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Renren Announces Unaudited Fourth Quarter and Fiscal Year 2012 Financial Results



   Renren Announces Unaudited Fourth Quarter and Fiscal Year 2012 Financial
                                   Results

PR Newswire

BEIJING, March 11, 2013

BEIJING, March 11, 2013 /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 fourth quarter
and fiscal year ended December 31, 2012.

Fourth Quarter 2012 Highlights

  o Total net revenues were US$48.8 million, a 48.8% increase from the
    corresponding period in 2011.
  o Online game revenues were US$25.9 million, a 116.5% increase from the
    corresponding period in 2011.
  o Gross profit was US$31.0 million, a 34.2% increase from the corresponding
    period in 2011.
  o Operating loss was US$28.3 million, compared to an operating loss of
    US$19.7 million in the corresponding period in 2011.
  o Net loss attributable to Renren was US$21.1 million, compared to a net
    income of US$44.3 million in the corresponding period in 2011.
  o Adjusted net loss (1) (non-GAAP) was US$16.7 million, compared to an
    adjusted net income of US$48.2 million in the corresponding period in
    2011.

Fiscal Year 2012 Highlights

  o Total net revenues were US$176.1 million, a 49.3% increase from 2011.
  o Online game revenues were US$90.2 million, a 113.2% increase from 2011.
  o Gross profit was US$109.5 million, a 19.3% increase from 2011.
  o Operating loss was US$91.7 million, compared to an operating loss of
    US$30.2 million in 2011.
  o Net loss attributable to Renren was US$75.0 million, compared to a net
    income of US$41.3 million in 2011.
  o Adjusted net loss (1) (non-GAAP) was US$61.9 million, compared to an
    adjusted net income of US$49.7 million in 2011.

"2012 was a year of investment and transition for Renren. We navigated through
the opportunities and disruptions of mobile internet and came out a stronger
mobile-centric company. We made progress in our mobile initiatives by rapidly
growing our mobile traffic on Renren, driving significant revenues from mobile
related games and opening up a whole new dimension for mobile commerce on
Nuomi. We are encouraged by these advances and will continue to push forward
in expanding existing and new mobile opportunities," commented Joseph Chen,
Chairman and Chief Executive Officer.

"Heading into 2013, our priorities are clear. Renren social networking
services remain our core foundation and we are devoted to continuously
improving user experience, particularly in mobile. As we further expand and
deepen our offerings, our diversified services built around our SNS platform
will also provide us a broad base to continue exploring new opportunities of
growth," said Mr. Chen.

"Our net revenues in the fourth quarter came in above the top-end of our
guidance. Among our business lines, games and Nuomi continue to show
encouraging trends while brand advertising still faces challenges. Our
investments in 2012 helped us go through the transition needed to capture the
mobile opportunities in front of us. Going into the new year with a healthy
balance sheet and more clarity in strategy and focus, we will continue to
further transform Renren into a true mobile company," 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.

Fourth Quarter 2012 Results

Total net revenues for the fourth quarter of 2012 were US$48.8 million,
representing a 48.8% increase from the corresponding period in 2011.

Internet Value-Added Services (IVAS) revenues were US$36.3 million,
representing a 103.8% increase from the corresponding period of 2011. Within
IVAS revenues, online game revenues were US$25.9 million for the fourth
quarter of 2012, a 116.5% 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. Other IVAS revenues were
US$10.4 million for the fourth quarter of 2012, a 77.8% increase from the
corresponding period of 2011. Within other IVAS revenues, Renren's social
commerce service, Nuomi, recorded US$5.4 million of net revenues for the
fourth quarter of 2012.

Online advertising revenues were US$12.5 million, representing a decrease of
16.7% 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 activated users on Renren.com,
however, continued to increase from approximately 147 million as of
December 31, 2011 to approximately 178 million as of December 31, 2012.
Monthly unique log-in users increased from approximately 38 million in
December 2011 to approximately 56 million in December 2012.

Cost of revenues was US$17.8 million, an 83.7% increase from the corresponding
period of 2011. Cost of revenues for the fourth quarter of 2012 included
US$0.3 million for Nuomi.  The increase in cost of revenues for the fourth
quarter was largely due to increased bandwidth and content investments for
56.com and the increased direct operating costs for launched games.

