The decrease in gross margin was mainly due to the decrease in revenue resulting in reduced bandwidth efficiency.

 

Sales and marketing expenses for the third quarter of 2015 were RMB28.1 million (US$4.4 million), or 8.6% of net revenues, a 10.2% increase over the previous quarter and an 8.2% decrease from the corresponding period in 2014.

 

General and administrative expenses for the third quarter of 2015 were RMB33.3 million (US$5.2 million), or 10.3% of net revenues, a 38.8% decrease from the previous quarter and a 21.6% decrease over the corresponding period in 2014. The decreases in general and administrative expenses were primarily attributable to an RMB14.9 million reversal for bad debt provision from one customer.

 

 

Research and development (R&D) expenses for the third quarter of 2015 were RMB23.8 million (US$3.7 million), or 7.3% of net revenues, representing an 11.3% decrease from the previous quarter and a 20.8% decrease from the corresponding period in 2014. The decrease in R&D expenses from the corresponding period in 2014 was mainly due to the significant amount of investment made in ChinaCache’s infrastructure development throughout 2014.

 

Transaction tax on assets transfer was RMB22.3 million (US$3.5 million), which was related to an asset transaction within the Company.

 

Adjusted EBITDA (non-GAAP), defined as EBITDA excluding share-based compensation expense and foreign exchange gain (loss), was RMB2.5 million (US$0.4 million), compared with RMB41.8 million in the previous quarter and RMB36.9 million in the corresponding period in 2014. Excluding the transaction tax on assets transfer, the adjusted EBITDA was RMB24.8 million (US$3.9 million).

 

Operating loss was RMB43.8 million (US$6.9 million) in the third quarter of 2015, compared with an operating loss of RMB10.0 million in the previous quarter and an operating income of RMB10.7 million in the corresponding period in 2014. Non-GAAP operating loss, which excludes share-based compensation expense, was RMB40.1 million (US$6.3 million), compared with non-GAAP operating income of RMB1.5 million in the previous quarter and non-GAAP operating income of RMB12.6 million in the corresponding period in 2014. Excluding the transaction tax on assets transfer, the non-GAAP operating loss was RMB17.8 million (US$2.8 million).

 

Income tax expense was RMB2.7 million (US$0.4 million) in the third quarter of 2015, compared with income tax benefit of RMB3.0 million in the previous quarter and income tax expense of RMB2.6 million in the corresponding period in 2014.

 

Net loss was RMB39.4 million (US$6.2 million) in the third quarter of 2015, compared with a net loss of RMB7.3 million in the previous quarter and a net income of RMB0.6 million in the corresponding period in 2014. Basic and diluted loss per American depositary share (“ADS”) for the third quarter of 2015 was RMB1.49 (US$0.23) each. Each ADS represents 16 ordinary shares of the Company. Excluding the transaction tax on assets transfer, net loss was RMB17.1 million (US$2.7 million).

 

Adjusted net loss (non-GAAP), defined as net loss before share-based compensation expense, foreign exchange gain (loss), and penalties on uncertain tax positions, was RMB44.4 million (US$7.0 million), compared with adjusted net income of RMB4.0 million in the previous quarter and adjusted net income of RMB8.9 million for the corresponding period in 2014.  Non-GAAP basic and diluted loss per ADS in the third quarter of 2015 was RMB1.68 (US$0.26) each. Excluding the transaction tax on assets transfer, adjusted net loss was RMB22.0 million (US$3.5 million), and the adjusted net loss per basic and diluted ADS for the third quarter of 2015 was RMB0.84 (US$0.13) each.

 

Balance Sheet

 

As of September 30, 2015, the Company had cash and cash equivalents of RMB618.6 million (US$97.3 million), compared with RMB375.9 million as of December 31, 2014. Capital expenditures for the third quarter of 2015 were RMB7.7 million (US$1.2 million).

 

2015 Revenue Guidance

 

ChinaCache currently expects to generate total net revenues in the range of RMB1.34 billion to RMB1.44 billion for full year 2015.

