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China Finance Online Reports Unaudited Second Quarter 2008 Results
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Net Revenues and Non-GAAP Net Income Exceeding Guidance

Net Revenues up 33% Q-o-Q, 156% Y-o-Y

Non-GAAP Net Income up 11% Q-o-Q, 202% Y-o-Y

Net Income up 30% Q-o-Q, 192% Y-o-Y

BEIJING, Aug. 28 /Xinhua-PRNewswire/ -- China Finance Online Co. Limited (Nasdaq: JRJC), a leading Chinese online financial information and listed company data provider, today announced its financial results for the second quarter ended June 30, 2008:

    Q2 2008 Highlights


                                          Second Quarter
                                         2008          2007     Variance in %
    1) Financial Data:                    (in thousands of U.S. dollars,
                                               except per ADS data)
    Net revenues                       $14,679        $5,723         156%
    GAAP net income                      4,561         1,562         192%
    Non-GAAP net income                  6,528         2,159         202%
    GAAP net income per ADS
          Basic                          $0.23         $0.08         188%
          Diluted                        $0.20         $0.08         150%
    Non-GAAP net income per ADS
          Basic                          $0.33         $0.11         200%
          Diluted                        $0.28         $0.11         155%

    2) Operating Data:
    Registered users                10,500,000     7,300,000          44%
    Active paid individual
     subscribers                       100,600        37,400         169%

 

 

 

 

 

 

 

 

 

 

 

  • In the second quarter of 2008, Chinese stock market continued to experience significant correction, with Shanghai Stock Exchange Composite Index down additional 21% following a record-setting 34% decline in Q1 2008. Despite the sharp decline in the stock market, the Company's core subscription service business still achieved solid growth.
  • As a result, net revenues reached $14.68 million for Q2 2008, exceeding the high end of the Company's previous guidance of $13.0 to $13.50 million, up 156% year-over-year and 33% quarter-over-quarter.
  • Non-GAAP net income, which is defined as net income excluding stock- based compensation expenses, was $6.53 million for Q2 2008, exceeding the high end of the Company's previous guidance of $5.5 to $6.0 million, up 202% year-over-year and 11% quarter-over-quarter. Non-GAAP basic and diluted net income per share were $0.07 and $0.06, respectively, and non-GAAP basic and diluted net income per ADS were $0.33 and $0.28 for Q2 2008, respectively.
  • GAAP net income was $4.56 million for Q2 2008, up 192% compared to $1.56 million for the second quarter of 2007. Basic and diluted GAAP net income per share were $0.05 and $0.04, respectively. Basic and diluted GAAP net income per ADS were $0.23 and $0.20 for Q2 2008, respectively.
  • Registered user accounts of jrj.com and stockstar.com grew to 10.50 million, an increase of 700,000 from the previous quarter. Active paid individual subscribers, which refer to individual investors who subscribe for a fee to our products through downloading, via web or by mobile phones, grew to 100,600 up 34% from the previous quarter. As of June 30, 2008, our Hong Kong brokerage operation Daily Growth, which was acquired in November, 2007, had approximately 1,100 customer accounts.

Explanation of the Company's non-GAAP financial measures and the related reconciliations to GAAP financial measures are included in the accompanying ''Reconciliation to Unaudited Condensed Consolidated Statements of Operations'', ''Non-GAAP Measures" and "Reconciliations from operating profit to EBITDA and adjusted EBITDA''.

