Charm Communications Inc. (
Q2 2011 Earnings Call
July 28, 2011 8:00 am ET
Nicholas Manganaro – Ogilvy Financial
He Dang – Chairman and Chief Executive Officer
Wei Zhou – Chief Financial Officer
James Marsh – Piper Jaffray
Nan Lee – SIG
Previous Statements by CHRM
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Hello and thank you for standing by for the Charm Communications Earnings Conference Call. At this time, all participants are in listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. Today’s conference is being recorded. If you have any objections you may disconnect at this time.
I would now like to turn the meeting over to your host for today’s conference, Mr. Nicholas Manganaro from Ogilvy Financial.
Hello everyone and welcome to Charm Communications earnings conference call for the second fiscal quarter, which ended June 30, 2011. The company’s earnings results were released yesterday and are available on the company’s IR website at ir.charmgroup.cn as well as on newswire services.
Today, you will hear opening remarks from Charm’s Founder and Chairman, Mr. Dang followed by the company’s Chief Financial Officer, Mr. Wei Zhou, who will provide a financial overview and guidance for the second quarter. After their prepared remarks, they will be available to answer your questions.
Before we continue, please note that the discussion today will contain certain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. 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 is required under applicable law. Also, please note that some of the information to be discussed includes the non-GAAP financial measures as defined in Regulation G. The most directly comparable US GAAP financial measures and information reconciling these non-GAAP financial measures, the Charm’s financial results prepared in accordance with US GAAP are included in Charm’s earnings release, which has been posted on the company’s IR website at ir.charmgroup.cn.
As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on Charm’s Investor Relations website.
I’ll now turn the call over to Charm Communications Founder, Chairman and CEO, Mr. Dang.
Hello, and welcome to our second quarter 2011 earnings conference call.
We continued to execute our company strategies and delivered solid growth in the second quarter of 2011 with impressive year-over-year increases across all of our business segments. We continued to gain market share during new client wins for both our traditional and non-traditional advertising businesses and solidified our market leadership position as a leading advertising agency in China.
Building on our core TV businesses, we also made significant inroads in our digital media business, where our internet agency business has more than doubled as a percentage of overall advertising agency revenues led by strong organic growth in our Charm Interactive business unit. All in all, we are pleased with our second quarter results in which we delivered excellent top and bottom line results.
The macro environment remained strong in terms of demand from advertisers for the second quarter. And with rising media prices across the industry advertisers continue to move towards integrated media solutions with increased focus on targeting and effectiveness. We’ve been able to extend our integrated service capabilities by leveraging our core strength in television advertising, which still accounts for more than 60% of all advertising spending in China. Strategic acquisition of ClickPro, and our continued partnership with Aegis Media in forming a joint-digital trading platform we have strengthened our service offerings. Second half of the year we look to maintain our number one position with CCTV China’s largest television network and to grow our television related inventory at a healthy rates all of which will protect our core competitiveness.
In terms of China’s overall advertising market Charm continue to capture a higher market share in the second quarter of 2011. Total customer advertising spending place through or with Charm increased 33.3% from $150.9 million in the second quarter of 2010 to $201.3 million in the second quarter of 2011 which is much higher than the 14% growth in the overall advertising market reported by CTR.
Moving on to our operational highlights we continue to execute on our strategy in the second quarter winning new clients and expanding our business with existing clients.
For Charm Advertising we witnessed robust billings growth of 27% in the second quarter, driven by strong demand for television advertising. On the strategic front we’re able to expand our industry coverage into the travel and tourism and internet sectors in particular on CCTV.
For travel and tourism we helped Shangxing Tourism Bureau and Hubei Tourism Bureau with our national branding campaigns. And for the internet industry we helped (inaudible) television campaigns. We continue to make investments and building out our media planning and buying platform for satellite and local television channels.
One key strategic initiatives in the second quarter was our VIP conferences in Beijing, Shanghai and Guangzhou where we had over 200 major clients along with the heads of advertising from CCTV and 14 other satellite channels and attendants. These conferences will set the tone for the second pitching season for Charm advertising.