 

This forecast reflects ChinaCache’s current view, which is subject to change.

 

Share Repurchase Program

 

On August 24, 2015, the Board of Directors approved a share buyback program, under which the Company is authorized to repurchase, through open market purchases or privately negotiated transactions, up to US$6 million worth of outstanding ADSs of ChinaCache over the next 12 months, depending on market conditions, share price and other factors, and subject to relevant rules and regulations under the U.S. securities laws. This buyback program is in addition to the program previously approved and announced on December 18, 2014 (the “2014 Buyback Program”). The 2014 Buyback Program authorized the Company to repurchase ADSs of ChinaCache not to exceed US$10 million in the aggregate.

 

As of December 1, 2015, the Company had repurchased 1,590,498 ADSs on the open market for a consideration of US$12.3 million under the two share buyback programs.

 

 

Conference Call Information

 

The Company has scheduled a corresponding conference call and live webcast to discuss these results at 7:00 PM Eastern time on December 2, 2015, which corresponds to 8:00 AM Beijing time on December 3, 2015.

 

The dial-in details for the live conference call are as follows:

 

·                  U.S. dial-in number: +1 (845) 675-0438

·                  Hong Kong dial-in number: +852 3018-6776

·                  International dial-in number: +65 6713-5440

·                  China dial-in number: 400-1200-654

·                  Conference ID: 79187972

 

A live and archived webcast of the conference call will be available on the Investor Relations section of ChinaCache’s website at en.chinacache.com.

 

A replay of the conference call will also be available until December 8, 2015 by dialing:

 

·                  U.S. dial-in number: +1 (855) 452-5696

·                  International dial-in number: +61 (2) 9003-4211

·                  China dial-in number: 400-632-2162

·                  Conference ID: 79187972

 

About ChinaCache International Holdings Ltd.

 

ChinaCache International Holdings Ltd. (NASDAQ: CCIH) is the leading total solutions provider of Internet content and application delivery services in China. As a carrier-neutral service provider, ChinaCache’s network in China is interconnected with networks operated by all telecom carriers, major non-carriers and local Internet service providers. With more than a decade of experience in developing solutions tailored to China’s complex Internet infrastructure, ChinaCache is a partner of choice for businesses, government agencies and other enterprises to enhance the reliability and scalability of online services and applications and improve end-user experience. For more information on ChinaCache, please visit ir.chinacache.com.

 

*Use of Non-GAAP Financial Measures

 

In evaluating its business, ChinaCache considers and uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC as supplemental measures to review and assess its operating performance: non-GAAP gross profit, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP research and development expenses, non-GAAP operating income (loss), adjusted net income (loss) (non-GAAP), EBITDA and adjusted EBITDA (non-GAAP).  The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of Non-GAAP to GAAP Financial Measures” set forth at the end of this press release.

 

 

To present non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses and non-GAAP research and development expenses, the Company excludes share-based compensation expense.

 

To present non-GAAP gross profit, the Company excludes share-based compensation expense.

 

To present non-GAAP operating income (loss), the Company excludes share-based compensation expense.

 

The Company defines adjusted net income (loss) as net income (loss) before share-based compensation expense, foreign exchange gain (loss) and penalties on uncertain tax positions.

 

The Company uses EBITDA to assist in reconciliation to adjusted EBITDA.  The Company defines EBITDA as net income (loss) before interest expense, interest income, income tax expense and penalties on uncertain tax positions and depreciation and amortization.  The Company defines adjusted EBITDA as EBITDA before share-based compensation expense and foreign exchange gain (loss) that the Company does not consider reflective of its ongoing operations.  The Company believes that the use of adjusted EBITDA facilitates investors’ use of operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in items such as capital structure (affecting relative interest expense and share-based compensation expense), the book amortization of intangibles (affecting relative amortization expense), the age and book value of facilities and equipment (affecting relative depreciation expense) and other non-cash expenses.  The Company also presents adjusted EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of the financial performance of companies in its industry.

