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Renren Announces Unaudited Third Quarter 2012 Financial Results

       Renren Announces Unaudited Third Quarter 2012 Financial Results

PR Newswire

BEIJING, Nov. 13, 2012



BEIJING, Nov. 13, 2012 /PRNewswire/ -- Renren Inc. (NYSE: RENN) ("Renren" or
the "Company"), a leading real-name social networking internet platform in
China, today announced its unaudited financial results for the third quarter
ended September 30, 2012.

Third Quarter 2012 Highlights

  oTotal net revenues were US$50.4 million, a 47.2% increase from the
    corresponding period in 2011.
  oOnline game revenues were US$24.2 million, a 120.2% increase from the
    corresponding period in 2011.
  oGross profit was US$30.9 million, a 12.4% increase from the corresponding
    period in 2011.
  oOperating loss was US$20.6 million, compared to an operating loss of
    US$6.4 million in the corresponding period in 2011.
  oNet loss attributable to Renren was US$15.4 million, compared to a net
    loss of US$1.2 million in the corresponding period in 2011.
  oAdjusted net loss (1)(non-GAAP) was US$12.1 million, compared to an
    adjusted net income of US$0.3 million in the corresponding period in 2011.

"We had another solid quarter of user growth. Our real-name user base
continued to show healthy year-over-year expansion of 25%, as total activated
users this quarter reached over 172 million, an increase of 35 million users
from the same period a year ago. Monthly unique log-in users also reached 48
million in the month of September, representing a 27% growth year-over-year,"
commented Joseph Chen, Chairman and Chief Executive Officer.

"Net revenues came in at the midpoint of our guidance and in-line with our
expectations. Our gaming business continues to show a very strong momentum,
driven by our cross-platform games. Nuomi, our group-buying business, also
continues to show encouraging trends across all major metrics, particularly in
transactions through mobile. However, our brand advertising business, despite
a sequential increase, continues to face challenges in the midst of a weak
economy coupled by intensifying competition and continued migration of
Renren's traffic from PC to mobile."

"Meanwhile, we also realize that the competitive landscape in the mobile world
is quite different from before. Therefore, our focus and investments will
continue to shift towards the mobile opportunities and challenges ahead of
us. We want to further deepen and expand upon our core competency in social
network services, particularly in the mobile world," said Mr. Chen.

"Our different businesses are at different stages of investment and
transformation. While we expect our investments will continue to outpace the
monetization progress in the near-term, we remain committed to building the
long-term value for our company and our shareholders." added Hui Huang,
Renren's Chief Financial Officer.

    Adjusted net income (loss) is a non-GAAP measure, which is defined as
(1) income (loss) from continuing operations excluding share-based
    compensation expenses, amortization of intangible assets and impairment of
    intangible assets.

Third Quarter 2012 Results

Total net revenues for the third quarter of 2012 were US$50.4 million,
representing a 47.2% increase from the corresponding period in 2011.

Online advertising revenues were US$17.0 million, representing a decrease of
13.7% from the corresponding period of 2011. The decrease was due to lower
advertising spending by brand advertisers in a softer macro-environment,
coupled by intensifying competition and continued migration of Renren's
traffic from PC to mobile. The number of Renren's activated users, however,
continued to increase from approximately 137million as of September30, 2011
to approximately 172million as of September30, 2012. Monthly unique log-in
users increased from approximately 38million in September2011 to
approximately 48million in September2012.

Internet Value-Added Services (IVAS) revenues were US$33.4 million,
representing a 129.3% increase from the corresponding period of 2011. Within
IVAS revenues, online game revenues were US$24.2 million for the third quarter
of 2012, a 120.2% increase from the corresponding period of 2011. The increase
in online game revenues during this quarter was due to the growing popularity
of several new in-house developed games recently launched. Other IVAS revenues
were US$9.2 million for the third quarter of 2012, a 157.1% increase from the
corresponding period of 2011. Within other IVAS revenues, Renren's social
commerce service, Nuomi, recorded US$4.6 million of net revenues for the third
quarter of 2012.