Q2 2008 Financial Results

Net Revenues:

During the second quarter of 2008, China Finance Online reported net revenues of $14.68 million, exceeding the high end of the Company's previous guidance of $13.0 to $13.5 million, compared to $5.72 million for the same period in 2007, and $11.06 million for the first quarter of 2008, up 156% year-over-year and 33% quarter-over-quarter. The increase is primarily due to the growth in subscription service fees from individual customers. Revenues from subscription service fees paid by individual customers were $13.13 million in the second quarter of 2008, representing 89% of net revenues for the quarter. Revenues from mobile value added services were $370,000, representing 3% of net revenues for the quarter. Revenues from subscription service fees paid by institutional customers were $267,000 in the second quarter of 2008, approximately 2% of net revenues for the quarter. Revenues from advertising-related business for the quarter contributed $758,000, representing 5% of net revenues for the quarter. Revenues from brokerage- related services, provided by Daily Growth, the Hong Kong securities brokerage firm which was acquired in November 2007, were $121,000 in the second quarter of 2008, representing 1% of net revenue for the quarter. Other revenues were $30,000, less than 1% of net revenues for the quarter.


    Revenues breakdown is summarized in the following table:

                                                   Three months ended
                                              June 30,    March 31,  June 30,
                                                2008        2008       2007
                                             (In thousands of U.S. dollars)
    1) Subscription service fees paid
        by individual customers            13,133  89%   9,618  87% 4,667  81%
    2) Revenues from mobile value added
        services                              370   3%     310   3%   334   6%
    3) Subscription service fees paid by
        institutional customers               267   2%     231   2%   258   5%
    4) Revenues from advertising-related
        business                              758   5%     585   6%   396   7%
    5) Revenues from brokerage-related
        services                              121   1%     153   1%   n/a  n/a
    6) Revenues from others                    30  <1%     158   1%    68   1%

    Total net revenues
                                           14,679 100%  11,055 100% 5,723 100%

Gross Profit:

Gross profit for the quarter was $12.58 million, compared to $4.64 million for the same period in 2007 and $9.34 million for the first quarter of 2008. Gross margin was 86% in the second quarter, compared to 81% in the same period of 2007 and 84% in the first quarter of 2008. The gross margin improvement was primarily due to cost leverage on increased sales and favourable sales mix.

A large portion of costs of revenue are website maintenance expenses, which consist of bandwidth costs, personnel-related expenses, server depreciation expenses, and content expenses for our jrj.com and stockstar.com websites. Website maintenance expenses for the second quarter of 2008 was $1.12 million in the quarter, compared to $730,000 from the second quarter of 2007 and $1.04 million for the previous quarter. As a percentage of net revenue, website maintenance expenses for the second quarter of 2008 were 8% in the quarter, compared to 13% for the second quarter of 2007 and 9% for the previous quarter.

Operating Expenses:

Operating expenses for the second quarter of 2008 totalled $9.0 million compared to $3.59 million for the same period in 2007 and $7.36 million from the previous quarter. The increase from Q1 2008 is primarily due to the increased professional fees, advertising fees, marketing promotion expenses related to the stock picking competition, as well as performance-based sales commissions. Excluding stock-based compensation of $1.97 million, operating expenses was $7.03 million for the second quarter of 2008, compared to $3.0 million for the second quarter of 2007 and $5.0 million for the first quarter of 2008. As a percentage of net revenue for the quarter, operating expenses excluding stock-based compensation was 48%, compared to 52% for the second quarter of 2007 and 45% for the first quarter of 2008.

 

 

 

 

 

 

  • General and administrative expenses for the quarter were $4.12 million, compared to $1.79 million for the same period in 2007 and $3.92 million from the previous quarter. The increase from the previous quarter is primarily due to the professional fees. Excluding stock-based compensation of $1.89 million, general and administrative expenses was $2.23 million for the second quarter, compared to $1.25 million in the second quarter of 2007 and $1.64 million in the previous quarter. As a percentage of net revenue in the quarter, general and administrative expenses excluding stock-based compensation for the second quarter was 15%, and decreased from 22% for the second quarter of 2007 and flat from the first quarter of 2008.
  • Sales and marketing expenses for the second quarter were $3.64 million, compared to $1.36 million for the same period in 2007 and $2.45 million from the previous quarter. The increase from the previous quarter is primarily due to the increase in advertising fees, marketing promotion expenses associated with the stock picking competition, as well as performance-based sales commissions. Excluding stock-based compensation of $66,000, sales and marketing expenses was $3.57 million for the second quarter, compared to $1.33 million in the second quarter of 2007 and $2.38 million in the previous quarter. As a percentage of net revenue in the quarter, sales and marketing expenses excluding stock-based compensation for the second quarter was 24%, relatively flat from the same quarter in 2007 and a slight increase from 22% for the first quarter of 2008.
  • Product development expenses for the second quarter were $1.24 million, compared to $443,000 for the same period in 2007 and $995,000 from the previous quarter, which were primarily due to the increases in employee compensation as a result of increased headcounts and server depreciation expenses. Excluding stock-based compensation of $13,000, product development expenses were $1.23 million, compared to $418,000 in the second quarter of 2007 and $972,000 in the previous quarter. As a percentage of net revenue in the quarter, product development expenses excluding stock-based compensation for the second quarter was 8%, increased from 7% in the second quarter of 2007 and decreased from 9% for the previous quarter.

