Youku Tudou Announces First Quarter 2015 Unaudited Financial Results

Youku Tudou Announces First Quarter 2015 Unaudited Financial Results

Mobile Advertising Revenues Grew over 200% Year-on-Year; Consumer Revenues Grew 706% Year-on-Year

BEIJING, May 20, 2015 /PRNewswire/ -- Youku Tudou Inc. (NYSE: YOKU), China's leading Internet television company ("Youku Tudou" or the "Company"), today announced its unaudited financial results for the first quarter 2015.

First Quarter 2015 Highlights[1]


-- Net revenues were RMB1.14 billion (US$183.8 million), a 47% increase
from the corresponding period in 2014[2]. Non-GAAP[3] net revenues were
RMB1.06 billion (US$170.4 million) in the first quarter of 2015, a 51%
increase from the corresponding period in 2014.
-- Gross profit was RMB1.5 million (US$0.2 million), as compared to
RMB132.1 million (US$21.3 million) from the corresponding period in
2014. Non-GAAP gross loss was RMB32.9 million (US$5.3 million) in the
first quarter of 2015, as compared to non-GAAP gross profit of RMB90.4
million (US$14.6 million) from the corresponding period in 2014.
-- Net loss was RMB517.4 million (US$83.5 million), as compared to RMB176.0
million (US$28.4 million) from the corresponding period in 2014.
Non-GAAP net loss was RMB481.8 million (US$77.7 million) in the first
quarter of 2015, as compared to RMB157.1 million (US$25.3 million) from
the corresponding period in 2014.
-- Basic and diluted loss per ADS, each representing 18 Class A ordinary
shares of the Company, for the first quarter of 2015 amounted to RMB2.67
(US$0.43) and RMB2.67 (US$0.43), respectively. Non-GAAP basic and
diluted loss per ADS for the first quarter of 2015 amounted to RMB2.49
(US$0.40) and RMB2.49 (US$0.40), respectively.
-- Cash, cash equivalents, restricted cash and short-term investments
totaled RMB8.52 billion (US$1.37 billion) as of March 31, 2015.
-- Acquisition of property and equipment for the first quarter of 2015 was
RMB73.0 million (US$11.8 million).
-- Acquisition of licensed copyright for the first quarter of 2015 was
RMB495.2 million (US$79.9 million).
"The first quarter was marked by solid progress in the three key growth pillars that drive our business development for this year: accelerated topline growth, revenue diversification, and significant ramp up of web-native content. We believe this clear growth strategy will improve our business economics going forward," said Victor Koo, Chairman and Chief Executive Officer of Youku Tudou. "From a more strategic perspective we note that multi-screen video has converged with neighboring industries, notably the pan-entertainment and media sectors, making us a strategic property and partner and positioning us amidst a much bigger growth opportunity going forward."

Dele Liu, President of Youku Tudou, added, "We have aggressively stepped up our investments in content this year across all categories, especially in original content, PGC and UGC, to enhance our web-based content eco-system. Leveraging synergy among our various business units, we are working towards a more balanced and sustainable content mix in which proprietary web-native content will be the foremost category driving our revenue and traffic growth over time."

First Quarter 2015 Results

Net revenues were RMB1.14 billion (US$183.8 million) in the first quarter of 2015, a 47% increase from the corresponding period in 2014. Non-GAAPnet revenues, which is herein defined as net revenues excluding barter sublicensing revenues, were RMB1.06 billion (US$170.4 million) in the first quarter of 2015, a 51% increase from the corresponding period in 2014, exceeded the high end of the non-GAAP net revenues guidance previously announced by the Company.

Advertising net revenues were RMB892.7 million (US$144.0 million) in the first quarter of 2015, a 43% increase from the corresponding period in 2014, exceeded the high end of the advertising net revenues guidance previously announced by the Company. The growth was primarily attributable to the increased use by brand advertisers of our advertising services as evidenced by an increase in the number of advertisers and the rising average spend per advertiser.

