In addition to missing Q2 estimates, Youku (NYSE:YOKU) is guiding for Q3 revenue of RMB1.09B-RMB1.13B ($177.2M-$183.7M), below an RMB1.15B consensus.
Youku says it was "still in the process" of renewing a service agreement with a major mobile carrier of the end of Q2, and thus opted to defer the recognition of ~RMB40M in revenue until the renewal is in place. That contributed to the Q2 miss, and also a slowdown in Y/Y revenue growth to 27% from Q1's 36%.
Content costs rose to 42% of revenue from 38% a year ago; bandwidth costs were steady at 22%. Opex rose 20% Y/Y to $50.5M (33% of revenue).
Youku now has 500M+ monthly users. Mobile has grown to account for over 30% of revenue. Subscription service revenue rose 379% Y/Y, but over 95% of revenue still comes from advertising.
The company's cash balance totaled $1.6B at the end of Q2, or nearly half its current market cap.
Along with its Q2 results, PetSmart (NASDAQ:PETM) has confirmed reports it will explore strategic alternatives, including a possible sale. JPMorgan has been hired to help out.
The company has also announced: it's buying online pet product retailer and content provider Pet360 for $130M up-front + up to $30M in earn-outs. PetSmart notes Pet360 reaches 12M+ "pet parents" per month, and that its assets include several popular pet food and content properties. The deal is expected to close in September.
PetSmart has launched "a broad cost-reduction program" that will "target all areas of the business, including, in order of magnitude, cost of goods sold, logistics, sourcing, store operating costs and overhead." More details will be given next quarter.
Comparable store sales fell 0.5% Y/Y in Q2. Q3 EPS guidance is at $0.93-$0.97 (consensus is at $0.94), and full-year EPS guidance is at $4.29-$4.39 (consensus is at $4.32).
Full-year net sales are expected to grow at a low-single digit clip (consensus is at 2%), and comparable store sales are expected to be relatively flat.
Hertz (NYSE:HTZ) now expects 2014 results to be "well below the low end" of prior guidance due to "operational challenges in the rental car and equipment segments," and its ongoing accounting review.
The "challenges" include heavy vehicle recall activity, "significantly higher-than-expected" U.S. opex, "issues and delays" in the installation of ERP and counter systems, and "continued soft demand" in the equipment rental market.
Hertz's audit committee has "directed the Company to conduct a review of the financial records for fiscal years 2011, 2012 and 2013 and their impact, if any, on 2014." Hertz notes additional errors might be found.
U.S. rental car revenue rose 4% Y/Y in Q2; rental car revenue/day rose "slightly." International rental car revenue rose 7%, and equipment rental revenue 1%.
Lead independent director George W. Tamke is resigning, and will be replaced by director Linda Fayne Levinson. Rent A Car Americas chief Scott Sider is retiring. Sider's responsibilities will be assumed by other execs.
RGS (NASDAQ:RGSE) chairman David Belluck: "After completing a comprehensive review of each of our businesses, the Board of Directors has determined that the best opportunity lies with our new Residential and Sunetric segments for maximizing future shareholder value. Dennis Lacey is uniquely qualified for the CEO role."
Lacey states RGS plans to "devote significant internal resources to growing our Residential segment by increasing the size of our sales force, building out our installation capabilities, and launching our leasing platform." At the same time, it will lower its focus on commercial solar, given RGS' commercial sales have been hurt by price pressure and longer project cycle times.
Residential revenue +49% Y/Y in Q2 to $15.9M, and commercial revenue +77% to $15.5M. Sunetric revenue totaled $3.1M. While residential and Sunetric respectively had gross margins of 22% and 26.3%, commercial GM was -4.1%.
Total gross margin was 11%, down from 14.9% in Q1 and 23.1% a year ago. Sales/operating expenses rose to $9.3M from $6.1M a year ago, and G&A spend to $4.1M from $1.9M. EPS was hurt by an $18.8M impairment charge taken on commercial assets.