Income from Operations:

Income from operations for the second quarter of 2008 was $3.58 million, compared to $1.05 million for the same quarter in 2007 and $1.97 million for the first quarter of 2008. Adjusted income from operations (non-GAAP), which is defined as income from operations excluding stock-based compensation expenses of $1.97 million, was $5.54 million for the quarter, compared to $1.65 million for the same quarter in 2007 and $4.34 million for the first quarter of 2008.

Net Income and Non-GAAP Net Income:

Net income was $4.56 million, compared to net income of $1.56 million for the second quarter of 2007 and $3.51 million for the first quarter of 2008. Net income margin was 31% for Q2 2008, compared to 27% for the same period in 2007 and 32% for the first quarter of 2008.

Total income tax benefit for the quarter was $88,000, compared to $150,000 for the same period in 2007 and $64,000 for the previous quarter.

Non-GAAP net income, which is defined as net income excluding stock-based compensation expenses, was $6.53 million for the second quarter of 2008, compared to $2.16 million for the second quarter of 2007, and $5.88 million for the first quarter of 2008. Excluding stock-based compensation expenses, non-GAAP net income margin for the second quarter of 2008 was 44%, compared to non-GAAP net income margin of 38% for the same period in 2007 and 53% for the first quarter of 2008.

As part of the net income for the second quarter, the Company recorded a net foreign exchange gain of $559,000, compared with $101,000 from the second quarter of 2007 and $870,000 from previous quarter.

Deferred Revenue:

Deferred revenue at the end of the second quarter of 2008, which represents prepaid service fees made by customers for subscription services that have not been rendered as of June 30, 2008, reached the Company's historical high of $34.87 million, with current deferred revenue of $27.95 million and non-current deferred revenue of $6.92 million.

Cash and Cash Equivalents:

Balance of cash and cash equivalents was approximately $85.93 million at the end of the second quarter of 2008, including cash denominated in RMB with an equivalent to $66.93 million and cash denominated in other foreign currencies with an equivalent to $19.0 million.

Cash Flow:

Cash inflow from subscription services provided to individual customers was $16.72 million, compared to $8.18 million for the second quarter of 2007 and $15.04 million for the previous quarter.

Adjusted EBITDA (Non-GAAP):

Adjusted EBITDA (non-GAAP), which is defined as earnings before interest, taxes, depreciation, amortization, other non-operating income and stock-based compensation expenses, was $6.0 million for the second quarter of 2008, compared to $1.87 million in the second quarter of 2007 and $4.77 million in previous quarter.

Other Operating Metrics

As of June 30, 2008, the Company has 10.50 million registered user accounts on its two websites jrj.com and stockstar.com, compared to 9.8 million in the previous quarter, an increase of 700,000 quarter-on-quarter.

Active paid individual subscribers grew to 100,600 at the end of the second quarter 2008, up 34% from 75,300 in the previous quarter.

As of June 30, 2008, our Hong Kong based brokerage service Daily Growth, which was acquired in November 2007, had approximately 1,100 customer accounts.