 

Those non-GAAP financial measures are not defined under U.S. GAAP and are not measures presented in accordance with U.S. GAAP.  Those non-GAAP financial measures have limitations as analytical tools, and when assessing the Company’s operating performance, investors should not consider them in isolation, or as a substitute for net income or other consolidated income statement data prepared in accordance with U.S. GAAP.  Some of these limitations include, but are not limited to:

 

·                  Adjusted net income, EBITDA and adjusted EBITDA do not reflect the Company’s cash expenditures or future requirements for capital expenditures or contractual commitments;

·                  They do not reflect changes in, or cash requirements for, the Company’s working capital needs;

·                  They do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on the Company’s debt;

·                  They do not reflect income taxes or the cash requirements for any tax payments;

·                  Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and adjusted net income, EBITDA and adjusted EBITDA do not reflect any cash requirements for such replacements;

·                  While share-based compensation is a component of cost of revenues and operating expenses, the impact on the Company’s financial statements compared to other companies can vary significantly due to such factors as assumed life of the options and assumed volatility of the Company’s ordinary shares; and

·                  Other companies may calculate adjusted net income, EBITDA and adjusted EBITDA differently than the Company does, limiting their usefulness as comparative measures.

 

Exchange Rate Information

 

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are based on the effective exchange rate of 6.3556 as of September 30, 2015.

 

 

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” and similar statements.  Among other things, the outlook for the full year 2015 and quotations from management in this announcement, as well as ChinaCache’s strategic and operational plans, contain forward-looking statements. ChinaCache may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. 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 statements, including but not limited to the following: the Company’s goals and strategies, expansion plans, the expected growth of the content and application delivery services market, the Company’s expectations regarding keeping and strengthening its relationships with its customers, and the general economic and business conditions in the regions where the Company provides its solutions and services. Further information regarding these and other risks is included in the Company’s filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and ChinaCache undertakes no duty to update such information, except as required under applicable law.

 

For investor and media inquiries please contact:

 

Investor Relations Department

ChinaCache International Holdings

Tel: +86 (10) 6408 5307

Email: [email protected]

 

Mr. Don Markley

The Piacente Group | Investor Relations

Tel: +1 212-481 2050

Email: [email protected]

 

FINANCIAL TABLES

 

·                  Unaudited Condensed Consolidated Balance Sheets

·                  Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

·                  Supplementary Metrics

·                  Reconciliations of Non-GAAP to GAAP Financial Measures

 

 

Condensed Consolidated Balance Sheets
(amounts in thousands)

 

		As of Dec 31		As of Sep 30		As of Sep 30
		2014		2015		2015
		RMB		RMB		US$
		(Audited)		(Unaudited)		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents		375,879		618,558		97,325
Restricted Cash		68,191		—		—
Accounts receivable, net		319,494		350,643		55,171
Prepaid expenses and other current assets		55,374		131,894		20,752
Short term investments		25,219		175,969		27,687
Deferred tax assets		20,658		20,090		3,161
Total current assets		864,815		1,297,154		204,096
Non-current assets
Property and equipment, net		418,886		536,985		84,490
Cloud infrastructure construction in progress		283,475		412,778		64,947
Intangible assets, net		10,321		11,345		1,785
Land use right, net		49,697		49,149		7,733
Long term investments		46,950		49,253		7,750
Deferred tax assets		980		2,077		327
Long term deposits and other non-current assets		56,084		76,411		12,023
Total non-current assets		866,393		1,137,998		179,055
Total Assets		1,731,208		2,435,152		383,151
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term loan		60,000		—		—
Accounts payable		255,821		248,403		39,084
Accrued employee benefits		45,016		47,526		7,478
Accrued expenses and other payables		411,803		1,169,055		183,941
Income tax payable		21,374		13,600		2,140
Liabilities for uncertain tax positions		11,739		11,739		1,847
Amounts due to related parties		18		18		3
Current portion of long term loan		7,180		7,180		1,130
Current portion of capital lease obligations		13,794		46,416		7,303
Deferred government grant		37,360		37,360		5,878
Total current liabilities		864,105		1,581,297		248,804
Non-current liabilities
Long-term loan		11,520		7,180		1,130
Non-current portion of capital lease obligations		20,592		67,201		10,574
Deferred tax liabilities		44		45		7
Deferred government grant		—		1,350		212
Total non-current liabilities		32,156		75,776		11,923
Total Liabilities		896,261		1,657,073		260,727
Total Shareholders’ equity		834,947		778,079		122,424
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		1,731,208		2,435,152		383,151

