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China Finance Online (ticker: JRJC), a provider of subscription-based online financial data covering China listed companies, missed Q1 2005 EPS and revenue estimates. Here are the details:


Q1 Results
(all percentage changes and comparisons are year on year, unless stated otherwise)

  • Net revenue rose 106% to $1.93 million versus consensus (1 analyst) of $2.25 million.
  • Net revenue decreased 7% sequentially due to stock market weakness.
  • Ad revenue was $179,000, representing 9% of net revenues.
  • Gross margin was 94% versus 90%.
  • G&A expenses rose 401% to $357,000 due to costs associated with being a public co.
  • Sales and marketing expenses rose 82% to $226,000 due to advertising and hiring personnel.
  • Operating expenses increased 123% to $721,000 due to increases in G&A expenses.
  • Operating expense margin was 37% versus 35%.
  • Operating income rose 114% to $1.1
    million, but decreased 24% sequentially.
  • Income tax increased from $9,000 to $160,000 due to institution of enterprise tax.
  • Net income rose 146% to $1.28 million, but decreased 31% sequentially.
  • Net margin was 66% versus 56%, and 89% in Q4 2004.
  • Basic and diluted income per ADS were each $0.06 versus consensus (1 analyst) of $0.07.
  • Basic and diluted income per share were each $0.01.

Q1 Subscriber Information
(all percentage changes and comparisons are year on year, unless stated otherwise)

  • New subscribers fell 78% to 2,606.
  • Repeat subscribers fell 26% to 3,713.
  • Decreases in new and repeat subscribers were due to weak Chinese stock market.
  • Average subscription fee per subscriber (ASF) for new subscribers rose 51% to $208, but decreased 27% sequentially.
  • ASF for repeat subscribers rose 51% to $238, but decreased 20% sequentially.

New Products and Partnerships

  • Cooperation agreements with China Construction Bank (CCB), China Minsheng Banking (CMBC) and CITIC Industrial Bank (CITICIB).
  • According to the agreements, CCB, CMBC and CITICIB will help promote and market China Finance's new service offering, Personal Finance, to their existing banking customers.
  • Personal Finance is China Finance's new proprietary financial service package. It combines personal finance tools such as book keeping, financial report and payment alert with comprehensive real time personal wealth management product information and news.
  • Company expects to launch Personal Finance in early Q3 2005.
  • Content co-branding partnerships with Internet portals tom.com, china.com and 21cn.com.
  • China Finance will embed its content in partners' finance or securities channels.

Comment

  • The company did not provide Q2 guidance. Of course, it did provide some guidance previously.
  • Without a rebound in the Chinese stock market, JRJC's prospects are cause for concern.
  • Notice not one management representative is quoted in the earnings press release. The numbers apparently speak for themselves.

JRJC chart below.

Jrjc428


Source: China Finance Online (JRJC) misses on continued weak subscriber growth; stock whacked in AH (1Q05 earnings)