Consumer revenues, which are mainly derived from our subscription-based service, mobile game joint operation and interactive live entertainment, were RMB120.8 million (US$19.5 million) in the first quarter of 2015, a 706% increase from the corresponding period in 2014. The growth was primarily attributable to the increasing user adoption of our consumer services as evidenced by expansion of subscriber base, growing paying users and average spend per user of our interactive live entertainment service, and increasing number of mobile game distributions.

Bandwidth costs as a component of cost of revenues were RMB306.8 million (US$49.5 million)in the first quarter of 2015, representing 29% of non-GAAP net revenues, as compared to 29% of non-GAAP net revenues for the corresponding period in 2014. This increase was primarily attributable to the increase in traffic and higher resolution quality of our video content.

Content costs as a component of cost of revenues were RMB669.0 million (US$107.9 million) in the first quarter of 2015, representing 59% of net revenues as compared to 46% of net revenues for the corresponding period in 2014. Non-GAAP content costs were RMB620.1 million (US$100.0 million) in the first quarter of 2015, representing 59% of non-GAAP net revenues, as compared to 46% of non-GAAP net revenues for the corresponding period in 2014. This increase was primarily due to expansion of our video content portfolio to support our new business growth initiatives.

Gross profit was RMB1.5 million (US$0.2 million)in the first quarter of 2015, as compared to RMB132.1 million (US$21.3 million) from the corresponding period in 2014. Non-GAAP gross loss was RMB32.9 million (US$5.3 million) in the first quarter of 2015, as compared to non-GAAP gross profit of RMB90.4 million (US$14.6 million) from the corresponding period in 2014.

Operating expenses were RMB544.1 million (US$87.8 million) in the first quarter of 2015, as compared to RMB312.0 million (US$50.3 million) for the corresponding period in 2014. Non-GAAP operating expenses were RMB474.0 million (US$76.5 million) in the first quarter of 2015, as compared to RMB251.3 million (US$40.5 million) for the corresponding period in 2014. Detailed discussion of each component of operating expenses is as follows:

Sales and marketing expenses were RMB320.4 million (US$51.7 million) in the first quarter of 2015, as compared to RMB185.7 million (US$30.0 million) for the corresponding period in 2014. Non-GAAP sales and marketing expenses were RMB286.7 million (US$46.3 million) in the first quarter of 2015, as compared to RMB163.2 million (US$26.3 million) for the corresponding period in 2014. This increase was primarily due to increases in marketing expenses and commission expenses paid to our sales force in line with our revenue growth.

Product development expenses were RMB139.6 million (US$22.5 million) in the first quarter of 2015, as compared to RMB80.1 million (US$12.9 million) for the corresponding period in 2014. Non-GAAP product development expenses were RMB120.0 million (US$19.4 million) in the first quarter of 2015, as compared to RMB62.0 million (US$10.0 million) for the corresponding period in 2014. This increase was primarily due to an increase in personnel related expenses for our product development in mobile, search, social, subscription and interactive live entertainment services.

General and administrative expenses were RMB84.1 million (US$13.6 million) in the first quarter of 2015, as compared to RMB46.1 million (US$7.4 million) from the corresponding period in 2014. Non-GAAP general and administrative expenses were RMB67.3 million (US$10.9 million) in the first quarter of 2015, as compared to RMB26.1 million (US$4.2 million) from the corresponding period in 2014. This increase was primarily due to increases in the personnel related expense and professional service fees.

Net loss was RMB517.4 million (US$83.5 million)in the first quarter of 2015, as compared to RMB176.0 million (US$28.4 million) for the corresponding period in 2014. Non-GAAP net loss was RMB481.8 million (US$77.7 million) in the first quarter of 2015, as compared to RMB157.1 million (US$25.3 million) from the corresponding period in 2014.

Business Outlook

For the second quarter of 2015, the Company expects non-GAAP net revenues will be between RMB1.47 billion and RMB1.52 billion, which with advertising net revenues contributing between RMB1.25 billion and RMB1.30 billion. This forecast reflects the Company's current and preliminary view, which is subject to change.