Cost of revenues was US$19.5 million, a 190.2% increase from the corresponding
period of 2011. Cost of revenues for the third quarter of 2012 included US$0.4
million for Nuomi.The increase in cost of revenues for the third quarter was
largely due to increased bandwidth investments and increased development costs
of Renren's recently launched games.

Operating expenses were US$51.5 million, a 51.8% increase from the
corresponding period of 2011. Operating expenses in the third quarter of 2012
included US$10.6 million expenses incurred on Nuomi. Excluding Nuomi, the
operating expenses in the third quarter of 2012 would be US$40.9 million, a
58.1% increase from the corresponding period in 2011.

Selling and marketing expenses were US$21.4 million, a 12.9% increase from the
corresponding period of 2011. The increase was primarily due to the increased
investments in Nuomi's sales force and advertising campaigns, along with
increased personnel related expenses and promotions for products on Renren.

Research and development expenses were US$20.8 million, a 102.1% increase from
the corresponding period in 2011. The increase was primarily due to headcount
and personnel related expense increases.

General and administrative expenses were US$9.3 million, a 98.4% increase from
the corresponding period in 2011. The increase was primarily due to the
growth of the company size and business operations.

Share-based compensation expense, which were all included in the operating
expenses, were US$2.6 million, compared to US$1.5 million in the corresponding
period in 2011. The increase was mainly due to additional share-based
incentive awards granted to directors, executives and employees.

Operating loss was US$20.6 million, compared to an operating loss of US$6.4
million in the corresponding period in 2011.

Net loss attributable to Renren Inc. was US$15.4 million, compared to a net
loss of US$1.2 million in the corresponding period in 2011. Excluding results
of operations attributable to Nuomi in both quarters, net loss in the third
quarter of 2012 would be US$9.1 million, compared to a net income of US$6.2
million in the corresponding period of 2011.

Adjusted net loss (non-GAAP) was US$12.1 million, compared to a net income of
US$0.3 million in the corresponding period in 2011. Excluding results of
operations attributable to Nuomi in both quarters, adjusted net loss in the
third quarter of 2012 would be US$5.9 million, compared to the adjusted net
income of US$7.7 million in the corresponding period in 2011. Adjusted net
income (loss) is defined as income (loss) from continuing operations excluding
share-based compensation expenses, amortization of intangible assets and
impairment of intangible assets.

Completion of the Share Repurchase Program

The Company's Share Repurchase Program, which was approved by its Board of
Directors on September 29, 2011 to repurchase up to US$150 million of its
ADSs, was completed as of September 28, 2012. During the third quarter of
2012, Renren repurchased approximately 13.3 million ADSs, bringing the total
share repurchase to 24.2 million ADS and an aggregate consideration of $101.8
million at the end of the program.

Business Outlook

The Company expects to generate revenues in an amount ranging from US$45
million to US$47 million in the fourth quarter of 2012, representing 37% to
43% year-over-year growth. This forecast reflects Renren's current and
preliminary view, which is subject to change.

Conference Call Information

Management will host an earnings conference call at 8:00 p.m. U.S. Eastern
Time on Tuesday, November 13, 2012 (Beijing/Hong Kong Time: 9:00a.m.,
Wednesday, November 14, 2012).

Interested parties may participate in the conference call by dialing the
numbers below and entering passcode 10-15 minutes prior to the initiation of
the call.

Dial-in Information:
US: +1 718-354-1231
Hong Kong: +852-2475-0994
China: +86 800-819-0121
International: + 65-6723-9381
Passcode: Renren

A replay of the call will be available for one week and dial-in information is
as follows:
International: + 61 2-8199-0299
Passcode: 64321273

This call will be webcast live and the replay will be available on Renren's
corporate web site at http://ir.renren-inc.com for 12 months.

About Renren Inc.