Outlook for Third Quarter 2008 and Full Year of 2008

The Company currently expects to generate net revenues in an amount ranging from $15.5 million to $16.50 million for the third quarter of 2008, representing a 112% to 126% increase from the corresponding period in 2007.

The Company estimates non-GAAP net income, which represents net income excluding share-based compensation expenses, will be between $6.3 million and $7.1 million for the third quarter of 2008, representing a 111% to 138% increase from the corresponding period in 2007. Accordingly, non-GAAP net income per ADS for the third quarter of 2008 is expected to be in the range of $0.27 to $0.31 per ADS based on an estimated 23 million fully diluted ADSs.

In spite of the challenging external business environment, we remain confident that we can achieve our full year operating targets through solid and consistent execution. We reaffirm our 2008 revenue guidance of $56.0 million to $61.0 million, and our non-GAAP net income guidance of $25.0 million to $29.0 million, or $1.09 to $1.26 per ADS.

The above forecast reflects the Company's current and preliminary view, which is subject to change. A number of important factors including, but not limited to, fluctuation in the Chinese stock market, could cause the actual results to differ materially from those contained in the above guidance.

Launch of Re-Designed Corporate Website

We are pleased to announce the official launch of our re-designed corporate website, http://www.chinafinanceonline.com , and a brand new Investor Relations section http://ir.chinafinanceonline.com . We believe the new websites will help us communicate with investors and analysts more efficiently and project a consistent and professional corporate image to the general public.

Conference Call

China Finance Online's management team will host a conference call at 8:00PM Eastern Time on August 28, 2008 (or 8:00AM August 29, 2008 in the Beijing/HK time zone) following the announcement to discuss detailed operating results.

The conference call will be available on Webcast live and replay at: http://phx.corporate-ir.net/playerlink.zhtml?c=183451&s=wm&e=1925391 . The call will be archived for 12 months at this website.

The dial-in details for the live conference call: U.S. Toll Free Number +1-877-847-0047, Hong Kong Dial In Number +852-3006-8101, and France Toll Free Number 0800-910-584, Password for all regions: 8457.

A replay of the conference call will be available from approximately 9:00PM Eastern Time on August 28, 2008 (or 9:00AM August 29, 2008 in the Beijing/HK time zone) to 9:00PM Eastern Time on September 04, 2008 (or 9:00AM September 05, 2008 in the Beijing/HK time zone). The dial-in details for the replay: U.S. Toll Free Number +1-877-847-0047, Hong Kong Dial In Number +852-3006-8101, and France Toll Free Number 0800-910-584, Access code for all regions: 064692.

About China Finance Online Co. Limited

China Finance Online Co. Limited is the market leader in providing online financial and listed company data, information and analytics in China. Through its websites, http://www.jrj.com and http://www.stockstar.com , the company provides individual users with subscription-based service packages that integrate financial and listed company data, information and analytics from multiple sources with features and functions such as data and information search, retrieval, delivery, storage and analysis. These features and functions are delivered through proprietary software available by download, through internet or through mobile handsets. Through its subsidiary, Shenzhen Genius Information Technology Co. Ltd, the company provides financial information database and analytics to institutional customers including domestic securities and investment firms. Through its subsidiary, Daily Growth Investment Company Limited, the company provides securities brokerage services for stocks listed on Hong Kong Stock Exchange.

Safe Harbor Statements

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.

Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that 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 not limited to, our historical and possible future losses, limited operating history, uncertain regulatory landscape in the People's Republic of China, fluctuations in quarterly operating results, our ability to successfully compete against new and existing competitors, our reliance on relationships with Chinese stock exchanges and raw data providers, changes in accounting policies, our ability to successful acquire and integrate businesses and the impact of our investments on our financial results. Further information regarding these and other risks is included in China Finance Online's annual report on Form 20-F for the year ended December 31, 2007, and other filings with the Securities and Exchange Commission. China Finance Online does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Non-GAAP Measures

To supplement the unaudited condensed consolidated financial information presented in accordance with Accounting Principles Generally Accepted in the United States of America ("GAAP"), the Company uses non-GAAP measures of income from operations, net income, net income per share, net income per ADS, and EBITDA, which are adjusted from results based on GAAP to exclude the stock-based compensation expenses primarily due to the adoption of SFAS 123R, which became effective on January 1, 2006. The non-GAAP financial measures are provided to enhance the investors' overall understanding of the Company's current and past financial performance in on-going core operations as well as prospects for the future. These measures should be considered in addition to results prepared and presented in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and therefore deems it important to provide all of this information to investors.

