Vipshop Reports Third Quarter 2012 Financial Results

             Vipshop Reports Third Quarter 2012 Financial Results

Achieves Non-GAAP Net Income Profitability

3Q12 Net Revenues Up 197.0% YOY

3Q12 Gross Margin Increased to 22.3%

Conference Call to be Held at 8:30 AM U.S. Eastern Time on November 14, 2012

PR Newswire

GUANGZHOU, China, Nov. 13, 2012

GUANGZHOU, China, Nov. 13, 2012 /PRNewswire/ -- Vipshop Holdings Limited
(NYSE: VIPS) ("Vipshop" or the "Company"), China's leading online discount
retailer for brands, today announced its unaudited financial results for the
quarter ended September 30, 2012.

Third Quarter 2012 Highlights

  oNet revenues increased by 197.0% over prior year period to US$155.9
    million, primarily attributable to a 173.6% increase in the number of
    active customers(1) to 1.7 million and a 157.6% increase in total
    orders(2) to 5.4 million.
  oGross margin increased to 22.3% from 19.0% in the prior year period and
    21.8% in the second quarter of 2012.
  oNon-GAAP loss from operations(3) decreased to US$1.2 million from US$10.7
    million in the prior year period. Non-GAAP operating loss margin(4)
    improved to 0.7% from 20.3% in the prior year period and 2.8% in the
    second quarter of 2012.
  oNet loss attributable to ordinary shareholders decreased to US$1.5 million
    from US$17.5 million in the prior year period. Net loss margin improved to
    0.9% from 33.4% in the prior year period and 4.3% in the second quarter of
    2012.
  oNon-GAAP net income attributable to ordinary shareholders(5) was
    US$640,542 compared to a non-GAAP net loss of US$10.8 million in the prior
    year period. Non-GAAP net margin(6) was 0.4% compared with a non-GAAP net
    loss margin of 20.6% in the prior year period and 3.1% from the second
    quarter of 2012.

Mr. Eric Shen, Chairman and CEO of Vipshop, stated, "We are very excited to
announce that we have achieved profitability on a non-GAAP basis for the first
time in our Company's history. Our success was led by exceptional financial
and operational results across the board, validating the value proposition we
provide to our consumers and brand partners. Moreover, we believe that this
achievement is a testament to our execution capabilities of not only rapidly
expanding our business scale but also of consistently improving our bottom
line. Building upon our expanding scale and continuous improvement in
operational efficiencies, we believe that Vipshop is poised to grow as an
industry leader in China's ever-growing e-Commerce market."

Mr. Donghao Yang, CFO of Vipshop, commented, "Not only did our revenue growth
exceed our expectations, but we were also able to further expand gross margin
to 22.3% during the summer, which is our seasonally low quarter. Through
growing leverage in our business model and improved operational expertise, we
continue to reduce fulfillment expenses as a percentage of revenues
demonstrating the growing strength of our leadership position. As China's
retail and e-Commerce industries continue to expand alongside its growing
middle class, we are well positioned to benefit from this strong growth trend
by providing the increasingly affluent Chinese consumers with their desired
branded products at attractive prices."

Third Quarter 2012 Financial Results

NET REVENUES

Net revenues for the third quarter of 2012 increased by 197.0% to US$155.9
million from US$52.5 million in the prior year period, primarily driven by
growth in the number of active customers and total orders.

The number of active customers for the third quarter of 2012 increased by
173.6% to 1.7 million from approximately 633,000 in the prior year period. The
number of total orders for the third quarter of 2012 increased by 157.6% to
5.4 million from 2.1 million in the prior year period. This increase was
primarily due to the Company's addition of several regional sub-sites in 2011,
as well as continued efforts to optimize brand and product selection, increase
the number of sales events and increase the number of SKUs available on its
website. In addition, the Company's regional warehouse expansion into
Shanghai, Chengdu and Beijing has enhanced its ability to accommodate
increased demand from end customers.

GROSS PROFIT

Gross profit for the third quarter of 2012 increased by 247.8% to US$34.8
million from US$10.0 million in the prior year period. This reflects both the
significant increase in net revenues as well as continued margin expansion.
Gross margin increased to 22.3% in the third quarter of 2012 from 19.0% in the
prior year period and 21.8% in the second quarter of 2012. This increase is
attributable to the Company's increased bargaining power with its suppliers
due to increased purchasing scale.

