Sina Technology News, August 25 afternoon edition - Kingsoft (HK: 03888) has released its unaudited second-quarter earnings report. The company reported revenue of 263 million yuan, up 14% from the previous quarter and an increase of 7%. Net profit was 1.07 billion yuan, showing a 44% rise from the previous quarter and a 31% year-on-year increase.
The following are the main financial statements:
Income:
Earnings for the quarter were 263 million yuan, marking a 14% increase quarter-over-quarter compared to the same period last year with a 7% rise. In the second quarter of 2011, revenue from entertainment software, application software, and services accounted for 66% and 34% respectively of the Group’s total revenue.
Revenue from the online game business was 173 million yuan, increasing by 6% quarter-over-quarter and 9% year-on-year. This growth is mainly due to the continued popularity of the JX series in China, which has shown outstanding performance.
The daily average best number of simultaneous users was 6.5 million, down 5% quarter-over-quarter and 20% year-on-year. The average monthly number of paying subscribers was 1.25 million, down 1% sequentially and 2% year-on-year. The decline in the daily average maximum number of simultaneous users and the average monthly number of paying users is mainly attributed to poor performance of games in Vietnam.
Average monthly income per online game user was 46 yuan, up 7% from the previous quarter and representing a 12% increase over the same period last year.
Revenue from the application software business was 90 million yuan, up 32% quarter-over-quarter and 3% year-on-year.
This quarterly growth is mainly due to strong sales growth in Kingsoft WPS Office business software amid improvements in the domestic genuine benefit environment. Part of the growth in Internet security service revenue saw a decrease.
Daily value-added service revenue from paying security users amounted to 21.3 million yuan, down 10% from the previous quarter and 72% year-on-year.
Value-added service revenue per paying security account was 4.7 yuan, down 4% sequentially but representing a 114% increase over the same period last year.
Gross Profit and Revenue Costs:
Gross profit was 228.4 million yuan, up 15% from the previous quarter and 6% year-on-year; the Group's gross profit margin was 87%, rising one percentage point from the previous quarter and unchanged from the previous year.
Cost of revenue for this quarter was 34.6 million yuan, up 6% quarter-over-quarter and 10% year-on-year. This quarterly growth is mainly due to an increase in server costs for Kingsoft Internet Security Services.
Development Costs:
Research and development costs for the quarter, net of government funding, were 61.4 million yuan, down 17% sequentially but up 7% year-on-year. The sequential decline in the second quarter of 2011 was mainly due to increased government allotments; on-year growth was mainly due to decreased capitalized development costs.
Sales and distribution costs for the quarter were 31.2 million yuan, up 57% from the previous quarter but down 7% year-on-year. This quarterly growth was primarily due to promotional activities.
Administrative Expenses:
Administrative costs for the quarter were 26.1 million yuan, down 8% sequentially and 4% year-on-year.
Share-based Compensation Costs:
Share-based compensation costs for the quarter were 3.7 million yuan, down 51% sequentially and 75% year-on-year.
Operating Profit Before Share-based Compensation Costs:
For these reasons, operating profit before share-based compensation costs for the quarter was 113.1 million yuan, up 47% sequentially and 30% year-on-year. The operating profit margin before share-based compensation costs was 43%, a ten-percentage-point increase sequentially and eight-percentage-point increase year-on-year.
Financial Income:
Financial income for the quarter was 13.8 million yuan, up 6% quarter-over-quarter and 79% year-on-year.
Finance Costs:
Banking amount for the quarter was 800,000 yuan, up 583% quarter-over-quarter while it was zero in the second quarter of 2010. This increase was mainly due to two loans added by the Group in the second quarter of 2011.
Income Tax Expense:
Tax expense for the quarter was 15.3 million yuan, up 34% quarter-over-quarter and 14% year-on-year. The Group’s effective tax rate decreased by two percentage points year-on-year.
Parent Company's Share of Profit:
For these reasons, the parent company's profit attributable to owners was 10.39 million yuan, showing a 55% increase from the previous quarter and the same period last year.
Profit Attributable to Owners of Parent Company Before Deducting Share-based Compensation Costs:
Profit attributable to owners of the parent company before deducting share-based compensation costs was 107.2 million yuan, representing a 44% increase quarter-over-quarter and a 31% increase year-on-year. As of June 30, 2011, March 31, 2011, and ending June 30, 2010 just three months, the Group’s net profit margin before share-based compensation costs were 41%, 32%, and 33%.
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