Conference Call Information

Youku Tudou's management will host an earnings conference call at 9:00 p.m. U.S. Eastern Time on May 20, 2015 (9:00 a.m. Beijing/Hong Kong Time on May 21, 2015).

Interested parties may participate in the conference call by dialing one of the following numbers below and entering passcode Youku# (i.e., 96858#) starting 10-15 minutes prior to the beginning of the call.



US Toll Free Dial In: +1-866-519-4004

International Dial In: +65-6723-9381

Mainland China Dial In: +86-800-819-0121 /
+86-400-620-8038

Hong Kong Dial In: +852-3018-6771
A replay of the call will be available by dialing +61 2 8199 0299 and entering passcode 42452065. The replay will be available through May 28, 2015

This call will be webcast live and the replay will be available for 12 months. Both will be available on the Investor Relations section of Youku Tudou's corporate website at http://ir.youku.com.

About Youku Tudou Inc.

Youku Tudou Inc. (NYSE: YOKU) is China's leading Internet television company. Its Youku and Tudou Internet television platforms enable users to search, view and share high-quality video content quickly and easily across multiple devices. Its Youku brand and Tudou brand are among the most recognized online video brands in China. Youku Tudou's American depositary shares, each representing 18 of Youku Tudou's Class A ordinary shares, are traded on the NYSE under the symbol "YOKU."

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Youku Tudou's strategic and operational plans, contain forward-looking statements. Youku Tudou may also make written or oral forward-looking statements in its filings with the U.S. Securities and Exchange Commission ("SEC"), 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 Youku Tudou'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: our goals and strategies; our future business development, financial condition and results of operations; the expected growth of the online video market in China; our expectations regarding demand for and market acceptance of our services; our expectations regarding the retention and strengthening of our relationships with key advertisers and customers; our plans to enhance user experience, infrastructure and service offerings; competition in our industry in China; and relevant government policies and regulations relating to our industry. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Youku Tudou does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Youku Tudou's financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Youku Tudou uses the following measures defined as non-GAAP financial measures by the SEC in evaluating its business: non-GAAP net revenues, non-GAAP content costs, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP sales and marketing expenses, non-GAAP product development expenses, non-GAAP general and administrative expenses, non-GAAP profit or loss from operations and non-GAAP net profit or loss and non-GAAP adjusted EBITDA profit or loss. We define non-GAAP net revenues as net revenues excluding barter sublicensing revenues. We define non-GAAP content costs as content costs excluding amortization of licensed copyrights from nonmonetary content exchanges, share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content. We define non-GAAP gross profit or loss as the respective nearest comparable GAAP financial measure to exclude barter sublicensing revenues, amortization of licensed copyrights from nonmonetary content exchanges, share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content. We define non-GAAP operating expenses as operating expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to customer relationship, technology and non-compete provisions. We define non-GAAP sales and marketing expenses as sales and marketing expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to customer relationship. We define non-GAAP product development expense as product development expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to technology. We define non-GAAP general and administrative expenses as general and administrative expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to non-compete provisions. We define non-GAAP profit or loss from operations as profit or loss from operations excluding barter sublicensing revenues, amortization of licensed copyrights from nonmonetary content exchanges , share-based compensation expenses, amortization of intangible assets from business combination and business combination related expenses. We define non-GAAP net profit or loss as net loss excluding barter sublicensing revenues, amortization of licensed copyrights from nonmonetary content exchanges , share-based compensation expenses, amortization of intangible assets from business combination and business combination related expenses. We define non-GAAP adjusted EBITDA profit or loss as net profit or loss before income taxes, interest expenses, interest income, depreciation and amortization (excluding amortization of acquired content), further adjusted for barter sublicensing revenues, amortization of licensed copyrights from nonmonetary content exchanges, share-based compensation expenses, amortization of intangible assets from business combination, business combination related expenses and other non-operating items.