 

 

Condensed Consolidated Statements of Comprehensive Income (loss)
(amounts in thousands, except for number of shares, per share and per ADS data)

 

		For the Three Months Ended
		Sep 30, 2014		Jun 30, 2015		Sep 30, 2015		Sep 30, 2015
		RMB		RMB		RMB		US$
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Net revenues		375,258		353,344		325,091		51,150
Cost of revenues		(261,371	)	(256,524	)	(261,250	)	(41,105	)
Gross profit		113,887		96,820		63,841		10,045
Sales & marketing expenses		(30,637	)	(25,526	)	(28,117	)	(4,424	)
General & administrative expenses		(42,523	)	(54,511	)	(33,341	)	(5,246	)
Transaction tax on assets transfer		—		—		(22,339	)	(3,515	)
Research & development expenses		(30,035	)	(26,819	)	(23,799	)	(3,745	)
Operating income (loss)		10,692		(10,036	)	(43,755	)	(6,885	)
Interest income		863		1,153		533		84
Interest expense		(1,965	)	(3,322	)	(3,234	)	(509	)
Other income		88		1,718		1,114		175
Foreign exchange (loss) gain, net		(6,409	)	188		8,606		1,354
Income (loss) before income taxes		3,269		(10,299	)	(36,736	)	(5,781	)
Income tax (expense) benefit		(2,646	)	2,953		(2,652	)	(417	)
Net income (loss) attributable to ordinary shareholders		623		(7,346	)	(39,388	)	(6,198	)
Foreign currency translation		1,687		(148	)	(103	)	(16	)
Unrealized holding gains arising during the period		141		212		249		39
Total other comprehensive income, net of tax		1,828		64		146		23
Comprehensive income (loss)		2,451		(7,282	)	(39,242	)	(6,175	)
Earnings (loss) per ordinary share:
Basic		0.00		(0.02	)	(0.09	)	(0.01	)
Diluted		0.00		(0.02	)	(0.09	)	(0.01	)
Earnings (loss) per ADS*:
Basic		0.02		(0.28	)	(1.49	)	(0.23	)
Diluted		0.02		(0.28	)	(1.49	)	(0.23	)
Weighted average number of ordinary shares used in earnings per share computation:
Basic		411,553,199		419,437,177		422,294,433		422,294,433
Diluted		422,211,476		419,437,177		422,294,433		422,294,433

 

*  Note1:1 ADS = 16 shares

Note2: Non-GAAP Financial Measures

 

 

Supplementary Metrics - Reconciliations of Non-GAAP to GAAP Financial Measures

(amounts in thousands, except for percentages, number of shares, per share and per ADS data)

(Unaudited)

 