Reconciliations of the Company's non-GAAP financial measures to unaudited Condensed Consolidated Statements of Operations are set fourth after the "Condensed Consolidated Statements of Operations" included in this release.

    For further information, please contact:

    Investor Relations
     China Finance Online Co. Limited
     Tel:   +86-10-5832-5288
     Email: ir@jrj.com



                       China Finance Online Co. Limited
               UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                        (In thousands of U.S. dollars)

                                                          Jun. 30    Dec. 31
                                                            2008       2007
    Assets
    Current assets:
          RMB account                                      66,932     51,129
          Foreign currency account                         18,996     23,600
       Cash and cash equivalents                           85,928     74,729
       Trust bank balances held on behalf of customers      4,778      2,850
       Advance to employees                                 2,344      1,673
       Accounts receivable, net                             4,436      1,491
       Prepaid expenses and other current assets            7,511      2,947
       Deferred tax assets, current                           363      1,130
    Total current assets                                  105,360     84,820
       Cost method investment                               1,480      1,480
       Property and equipment, net                          8,229      5,455
       Acquired intangible assets, net                      1,905      1,938
       Rental deposits                                        588        500
       Goodwill                                            10,669      9,652
       Deferred tax assets, non-current                       856         14
       Other deposits                                          25         25
    Total assets                                          129,112    103,884

    Liabilities and shareholders' equity
    Current liabilities:
       Deferred revenue, current                           27,953     20,457
       Accrued expenses and other current liabilities       6,652      6,951
       Amount due to customers for trust bank balances
        held on behalf of customers                         4,778      2,850
       Accounts payable                                       769        764
       Deferred tax liability, current                          7         --
       Income taxes payable                                     5         12
    Total current liabilities                              40,164     31,034
       Deferred tax liability, non-current                    192        352
       Deferred revenue, non-current                        6,920      4,665
    Total liabilities                                      47,276     36,051
    Minority interests                                         --        471
    Total shareholders' equity                             81,836     67,362
    Total liabilities, minority interests and
     shareholders' equity                                 129,112    103,884



                       China Finance Online Co. Limited
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
            (in thousands of U.S. dollars, except per share data)

                                 Three months ended         Six months ended
                        Jun 30,    Jun 30,     Mar 31,     Jun 30,    Jun 30,
                         2008        2007        2008        2008       2007

    Net revenues        14,679       5,723      11,055      25,734       9,719
    Cost of revenues
    (includes
     share-based
     compensation
     expense of $0,
     $0, $0, $0 and
     $16, respectively) (2,101)     (1,079)     (1,717)     (3,818)     (1,912)
    Gross profit        12,578       4,644       9,338      21,916       7,807
    Operating
     expenses
    General and
     administrative
    (includes
     share-based
     compensation
     expenses
     of $1,888, $540,
     $2,276, $4,164,
     and $866
     respectively)      (4,121)     (1,789)     (3,917)     (8,038)     (2,984)
    Sales and
     marketing
     (includes
     share-based
     compensation
     expenses
     of $66, $32,
     $67, $133 and
     $57 respectively)  (3,639)     (1,360)     (2,452)     (6,091)     (2,607)
    Product
     development
     (includes
     share-based
     compensation
     expenses
     of $13, $25,
     $23, $36 and
     $51 respectively)  (1,241)       (443)       (995)     (2,236)       (790)