Renren Inc. (NYSE: RENN) operates a leading real name social networking
internet platform in China. It enables users to connect and communicate with
each other, share information and user generated content, play online games,
listen to music, shop for deals and enjoy a wide range of other features and
services. Renren's platform includes the main social networking website
Renren.com, the online games center game.Renren.com, the social commerce
website Nuomi.com, and the video-sharing website 56.com. Renren's American
depositary shares, each of which represents three ClassA ordinary shares,
trade on NYSE under the symbol "RENN". Renren had approximately 172 million
activated users as of September 30, 2012.

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 business outlook for the fourth quarter of 2012 and
quotations from management in this announcement, as well as Renren's strategic
and operational plans, contain forward-looking statements. Renren may also
make written or oral forward-looking statements in its filings with the U.S.
Securities and Exchange Commission ("SEC"), 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 Renren'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: our
goals and strategies; our future business development, financial condition and
results of operations; the expected growth of the social networking site
market in China; our expectations regarding demand for and market acceptance
of our services; our expectations regarding the retention and strengthening of
our relationships with key advertisers and customers; our plans to enhance
user experience, infrastructure and service offerings; competition in our
industry in China; and relevant government policies and regulations relating
to our industry. Further information regarding these and other risks is
included in our annual report on Form20-F and other documents filed with the
SEC. All information provided in this pressreleaseand in the attachments is
as of the date of this press release, and Renren does not undertake any
obligation to update anyforward-looking statement, except as required under
applicable law.

About Non-GAAP Financial Measures

To supplement Renren's consolidated financial results presented in accordance
with United States Generally Accepted Accounting Principles ("GAAP"), Renren
uses "adjusted net income (loss)" which is defined as "a non-GAAP financial
measure" by the SEC, in evaluating its business. We define adjusted net income
(loss) as income (loss) from continuing operations excluding share-based
compensation expenses, amortization of intangible assets and impairment of
intangible assets. We present adjusted net income (loss) because it is used by
our management to evaluate our operating performance. We also believe that
this non-GAAP financial measure provide useful information to investors and
others in understanding and evaluating our consolidated results of operations
in the same manner as our management and in comparing financial results across
accounting periods and to those of our peer companies.

The presentation of this non-GAAP financial measure is not intended to be
considered in isolation from, or as a substitute for, the financial
information prepared and presented in accordance with GAAP. For more
information on these non-GAAP financial measures, please see the table
captioned "Reconciliation of non-GAAP results of operations measures to the
comparable GAAP financial measures" at the end of this release.

For more information, please contact:

Sam Lawn
Investor Relations Director
Renren Inc.
Tel: (86 10) 8448 1818 ext 1300
Email: ir@renren-inc.com



RENREN INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in US dollars, in thousands, except       December31,  September30,
shares,
per shares, ADS, and per ADS data)                 2011          2012
ASSETS
Current assets:
Cash and cash equivalents                        $  284,643    $  456,655
Term deposits                                       702,680       350,000
Short-term investments                              53,393        85,833
Accounts receivable, net                            14,911        20,629
Prepaid expenses and other current assets           59,389        32,191
Amounts due from related parties                    573           82
Deferred tax assets-current                         1,381         1,384
Total current assets                                1,116,970     946,774
Non-current assets:
Equipment, net                                      22,301        29,542
Intangible assets, net                              28,086        26,967
Goodwill                                            58,998        59,149
Long-term investments                               50,300        88,425
Other non-current assets                            1,353         31,445
Total non-current assets                            161,038       235,528
TOTAL ASSETS                                     $  1,278,008  $  1,182,302
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                                 $  20,381     $  33,435
Accrued expenses and other payables                 31,108        31,629
Amounts due to a related party                      51            -
Deferred revenue and advance from customers        7,441         10,978
Income tax payable                                  1,506         2,225
Total current liabilities                           60,487        78,267
Non-current liabilities:
Deferred tax liabilities-noncurrent                 6,976         6,597
Total non-current liabilities                       6,976         6,597
TOTAL LIABILITIES                                   67,463        84,864
Commitments
Shareholders' Equity:
Class A ordinary shares (US$0.001 par value,
3,000,000,000 shares authorized, 770,912,350 and
726,924,519 issued and outstanding as of              771           727
December31, 2011 and September 30, 2012,
respectively)
Class B ordinary shares (US$0.001 par value,
500,000,000 shares authorized, 398,763,450 and
401,867,617 issued and outstanding as of              399           402
December31, 2011 and September 30, 2012,
respectively)
Treasury stocks, at cost                            (25,597)      (101,728)
Additional paid-in capital                          1,407,059     1,417,863
Statutory reserves                                  3,507         3,507
Accumulated deficit                                 (183,228)     (237,170)
Accumulated other comprehensive income             7,334         13,837
Total shareholders' equity                          1,210,245     1,097,438
Noncontrolling Interests                            300           -
Total equity                                        1,210,545     1,097,438
LIABILITIES AND EQUITY                           $  1,278,008  $  1,182,302



