AutoNavi Holdings Limited Reports Second Quarter 2012 Results

BEIJING, Aug. 14, 2012 (GLOBE NEWSWIRE) -- AutoNavi Holdings Limited ("AutoNavi" or the "Company") (Nasdaq:AMAP), a leading provider of digital map content and navigation and location-based solutions in China, today announced its unaudited financial results for the second quarter ended June 30, 2012.

Second Quarter 201 2 Operational Highlights
  • AutoNavi's free mobile map application had a total of 65 million users and over 36 million monthly active users as of the end of the second quarter of 2012, compared to a total of 52 million users and over 29 million monthly active users as of the end of the first quarter of 2012, and a total of 17 million users and over 4 million monthly active users as the end of the second quarter of 2011.

Second Quarter 201 2 Financial Highlights
  • Net revenues in the second quarter of 2012 were $40.2 million, an increase of 22.0% year-over-year.  
  • Gross profit in the second quarter of 2012 was $30.1 million, an increase of 27.4% year-over-year.    
  • Operating income in the second quarter of 2012 was $9.6 million, a decrease of 8.7% year-over-year. Non-GAAP operating income in the second quarter of 2012 was $13.9 million, an increase of 21.2% year-over-year.   
  • Net income attributable to AutoNavi shareholders was $8.8 million in the second quarter of 2012, a decrease of 8.1% year-over-year. Non-GAAP net income attributable to AutoNavi shareholders was $13.1 million in the second quarter of 2012, an increase of 24.2% year-over-year.

First Six Months of 2012 Financial Highlights
  • Net revenues in the first six months of 2012 were $75.9 million, an increase of 30.0% year-over-year.  
  • Gross profit in the first six months of 2012 was $57.0 million, an increase of 37.0% year-over-year.    
  • Operating income in the first six months of 2012 was $19.6 million, an increase of 3.2% year-over-year. Non-GAAP operating income in the first six months of 2012 was $27.1 million, an increase of 33.5% year-over-year.   
  • Net income attributable to AutoNavi shareholders was $17.7 million in the first six months of 2012, a decrease of 12.2% year-over-year. Non-GAAP net income attributable to AutoNavi shareholders was $25.3 million in the first six months of 2012, an increase of 23.1% year-over-year.

"Our overall business maintained a healthy growth trajectory during the first half of 2012, with net revenues growing 30% year-over-year to $75.9 million," said Mr. Congwu Cheng, chief executive officer of AutoNavi. "In the second quarter, our mobile and Internet location-based solutions business hit new record high with $11 million in net revenues, representing more than 100% year-over-year growth and accounting for nearly 28% of our total revenues. Our ability to integrate a mapping value chain of data collection, content production and application development differentiates AutoNavi in the mobile Internet space. This competitive advantage allows us to provide rich and authentic location-based content, while being recognized as a trusted resource for people on the go."

Mr. Cheng added, "As a professional mapping company, the nature of AutoNavi's map is content-neutral and independently-sourced, as well as compatible with a dynamic range of content, which makes it the ideal display platform for local merchants. We will continue to leverage our strategic distribution channels to enhance our partnerships with handset makers, automakers, mobile operators and API third-party developers, further broadening the reach of our map. This will provide AutoNavi with a strong foundation for capturing the tremendous growth opportunities in mobile internet advertising and e-commerce."

Second Quarter 2012 Results

Revenues

Total net revenues in the second quarter of 2012 were $40.2 million, an increase of 22.0% year-over-year from $32.9 million in the second quarter of 2011, and an increase of 12.7% from $35.7 million in the first quarter of 2012.

Automotive Navigation

Net revenues from the automotive navigation market in the second quarter of 2012 were $24.9 million, an increase of 9.0% year-over-year and 14.6% over the previous quarter. The increases were mainly due to an increase in the number of copies of digital map data licensed for use with in-dash navigation systems, which is directly linked to the number of vehicles equipped with these systems that are sold in China.