    Total operating
     expenses           (9,001)     (3,592)     (7,364)    (16,365)     (6,381)
    Income from
     operations          3,577       1,052       1,974       5,551       1,426
    Interest income        345         253         344         689         507
    Other income,
     net                   (11)          6           2          (9)         68
    Exchange gain,
     net                   559         101         870       1,429         101

    Income before
     income tax
     benefit             4,470       1,412       3,190       7,660       2,102
    Income tax
     benefit                88         150          64         152         235
    Purchased
     pre-acquisition
     earning                --          --         227         227          --
    Minority
     interests in
     net income of
     consolidated
     subsidiary              3          --          28          31          --

    Net income           4,561       1,562       3,509       8,070       2,337
    Income
     attributable
     to ordinary
     shareholders        4,561       1,562       3,509       8,070       2,337
    Income per share
      Basic              $0.05       $0.02       $0.04       $0.08       $0.02
      Diluted            $0.04       $0.02       $0.03       $0.07       $0.02
    Income per ADS
      Basic              $0.23       $0.08       $0.18       $0.41       $0.12
      Diluted            $0.20       $0.08       $0.15       $0.35       $0.12
    Weighted average
     ordinary shares
    Basic
                    98,829,766  95,676,903  98,646,281  98,738,024  95,205,935
    Diluted
                   114,810,694 101,914,801 113,735,492 114,292,220 101,443,833
    Weighted average
     ADSs
    Basic
                    19,765,953  19,135,381  19,729,256  19,747,605  19,041,187
    Diluted
                    22,962,139  20,382,960  22,747,098  22,858,444  20,288,767



                       China Finance Online Co. Limited
          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                        (in thousands of U.S. dollars)

                                                    Three months ended
                                               Jun. 30,   Jun. 30,   Mar. 31,
                                                 2008       2007       2008
    Cash flows from operating activities:
    Net income                                   4,561      1,562      3,509
    Adjustments to reconcile net
     income to net cash provided
     by operating activities:
    Stock-based compensation                     1,967        597      2,366
    Depreciation and amortization                  455        219        425
    Deferred taxes                                 (94)      (165)       (77)
    Loss on disposal of property and equipment      11         --         --
    Minority interests                              (3)        --        (28)
    Purchased pre-acquisition earning               --         --       (227)
    Changes in assets and liabilities:
    Accounts receivable                         (2,643)      (382)      (199)
    Prepaid expenses and other current assets   (3,777)       641     (1,456)
    Advance to employees                        (1,013)        --        443
    Trust bank balances held on behalf
     of customers                               (1,585)        --       (342)
    Rental deposits                                (34)        (1)       (36)
    Deferred revenue                             4,214      3,290      3,717
    Accounts payable                                29         --       (285)
    Amount due to customers for trust bank
     balances held on behalf of customers        1,585         --        342
    Accrued expenses and other current
     liabilities                                   669        642     (1,268)
    Income taxes payable                           (76)        15         67
    Net cash provided by operating activities    4,266      6,418      6,951

    Cash flows from investing activities:
    Acquisition of minority interest              (628)        --         --
    Purchase of property and equipment          (2,269)      (943)      (771)
    Net cash used in investing activities       (2,897)      (943)      (771)

    Cash flows from financing activities:
    Proceeds from stock options
     exercised by employees                        312        250        121
    Proceeds from exercise of options
     granted to non-employees                       --        192         --
    Proceeds from capital injection              1,006         --         --
    Net cash provided by financing activities    1,318        442        121

    Effect of exchange rate changes                843        735      1,368

    Net increase in cash and cash equivalents    3,530      6,652      7,669
    Cash and cash equivalents,
     beginning of quarter                       82,398     49,500     74,729
    Cash and cash equivalents, end of quarter   85,928     56,152     82,398



                       China Finance Online Co. Limited
   RECONCILIATIONS OF NON-GAAP MEASURES TO UNAUDITED CONDENSED CONSOLIDATED
                           STATEMENT OF OPERATIONS
              (U.S. Dollar in thousands, except per share data)