We present non-GAAP financial measures because they are used by our management to evaluate our operating performance. We also believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies. A limitation of using non-GAAP financial measures is that non-GAAP measures exclude share-based compensation charges that have been and will continue to be significant recurring expenses in Youku Tudou's business for the foreseeable future.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP financial measures" at the end of this release.

For more information, please contact:

Chang You

Youku Tudou Inc.

Tel: (+8610) 5885-1881 x 8066

Email: changyou@youku.com



[1] The reporting currency of the
Company is Renminbi ("RMB"), but
for the convenience of the reader,
the amounts presented throughout
the release are in US dollars
("US$"). Unless otherwise noted,
all conversions from RMB to US$
are made at a rate of RMB6.1990 to
US$1.00, the effective noon buying
rate as of March 31, 2015 in the
City of New York for cable
transfers of RMB as certified for
customs purposes by the Federal
Reserve Bank of New York. No
representation is made that the
RMB amounts could have been, or
could be, converted into US$ at
such rate.


[2] As noted in the Company's annual
report for fiscal year 2014 on
Form 20-F (the "2014 Annual
Report"), certain adjustments were
made to the Company's historical
consolidated financial statements
reflecting certain revisions to
its accounting treatment for (i)
licensed copyrights and (ii)
nonmonetary exchanges of licensed
copyrights, as further described
in the 2014 Annual Report.
Accordingly, unaudited financial
information in this release in
relation to the first and fourth
quarters of 2014 has been amended,
where applicable, principally as a
result of, and to reflect the
adjustment caused by such
revisions of the Company's
accounting treatment.


[3] All non-GAAP measures exclude, as
applicable, barter sublicensing
revenues, amortization of licensed
copyrights from nonmonetary
content exchanges, share-based
compensation expenses and
amortization of intangible assets
from business combination. The
Company enters into nonmonetary
exchanges of licensed copyrights,
and generated nonmonetary barter
sublicensing revenues from such
transactions. As such, the company
treats barter sublicensing
revenues as non-GAAP net revenues
item starting the first quarter of
2015. The business outlook
guidance provided in the release
of fourth quarter and fiscal year
2014 unaudited financial reports
dated March 19, 2015 was also
presented on non-GAAP net
revenues basis. For further
details on non-GAAP measures,
please refer to the reconciliation
table and a detailed discussion of
the Company's use of non-GAAP
information set forth elsewhere in
this press release.




YOUKU TUDOU INC.

CONSOLIDATED BALANCE SHEETS


(Amounts in thousands, except for number of shares) As of
-------------------------------------------------- -----

December 31, 2014 March 31, 2015 March 31, 2015
----------------- -------------- --------------

RMB RMB US$

ASSETS (Audited) (Unaudited) (Unaudited)


Current assets:

Cash and cash equivalents 3,820,742 2,886,812 465,690

Restricted cash 617,586 1,293,094 208,597

Short-term investments 4,021,199 4,338,524 699,875

Accounts receivable 1,719,760 1,931,492 311,581

Licensed copyrights, net 220,152 241,680 38,987

Amounts due from related parties 125,204 53,417 8,617

Deferred tax assets, net 2,283 2,283 368

Prepayments and other assets 117,716 321,536 51,869


Total current assets 10,644,642 11,068,838 1,785,584


Non-current assets:

Property and equipment, net 293,027 329,961 53,229

Long-term investments 67,293 97,046 15,655

Available-for-sale financial assets - 21,267 3,431

Licensed copyrights, net 505,173 626,619 101,084

Intangible assets, net 875,502 872,397 140,732

Capitalized content production costs 1,678 1,647 266

Prepayments and other assets 431,377 418,053 67,439

Goodwill 4,262,569 4,262,569 687,622

Total non-current assets 6,436,619 6,629,559 1,069,458
--------- --------- ---------


TOTAL ASSETS 17,081,261 17,698,397 2,855,042
========== ========== =========


LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:

Accounts payable 563,009 735,863 118,707

Advances from customers and deferred revenue 36,232 84,264 13,593

Amounts due to related parties 4 1 -

Accrued expenses and other liabilities 1,668,122 1,782,215 287,502

Short-term bank loans 500,000 1,170,253 188,781


Total current liabilities 2,767,367 3,772,596 608,583


Non-current liabilities?

