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Charm Communications' CEO Discusses Q2 2012 Results - Earnings Call Transcript

These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Charm does not assume any obligation to update any forward-looking statements except as required under applicable law.

Also, please note that some of the information to be discussed includes non-GAAP financial measures as defined in Regulation G. The most directly comparable U.S. GAAP financial measures and information reconciling these non-GAAP financial measures to Charm’s financial results prepared in accordance with U.S. GAAP are included in Charm’s earnings release, which has been posted on the company’s IR website at ir.charmgroup.cn. Please note that this conference is being recorded. In addition, a webcast of this conference call will be available on Charm’s Investor Relations website.

I will now turn the call over to Charm Communications Founder, Chairman and CEO, Mr. Dang, for whom I will be the translation.

He Dang

[Foreign Language]

Hello, everyone. And welcome to our second quarter earnings conference call.

[Foreign Language]

During the second quarter of 2012, we continue to invest in our overall business, while generating strong growth in our core advertising agency business. The segments performed particularly well, in spite of a challenging advertising market and continue to gain market share with total advertising turnover or billings up 20.6% year-over-year outpacing industry market growth.

This increase speaks to the strategic investments we have made to provide more integrated advertising and digital solutions for our clients. Our digital billings driven especially by our search business under Charm Click grew 80% year-over-year and digital revenues increased to 30% of total agency revenues.

[Foreign Language]

China’s macro economics slowdown over the first half of 2012 had a substantial impact on the advertising industry. According to CTR market research, traditional media advertising increased just 3.9% in the first half of 2012, the lowest rate in the past five years. This slowdown in advertising demand was worst than we had anticipated and we now expect these challenging conditions to continue through the remainder of 2012.

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