                                           Three months ended Jun. 30, 2008
                                        Reported                     Adjusted
                                         US GAAP     Adjustment      Non-GAAP
    Net revenues                          14,679                      14,679
    Cost of revenues                      (2,101)                     (2,101)
    Gross profit                          12,578                      12,578


    Operating expenses
    General and administrative            (4,121)     1,888  (a)      (2,233)
    Sales and marketing                   (3,639)        66  (a)      (3,573)
    Product development                   (1,241)        13  (a)      (1,228)

    Total operating expenses              (9,001)     1,967           (7,034)
    Income from operations                 3,577      1,967            5,544
    Interest income                          345                         345
    Other income, net                        (11)                        (11)
    Exchange gain, net                       559                         559

    Income before income tax benefit       4,470      1,967            6,437
    Income tax benefit                        88                          88
    Minority interests in net income
     of consolidated subsidiary                3                           3

    Net income                             4,561      1,967            6,528

    Net income per share
    Basic                                  $0.05      $0.02            $0.07
    Diluted                                $0.04      $0.02            $0.06

    Net income per ADS
    Basic                                  $0.23      $0.10            $0.33
    Diluted                                $0.20      $0.09            $0.28

    Weighted average ordinary shares
    Basic                             98,829,766                  98,829,766
    Diluted                          114,810,694                 114,810,694
    Weighted average ADSs
    Basic                             19,765,953                  19,765,953
    Diluted                           22,962,139                  22,962,139

    (a) Exclude total share-based compensation expense of $1,967.



    Non-GAAP Measures
                                             Three months ended Jun. 30,
                                                        2008
                                             (U.S. Dollar in thousands)
                                          GAAP                    Non-GAAP
                                         Result    Adjustment      Results
                                                       (a)
    Income from operations                3,577       1,967         5,544


                                             Three months ended Jun. 30,
                                                        2007
                                             (U.S. Dollar in thousands)
                                          GAAP                    Non-GAAP
                                         Result    Adjustment      Results
                                                       (a)
    Income from operations                1,052         597         1,649


                                             Three months ended Mar. 31,
                                                        2008
                                             (U.S. Dollar in thousands)
                                          GAAP                  Non-GAAP
                                         Result   Adjustment     Results
                                                      (a)
    Income from operations                1,974       2,366       4,340


                                             Three months ended Jun. 30,
                                                        2008
                                             (U.S. Dollar in thousands)
                                          GAAP                    Non-GAAP
                                         Result    Adjustment      Results
                                                       (a)
    Net income                            4,561       1,967        6,528


                                             Three months ended Jun. 30,
                                                        2007
                                             (U.S. Dollar in thousands)
                                          GAAP                   Non-GAAP
                                         Result    Adjustment     Results
                                                       (a)
    Net income                            1,562         597        2,159


                                             Three months ended Mar. 31,
                                                        2008
                                             (U.S. Dollar in thousands)
                                          GAAP                   Non-GAAP
                                         Result     Adjustment    Results
                                                       (a)
    Net income                            3,509       2,366        5,875


    (a) The adjustment is for share-based compensation expenses.


    Reconciliations from operating profit to EBITDA and adjusted EBITDA

                                              Three         Three      Three
                                              months        months     months
                                              ended         ended      ended
                                             Jun. 30,      Jun. 30,   Mar. 31,
                                               2008           2007      2008
                                                (U.S. Dollar in thousands)
    Net income                                4,561        1,562       3,509
    Adjustment
       Interest income                         (345)        (253)       (344)
       Income tax benefit                       (88)        (150)        (64)
    Other income and expenses                  (551)        (107)     (1,127)
       Depreciation                             375          146         347
       Amortization of intangibles               80           73          78
    EBITDA                                    4,032        1,271       2,399
      Share-based compensation                1,967          597       2,366
    Adjusted EBITDA                           5,999        1,868       4,765

SOURCE China Finance Online Co. Limited

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