The9 Limited Reports First and Second Quarter 2012 Unaudited Financial Results

Posted on 2012-08-24 11:04:02 BJT, by The9

The9 Limited Reports First and Second Quarter 2012 Unaudited Financial Results

  Shanghai, China – August 23, 2012. The9 Limited (NASDAQ: NCTY) (“The9”), an online game developer and operator, announced its unaudited financial results for the first quarter ended March 31, 2012 and the second quarter ended June 30, 2012 today.

  Financial Highlights:

  First Quarter 2012

  - Net revenues in the first quarter of 2012 amounted to RMB48.6 million (US$7.7 million), representing an increase of 74% from RMB27.9 million (US$4.4 million) in the fourth quarter of 2011 and an increase of 89% from RMB25.8 million (US$4.1 million) in the first quarter of 2011 mainly due to an increase in net revenues from Shen Xian Zhuan, a massively multiplayer online role-playing game.

  - Net loss attributable to holders of ordinary shares in the first quarter of 2012 amounted to RMB111.4 million (US$17.5 million), representing a decrease of 12% from RMB126.0 million (US$19.8 million) in the fourth quarter of 2011, mainly due to the increase in net revenues; and an increase of 112% from RMB52.6 million (US$8.3 million) in the first quarter of 2011, mainly due to increases in marketing expenses and product development expenses.

  Second Quarter 2012

  - Net revenues in the second quarter of 2012 amounted to RMB54.8 million (US$8.6 million), representing an increase of 13% from RMB48.6 million (US$7.7 million) in the first quarter of 2012 and an increase of 115% from RMB25.5 million (US$4.0 million) in the second quarter of 2011, mainly due to an increase in net revenues from Shen Xian Zhuan.

  Net loss attributable to holders of ordinary shares in the second quarter of 2012 amounted to RMB118.0 million (US$18.6 million), representing an increase of 6% from RMB111.4 million (US$17.5 million) in the first quarter of 2012, mainly due to an increase in product development expenses; and an increase of 881% from the second quarter of 2011 from RMB12.0 million (US$1.9 million), mainly due to recognition of a gain on the disposal of an investment in the second quarter of 2011.

  Management Comments:

  Jun Zhu, Chairman and Chief Executive Officer of The9 said, “We have a very high level of confidence in the two Massively Multiplayer Online shooting games in our pipeline. Firefall just released the biggest patch update ever in early August and received highly positive feedback from gamers. Firefall will be commercialized in the U.S. very soon and Red 5 will release more beta invites in the U.S. to attract more gamers to join Firefall. Red 5 has also set up a subsidiary in Ireland in May 2012 to prepare for the launch in Europe. Planetside 2 is another well-known game for which we obtained the license in China. Planetside 2 is already in closed beta in the U.S. We are now localizing the game in China and plan to start the internal technical test in China by the end of this year. We believe these two robust games in our pipeline will significantly strengthen our capability in achieving further growth. ”

  Discussion of The9’s Unaudited First and Second Quarter 2012 Results

  Net Revenues

  Our net revenues in the first quarter of 2012 amounted to RMB48.6 million (US$7.7 million), representing an increase of 74% from RMB27.9 million (US$4.4 million) in the fourth quarter of 2011 and an increase of 89% from RMB25.8 million (US$4.1 million) in the first quarter of 2011. These increases were primarily due to an increase in net revenues from Shen Xian Zhuan.

  Our net revenues in the second quarter of 2012 amounted to RMB54.8 million (US$8.6 million), representing an increase of 13% from RMB48.6 million (US$7.7 million) in the first quarter of 2012 and an increase of 115% from RMB25.5 million (US$4.0 million) in the second quarter of 2011. These increases were also primarily due to an increase in net revenues from Shen Xian Zhuan.

  Gross Profit

  Our gross profit in the first quarter of 2012 amounted to RMB32.8 million (US$5.2 million), representing an increase of 147% from RMB13.3 million (US$2.1 million) in the fourth quarter of 2011 and an increase of 18% from RMB27.7 million (US$4.4 million) in the first quarter of 2011. The increases in gross profit primarily reflected a lower level of royalty incurred as we generated a majority of net revenues in the first quarter of this year from Shen Xian Zhuan, our self-developed game.

  Our gross profit in the second quarter of 2012 amounted to RMB38.8 million (US$6.1 million), representing an increase of 18% from RMB32.8 million (US$5.2 million) in the first quarter of 2012 and an increase by 206% from RMB12.7 million (US$2.0 million) in the second quarter of 2011. The increases in gross profit primarily reflected a lower level of royalty incurred as we generated a majority of revenues in the second quarter of this year from Shen Xian Zhuan, our self-developed game.

  

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