Renren (RENN) is guiding for Q4 revenue of $29M-$31M. That's far below a consensus of $48.9M, and also down sharply from Q3 and year-ago levels of $47.6M and $48.8M, respectively.
Renren's Q3 numbers make some likely culprits for the guidance apparent. After rising 1% in Q2, online game revenue fell 17% Y/Y to $20.1M due to the maturing of existing titles (and the failure of new titles to make up for it). Online ad revenue, up 2% in Q2, fell 11% Y/Y to $14.9M as Renren continues to bleed Chinese social networking share to Tencent and Sina.
Two bright spots: Other Internet value-added service revenue rose 32% to $6.1M thanks to Renren's Woxiu virtual talent show service, and the Nuomi daily deals unit (now 59%-owned by Baidu) saw revenue rise 36% to $6.5M.
In spite of Renren's revenue pressures, opex rose 27% Y/Y. Sales/marketing spend +34% to $28.5M, R&D +7% to $22.4M, G&A +57% to $14.6M. Given the Q4 guidance, job cuts might soon be on the way.
Confirming a Marbridge Consulting report, Renren says it's restructuring its gaming ops to focus on "high-quality games."