Deferred tax liabilities 213,608 213,608 34,458

Other liabilities 6,570 15,030 2,425

Total non-current liabilities 220,178 228,638 36,883
------- ------- ------


Total liabilities 2,987,545 4,001,234 645,466


Commitments and contingencies


Shareholders' equity?

Class A Ordinary Shares (US$0.00001 par value, 9,340,238,793 authorized, 3,123,742,699 and 3,135,586,285
issued as of December 31, 2014 and March 31, 2015, respectively, 2,834,270,299 and 2,846,113,885
outstanding as of December 31, 2014 and March 31, 2015, respectively) 201 202 33

Class B Ordinary Shares (US$0.00001 par value, 659,761,207 authorized, 645,691,903 and 645,691,903 issued
and outstanding as of December 31, 2014 and March 31, 2015, respectively) 48 48 8

Additional paid-in capital 18,878,497 18,962,797 3,059,009

Treasury stock (at cost, 289,472,400 and 289,472,400 (1,845,892) (1,845,892) (297,773)
as of December 31, 2014 and March 31, 2015, respectively)

Statutory reserves 13,146 13,146 2,121

Accumulated deficit (2,681,658) (3,199,099) (516,068)

Accumulated other comprehensive loss (270,626) (234,039) (37,754)

Total shareholders' equity 14,093,716 13,697,163 2,209,576
---------- ---------- ---------


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 17,081,261 17,698,397 2,855,042
========== ========== =========




YOUKU TUDOU INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


For the Three Months Ended
--------------------------

(Amounts in thousands, except for number of shares and ADS and per share and per ADS data)
------------------------------------------------------------------------------------------

March 31, December 31, March 31, March 31,
2014 2014 2015 2015
---- ---- ---- ----

RMB RMB RMB US$

(Unaudited-As revised) (Unaudited-As revised) (Unaudited) (Unaudited)


Net revenues(including advertising net revenues from related parties amounting to RMB110,201 and RMB48,010 for the three months
ended December 31, 2014 and March 31, 2015, respectively) 774,685 1,282,369 1,139,458 183,814


Cost of revenues (Note 1) (642,560) (1,047,736) (1,137,987) (183,576)
-------- ---------- ---------- --------


Gross profit 132,125 234,633 1,471 238


Operating expenses:

Product development (80,138) (123,271) (139,573) (22,515)

Sales and marketing (185,696) (343,647) (320,433) (51,691)

General and administrative (46,129) (78,721) (84,058) (13,560)

Total operating expenses (311,963) (545,639) (544,064) (87,766)
-------- -------- -------- -------


Government grant income - 20,641 123 20


Loss from operations (179,838) (290,365) (542,470) (87,508)


Interest income 6,053 22,660 29,811 4,809

Interest expenses - - (10,743) (1,733)

Share of net loss of equity investee - (840) (1,247) (201)

Other income (loss), net (2,259) (1,195) 7,352 1,186
------ ------ ----- -----

Total other income, net 3,794 20,625 25,173 4,061


Loss before income taxes (176,044) (269,740) (517,297) (83,447)

Income tax expense - (51,815) (144) (23)


Net loss (176,044) (321,555) (517,441) (83,470)
======== ======== ======== =======


Other comprehensive (loss) income, before tax

Foreign currency translation adjustments 20,959 (35,370) 36,587 5,902
------ ------- ------ -----

Other comprehensive (loss) income, before tax 20,959 (35,370) 36,587 5,902

Income tax expense related to components of other comprehensive (loss) income - - - -
--- --- --- ---


Other comprehensive (loss) income, net of tax 20,959 (35,370) 36,587 5,902
====== ======= ====== =====

0

Net loss per share, basic and diluted (0.06) (0.09) (0.15) (0.02)

Net loss per ADS (each ADS represents 18 class A ordinary shares), (1.05) (1.66) (2.67) (0.43)
basic and diluted

Shares used in computation, basic and diluted 3,021,981,224 3,483,140,763 3,485,681,620 3,485,681,620

ADSs used in computation, basic and diluted 167,887,845 193,507,820 193,648,978 193,648,978


The accompanying notes are an integral part of the press release.