OPERATING EXPENSES

Total operating expenses for the third quarter of 2012 increased by 38.6% to
US$38.0 million from US$27.4 million in the prior year period. As a percentage
of net revenues, total operating expenses decreased to 24.4% from 52.2% in the
prior year period and 25.9% in the second quarter of 2012.

  oFulfillment expenses increased by 89.8% to US$21.7 million for the third
    quarter of 2012 from US$11.4 million in the prior year period, primarily
    reflecting the increase in sales volume and number of orders fulfilled. As
    a percentage of net revenues, fulfillment expenses decreased to 13.9% from
    21.8% in the prior year period and 15.2% in the second quarter of 2012,
    which reflects the Company's strategy of shifting towards using regional
    delivery services and capacity expansion of regional warehouses.
  oMarketing expenses increased to US$7.3 million from US$4.6 million in the
    prior year period. As a percentage of net revenues, marketing expenses
    decreased to 4.7% from 8.7% in the prior year period and 4.9% in the
    second quarter of 2012, demonstrating the Company's ability to control
    marketing expenses and leverage word-of-mouth referrals.
  oTechnology and content expenses increased to US$3.2 million from
    approximately US$1.2 million in the prior year period, primarily
    reflecting the Company's continued efforts to invest in its website and IT
    system to better support future growth. As a percentage of net revenues,
    technology and content expenses remain stable at 2.1% compared with 2.3%
    in the prior year period and 2.0% in the second quarter of 2012.
  oGeneral and administrative expenses decreased to US$6.3 million from
    US$10.4 million in the prior year period, primarily due to decreased
    share-based compensation charges. As a percentage of net revenues, general
    and administrative expenses was 4.1% compared with 19.7% in the prior year
    period and 4.1% in the second quarter of 2012, reflecting the Company's
    increased operational leverage and continued cost-control efforts.

Loss from operations decreased to US$3.3 million from US$17.4 million in the
prior year period reflecting the growing scale of the Company's operations,
improved gross margin and costs control. Operating loss margin improved to
2.1% from 33.2% in the prior year period and 4.0% in the second quarter of
2012.

Non-GAAP loss from operations, which excludes the impact of share-based
compensation expense, decreased to US$1.2 million from US$10.7 million in the
prior year period. Non-GAAP operating loss margin improved to 0.7% from 20.3%
in the prior year period and 2.8% in the second quarter of 2012.

NET LOSS

Net loss attributable to ordinary shareholders decreased to US$1.5 million
from US$17.5 million in the prior year period. Net loss margin improved to
0.9% from 33.4% in the prior year period and from 4.3% from the second quarter
of 2012. Net loss attributable to ordinary shareholders per diluted ADS(7) was
US$0.03 compared to US$0.76 in the prior year period.

Non-GAAP net income attributable to ordinary shareholders, which excludes
share-based compensation expenses, was US$640,542 compared to a non-GAAP net
loss of US$10.8 million in the prior year period. Non-GAAP net margin was 0.4%
compared with a non-GAAP net loss margin of 20.6% in the prior year period and
a non-GAAP net loss margin of 3.1% from the second quarter of 2012. Non-GAAP
net income attributable to ordinary shareholders per diluted ADS was US$0.01
in the third quarter of 2012 compared to a non-GAAP net loss attributable to
ordinary shareholders per diluted ADS of US$0.47 in the prior year period.

For the quarter ended September 30, 2012, the Company's weighted average
number of ADSs used in computing diluted loss per ADS was 50,569,900.

As of September 30, 2012, the Company had cash and cash equivalents of US$91.9
million and short-term investments of US$40.1 million.

For the third quarter of 2012, net cash from operating activities was US$17.0
million.

Business Outlook

For the fourth quarter of 2012, the Company expects its net revenues to be
between US$235 million and US$240 million, representing a year-over-year
growth rate of approximately 123% to 128%.As a result, for the full year of
2012, the Company expects its net revenues to be between US$627 million and
US$632 million, representing a year-over-year growth rate of approximately
176% to 178%. These forecasts reflect the Company's current and preliminary
view on the market and operational conditions, which are subject to change.

Conference Call Information

The Company will hold a conference call on Wednesday, November 14, 2012 at
8:30 am Eastern Time or 9:30 pm Beijing Time to discuss its financial results
and operating performance for the third quarter of 2012.