Operating expenses were US$59.3 million, a 38.4% increase from the
corresponding period of 2011. Operating expenses in the fourth quarter of 2012
included US$10.8 million expenses incurred on Nuomi. Excluding Nuomi, the
operating expenses in the fourth quarter of 2012 would be US$48.5 million, a
56.6% increase from the corresponding period in 2011.

Selling and marketing expenses were US$22.4 million, an 11.1% increase from
the corresponding period of 2011. The increase was primarily due to the
increased personnel related expenses and promotions for our launched games.

Research and development expenses were US$25.5 million, an 84.2% increase from
the corresponding period in 2011. The increase was primarily due to headcount
and personnel related expense increases, particularly for mobile-related
investments.

General and administrative expenses were US$11.4 million, a 76.2% 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$4.0 million, compared to US$1.3 million in the corresponding
period in 2011. 

Operating loss was US$28.3 million, compared to an operating loss of US$19.7
million in the corresponding period in 2011.

Net loss attributable to Renren Inc. was US$21.1 million, compared to a net
income of US$44.3 million in the corresponding period in 2011, the latter of
which was largely due to a one-time US$51 million gain from disposing of our
investment in eLong. Excluding results of operations attributable to Nuomi in
both quarters, net loss in the fourth quarter of 2012 would be US$15.5
million, compared to a net income of US$53.4 million in the corresponding
period of 2011.

Adjusted net loss (non-GAAP) was US$16.7 million, compared to an adjusted net
income of US$48.2 million in the corresponding period in 2011 which was
largely due to a one-time US$51 million gain from disposing of our investment
in eLong. Excluding results of operations attributable to Nuomi in both
quarters, adjusted net loss in the fourth quarter of 2012 would be US$11.1
million, compared to the adjusted net income of US$57.3 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.

Fiscal Year 2012 Results

Total net revenues  in 2012 were US$176.1 million, a 49.3% increase from 2011.

Internet Value-Added Services (IVAS) revenues in 2012 were US$122.3 million,
representing a 109.5% increase from 2011. Within IVAS revenues, online game
revenues were US$90.2 million in 2012, a 113.2% increase from 2011, driven by
our in-house developed cross-platform games. Other IVAS revenues were US$32.1
million for 2012, a 99.6% increase from 2011. Within other IVAS revenues,
Renren's social commerce service, Nuomi, recorded US$16.1 million of net
revenues for 2012, a 149.6% increase from 2011.

Online advertising revenues in 2012 were US$53.8 million, representing a
decrease of 9.7% from 2011.  The decrease in advertising revenues was an
overall result from a weaker macro-environment, increased competition and the
continuing shift of our traffic from PC to mobile.

Cost of revenues in 2012 was US$66.6 million, a 154.0% increase from 2011.
Cost of revenues in 2012 included US$1.5 million for Nuomi. The increase was
largely due to increased bandwidth investments for 56.com and Renren.com, and
the increased direct operating and license costs for launched games.

Gross profit  in 2012 was US$109.5 million, a 19.3% increase from US$91.7
million in 2011. Gross margin was 62.2%, compared to 77.8% in 2011.

Operating expenses  in 2012 were US$201.2 million, a 65.0% increase from 2011.
Operating expenses in 2012 included US$42.2 million expenses incurred on
Nuomi. Excluding Nuomi, operating expenses in 2012 would be US$159.0 million,
a 73.2% increase from 2011.

Selling and marketing expenses in 2012 were US$82.8 million, a 33.4% increase
from 2011, primarily due to expanded sales force for Nuomi, increased
promotion expenses for our games, as well as increased sales and promotion
expenses for 56.com.

Research and development expenses in 2012 were US$79.5 million, a 97.3%
increase from 2011, primarily due to headcount and personnel related expense
increases. Our mobile-related investments contributed a significant part of
our R&D expense increase for 2012.

General and administrative expenses in 2012 were US$38.9 million, a 125.7%
increase from 2011, primarily due to the growth of the company size, expanded
business operations, and expenses associated with becoming a publicly listed
company.

Share-based compensation expenses in 2012, which were all included in the
operating expenses, were US$10.9 million, compared to US$5.5 million in 2011.
The increase was mainly due to additional share-based incentive awards granted
to directors, executives and employees.

Operating loss  in 2012 was US$91.7 million, compared to US$30.2 million
operating loss in 2011.