		For the Three Months Ended
		Sep 30,		Jun 30,		Sep 30,		Sep 30,
		2014		2015		2015		2015
		RMB		RMB		RMB		US$
Adjusted EBITDA — defined as EBITDA before share-based compensation expense and foreign exchange loss (gain)
Net income (loss)		623		(7,346	)	(39,388	)	(6,198	)
Depreciation		23,707		37,737		40,519		6,375
Amortization		534		817		981		154
Interest expense		1,965		3,322		3,234		509
Interest income		(863	)	(1,153	)	(533	)	(84	)
Income tax expense (benefit)		2,646		(2,953	)	2,652		417
Share-based compensation		1,872		11,569		3,615		569
Foreign exchange loss (gain)		6,409		(188	)	(8,606	)	(1,354	)
Adjusted EBITDA		36,893		41,805		2,474		388
Margin%		9.8	%	11.8	%	0.8	%	0.8	%
Adjusted net income — defined as net income (loss) before share-based compensation, foreign exchange loss (gain) and penalties on uncertain tax positions
Net income (loss)		623		(7,346	)	(39,388	)	(6,198	)
Share-based compensation		1,872		11,569		3,615		569
Foreign exchange loss (gain)		6,409		(188	)	(8,606	)	(1,354	)
Adjusted net income (loss)		8,904		4,035		(44,379	)	(6,983	)
Margin%		2.4	%	1.1	%	(13.7	)%	(13.7	)%
Earnings (loss) per ordinary share:
Basic		0.02		0.01		(0.11	)	(0.02	)
Diluted		0.02		0.01		(0.11	)	(0.02	)
Earnings (loss) per ADS:
Basic		0.35		0.15		(1.68	)	(0.26	)
Diluted		0.34		0.15		(1.68	)	(0.26	)
Non-GAAP gross profit - defined as gross profit before share-based compensation expense
Gross profit		113,887		96,820		63,841		10,045
Plus: Share-based compensation		162		999		419		66
Non-GAAP gross profit		114,049		97,819		64,260		10,111
Margin%		30.4	%	27.7	%	19.8	%	19.8	%
Non-GAAP operating expense - defined as operating expense before share-based compensation expense
Sales & marketing expenses		30,637		25,526		28,117		4,424
Minus: Share-based compensation		(366	)	(824	)	(262	)	(41	)
Non-GAAP sales & marketing expenses		30,271		24,702		27,855		4,383
% of net revenues		8.1	%	7.0	%	8.6	%	8.6	%
General & administrative expenses		42,523		54,511		33,341		5,246
Minus: Share-based compensation		(998	)	(8,933	)	(2,898	)	(456	)
Non-GAAP general & administrative expenses		41,525		45,578		30,443		4,790
% of net revenues		11.1	%	12.9	%	9.4	%	9.4	%
Research & development expenses		30,035		26,819		23,799		3,745
Minus: Share-based compensation		(346	)	(813	)	(36	)	(6	)
Non-GAAP research & development expenses		29,689		26,006		23,763		3,739
% of net revenues		7.9	%	7.4	%	7.3	%	7.3	%
Non-GAAP operating income — defined as GAAP operating income (loss) before share-based compensation expense
Operating income (loss)		10,692		(10,036	)	(43,755	)	(6,885	)
Plus: Share-based compensation		1,872		11,569		3,615		569
Non-GAAP operating income (loss)		12,564		1,533		(40,140	)	(6,316	)
Margin%		3.3	%	0.4	%	(12.3	)%	(12.3	)%

 

 

Supplementary Metrics

(Unaudited)

 

		Jun 30, 2014		Sep 30, 2014		Dec 31,  2014		Mar 31, 2015		Jun 30,  2015		Sep 30, 2015
Revenues breakdown by industry verticals
Internet and software		23	%	23	%	22	%	22	%	21	%	21	%
Mobile internet		15	%	16	%	16	%	16	%	16	%	18	%
Media and entertainment		29	%	29	%	29	%	29	%	30	%	28	%
E-commerce		20	%	19	%	19	%	19	%	19	%	19	%
Enterprises		12	%	13	%	14	%	14	%	14	%	14	%
Government agencies		1	%	0	%	0	%	0	%	0	%	0	%
Total		100	%	100	%	100	%	100	%	100	%	100	%
Capital expenditures		58,368		104,588		66,611		56,144		25,150		7,735
As a percentage of net revenues		16.9	%	27.9	%	19.7	%	15.4	%	7.1	%	2.4	%