Dangdang.com's financial report: In Q3 2011, Dangdang.com's total revenue was RMB 908.9 million and its net loss was RMB 73.4 million

November 16, 2011 Dangdang.com (NYSE: DANG) today released its third quarter financial report for the fiscal year 2011 ending September 30, with total revenue of RMB 908.9 million (approximately US$142.5 million), a year-on-year increase of 50%. Net loss was RMB 73.4 million (approximately US$11.5 million), while net profit was RMB 32.7 million (approximately US$5.15 million) in the same period last year.

Third quarter results highlights:

Total revenue was RMB 908.9 million (approximately US$142.5 million), a year-on-year increase of 50%.

Daily necessities revenue was RMB 255 million (approximately US$40 million), a year-on-year increase of 162%, accounting for 28% of total revenue, compared with 16% in the same period last year.

The number of active users in the third quarter was 5.5 million, a year-on-year increase of 36%, and the total number of orders was approximately 10.8 million, a year-on-year increase of 32%.

Dangdang recent activities:

By expanding sales of daily necessities, the early childhood products channel has become China's leading online children's product sales channel.

Since mid-September, Dangdang has increased its marketing expenses to promote its brand in first-tier cities.

Improve the user experience with better packaging and faster shipping.

Increase investment in daily necessities procurement teams and e-book platform research and development.

Launched an enhanced mobile site, currently generating more than 7,000 orders per day.

Third quarter performance analysis:

Total revenue was RMB 908.9 million (approximately US$142.5 million), a year-on-year increase of 50%.

Media product revenue was RMB 637.9 million (approximately US$100.3 million), a year-on-year increase of 27%. Daily necessities revenue was RMB 255 million (approximately US$40 million), a year-on-year increase of 162%. Other revenue was RMB 14.2 million (approximately US$2.2 million), a year-on-year increase of 141%.

The number of active users was approximately 5.5 million, a year-on-year increase of 36%, and the total number of orders was approximately 10.8 million, a year-on-year increase of 32%.

Revenue costs were RMB 783.9 million (approximately US$122.9 million), accounting for 86% of total revenue, compared with 75% in the same period last year.

Fulfillment expenses (including warehousing and freight expenses) were RMB128.7 million (approximately US$20.2 million), accounting for 14.2% of total revenue, compared with 12.6% in the same period last year. The increase in fulfillment expenses was mainly due to the expansion of the procurement team, the establishment of new warehouses and the improvement of user experience, such as increasing delivery speed.

Marketing expenses were RMB 40.4 million (US$6.3 million), accounting for 4.4% of total revenue, compared with 3.9% in the same period last year. The increase in marketing expenses was due to brand promotion in first-tier cities starting in mid-September.

Technology and content expenses were RMB 21.2 million (approximately US$3.3 million), accounting for 2.3% of total revenue, compared with 2.9% in the same period last year.

General and administrative expenses were RMB 21 million (approximately US$3.3 million), accounting for 2.3% of total revenue, down from 2.9% in the same period last year.

Stock incentive expenses were RMB 2.3 million (approximately US$400,000), down 48.9% from RMB 4.5 million in the same period last year.

The operating loss was RMB 81.9 million (approximately US$12.8 million), compared with an operating loss of RMB 18 million in the same period last year. The increase in operating loss was mainly due to the decline in gross profit.

Excluding share-based incentive expenses (based on non-U.S. GAAP), the operating loss was RMB 79.6 million (approximately US$12.5 million), compared with an operating profit of US$22.4 million in the same period last year.

Income tax expense was RMB 24.1 million (approximately US$3.8 million).

The net loss was RMB 73.4 million (approximately US$11.5 million), compared with a net profit of RMB 32.7 million in the same period last year, mainly due to a decline in gross profit and increased marketing expenses.

Excluding equity incentive expenses (based on non-U.S. GAAP), the net loss was RMB 71.1 million (approximately US$11.1 million), compared with a net profit of RMB 37.2 million in the same period last year.

As of September 30, 2011, Dangdang.com held RMB 1.5515 billion (approximately US$243.3 million) in cash, cash equivalents, short-term deposits and held-to-maturity investments, compared with RMB 1.6919 billion (approximately US$256.3 million) as of December 31, 2010.

Capital expenditure was RMB 14.5 million (approximately US$2.3 million).

Based on non-U.S. generally accepted accounting principles, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was RMB 72.4 million (approximately US$11.3 million), compared with RMB 26 million in the same period last year.

Fourth quarter earnings expectations:

Dangdang expects total revenue to reach RMB 1.173 billion, a year-on-year increase of 65%.