Mobile and Internet Location-based Solutions

The mobile and Internet location-based solutions business in the second quarter of 2012 again delivered record results with $11.0 million in net revenues, representing an increase of 104.5% year-over-year and 11.5% over the previous quarter. The increases were primarily due to the growth in revenues derived from the pre-installation of the Company's navigation solutions on mobile phones and our provision of location-based solutions to mobile operators. 

Public Sector and Enterprise Applications

Net revenues from the public sector and enterprise applications market in the second quarter of 2012 were $3.9 million, a decrease of 7.5% year-over-year and an increase of 8.2% over the previous quarter. The year-over-year decrease was a result of better performance of certain large aerial photogrammetry contract in the second quarter of 2011. The sequential increase was mainly due to an increased number of new aerial photogrammetry and map data licensing contracts during the quarter.

Cost of Revenues

Cost of revenues in the second quarter of 2012 was $10.1 million, representing an increase of 8.3% year-over-year and 15.2% sequentially. The year-over-year increase was mainly due to a general annual increase in salary and welfare benefits for employees directly involved in data collection and processing. The sequential increase was largely attributable to a rise in direct data production costs.

Operating Expenses

Total operating expenses in the second quarter of 2012 were $20.6 million, an increase of 56.0% year-over-year and 16.7% over the previous quarter. Non-GAAP operating expenses, which exclude share-based compensation expenses, were $16.3 million, an increase of 33.3% year-over-year and 12.9% sequentially.

Research and development ("R&D") expenses increased 40.8% year-over-year and 3.0% sequentially to $8.2 million. The year-over-year increase was primarily due to higher salary and benefit expenses, a result of an increase in the number of R&D staff, higher share-based compensation expenses and outsourced development costs. Non-GAAP R&D expenses, which exclude share-based compensation expenses, increased 34.9% year-over-year and 5.0% sequentially to $7.3 million.

Selling and marketing expenses increased 95.8% year-over-year and 26.7% sequentially to $6.7 million. The year-over-year increase was primarily due to higher salary and benefit expenses resulting from increased sales headcount, higher share-based compensation expenses, increased marketing expenses associated with branding activities and traveling expenses. The sequential increase was primarily due to higher share-based compensation expenses, increased marketing expenses associated with branding activities and travel expenses. Non-GAAP selling and marketing expenses, which exclude share-based compensation expenses, increased 56.9% year-over-year and 22.3% sequentially to $4.9 million.

General and administrative expenses increased 44.1% year-over-year and 29.6% sequentially to $5.7 million. The year-over-year increase was primarily due to higher salary and benefit expenses resulting from an increase in the number of general and administrative personnel and higher share-based compensation expenses in the second quarter of 2012. The sequential increase was primarily due to higher share-based compensation expenses. Non-GAAP general and administrative expenses, which exclude share-based compensation expenses, increased 11.1% year-over-year and 17.5% sequentially to $4.1 million.

Net Income Attributable to AutoNavi Shareholders

Net income attributable to AutoNavi shareholders was $8.8 million in the second quarter of 2012, a decrease of 8.1% year-over-year from $9.6 million in the second quarter of 2011 and a decrease of 1.4% quarter-over-quarter from $8.9 million in the first quarter of 2012. Diluted net income per American depositary share ("ADS") attributable to AutoNavi shareholders for the second quarter of 2012 was $0.17, as compared to $0.19 from a year ago. One ADS represents four ordinary shares.

Non-GAAP net income attributable to AutoNavi shareholders, which excludes share-based compensation expenses, was $13.1 million in the second quarter of 2012, an increase of 24.2% year-over-year and 7.9% sequentially. Diluted non-GAAP net income per ADS attributable to AutoNavi shareholders for the second quarter of 2012 was $0.26, as compared to $0.21 from a year ago.

Cash Balance

As of June 30, 2012, the Company had $171.9 million in cash and cash equivalents.

Business Outlook

The Company maintains its estimate of full year 2012 net revenues, which is in the range of $152 million to $159 million, representing an increase of approximately 20% to 25% over fiscal year 2011.