RENREN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                                                                For the Three Months Ended
(AmountsinUSdollars,inthousands,exceptshares,            September 30,     June 30,        September30,
per shares, ADS, and per ADS data)                              2011             2012             2012
Net revenues
Online advertising                                            $ 19,635         $ 15,096         $ 16,938
IVAS                                                            14,579           29,728           33,428
Total net revenues                                              34,214           44,824           50,366
Cost of revenues                                               (6,701)          (16,899)         (19,444)
Gross profit                                                    27,513           27,925           30,922
Operating expenses:
Selling and marketing                                           (18,935)         (21,578)         (21,371)
Research and development                                        (10,314)         (17,826)         (20,844)
General and administrative                                      (4,708)          (10,726)         (9,341)
Total operating expenses                                        (33,957)         (50,130)         (51,556)
Loss from operations                                           (6,444)          (22,205)         (20,634)
Other income                                                    216              13               1,362
Exchange gain (loss) on dual currency deposit and offshore       2,728            (3,114)          972
bank accounts
Interest income                                                 2,899            5,101            5,733
Realized gain on available-for-sale investments                 -                2,460            870
Loss before provision of income tax, loss in equity method      (601)            (17,745)         (11,697)
investment and noncontrolling interests, net of income taxes
Income tax expenses                                             (713)            (177)            (117)
Loss before loss in equity method investments and               (1,314)          (17,922)         (11,814)
noncontrolling interests, net of income taxes
Loss in equity method investments, net of income taxes          -                (7,017)          (3,586)
Net loss                                                        (1,314)          (24,939)         (15,400)
Add:Netlossattributabletononcontrollinginterests,netof   129              -                -
income taxes
Net loss attributable to Renren Inc.                          $ (1,185)        $ (24,939)       $ (15,400)
Net loss per share, basic                                     $ 0.00           $ (0.02)         $ (0.01)
Net loss per ADS, basic                                       $ 0.00           $ (0.06)         $ (0.04)
Net loss per share, diluted                                   $ 0.00           $ (0.02)         $ (0.01)
Net loss per ADS, diluted                                     $ 0.00           $ (0.06)         $ (0.04)
Shares used in computation, basic                               1,177,595,401    1,167,959,726    1,141,783,844
ADS used in computation, basic                                  392,531,800      389,319,909      380,594,615
Shares used in computation, diluted                             1,177,595,401    1,167,959,726    1,141,783,844
ADS used in computation, diluted                                392,531,800      389,319,909      380,594,615





Reconciliation of Non-GAAP results of operations measures to the comparable GAAP financial measures
Adjusted net income (loss)
                                                                           For the Three Months Ended
(AmountsinUSdollars,inthousands) September30,  June30,  September30,
                                                                           2011             2012        2012
Loss from continuing operations                                          $    (1,314)     $ (24,939)  $    (15,400)
Add back: Shared-based compensation expenses                                  1,524         2,537          2,585
Addback:Amortizationofintangibleassets                            54            604            673
Adjusted net income (loss)                                               $    264         $ (21,798)  $    (12,142)

SOURCE Renren Inc.

Website: http://ir.renren-inc.com
 
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