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ChinaCache International Holdings Ltd. Announces First Quarter 2015 Financial Results

BEIJING, May 18, 2015 (GLOBE NEWSWIRE) -- ChinaCache International Holdings Ltd. ("ChinaCache" or the "Company") (Nasdaq:CCIH), the leading total solutions provider of Internet content and application delivery services in China, today announced its unaudited condensed consolidated financial results for the first quarter ended March 31, 2015.

Highlights for the First Quarter of 2015

  • Net revenues in the first quarter were RMB363.7 million (US$58.7 million), exceeding the high-end of the prior guidance by approximately 3.9%, and representing a 12.3% increase year-over-year.
  • Gross profit in the first quarter was RMB107.4 million (US$17.3 million), an increase of 9.3% year-over-year.
  • Adjusted EBITDA (non-GAAP) in the first quarter was RMB49.7 million (US$8.0 million), representing a year-over-year growth of 95.2% from RMB25.4 million in the first quarter of 2014.
  • Adjusted net income (non-GAAP) was RMB10.4 million (US$1.7 million) in the first quarter of 2015, representing a year-over-year growth of 289.2% from RMB2.7 million in the first quarter of 2014.
  • Non-GAAP basic and diluted earnings per ADS in the first quarter of 2015 were RMB0.40 (US$0.07) and RMB0.39 (US$0.06), respectively.

"I am pleased to report a successful first quarter, generating double-digit revenue growth, which exceeded the upper end of our guidance range," commented Mr. Song Wang, Founder, Chairman and Chief Executive Officer of ChinaCache. "As we completed the migration to our High Performance Cloud Cache Platform and continue to invest to improve our infrastructure capabilities, we are experiencing enhanced customer satisfaction and increased new customer engagements, including CreditEase and Taikang Life. Customers are pleased with the introduction of our MPlus mobile intelligence aware solution, and our SMS (Smart Media Server) live streaming platform."

"We are excited about our strong start to 2015, and we will continue focusing on meeting customer demands, while improving operation efficiency and achieving strong financial results through margin expansion and expense discipline."

First Quarter 2015 Financial Results

Net revenues for the first quarter of 2015 were RMB363.7 million (US$58.7 million), exceeding the upper end of the Company's revenue guidance range of RMB340.0 million to RMB350.0 million, and representing a 7.3% increase from the previous quarter and a 12.3% increase from the corresponding period in 2014.

Cost of revenues for the first quarter of 2015 was RMB256.3 million (US$41.3 million), representing an 8.1% increase over the previous quarter and a 13.6% increase from the corresponding period in 2014.

Gross margin for the first quarter of 2015 was 29.5%, compared with 30.0% for the previous quarter and 30.3% for the corresponding period in 2014. Non-GAAP gross margin for the first quarter of 2015, which excludes share-based compensation, was 29.9%, compared with 30.0% in the previous quarter and 30.5% for the corresponding period in 2014.

Sales and marketing expenses for the first quarter of 2015 were RMB31.8 million (US$5.1 million), or 8.8% of net revenues, representing a 9.1% increase over the previous quarter and a 2.6% decrease from the corresponding period in 2014. The quarter-over-quarter increase was mainly due to an increase in both share-based compensation and other personnel-related expenses in the first quarter of 2015 compared with the same period in 2014 and the year-over-year decrease was primarily a result of our continued efforts to cut cost.

General and administrative expenses for the first quarter of 2015 were RMB49.7 million (US$8.0 million), or 13.7% of net revenues, representing a 32.6% decrease from the previous quarter and a 33.7% increase over the corresponding period in 2014. The year-over-year increase was mainly due to an increase in both share-based compensation and other personnel-related expenses.

Research and development expenses for the first quarter of 2015 were RMB27.0 million (US$4.3 million), or 7.4% of net revenues, representing a 4.1% decrease from the previous quarter and a 4.4% decrease from the corresponding period in 2014. The overall decrease was mainly due to the investment to advance our infrastructure capabilities throughout 2014.