Net loss attributable to Renren Inc. in 2012 was US$75.0 million, compared to
a net income of US$41.3 million in 2011, the latter of which was largely due
to a one-time US$51 million gain from disposing of our investment in eLong.
Excluding results of operations attributable to Nuomi, net loss in 2012 would
be US$47.7 million compared to a net income of US$65.6 million in 2011.

Adjusted net loss (non-GAAP)  in 2012 was US$61.9 million, compared to an
adjusted net income of US$49.7 million in 2011 which was largely due to a
one-time US$51 million gain from disposing of our investment in eLong.
Excluding results of operations attributable to Nuomi, adjusted net loss in
2012 would be US$34.6 million. 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.

Business Outlook

The Company expects to generate revenues in an amount ranging from US$44
million to US$46 million in the first quarter of 2013, 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 7:00 a.m. U.S. Eastern
Time on Monday, March 11, 2013 (Beijing/Hong Kong Time: 7:00 p.m., Monday,
March 11, 2013).

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: 14671441

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,
shop for deals, watch videos and enjoy a wide range of other features and
services. Renren's businesses primarily include the main social networking
website Renren.com, the game development and operating platform Renren Games,
the social commerce website Nuomi.com, and the video-sharing website 56.com.
Renren.com had approximately 178 million activated users as of December 31,
2012. Renren's American depositary shares, each of which represents three
Class A ordinary shares, trade on NYSE under the symbol "RENN".

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 first quarter of 2013 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 Form 20-F and other documents filed with the
SEC. All information provided in this press release and in the attachments is
as of the date of this press release, and Renren does not undertake any
obligation to update any forward-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      December 31,    December 31,
shares,
per shares, ADS, and per ADS data)                2011            2012
 ASSETS 
 Current assets: 
 Cash and cash equivalents                        $  284,643    $ 207,438
 Term deposits                                       702,680      550,000
 Short-term investments                              53,393       148,018
 Trade and notes receivable, net                     14,911       18,402
 Prepaid expenses and other current assets           59,389       29,591
 Amounts due from related parties                    573          258
 Deferred tax assets-current                         1,381        —
 Total current assets                                1,116,970    953,707
 Non-current assets: 
 Equipment, net                                      22,301       32,355
 Intangible assets, net                              28,086       26,820
 Goodwill                                            58,998       59,673
 Long-term investments                               50,300       107,597
 Amounts due from related parties - noncurrent       —            1,605
 Other non-current assets                            1,353        22,634
 Total non-current assets                            161,038      250,684
 TOTAL ASSETS                                     $  1,278,008  $ 1,204,391
 LIABILITIES AND EQUITY 
 Current liabilities: 
 Accounts payable                                 $  20,381     $ 36,743
 Accrued expenses and other payables                 31,108       41,608
 Amounts due to a related party                      51           77
 Deferred revenue and advance from customers         7,441        10,668
 Income tax payable                                  1,506        1,023
 Total current liabilities                           60,487       90,119
 Non-current liabilities: 
 Deferred tax liabilities-noncurrent                 6,976        6,564
 Total non-current liabilities                       6,976        6,564
 TOTAL LIABILITIES                                   67,463       96,683
 Commitments 
 Shareholders' Equity: 
 Class A ordinary shares (US$0.001 par value,
3,000,000,000 shares authorized,
    770,912,350 and 729,848,742 issued and           771          730
outstanding as of December 31, 2011 and
    December 31, 2012, respectively) 
 Class B ordinary shares (US$0.001 par value,
500,000,000 shares authorized,
    398,763,450 and 402,680,117 issued and           399          403
outstanding as of December 31, 2011 and
    December 31, 2012, respectively) 
 Treasury stocks, at cost                            (25,597)     —
 Additional paid-in capital                          1,407,059    1,320,649
 Subscription receivable                             —            (229)
 Statutory reserves                                  3,507        6,712
 Accumulated deficit                                 (183,228)    (261,459)
 Accumulated other comprehensive income              7,334        40,687
 Total shareholders' equity                          1,210,245    1,107,493
 Noncontrolling Interests                            300          215
 Total equity                                        1,210,545    1,107,708
 LIABILITIES AND EQUITY                           $  1,278,008  $ 1,204,391

 

 