Note 1. Cost of Revenues For the Three Months Ended
--------------------------


March 31, December 31, March 31, March 31,
2014 2014 2015 2015
---- ---- ---- ----

RMB RMB RMB US$

(Amounts in thousands) (Unaudited-As revised) (Unaudited-As revised) (Unaudited) (Unaudited)

Cost of revenues:

Value added, business taxes and surcharges 62,958 115,494 98,388 15,872

Bandwidth costs 201,889 272,196 306,835 49,497

Depreciation of servers and other equipment 20,165 28,935 34,349 5,542

Interactive broadcasting revenue sharing fees 988 20,101 24,087 3,886

Cost of goods sold - - 5,337 862

Content costs 356,560 611,010 668,991 107,917

Total Cost of Revenues 642,560 1,047,736 1,137,987 183,576
======= ========= ========= =======




YOUKU TUDOU INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


For the Three Months Ended
--------------------------

(Amounts in thousands)
---------------------

March 31, December 31, March 31, March 31,
2014 2014 2015 2015
---- ---- ---- ----

RMB RMB RMB US$

(Unaudited-As revised) (Unaudited-As revised) (Unaudited) (Unaudited)

Cash flows from operating activities:

Net loss (176,044) (321,555) (517,441) (83,470)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities

Depreciation of fixed assets 26,517 35,398 40,676 6,562

Bad debt expense (6,473) 5,616 14,800 2,387

Amortization of licensed copyrights 206,863 404,461 450,865 72,732

Amortisation and impairment of intangible assets and capitalized content production costs 5,930 16,148 13,930 2,247

Barter sublicensing revenues (74,311) (18,009) (83,239) (13,428)

Loss (gain) on disposal of property and equipment 90 146 (47) (8)

Foreign exchange loss (gain) 2,164 4,262 (20,070) (3,238)

Share-based compensation 70,220 85,614 79,772 12,868

Deferred income tax benefits - (10) - -

Share of net loss of equity investee - 840 1,247 201

Changes in operating assets and liabilities, net of acquisition:

Restricted cash (2) 552,632 (5,507) (888)

Accounts receivable 179,153 (99,230) (101,326) (16,346)

Amounts due from related parties - (53,164) (53,417) (8,617)

Prepayments and other assets (10,615) (25,241) (103,103) (16,632)

Capitalized content production costs (2,972) (22,588) (21,974) (3,545)

Accounts payable 4,574 20,564 71,836 11,588

Advances from customers and deferred revenue 1,816 10,644 36,933 5,958

Accrued expenses and other liabilities 29,591 290,176 88,424 14,263

Amount due to related parties - (114) 1 -


Net cash provided by operating activities 256,501 886,590 (107,640) (17,366)


Cash flows from investing activities:

Acquisition of property and equipment (28,191) (52,172) (72,990) (11,774)

Purchase of available-for-sale financial assets - - (21,267) (3,431)

Proceeds received from maturity of short-term investments 1,132,459 265,580 - -

Short-term investments placed with financial institutions (1,391,239) (1,156,085) (280,308) (45,218)

Proceeds from disposal of property and equipment 180 7 47 8

Collection of loans to third parties - 5,600 - -

Loans to third parties - (5,000) (3,000) (484)

Acquisition of shares of investees - (18,133) - -

Acquisition of licensed copyrights (165,891) (477,310) (495,247) (79,891)

Acquisition of intangible assets - (981) - -


Net cash used in investing activities (452,682) (1,438,494) (872,765) (140,790)


Cash flows from financing activities:

Exercise of employee stock options 11,809 3,176 4,529 731

Increase in restricted cash - (611,900) (670,000) (108,082)

Proceeds from short-term bank loans - 500,000 670,253 108,123

Repurchase of ADS - (552,248) - -

Proceeds from Ali investment, net of issuance costs - (272) - -

Net cash provided by (used in) financing activities 11,809 (661,244) 4,782 772

Effect of exchange rate changes on cash and cash equivalents 18,795 (39,632) 41,693 6,726
------ ------- ------ -----

Net (decrease) increase in cash and cash equivalents (165,577) (1,252,780) (933,930) (150,658)

Cash and cash equivalents at the beginning of the period 1,764,221 5,073,522 3,820,742 616,348

Cash and cash equivalents at the end of the period 1,598,644 3,820,742 2,886,812 465,690
========= ========= ========= =======





Reconciliations of Non-GAAP results of operations measures to the nearest comparable GAAP financial measures (1) (Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"), unaudited)


1. Non-GAAP Net Revenues For the Three Months Ended
--------------------------


March 31, December 31, March 31, March 31,
2014 2014 2015 2015
---- ---- ---- ----

RMB RMB RMB US$

Net Revenues 774,685 1,282,369 1,139,458 183,814

Deduct: barter sublicensing revenues 74,311 18,009 83,239 13,428

Non-GAAP Net Revenues 700,374 1,264,360 1,056,219 170,386
======= ========= ========= =======


2. Non-GAAP Content Costs For the Three Months Ended
--------------------------


March 31, December 31, March 31, March 31,
2014 2014 2015 2015
---- ---- ---- ----

RMB RMB RMB US$

Content costs 356,560 611,010 668,991 107,917

Deduct: amortization of licensed copyrights from nonmonetary content exchanges 18,512 31,416 36,445 5,879

Deduct: share-based compensation 12,223 13,297 12,407 2,001

Deduct: amortization of intangible assets from business combination 1,860 - - -

Non-GAAP content costs 323,965 566,297 620,139 100,037
======= ======= ======= =======


3. Non-GAAP Gross Profit (Loss) For the Three Months Ended
--------------------------


March 31, December 31, March 31, March 31,
2014 2014 2015 2015
---- ---- ---- ----

RMB RMB RMB US$

Gross profit 132,125 234,633 1,471 238

Deduct: barter sublicensing revenues 74,311 18,009 83,239 13,428

Add back: amortization of licensed copyrights from nonmonetary content exchanges 18,512 31,416 36,445 5,879

Add back: share-based compensation 12,223 13,297 12,407 2,001

Add back: amortization of intangible assets from business combination 1,860 - - -

Non-GAAP gross profit (loss) 90,409 261,337 (32,916) (5,310)
====== ======= ======= ======



4. Non-GAAP Operating Expenses For the Three Months Ended
--------------------------


March 31, December 31, March 31, March 31,
2014 2014 2015 2015
---- ---- ---- ----

RMB RMB RMB US$

Operating expenses 311,963 545,639 544,064 87,766

Deduct: share-based compensation 57,997 72,317 67,365 10,867

Deduct: amortization of intangible assets from business combination 2,691 2,691 2,691 434

Non-GAAP operating expenses 251,275 470,631 474,008 76,465
======= ======= ======= ======



5. Non-GAAP Sales and Marketing Expenses For the Three Months Ended
--------------------------


March 31, December 31, March 31, March 31,
2014 2014 2015 2015
---- ---- ---- ----

RMB RMB RMB US$

Sales and marketing expenses 185,696 343,647 320,433 51,691

Deduct: share-based compensation 21,172 31,832 32,351 5,219

Deduct: amortization of intangible assets from business combination 1,344 1,344 1,344 217

Non-GAAP sales and marketing expenses 163,180 310,471 286,738 46,255
======= ======= ======= ======



6. Non-GAAP Product Development Expenses For the Three Months Ended
--------------------------


March 31, December 31, March 31, March 31,
2014 2014 2015 2015
---- ---- ---- ----