Adjusted EBITDA (non-GAAP), defined as EBITDA excluding share-based compensation expense and foreign exchange gain (loss), was RMB49.7 million (US$8.0 million) compared with RMB12.1 million in the fourth quarter of 2014, representing a quarter-over-quarter growth of 309.6% and a year-over-year growth of 95.2% from RMB25.4 million in the corresponding period in 2014.

Operating loss was RMB1.1 million (US$0.2 million) in the first quarter of 2015, compared to an operating loss of RMB29.4 million in the previous quarter and an operating income of RMB0.2 million in the corresponding period in 2014. Non-GAAP operating income, which excludes share-based compensation expense, was RMB14.1 million (US$2.3 million), compared with a non-GAAP operating loss of RMB20.8 million in the fourth quarter of 2014, and represent a year-over-year growth of 284.0% from RMB3.7 million in the corresponding period in 2014.

Income tax expense was RMB0.5 million (US$0.1 million) in the first quarter of 2015, compared with income tax benefit of RMB3.0 million in the fourth quarter of 2014 and income tax expense of RMB0.8 million in the corresponding period in 2014.

Net loss was RMB5.2 million (US$0.8 million) in the first quarter of 2015, compared to a net loss of RMB20.6 million in the fourth quarter of 2014 and a net income of RMB6.3 million in the corresponding period in 2014. Basic and diluted loss per American depositary share ("ADS") for the first quarter of 2015 was RMB0.20 (US$0.03) and RMB0.20 (US$0.03), respectively. Each ADS represents 16 ordinary shares of the Company.

Adjusted net income (non-GAAP), defined as net income before share-based compensation expense, foreign exchange gain (loss), and penalties on uncertain tax positions, was RMB10.4 million (US$1.7 million), compared to an adjusted net loss (non-GAAP) of RMB16.8 million in the fourth quarter of 2014, representing a quarter-over-quarter increase of 162.1% and a year-over-year growth of 289.2% from RMB2.7 million in the corresponding period in 2014.

Non-GAAP basic and diluted earnings per ADS in the first quarter of 2015 were RMB0.40 (US$0.07) and RMB0.39 (US$0.06), respectively.

Balance Sheet

As of March 31, 2015, the Company had cash and cash equivalents of RMB681.0 million (US$109.9 million), compared with RMB375.9 million as of December 31, 2014. Capital expenditures for the first quarter of 2015 were RMB56.1 million (US$9.1 million).

Share Repurchase

During March 2015, the Company repurchased in the open market a total of 65,920 of its ordinary shares, represented by 4,120 ADSs, at an average price of US$10.0 per ADS under the repurchase program.

Second Quarter of 2015 Revenue Guidance

ChinaCache currently expects to generate total net revenues in the range of RMB392.0 million to RMB403.0 million for the second quarter of 2015, representing an increase of 7.8% to 10.8% over the first quarter of 2015.

This forecast reflects ChinaCache's current view, which is subject to change.

Conference Call Information

The Company has scheduled a corresponding conference call and live webcast to discuss these results at 8:00 PM Eastern time on May 18, 2015, which corresponds to 8:00 AM Beijing time on May 19, 2015.

The dial-in details for the live conference call are as follows:

  • U.S. dial-in number: +1 (845) 675-0438
  • Hong Kong dial-in number: +852 3018-6776
  • International dial-in number: +65 6723-9385
  • China dial-in number: 400-1200-654
  • Conference ID: 43264961

A live and archived webcast of the conference call will be available on the Investor Relations section of ChinaCache's website at en.chinacache.com.

A replay of the conference call will also be available until May 24, 2015 by dialing:

  • U.S. dial-in number: +1 (855) 452-5696
  • International dial-in number: +61 (2) 9003-4211
  • China dial-in number: 400-632-2162
  • Conference ID: 43264961

About ChinaCache International Holdings Ltd.

ChinaCache International Holdings Ltd. (Nasdaq:CCIH) is the leading total solutions provider of Internet content and application delivery services in China. As a carrier-neutral service provider, ChinaCache's network in China is interconnected with networks operated by all telecom carriers, major non-carriers and local Internet service providers. With more than a decade of experience in developing solutions tailored to China's complex Internet infrastructure, ChinaCache is a partner of choice for businesses, government agencies and other enterprises to enhance the reliability and scalability of online services and applications and improve end-user experience. For more information on ChinaCache, please visit ir.chinacache.com.