To participate in the call, please dial the following numbers:

United States:  +1-646-254-3515
International Toll Free:     +1-855-500-8701
China Domestic:     400-1200654
Hong Kong:   +852-3051-2745
Conference ID:    #58808563

The replay will be accessible through November 21, 2012 by dialing the
following numbers:

United States Toll Free:       +1-855-452-5696
International:  +61 2 8199 0299
Conference ID:      #58808563

A live and archived webcast of the conference call will also be available at
the Company's investor relations website at http://ir.vipshop.com

About Vipshop Holdings Limited

Vipshop Holdings Limited ("Vipshop" or the "Company") is China's leading
online discount retailer for brands. Vipshop offers high quality and popular
branded products to consumers throughout China at a significant discount to
retail prices. Since it was founded in August 2008, the Company has rapidly
built a sizeable and growing base of customers and brand partners. For more
information, please visit ir.vipshop.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. Among
other things, the business outlook and quotations from management in this
announcement, as well as Vipshop's strategic and operational plans, contain
forward-looking statements. Vipshop may also make written or oral
forward-looking statements in its periodic reports to 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 Vipshop'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:
Vipshop's goals and strategies; Vipshop's future business development, results
of operations and financial condition; the expected growth of the online
discount retail market in China; Vipshop's ability to attract customers and
brand partners and further enhance its brand recognition; Vipshop's
expectations regarding demand for and market acceptance of flash sales
products and services; competition in the discount retail industry;
fluctuations in general economic and business conditions in China and
assumptions underlying or related to any of the foregoing. Further information
regarding these and other risks is included in Vipshop's filings with the SEC.
All information provided in this press release and in the attachments is as of
the date of this press release, and Vipshop does not undertake any obligation
to update any forward-looking statement, except as required under applicable
law.

Use of Non-GAAP Financial Measures

The unaudited condensed consolidated financial information is prepared in
conformity with accounting principles generally accepted in the United States
of America ("U.S. GAAP"), except that the consolidated statement of
shareholders' equity and comprehensive income (loss), consolidated statements
of cash flows, and the detailed notes required by Accounting Standards
Codification 270 Interim Reporting ("ASC270"), have not been presented.Vipshop
uses non-GAAP net income/(loss) attributable to ordinary shareholders,
non-GAAP net income/(loss) attributable to ordinary shareholders per diluted
ADS, non-GAAP income/(loss) from operations, non-GAAP net (loss) margin, and
non-GAAP operating (loss) margin, each of which is a non-GAAP financial
measure. Non-GAAP net income income/(loss) attributable to ordinary
shareholders is net income/(loss) attributable to ordinary shareholders
excluding share-based compensation expenses. Non-GAAP income/(loss) from
operations is income/(loss) from operations excluding share-based compensation
expenses. Non-GAAP operating (loss) margin is non-GAAP income/(loss) from
operations as a percentage of net revenues. Non-GAAP net (loss) margin is
non-GAAP net income /(loss) attributable to ordinary shareholders as a
percentage of net revenues. The Company believes that separate analysis and
exclusion of the non-cash impact of share-based compensation adds clarity to
the constituent parts of its performance. The Company reviews these non-GAAP
financial measures together with GAAP financial measures to obtain a better
understanding of its operating performance. It uses these non-GAAP financial
measures for planning, forecasting and measuring results against the forecast.
The Company believes that non-GAAP financial measures are useful supplemental
information for investors and analysts to assess its operating performance
without the effect of non-cash share-based compensation expenses, which have
been and will continue to be significant recurring expenses in its business.
However, the use of non-GAAP financial measures have material limitations as
an analytical tools. One of the limitations of using non-GAAP financial
measures is that they do not include all items that impact the Company's net
income/(loss) for the period. In addition, because non-GAAP financial measures
are not measured in the same manner by all companies, they may not be
comparable to other similar titled measures used by other companies. In light
of the foregoing limitations, you should not consider non-GAAP financial
measure in isolation from or as an alternative to the financial measure
prepared in accordance with U.S. GAAP.

The presentation of these non-GAAP financial measures is not intended to be
considered in isolation from, 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 "Vipshop Holdings Limited Reconciliations of GAAP and Non-GAAP
Results" at the end of this release.

(1) Active customers are defined as any registered member who has purchased
products from the Company at least once during the quarter.
(2) Total orders are defined as the total number of orders placed during the
quarter.
(3) Non-GAAP income/(loss) from operations is a non-GAAP financial measure,
which is defined as income/(loss) from operations excluding share-based
compensation expenses.
(4) Non-GAAP operating (loss) margin is a non-GAAP financial measure, which is
defined as non-GAAP income/(loss) from operations as a percentage of net
revenues.
(5) Non-GAAP net income/(loss) attributable to ordinary shareholders is a
non-GAAP financial measure, which is defined as net income/(loss) attributable
to ordinary shareholders excluding share-based compensation expenses.
(6) Non-GAAP net (loss) margin is a non-GAAP financial measure, which is
defined as non-GAAP net income /(loss) attributable to ordinary shareholders
as a percentage of net revenues.
(7) "ADS" is American Depositary Share. Each ADS represents two ordinary
shares.

