Hurray! CEO Confident Despite Revenue and Net Income Plunges

by: SA Editor Abbi Adest August 21, 2006 | about stocks: HRAY

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Hurray! Holding Co., Ltd (HRAY), a provider of ringtones, ringbacktones and other wireless music-related services in China, reported Q2 2006 earnings last Thursday. CEO QD Wang and CFO Jesse Liu comment on the company's ups and downs in the last quarter in their conference call transcript:

QD Wang

Now let’s start from our Q2 2006 financial highlights. Total revenues was $18.3 million, up 10.2% quarter-over-quarter and 22.1% year-over-year exceeding previously reaffirmed guidance of $16.5 million to $17.5 million. Record wireless value-added services revenues was $16.6 million, growth of 14.5% quarter-over-quarter and growth of 23.7% year-over-year.

Software and system integration services revenues were $0.4 million, a decline of 43.0% quarter-over-quarter and 77.1% year-over-year. Recorded music revenues, which are from the Company's new music development, production and distribution business were $1.4 million.

Net income was $1.7 million, growth of 84.9% quarter-over-quarter and a decline of 66.0% year-over-year. Adjusted EBITDA of $2.2 million, growth of 39.5% quarter-over-quarter and a decline of 58.3% year-over-year. Diluted earnings per ADS were $0.08.

Here at Hurray! we are very pleased to report record revenues which exceed our previous estimate. Our renewed revenue and profit growth from previous quarters is a strong demonstration of our ability to execute in a challenging operating environment. We are confident that we will be able to minimize the negative impact of new operator policies in the third quarter and resume revenue and profit growth in the near future.

Now I would like to turn to Jesse Liu for more detailed financial results in Q2.

Jesse Liu

Good morning and good evening to all of you in Asia, as well as in North America. Without going through the details this time, I would like to just highlight a few key progresses we have made. Wireless value-added services generated from China Mobile, China Telecom and China Netcom grew 26% quarter-over-quarter and 157% year-over-year to $11 million, representing 67% of our total wireless value-added services revenue, an increase from 61% in the previous quarter and 32% in the second quarter of 2005.

Wireless value-added services revenues generated from SMS, IVR, ringback tones, MMS and Java grew 24.6% quarter-over-quarter and 133% year-over-year to $11 million, representing 67% of our total wireless value-added services revenues, an increase from 61% in the previous quarter and 35% in the second quarter.

Also, wireless value-added services revenues generated from operator independent margin promotion, distribution such as Internet marketing and licenses, direct media advertising and handset vendor partnerships reached approximately 28% from $4.2 million of our total wireless value-added services revenues for the quarter.