RMB RMB RMB US$

Product development expenses 80,138 123,271 139,573 22,515

Deduct: share-based compensation 17,206 17,877 18,708 3,018

Deduct: amortization of intangible assets from business combination 905 905 905 146

Non-GAAP product development expenses 62,027 104,489 119,960 19,351
====== ======= ======= ======



7. Non-GAAP General and Administrative Expenses For the Three Months Ended
--------------------------


March 31, December 31, March 31, March 31,
2014 2014 2015 2015
---- ---- ---- ----

RMB RMB RMB US$

General and administrative expenses 46,129 78,721 84,058 13,560

Deduct: share-based compensation 19,619 22,608 16,306 2,630

Deduct: amortization of intangible assets from business combination 442 442 442 71

Non-GAAP general and administrative expenses 26,068 55,671 67,310 10,859
====== ====== ====== ======



8. Non-GAAP Loss from Operations For the Three Months Ended
--------------------------


March 31, December 31, March 31, March 31,
2014 2014 2015 2015
---- ---- ---- ----

RMB RMB RMB US$

Loss from operations (179,838) (290,365) (542,470) (87,508)

Deduct: barter sublicensing revenues 74,311 18,009 83,239 13,428

Add back: amortization of licensed copyrights from nonmonetary content exchanges 18,512 31,416 36,445 5,879

Add back: share-based compensation 70,220 85,614 79,772 12,868

Add back: amortization of intangible assets from business combination 4,551 2,691 2,691 434
----- ----- ----- ---

Non-GAAP loss from operations (160,866) (188,653) (506,801) (81,755)
======== ======== ======== =======



9. Non-GAAP Net Loss For the Three Months Ended
--------------------------


March 31, December 31, March 31, March 31,
2014 2014 2015 2015
---- ---- ---- ----

RMB RMB RMB US$

Net loss (176,044) (321,555) (517,441) (83,470)

Deduct: barter sublicensing revenues 74,311 18,009 83,239 13,428

Add back: amortization of licensed copyrights from nonmonetary content exchanges 18,512 31,416 36,445 5,879

Add back: share-based compensation 70,220 85,614 79,772 12,868

Add back: amortization of intangible assets from business combination 4,551 2,691 2,691 434
----- ----- ----- ---

Non-GAAP net loss (157,072) (219,843) (481,772) (77,717)
======== ======== ======== =======



10. Non-GAAP adjusted EBITDA Loss For the Three Months Ended
--------------------------


March 31, December 31, March 31, March 31,
2014 2014 2015 2015
---- ---- ---- ----

RMB RMB RMB US$

Net loss (176,044) (321,555) (517,441) (83,470)

Add back:

Depreciation and amortization (excluding amortization

of acquired content ) (2) 26,527 35,408 40,686 6,563

Interest income (6,053) (22,660) (29,811) (4,809)

Interest expenses - - 10,743 1,733

Income taxes - 51,815 144 23
--- ------ --- ---

EBITDA loss (155,570) (256,992) (495,679) (79,960)


Adjustments:

Barter sublicensing revenues (74,311) (18,009) (83,239) (13,428)

Amortization of licensed copyrights from nonmonetary content exchanges 18,512 31,416 36,445 5,879

Share-based compensation 70,220 85,614 79,772 12,868

Amortization of intangible assets from business combination 4,551 2,691 2,691 434

Others, net 2,259 1,195 (7,352) (1,186)
----- ----- ------ ------

Non-GAAP adjusted EBITDA loss (134,339) (154,085) (467,362) (75,393)
======== ======== ======== =======



(1) For more information on the Non-GAAP financial measures, please see the section captioned "About Non-GAAP Financial Measures" in this earnings release.

(2) The amortization expense was related to an advertising license acquired in April 2010. The amortization of acquired content was not treated as a Non-GAAP adjustment.


SOURCE Youku Tudou Inc.

Youku Tudou Inc.


-------
Profile: intent