RENREN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                    For the Three Months Ended                          For the Twelve Months Ended 
(Amounts in US
dollars, in         December 31,     September 30,    December 31,     December 31,   December 31,
thousands, except
shares,
per shares, ADS,    2011             2012             2012             2011           2012
and per ADS data)
 Net revenues 
 Online             $ 14,974         $ 16,938         $ 12,478         $ 59,613       $ 53,842
advertising 
 IVAS                 17,832           33,428           36,339           58,354         122,244
 Total net            32,806           50,366           48,817           117,967        176,086
revenues 
 Cost of              (9,688)          (19,444)         (17,801)         (26,233)       (66,619)
revenues  
 Gross profit         23,118           30,922           31,016           91,734         109,467
 Operating
expenses: 
 Selling and          (20,189)         (21,371)         (22,422)         (62,050)       (82,789)
marketing 
 Research and         (13,867)         (20,844)         (25,539)         (40,310)       (79,541)
development 
 General and          (6,458)          (9,341)          (11,380)         (17,215)       (38,860)
administrative 
 Impairment of        (2,351)          —                —                (2,351)        —
intangible assets 
 Total operating      (42,865)         (51,556)         (59,341)         (121,926)      (201,190)
expenses 
 Loss  from           (19,747)         (20,634)         (28,325)         (30,192)       (91,723)
operations 
 Other income         2,007            1,362            161              2,367          2,446
 Exchange gain
(loss) on dual
currency deposit      3,012            972              —                7,753          (1,769)
and offshore bank
    accounts 
 Interest income      5,658            5,733            3,379            9,619          20,067
 Realized gain on
available-for-sale    50,884           870              770              50,884         4,317
investments 
 Impairment of
cost method           (79)             —                —                (79)           —
investment 
 Income (loss)
before provision
of income tax,
earnings (loss)
in equity method      41,735           (11,697)         (24,015)         40,352         (66,662)
investments and
noncontrolling
interests, net
of income taxes 
 Income tax
benefit               1,120            (117)            (494)            (668)          (920)
(expenses) 
 Income (loss)
before earnings
(loss) in equity
method investments    42,855           (11,814)         (24,509)         39,684         (67,582)
and noncontrolling
interests, net of
income taxes 
 Earnings (loss)
in equity method      1,320            (3,586)          3,411            1,320          (7,471)
investments, net
of income taxes 
 Net income           44,175           (15,400)         (21,098)         41,004         (75,053)
(loss) 
 Add: Net loss
attributable to
noncontrolling        115              —                14               252            27
interests, net
of income taxes 
 Net income (loss)
attributable to     $ 44,290         $ (15,400)       $ (21,084)       $ 41,256       $ (75,026)
Renren Inc. 
 Net income (loss)  $ 0.04           $ (0.01)         $ (0.02)         $ 0.05         $ (0.07)
per share, basic 
 Net income (loss)  $ 0.11           $ (0.04)         $ (0.06)         $ 0.15         $ (0.20)
per ADS, basic 
 Net income (loss)
per share,          $ 0.04           $ (0.01)         $ (0.02)         $ 0.05         $ (0.07)
diluted 
 Net income (loss)  $ 0.11           $ (0.04)         $ (0.06)         $ 0.14         $ (0.20)
per ADS, diluted 
 Shares used in
computation,          1,180,272,256    1,141,783,844    1,130,402,052    850,670,583    1,151,659,545
basic 
 ADS used in
computation,          393,424,085      380,594,615      376,800,684      283,556,861    383,886,515
basic 
 Shares used in
computation,          1,214,824,327    1,141,783,844    1,130,402,052    901,340,381    1,151,659,545
diluted 
 ADS used in
computation,          404,941,442      380,594,615      376,800,684      300,446,794    383,886,515
diluted 
 Reconciliation of Non-GAAP results of operations measures to the comparable GAAP financial measures 
 Adjusted net
income (loss) 
                     For the Three Months Ended                         For the Twelve Months Ended 
 (Amounts in US     December 31,     September 30,    December 31,     December 31,   December 31,
dollars, in
thousands)          2011             2012             2012             2011           2012
 Income (loss)
from continuing     $ 44,175         $ (15,400)       $ (21,098)       $ 41,004       $ (75,053)
operations 
 Add back:
Shared-based          1,284            2,585            4,005            5,523          10,897
compensation
expenses 
  Add back:
Amortization of       388              673              413              797            2,255
intangible assets 
 Add back:
Impairment of         2,351            —                —                2,351          —
intangible assets 
 Adjusted net       $ 48,198         $ (12,142)       $ (16,680)       $ 49,675       $ (61,901)
income (loss) 

 

SOURCE Renren Inc.

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