Chinese Internet portal Sina.com (SINA) says net revenues increased 15% year over year to US$64.3 million for the quarter ended September 30, 2007.
"We are very pleased to report record total revenues and non-GAAP net income in the third quarter," said Charles Chao, CEO of Sina. "As advertising revenues now account for over 70% of our total revenues, we have started to see operating margin expansion with rapid growth in advertising business."
Advertising revenues for the third quarter of 2007 totaled US$45.8 million, representing a 40% increase from the same period last year and an 11% increase from last quarter. Advertising revenues in China grew 41% year over year or 11% quarter over quarter to US$44.9 million for the third quarter of 2007. Advertising revenues in the third quarter of 2007 represented 71% of total revenues, up from 58% in the same period last year and 69% in the previous quarter. Non-advertising revenues for the third quarter of 2007 totaled US$18.5 million, a 21% decrease from the same period last year and flat over the previous quarter. MVAS revenues dropped 24% year over year to US$16.6 million in the third quarter of 2007. Revenues from SMS and IVR, which accounted for 74% of MVAS revenues in the third quarter of 2007, declined 32% year over year, mainly as a result of policy changes by mobile operators in China.
Gross margin for the third quarter of 2007 was 62%, down from 64% for the same period last year and same as the previous quarter. Advertising gross margin for the third quarter of 2007 was 64%, compared to 65% for the same period last year and 62% in the previous quarter. Non-GAAP advertising gross margin, which excludes stock-based compensation, for the third quarter of 2007 was 65%, compared to 67% in the same period last year and 63% in the previous quarter. The year over year decline in advertising gross margin was mainly due to higher costs associated with content, web production and bandwidth. The sequential increase in advertising gross margin was due to revenues growing faster than advertising cost of sales.
MVAS gross margin for the third quarter of 2007 was 56%, compared to 62% for the same period last year and 61% last quarter. The decline in MVAS gross margin was primarily due to lower MVAS revenues without a proportionate decrease in related content and channel costs.
Operating expenses for the third quarter of 2007 amounted to US$24.7 million, a decline of 3% from the same period last year and an increase of 1% from last quarter. Non-GAAP operating expenses, which excluded stock-based compensation and amortization expense of intangible assets, for the third quarter of 2007 were US$23.1 million, flat over the same period last year and increased 2% from the previous quarter. The sequential increase in operating expenses was primarily due to higher marketing expenses and professional service fees, partially offset by lower bad debt expenses.
Net income for the third quarter of 2007 was US$17.2 million, an increase of 60% from the same period last year and 19% from last quarter. Diluted net income per share for the third quarter of 2007 was US$0.28, compared to US$0.19 in the same period last year and US$0.25 last quarter. Non-GAAP net income for the third quarter of 2007 was US$19.1 million, an increase of 31% from the same period last year and 19% from the previous quarter. Non-GAAP diluted net income per share for the third quarter of 2007 was US$0.32, compared to US$0.25 in the same period last year and US$0.27 last quarter.
As of September 30, 2007, Sina's cash, cash equivalents and short-term investments amounted to US$439.4 million, compared to US$362.8 million as of December 31, 2006. Cash flow from operating activities for the third quarter of 2007 was US$19.6 million.
