“In the fiscal 2012 first quarter, our India Online advertising business was adversely impacted because of continued weakness in the banking, financial services, insurance and consumer electronics industries while we saw good traction in our Online Shopping segment with increase transaction volumes and improved margins.
“The interplay of these trends and the effect of a falling Rupee vis-à-vis the US dollar is reflected in our results which shows a decline compared to the previous fiscal periods. Our long-term story has not changed and we remain confident that as the Indian broadband market grows and technology and infrastructure improves, Rediff will be well positioned for growth and enhanced bottom-line performance over the long-term,” stated Ajit Balakrishnan, Chairman and Chief Executive Officer of Rediff.com.
Overall revenues declined 32% in dollar terms over the corresponding quarter in the last fiscal year. Total India revenues, which include online advertising revenues and fee-based revenues, declined 37% over the corresponding quarter last year. Within fee-based revenues, revenues from online shopping business increased 109% in Rupee terms while achieving a margin of 12%, an increase of 100 basis points over the comparable year-ago period.
For the quarter ended June 30, 2012, our India online advertising revenues declined 45% in dollar terms (34% in Rupee terms) compared to the corresponding quarter last year and 34% in dollar terms (28% in Rupee terms) compared to the immediately preceding quarter. However, it is important to note that our India online advertising revenues were impacted by a 22% decrease in the value of the Indian Rupee vs. the U.S. dollar in the comparable year-over-year periods.Operating expenses for the comparable first quarter periods declined from $4.32 million in 2011 to $3.45 million in 2012, a decrease of approximately 20%. The company continues to closely monitor its expense structure and has taken steps to reduce its SG&A compared to prior year periods. (Please see further below a reconciliation of non-GAAP operating expenses to operating expenses under GAAP.) Additionally, our operating EBITDA loss for the quarter ended June 30, 2012 was $2.27 million, compared to an Operating EBITDA loss of $2.01 million for the corresponding quarter last year. (Operating EBITDA is a non-GAAP financial measure. Please see further below a reconciliation of Operating EBITDA to net income.)