Youlu (YOKU) expects Q4 revenue of RMB860M-RMB900M ($141.2M-$147.8M), below a consensus of RMB921.5M ($151.3M). But the company is also forecasting it will achieve non-GAAP profitability in Q4 after posting a $26.1M ($0.16/share) non-GAAP net loss in Q3.
The Chinese online/mobile video leader took a page from Netflix in Q3 and decided to accelerate the pace at which it amortized content costs for TV serial dramas and moves, so as to reflect a "new consumption pattern" among viewers. This led's Youku's content costs to rise 58% Q/Q to $78.2M and equal 56% of revenue, up from 40% in Q2.
If not for the change, content costs would've only totaled $54.6M, +11% Q/Q and 39% of revenue, and non-GAAP net loss would've only amounted to $2.5M.
While total revenue rose 14% Q/Q, ad revenue only rose 3%. Bandwidth costs rose 11% Q/Q to $29.7M, and sales/marketing costs rose 5% to $25.7M.