*Use of Non-GAAP Financial Measures

In evaluating its business, ChinaCache considers and uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC as supplemental measures to review and assess its operating performance: non-GAAP gross profit, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP research and development expenses, non-GAAP operating income (loss), adjusted net income (loss) (non-GAAP), EBITDA and adjusted EBITDA (non-GAAP). The presentation of these non-GAAP financial measures is not intended to be considered in isolation 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 "Reconciliations of Non-GAAP to GAAP Financial Measures" set forth at the end of this press release.

To present non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses and non-GAAP research and development expenses, the Company excludes share-based compensation expense.

To present non-GAAP gross profit, the Company excludes share-based compensation expense.

To present non-GAAP operating income (loss), the Company excludes share-based compensation expense.

The Company defines adjusted net income (loss) as net income (loss) before share-based compensation expense, foreign exchange gain (loss) and penalties on uncertain tax positions.

The Company uses EBITDA to assist in reconciliation to adjusted EBITDA. The Company defines EBITDA as net income (loss) before interest expense, interest income, income tax expense and penalties on uncertain tax positions and depreciation and amortization. The Company defines adjusted EBITDA as EBITDA before share-based compensation expense and foreign exchange gain (loss) that the Company does not consider reflective of its ongoing operations. The Company believes that the use of adjusted EBITDA facilitates investors' use of operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in items such as capital structure (affecting relative interest expense and share-based compensation expense), the book amortization of intangibles (affecting relative amortization expense), the age and book value of facilities and equipment (affecting relative depreciation expense) and other non-cash expenses. The Company also presents adjusted EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of the financial performance of companies in its industry.

Those non-GAAP financial measures are not defined under U.S. GAAP and are not measures presented in accordance with U.S. GAAP. Those non-GAAP financial measures have limitations as analytical tools, and when assessing the Company's operating performance, investors should not consider them in isolation, or as a substitute for net income or other consolidated income statement data prepared in accordance with U.S. GAAP. Some of these limitations include, but are not limited to:

  • Adjusted net income, EBITDA and adjusted EBITDA do not reflect the Company's cash expenditures or future requirements for capital expenditures or contractual commitments;
  • They do not reflect changes in, or cash requirements for, the Company's working capital needs;
  • They do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on the Company's debt;
  • They do not reflect income taxes or the cash requirements for any tax payments;
  • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and adjusted net income, EBITDA and adjusted EBITDA do not reflect any cash requirements for such replacements;
  • While share-based compensation is a component of cost of revenues and operating expenses, the impact on the Company's financial statements compared to other companies can vary significantly due to such factors as assumed life of the options and assumed volatility of the Company's ordinary shares; and
  • Other companies may calculate adjusted net income, EBITDA and adjusted EBITDA differently than the Company does, limiting their usefulness as comparative measures.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are based on the effective exchange rate of 6.1990 as of March 31, 2015.

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 outlook for the second quarter and full year 2015 and quotations from management in this announcement, as well as ChinaCache's strategic and operational plans, contain forward-looking statements. ChinaCache may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. 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 statements, including but not limited to the following: the Company's goals and strategies, expansion plans, the expected growth of the content and application delivery services market, the Company's expectations regarding keeping and strengthening its relationships with its customers, and the general economic and business conditions in the regions where the Company provides its solutions and services. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and ChinaCache undertakes no duty to update such information, except as required under applicable law.