Share Repurchase Program Update

AutoNavi announced a share repurchase plan on February 28, 2012, pursuant to which the Company is authorized, but not obligated, by its board of directors to repurchase up to US$50 million worth of its ADSs until February 26, 2013. As of August 13, 2012, the Company has repurchased a total of 809,140 ADSs, representing 3,236,560 ordinary shares, with a total consideration of approximately $9.4 million at a price range of $10.47 to $12.57 per ADS, including brokerage commissions.

Conference Call Information

AutoNavi's management will hold an earnings conference call at 8:00 a.m. Eastern Daylight Time (EDT) on August 14, 2012 (8:00 p.m. Beijing/Hong Kong time on August 14, 2012).

The dial-in numbers and passcode for the conference call are as follows:

U.S. Toll Free: +1-866-519-4004
International: +65-6723-9381
Hong Kong: +852-2475-0994
United Kingdom: +44-20-3059-8139
Passcode: AutoNavi

A replay of the conference call may be accessed by phone at the following number until August 21, 2012:
U.S. Toll Free: +1-866-214-5335
International: +61-2-8235-5000
Passcode: 12958658

Additionally, an archived web-cast of this call will be available on the Investor Relations section of AutoNavi's website at http://ir.autonavi.com.

About AutoNavi Holdings Limited

AutoNavi Holdings Limited (Nasdaq:AMAP) is a leading provider of digital map content and navigation and location-based solutions in China. At the core of its business is a comprehensive nationwide digital map database that covers approximately 3.4 million kilometers of roadway and over 20 million points of interest across China. Through its digital map database and proprietary technology platform, AutoNavi provides comprehensive, integrated navigation and location-based solutions optimized for the Chinese market and users, including automotive navigation solutions, mobile location-based solutions and Internet location-based solutions, and public sector and enterprise applications. For more information on AutoNavi, please visit http://www.autonavi.com.

Forward Looking Statements

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the quotations from management in this press release, as well as AutoNavi's strategic and operational plans, contain forward-looking statements. AutoNavi may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about AutoNavi's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: AutoNavi's ability to adequately maintain and update its digital map database and minimize errors in its solutions; its current reliance on the automotive navigation market and a small number of customers for a substantial portion of its revenues; the project-based nature of its public sector and enterprise applications business; its limited operating history in the mobile/Internet location-based solutions markets; compliance with a complex set of laws, rules and regulations governing its surveying and mapping and other businesses in China; competition in the navigation and location-based solutions businesses in China; and its ability to manage its growth effectively and efficiently. Further information regarding these and other risks is included in AutoNavi's annual report on Form 20-F as well as in its other filings with the Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release, and AutoNavi undertakes no duty to update such information, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement AutoNavi's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), AutoNavi uses in this press release the following non-GAAP financial measures: (1) non-GAAP operating expenses, (2) non-GAAP R&D expenses, (3) non-GAAP selling and marketing expenses, (4) non-GAAP general and administrative expenses, (5) non-GAAP operating income, (6) non-GAAP net income attributable to AutoNavi shareholders, and (7) non-GAAP diluted net income per ADS attributable to AutoNavi shareholders, which are adjusted from results based on GAAP to exclude the impact of share-based compensation expenses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

AutoNavi believes that these non-GAAP financial measures facilitate investors' and management's comparisons to AutoNavi's historical performance and assist management's financial and operational decision making. A limitation of using these non-GAAP financial measures is that share-based compensation expenses are recurring expenses that will continue to exist in AutoNavi's business for the foreseeable future. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying table has more details on the reconciliation between non-GAAP financial measures and their most directly comparable GAAP financial measures to provide investors with context as to how the adjustments impact the GAAP amounts.
 
