Focus Media Reports Strong Sequential Ad Growth; Margins Weaken (FMCN 2Q05 Earnings Results)

Focus Media (ticker: FMCN) reported Q2 2005 earnings results today. There were no analyst estimates available. Key stats from the quarter:

Q2 Results

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

• Total revenue rose 127.9% to $14.6 million, and rose 52.3% sequentially.
• Advertising services revenue rose 160.6% to $14.3 million, and rose 51.8% sequentially.
• Ad services in commercial locations -- unrelated party revenue rose 130.6% to $12.4 million.
• Ad services in commercial locations -- related party revenue rose 1,443.2% to $1.5 million.
• Ad services revenue for in-store locations rose from $0 to $338,739.
• Ad equipment revenue fell 70.8% to $263,848.
• Gross margin was 60.6% vs 67.2%.
• Operating expenses rose 257.3% to $4.3 million.
• G&A expenses rose 369.3% to $2.3 million.
• Sales and marketing expenses rose 177.7% to $2.0 million.
• Operating income rose 46.6% to $4.5 million.
• Operating margin was 31.1% vs 48.4%.
• Net income rose 119.2% to $4.3 million.
• Net margin was 29.8% vs 31.0%.
• Diluted EPS of $0.13 vs loss of $0.55 (assumes conversion of preferred shares). There were no analyst estimates available.

Balance Sheet

• Cash and equivalents of $112.9 million as of June 30, 2005.

Other Stats

• Total time slots sold on the commercial location network rose 53.0% sequentially to 3,057.
• Total number of available 30-second equivalent time slots on the commercial location network rose 11.8% sequentially to 6,720 due to impact of recently acquired regional distributors.
• Total 30-second equivalent time slots sold as a percentage of total 30-second equivalent time slots available for the commercial location network rose to 45.4% from 33.2% in Q1.
• Average advertising revenue per 30-second time slot for the commercial location network fell 3.1% sequentially to $4,573. Decline due to increase in time sold in cities with relatively lower ad rates.

Q3 Guidance

• Total revenue of $17.0 - $17.5 million.
• Net income of $6.3 million - $6.5 million.