Condensed Consolidated Balance Sheets
(amounts in thousands)
As of Dec 31 As of Mar 31 As of Mar 31
2014 2015 2015
RMB RMB US$
(Audited) (Unaudited) (Unaudited)
ASSETS
Current assets
Cash and cash equivalents 375,879 680,983 109,854
Restricted Cash 68,191 68,131 10,991
Accounts receivable, net 319,494 373,953 60,325
Prepaid expenses and other current assets 55,374 86,970 14,028
Short term investment 25,219 25,507 4,115
Deferred tax assets 20,658 24,102 3,888
Total current assets 864,815 1,259,646 203,201
Non-current assets
Property and equipment, net 418,886 523,366 84,427
Cloud infrastructure construction in progress 283,475 328,463 52,986
Intangible assets, net 10,321 9,327 1,505
Land use right, net 49,697 49,650 8,009
Long term investments 46,950 46,950 7,574
Deferred tax assets 980 1,637 264
Long term deposits and other non-current assets 56,084 66,365 10,706
Total non-current assets 866,393 1,025,758 165,471
Total Assets 1,731,208 2,285,404 368,672
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term loan 60,000 60,000 9,679
Accounts payable 255,821 328,452 52,985
Accrued employee benefits 45,016 64,271 10,368
Accrued expenses and other payables 411,803 816,360 131,692
Income tax payable 21,374 21,593 3,483
Liabilities for uncertain tax positions 11,739 11,739 1,894
Amounts due to related parties 18 18 3
Current portion of long term loan 7,180 7,180 1,158
Current portion of capital lease obiligations 13,794 30,232 4,877
Deferred government grant 37,360 37,360 6,027
Total current liabilities 864,105 1,377,205 222,166
Non-current liabilities
Long-term loan 11,520 10,770 1,737
Non-current portion of capital lease obligations 20,592 49,737 8,023
Deferred tax liabilities 44 44 7
Total non-current liabilities 32,156 60,551 9,767
Total Liabilities 896,261 1,437,756 231,933
Total Shareholders' equity 834,947 847,648 136,739
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,731,208 2,285,404 368,672
Condensed Consolidated Statements of Comprehensive Income (Loss)
(amounts in thousands, except for number of shares, per share and per ADS data)
For the Three Months Ended
Mar 31, 2014 Dec 31, 2014 Mar 31, 2015 Mar 31, 2015
RMB RMB RMB US$
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net revenues 323,866 338,850 363,745 58,678
Cost of revenues (225,586) (237,157) (256,299) (41,345)
Gross profit 98,280 101,693 107,446 17,333
Sales & marketing expenses (32,671) (29,175) (31,833) (5,135)
General & administrative expenses (37,194) (73,797) (49,712) (8,019)
Research & development expenses (28,207) (28,113) (26,962) (4,349)
Operating income (loss) 208 (29,392) (1,061) (170)
Interest income 424 1,052 992 160
Interest expense (1,491) (3,192) (4,129) (666)
Other income 922 3,098 18 3
Foreign exchange gain (loss), net 7,048 4,814 (475) (77)
Income (loss) before income taxes 7,111 (23,620) (4,655) (750)
Income tax (expense) benefit (846) 2,981 (548) (88)
Net income (loss) attributable to ordinary shareholders 6,265 (20,639) (5,203) (838)
Foreign currency translation 337 (1,857) 266 43
Unrealized holding gains arising during the period 95 200 286 46
Total other comprehensive income (loss), net of tax 432 (1,657) 552 89
Comprehensive income (loss) 6,697 (22,296) (4,651) (749)
Earnings (loss) per ordinary share:
Basic 0.02 (0.05) (0.01) (0.00)
Diluted 0.02 (0.05) (0.01) (0.00)
Earnings (loss) per ADS*:
Basic 0.26 (0.80) (0.20) (0.03)
Diluted 0.25 (0.80) (0.20) (0.03)
Weighted average number of ordinary shares used in earnings per share computation:
Basic 381,584,158 412,586,217 413,501,903 413,501,903
Diluted 394,517,873 412,586,217 413,501,903 413,501,903