AUTONAVI HOLDINGS LIMITED
Consolidated Balance Sheet (unaudited)
(In thousands of U.S. dollars)
     
  June 30, December 31,
  2012 2011
     
     
Assets    
Current assets    
Cash and cash equivalents 171,929 199,696
Term deposit 31,481  -- 
Accounts receivable, net of allowance for doubtful accounts of $1,042 and $823 as of June 30, 2012 and December 31, 2011, respectively 43,411 36,273
Due from related parties, trading 4,807 1,056
Due from related parties, non-trading 3 221
Prepaid expense and other current assets 13,484 5,542
Deferred tax assets-current 1,146 1,355
Total current assets 266,261 244,143
     
Properties and equipment, net 47,511 49,245
Equity method investments 4,374 4,442
Prepaid consideration in connection with equity investment  --  183
Acquired intangible assets, net 5,814 6,855
Goodwill 8,666 8,747
Deferred tax assets-non-current 238 224
Other long term assets 420 628
     
TOTAL ASSETS 333,284 314,467
     
Liabilities    
Current liabilities    
Accounts payable (including accounts payable of the consolidated variable interest entities without recourse to AutoNavi Holdings Limited $2,630 and $2,358 as of June 30, 2012 and December 31, 2011, respectively) 2,630 2,364
Deferred revenue (including deferred revenue of the consolidated variable interest entities without recourse to AutoNavi Holdings Limited $8,482 and $5,567 as of June 30, 2012 and December 31, 2011, respectively) 9,617 7,328
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated variable interest entities without recourse to AutoNavi Holdings Limited $23,208 and $23,944 as of June 30, 2012 and December 31, 2011, respectively) 26,021 26,071
Income tax payable (including income tax payable of the consolidated variable interest entities without recourse to AutoNavi Holdings Limited $6,935 and $7,394 as of June 30, 2012 and December 31, 2011, respectively) 7,082 7,481
     
Total current liabilities 45,350 43,244
     
Non-current liabilities    
Deferred tax liability-non-current (including deferred tax liability of the consolidated variable interest entities without recourse to AutoNavi Holdings Limited $1,007 and $1,191 as of June 30, 2012 and December 31, 2011, respectively) 1,135 1,345
     
Total liabilities 46,485 44,589
     
Equity    
Ordinary shares 19 19
Additional paid-in capital 183,982 175,726
Treasury stock (8,119)  -- 
Statutory reserve 9,363 9,363
Retained earnings 79,255 61,517
Accumulated other comprehensive income 16,502 18,262
     
Total AutoNavi Holdings Limited shareholders' equity 281,002 264,887
Noncontrolling interest 5,797 4,991
     
Total equity 286,799 269,878
     
TOTAL LIABILITIES AND EQUITY 333,284 314,467
 
 
AUTONAVI HOLDINGS LIMITED
Consolidated Statements of Comprehensive Income (unaudited)
(In thousands of U.S. dollars, except share and per share data)
           
  For the three months ended For the six months ended
  June 30, June 30, March 31, June 30, June 30,
  2012 2011 2012 2012 2011
           
Revenue 41,232 33,628 36,579 77,811 59,593
Business tax (1,033) (681) (913) (1,946) (1,220)
Net revenues 40,199 32,947 35,666 75,865 58,373
Cost of revenues (10,085) (9,309) (8,757) (18,842) (16,742)
Gross profit 30,114 23,638 26,909 57,023 41,631
           
Operating expenses:          
Research and development (8,245) (5,854) (8,008) (16,253) (9,736)
Selling and marketing (6,666) (3,405) (5,260) (11,926) (6,047)
General and administrative (5,663) (3,930) (4,369) (10,032) (6,878)
Total operating expenses (20,574) (13,189) (17,637) (38,211) (22,661)
Government subsidies  10  11  762  772  11
Operating income 9,550 10,460 10,034 19,584 18,981
           
