Charm Communications Inc. (
Q3 2011 Earnings Conference Call
October 27, 2011 08:00 ET
He Dang – Founder, Chairman, and Chief Executive Officer
Wei Zhou – Chief Financial Officer
Wallace Cheung – Credit Suisse
Eddie Leung – Merrill Lynch
Dick Wei – JPMorgan
Previous Statements by CHRM
» Charm Communications CEO Discusses Q2 2011 Results - Earnings Call Transcript
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» Charm Communications CEO Discusses Q3 2010 Results - Earnings Call Transcript
Hello and thank you for standing by for Charm Communications Earnings Conference Call. At this time, all participants are in a 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.
Nicholas Manganaro – Ogilvy Financial
Hello everyone and welcome to Charm Communications earnings conference call for the third fiscal quarter, which ended September 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 fourth 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 U.S. 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 expectation.
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, the 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. 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 will now turn the call over to Charm Communications Founder, Chairman and CEO, Mr. Dang.
He Dang – Founder, Chairman, and Chief Executive Officer
Hello and welcome to our third quarter 2011 earnings conference call.
First, I am very happy to announce that we continued to execute on our strategies and delivered strong top and bottom line results despite the somewhat turbulent macro environment in the third quarter. We were able to rely on our enhanced integrated communication capabilities as well as our strong client base to sustain our growth momentum and achieve 45% growth in total revenue year-over-year.
Advertising agency businesses for traditional media continues to deliver stable growth. Our internet advertising agency business delivered an impressive fivefold increase in agency revenues compared to the third quarter last year and currently makes up over 20% of our total advertising agency revenues compared to 13% in the second quarter of 2011 and 5% in full year 2010.
Looking at the overall advertising market, we continue to see strong demand from advertisers, which is part of a larger consumer spending trend in China in which Chinese consumers are improving their lifestyles and their earning power increases. Advertisers are placing greatest strategic emphasis on developing grant equity in order to compete for customers. At the same time, advertisers are becoming more sophisticated with their immediate placement and more diligent with their budget while focusing on the return on investment.
However, continued media fragmentation dealing with the development of the Internet in China is beginning to impact advertisers brand development and overall communication strategy all of which are driving advertisers to seek agencies with the most integrated communication capability. We see advertisers actively seeking in fact demanding the agencies not only fully comprehend the nuances of traditional and new media, but also combined them in innovative ways, but optimizing their communication strategy. We see this increasing demand as a tremendous long-term growth opportunity for Charm, especially as we broaden our integrated TV and Internet communication solution.
We already entered the busiest time of the year. The CCTV primetime auction, which is the key parameter for business and advertiser confidence to the upcoming year will take place on November 8. And other key satellite channels will hold their 2012 pre-sales and auctions around the same time. Almost all Chinese companies will be signing their 2012 marketing strategies and budgets around this time. At Charm, we have been and will remain active in helping our advertisers to plan for 2012 applying our understanding of the dynamic media landscape and leveraging our proprietary planning and auction tools and database. We hope to develop targeted and effective integrated communication plans for advertisers and to help them achieve successful auction results.
Therefore in spite of the macro challenges we see unfolding globally and within China, we still see distinct growth opportunities in our industry and will remain positive as we head into 2012.
As for operating highlights in the third quarter, we continued to improve our service capabilities and are beginning to see the reward for past investments and winning new clients and securing foothold in new businesses.