(all percentage changes and comparisons are year on year, unless stated otherwise)
- Total revenue rose 0.6% to $14.9 million, and rose 6.2% sequentially. Consensus estimate of $14.78 million (2 analysts).
- 2.5G revenue rose 140.3% to $9.4 million, and rose 4.3% sequentially.
- 2G revenue fell 21.8% to $3.5 million, and was flat sequentially.
- SMS revenue fell 49.4% to $2.3 million, and fell 21.6% sequentially.
- IVR revenue rose 100.6% sequentially to $1.3 million.
- Software and system integration services revenue fell 69.1% to $2.0 million, but rose 32.1% sequentially.
- Gross margin was 57.3% versus 36.9%, and 62.4% in Q4.
- Operating expenses rose 24.9% to $3.1 million, and fell 11.3% sequentially.
- Operating income rose 81.9% to $5.5 million, and rose 3.1% sequentially.
- Operating margin was 36.8% versus 20.3%, and 37.9% in Q4.
- Net income rose 90.6% to $5.6 million and rose 6.1% sequentially.
- Net margin was 37.4% versus 19.8%, and 37.4% in Q4.
- Fully diluted earnings per American Depositary Share (NYSE:ADS) were $0.31 versus $0.19. Consensus estimate of $0.24 (2 analysts).
Income Statement Notes
- WAP services revenue impacted by slower growth of China Unicom's (ticker: CHU) CDMA user base and intensified competition among providers of wireless value-added services on China Mobile's (ticker: CHL) networks.
- Most of 2.5G services revenue derived from WAP services, with a relatively limited contribution from its existing Java services as well as its MMS services.
- Sequential SMS decline was offset by strong growth in IVR services.
- Sequential decline in gross margin for 2.5G services primarily due to increased revenue sharing with third party content providers and promotional partners.
- Increase in operating expenses primarily due to staff costs and increased personnel.
- As of March 31, 2005, cash and equivalents of $73.5 million.
Chairman and CEO QD Wang
We are very pleased with our overall financial performance during the
first quarter of 2005. We are particularly proud that we have been able
to sustain growth in our core 2.5G area during a period of continued market
change, regulatory uncertainty and sector development. We continue to be a
leader in the 2.5G WAP content and software business and have great confidence
in the long term growth opportunities for 2.5G services. We believe we are
well positioned for market leadership in China as wireless value-added
services continue to migrate from 2G services to more sophisticated 2.5G
services and as users commence migrating to 3G services in the future.