           
Gain on re-measurement of fair value of the equity method investment  --   --   --   --   995
Interest income 1,563 1,466 1,616  3,179  2,615
Change in fair value of forward contract  --  (1,298)  --   --  (288)
Foreign exchange (loss)/gains (438) 1,103 (30) (468) 552
Other Income 47 47 47 94 94
Income before income taxes and share of net (loss)/income of equity method investments 10,722 11,778 11,667 22,389 22,949
Income tax expense (1,196) (1,698) (2,093) (3,289) (2,061)
Share of net (loss)/income of equity method investments (263) 40 (238) (501) 52
Net income 9,263 10,120 9,336 18,599 20,940
Less: Net income attributable to noncontrolling interest 458 543 403 861 744
Net income attributable to AutoNavi Holdings Limited shareholders 8,805 9,577 8,933 17,738 20,196
           
Net income per ordinary share attributable to AutoNavi Holdings Limited shareholders          
Basic 0.05 0.05 0.05 0.09 0.11
Diluted 0.04 0.05 0.04 0.09 0.10
           
Net income 9,263 10,120 9,336 18,599 20,940
Other comprehensive (loss)/income, net of tax          
Foreign currency translation adjustment (1,676) 1,848 (139) (1,815) 2,825
           
Comprehensive income  7,587  11,968  9,197  16,784  23,765
Less: comprehensive income attributable to noncontrolling interest  406  592  400 806  822
Comprehensive income attributable to AutoNavi Holdings Limited shareholders  7,181  11,376  8,797  15,978  22,943
           
Weighted average number of shares used in calculating net income per ordinary share          
Basic 192,206,265 189,886,340 191,804,433 192,005,349 189,433,136
Diluted 202,499,739 201,317,855 202,405,245 202,452,492 201,256,323
   
   
AUTONAVI HOLDINGS LIMITED  
Reconciliation of non-GAAP measures to most directly comparable GAAP measures (unaudited)  
(In thousands of U.S. dollars, except per ADS data)  
         
  For the three months ended  
  June 30, June 30, March 31,  
  2012 2011 2012  
         
Total operating expenses 20,574 13,189 17,637  
Share-based compensation (4,228) (928) (3,157)  
Non-GAAP total operating expenses 16,346 12,261 14,480  
         
R&D expenses 8,245 5,854 8,008  
Share-based compensation (971) (460) (1,082)  
Non-GAAP R&D expenses 7,274 5,394 6,926  
         
Selling and marketing expenses 6,666 3,405 5,260  
Share-based compensation (1,725) (255) (1,221)  
Non-GAAP selling and marketing expenses 4,941 3,150 4,039  
         
General and administrative expenses 5,663 3,930 4,369  
Share-based compensation (1,532) (213) (854)  
Non-GAAP general and administrative expenses 4,131 3,717 3,515  
         
Operating income 9,550 10,460 10,034  
Share-based compensation 4,313 981 3,223  
Non-GAAP operating income 13,863 11,441 13,257  
         
Net income attributable to AutoNavi Holdings Limited shareholders 8,805 9,577 8,933  
Share-based compensation 4,313 981 3,223  
Non-GAAP net income attributable to AutoNavi Holdings Limited shareholders 13,118 10,558 12,156  
     
  For the three months ended June 30, 2012  
  GAAP Adjustments Non-GAAP(a)  
Diluted net income per ADS attributable to AutoNavi Holdings Limited shareholders 0.17 0.09 0.26  
       
(a) Non-GAAP diluted net income per ADS attributable to AutoNavi Holdings Limited shareholders is computed by dividing non-GAAP net income attributable to AutoNavi Holdings Limited shareholders by the weighted average number of diluted ordinary shares outstanding used in computing the GAAP diluted net income per ordinary share attributable to AutoNavi Holdings Limited shareholders (after adjusting for the ADS to ordinary share ratio).  
CONTACT: For investor and media inquiries please contact:         In China:         Serena Shi         AutoNavi Holdings Limited         Tel: +86-10-8410-7883         E-mail: serena.shi@autonavi.com          Derek Mitchell         Ogilvy Financial, Beijing         Tel: +86-10-8520-6284         E-mail: amap@ogilvy.com         In the U.S.:         Jessica Barist Cohen         Ogilvy Financial, New York         Tel: +1-646-460-9989         E-mail: amap@ogilvy.com