Investor Relations Contact

Vipshop Holdings Limited
Millicent Tu
Tel: +86 (20) 2233-0732
Email: IR@vipshop.com 

ICR, Inc.
Jeremy Peruski
Tel: +1 (646) 405-4866
Email: IR@vipshop.com

Vipshop Holdings Limited
Condensed Consolidated Statements of Operations
(Amounts in US dollars, except for number of shares and ADS and per share and per ADS data)


                                                                          Three Months Ended
                                                                          September30,2011 September30,2012 June30,2012
                                                                          USD                USD                USD
                                                                          (Unaudited)        (Unaudited)        (Unaudited)
Net revenues                                                              52,507,268         155,944,583          135,279,785
Cost of goods sold                                                        (42,511,012)       (121,180,318)        (105,727,006)
Gross profit                                                              9,996,256          34,764,265           29,552,779
Operating expenses
Fulfillment expenses*                                                     (11,432,449)       (21,703,487)         (20,540,533)
Marketing expenses                                                        (4,559,574)        (7,310,957)          (6,593,048)
Technology and content expenses                                           (1,190,921)        (3,218,857)          (2,656,044)
General and administrative expenses                                       (10,352,062)       (6,321,337)          (5,575,356)
Other income                                                              116,386            538,739              369,609
Total operating expenses                                                  (27,418,620)       (38,015,899)         (34,995,372)
Loss from operations                                                      (17,422,364)       (3,251,634)          (5,442,593)
Interest expense                                                          (189,745)          (1,197)              (33,977)
Interest income                                                           13,665             1,372,350            375,826
Exchange (loss) gain                                                      57,158             424,454              (678,866)
Loss before income taxes                                                  (17,541,286)       (1,456,027)          (5,779,610)
Income tax expenses                                                       -                  -                    -
Net loss                                                                  (17,541,286)       (1,456,027)          (5,779,610)
Deemed dividend on issuance of Series A Preferred Shares                  -
Net loss attributable to ordinary shareholders                            (17,541,286)       (1,456,027)          (5,779,610)
Weighted average numbers of shares used in calculating net loss per
share:
-- Basic                                                                  46,268,513         101,139,801          101,138,565
-- Diluted                                                                46,268,513         101,139,801          101,138,565
Net loss per share
-- Basic                                                                  (0.38)             (0.01)               (0.06)
-- Diluted                                                                (0.38)             (0.01)               (0.06)
Net loss per ADS (2 ordinary shares equal to 1 ADS)
-- Basic                                                                  (0.76)             (0.03)               (0.11)
-- Diluted                                                                (0.76)             (0.03)               (0.11)


*Includingshippingandhandlingexpenses,whichamountedUS$7.3million,
US$13 million and US$12 million in the three month periods ended
September 30, 2011, September 30, 2012 and June 30, 2012, respectively.
                                                                          Three Months Ended
                                                                          September 30, 2011 September 30, 2012 June 30, 2012
                                                                          USD                USD                USD
                                                                          (Unaudited)        (Unaudited)        (Unaudited)
Share-based compensation charges included are follows
Fulfillment expenses                                                      42,197             79,090               75,540
Marketing expenses                                                        9,316              30,203               29,628
Technology and content expenses                                           78,639             258,947              212,248
General and administrative expenses                                       6,611,001          1,728,329            1,286,408
Total                                                                     6,741,153          2,096,569            1,603,824