* Note1:1 ADS = 16 shares
Note2: Non-GAAP Financial Measures
Supplementary Metrics - Reconciliations of Non-GAAP to GAAP Financial Measures
(amounts in thousands, except for percentages, number of shares, per share and per ADS data)
(Unaudited)
For the Three Months Ended
Mar 31, 2014 Dec 31, 2014 Mar 31, 2015 Mar 31, 2015
RMB RMB RMB US$
Adjusted EBITDA — defined as EBITDA before share-based compensation expense and foreign exchange (gain) loss
Net income (loss) 6,265 (20,639) (5,203) (838)
Depreciation 20,321 29,156 34,185 5,515
Amortization 522 619 1,349 218
Interest expense 1,491 3,192 4,129 666
Interest income (424) (1,052) (992) (160)
Income tax expense (benefit) 846 (2,981) 548 88
Share-based compensation 3,464 8,586 15,163 2,445
Foreign exchange (gain) loss (7,048) (4,814) 475 77
Penalties on uncertain tax positions -- 56 -- --
Adjusted EBITDA 25,437 12,123 49,654 8,011
Margin% 7.9% 3.6% 13.7% 13.7%
Adjusted net income (loss) — defined as net income (loss) before share-based compensation, foreign exchange (gain) loss and penalties on uncertain tax positions
Net income (loss) 6,265 (20,639) (5,203) (838)
Share-based compensation 3,464 8,586 15,163 2,445
Foreign exchange (gain) loss (7,048) (4,814) 475 77
Penalties on uncertain tax positions -- 56 -- --
Adjusted net income (loss) 2,681 (16,811) 10,435 1,684
Margin% 0.8% (5.0%) 2.9% 2.9%
Earnings (loss) per ordinary share:
Basic 0.01 (0.04) 0.03 0.00
Diluted 0.01 (0.04) 0.02 0.00
Earnings (loss) per ADS:
Basic 0.11 (0.65) 0.40 0.07
Diluted 0.11 (0.65) 0.39 0.06
Non-GAAP gross profit – defined as gross profit before share-based compensation expense
Gross profit 98,280 101,693 107,446 17,333
Plus: Share-based compensation 374 108 1,307 211
Non-GAAP gross profit 98,654 101,801 108,753 17,544
Margin% 30.5% 30.0% 29.9% 29.9%
Non-GAAP operating expense – defined as operating expense before share-based compensation expense
Sales & marketing expenses 32,671 29,175 31,833 5,135
Minus: Share-based compensation (808) (327) (1,103) (178)
Non-GAAP sales & marketing expenses 31,863 28,848 30,730 4,957
% of net revenues 9.8% 8.5% 8.4% 8.4%
General & administrative expenses 37,194 73,797 49,712 8,019
Minus: Share-based compensation (1,569) (6,542) (11,089) (1,788)
Non-GAAP general & administrative expenses 35,625 67,255 38,623 6,231
% of net revenues 11.0% 19.8% 10.6% 10.6%
Research & development expenses 28,207 28,113 26,962 4,349
Minus: Share-based compensation (713) (1,609) (1,664) (268)
Non-GAAP research & development expenses 27,494 26,504 25,298 4,081
% of net revenues 8.5% 7.8% 7.0% 7.0%
Non-GAAP operating income (loss) — defined as GAAP operating income (loss) before share-based compensation expense
Operating income (loss) 208 (29,392) (1,061) (170)
Plus: Share-based compensation 3,464 8,586 15,163 2,445
Non-GAAP operating income (loss) 3,672 (20,806) 14,102 2,275
Margin% 1.1% (6.1%) 3.9% 3.9%
Supplementary Metrics
(Unaudited)
Mar 31, 2014 Jun 30, 2014 Sep 30, 2014
Revenues breakdown by industry verticals
Internet and software 23% 23% 23%
Mobile internet 15% 15% 16%
Media and entertainment 28% 29% 29%
E-commerce 21% 20% 19%
Enterprises 11% 12% 13%
Government agencies 2% 1% 0%
Total 100% 100% 100%
Capital expenditures 29,728 58,368 104,588
As a percentage of net revenues 9.2% 16.9% 27.9%

CONTACT: For investor and media inquiries please contact: Investor Relations Department ChinaCache International Holdings Tel: +86 (10) 6408 5307 Email: ir@chinacache.com Mr. Glenn Garmont or Mr. Don Markley The Piacente Group | Investor Relations Tel: +1 212-481 2050 Email: chinacache@tpg-ir.com

Source:ChinaCache International Holdings Ltd.