Vipshop Holdings Limited
Condensed Consolidated Balance Sheets
(Amounts in US dollars)
                                                                                                                 AsofDecember31,2011 AsofSeptember30,2012
                                                                                                                 USD                     USD
ASSETS                                                                                                           (Audited)               (Unaudited)
CURRENT ASSETS
Cash and cash equivalents                                                                                        44,954,778              91,875,685
Restricted deposits                                                                                              14,214,585              -
Short-term investments                                                                                           -                       40,098,385
Accounts receivable                                                                                              4,150,664               2,831,356
Amounts due from related parties                                                                                2,101,853               477,634
Other receivables                                                                                                9,410,481               6,222,200
Inventories                                                                                                      69,742,200              90,325,964
Advance to suppliers                                                                                             12,626,286              18,397,721
Prepaid expenses                                                                                                 1,077,194               861,213
Total current assets                                                                                             158,278,041             251,090,158
NON-CURRENT ASSETS
Property and equipment, net                                                                                      9,148,162               8,489,609
Deposits for property, plant and equipment                                                                       -                       724,463
Other assets                                                                                                     9,117                   6,380
Total non-current assets                                                                                         9,157,279               9,220,452
TOTAL ASSETS                                                                                                     167,435,320             260,310,610
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable (Including accounts
payable of the VIE without recourse to the
Company of $2,243,711 and $137,331 as of                                                                         88,020,376              105,315,761
December 31, 2011 and September 30,2012 ,
respectively)
Advancefrom customers(Includingadvancefrom customers of the VIE without recourse to the Company of           15,381,357              34,254,432
$15,378,465 and $34,183,215 as of December 31, 2011 and September 30,2012 , respectively)
Accrued expenses and other current liabilities((Including accrued expenses and other current liabilities of the
VIE without recourse to the Company of $11,825,417 and $16,061,844 as of December 31, 2011 and September 30,2012 26,666,502              37,086,069
, respectively)
Amounts due to related parties(Including amounts due to related parties of the VIE without recourse to the       3,797,508               1,590,227
Company of $2,992,516 and $665,049 as of December 31, 2011 and September 30,2012 , respectively)
Deferred income ((Including deferred income of the VIE without recourse to the Company of $2,569,655 and        2,569,655               8,459,309
$7,419,825 as of December 31, 2011 and September 30,2012 , respectively))
Bank borrowings                                                                                                  12,710,720              -
Total current liabilities                                                                                        149,146,118             186,705,798
Totalliabilities 149,146,118             186,705,798
EQUITY:
Ordinary shares (US$0.0001 par value,471,620,833 shares authorized and 46,234,650 shares issued and outstanding  4,624                   10,116
as of December 31,2011;US$0.0001 par value, 101,159,707 shares issued and outstanding as of September 30,2012)
Series A convertible preference shares (US$0.0001 par value:20,212,500 shares authorized, issued and outstanding 20,113,898              -
as of December 31,2011; nil authorized, issued and outstanding as of September 30,2012)
Series B convertible preference shares(US$0.0001 par value:8,166,667 shares authorized, issued and outstanding   41,147,021              -
as of December 31,2011; nil authorized, issued and outstanding as of September 30,2012)
Additional paid-in capital                                                                                       124,341,953             256,369,162
Accumulated losses                                                                                               (166,553,261)           (182,375,137)
Accumulated other comprehensive income (loss)                                                                    (765,033)               (399,329)
Total shareholders' equity                                                                                       18,289,202              73,604,812
TOTAL LIABILITIES AND EQUITY                                                                                   167,435,320             260,310,610





Vipshop Holdings Limited
Reconciliations of GAAP and Non-GAAP Results
                                                                      Three Months Ended
                                                                      September30,2011 September30,2012 June30,2012
                                                                      USD                USD                USD
                                                                      (Unaudited)        (Unaudited)        (Unaudited)
Loss from operations                                                  (17,422,364)         (3,251,634)          (5,442,593)
Share-based compensation expenses                                     6,741,153            2,096,569            1,603,824
Non-GAAP income/loss from operation                                   (10,681,211)         (1,155,065)          (3,838,769)
Netlossattributabletoordinaryshareholders (17,541,286)         (1,456,027)          (5,779,610)
Share-based compensation expenses                                     6,741,153            2,096,569            1,603,824
Non-GAAP net income/loss                                              (10,800,133)         640,542              (4,175,786)
Non-GAAP weighted average numbers of shares used in calculating net
income (loss) per share:
-- Basic                                                              46,268,513           101,139,801          101,138,565
-- Diluted                                                            46,268,513           102,440,611          101,138,565
Non-GAAP net income/loss per share
-- Basic                                                              (0.23)               0.01                 (0.04)
-- Diluted                                                            (0.23)               0.01                 (0.04)
Non-GAAP net income/loss per ADS (2 ordinary shares equal to 1 ADS)
-- Basic                                                              (0.47)               0.01                 (0.08)
-- Diluted                                                            (0.47)               0.01                 (0.08)



SOURCE Vipshop Holdings Limited

Website: ir.vipshop.com
 
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