Jiayuan Announces Third Quarter 2011 Financial Results

BEIJING, Nov. 17, 2011 /PRNewswire via COMTEX/ — Jiayuan.com International Ltd. (“Jiayuan”)  , operator of the largest online dating platform in China, today announced its unaudited financial results for the third quarter ended September 30, 2011.

Third Quarter 2011 Highlights(1)

Net revenues for the third quarter of 2011 were RMB90.9 million (US$14.3 million), a year-over-year increase of 84.5%.

Operating income for the third quarter of 2011 was RMB21.5 million (US$3.4 million), a year-over-year increase of 132.4%. Excluding share-based compensation, non-GAAP(2) operating income for the third quarter of 2011 was RMB25.2 million (US$4.0 million), representing a year-over-year increase of 118.1%.

Net income attributable to Jiayuan for the third quarter of 2011 was RMB24.9 million (US$3.9 million), a year-over-year increase of 242.6%. Excluding share-based compensation, non-GAAP net income attributable to Jiayuan for the third quarter of 2011 was RMB28.6 million (US$4.5 million), a 198.9% year-over-year increase.

Jiayuan had 5,560,387 average monthly active user accounts(3) during the quarter, compared to 4,201,952 in the corresponding period in 2010. The number of average monthly paying user accounts in the third quarter of 2011 was 1,250,439, almost double the 649,250 average monthly paying user accounts recorded in the corresponding period in 2010.

“I’m pleased to report another quarter of strong growth for Jiayuan, as we continue to provide the best user experience in China’s online dating industry,” said Ms. Rose Gong, chief executive officer of Jiayuan. “Our recently launched smartphone applications were downloaded more than a million times by the end of September, and Jiayuan’s industry-leading map-based search services are quickly gaining traction in thousands of neighborhoods across the country. Building out innovative features such as these draws more new users into our network, helps them to make more valuable connections and ultimately encourages them to become more active on our site.”

Mr. Shang Koo, chief financial officer of Jiayuan, commented: “In the third quarter we were pleased to record very impressive growth on both the top and bottom lines driven by a marked increase in the number of average monthly paying user accounts, which doubled to more than 1.2 million user accounts from a year ago. We are confident that the paying user ratio will increase further as we roll out new features that increase user activity on our site and enhance our position as the clear market leader.”

Mr. Koo continued, “In the third quarter, we also began an extensive marketing effort aimed at promoting our mobile services and building brand awareness to solidify Jiayuan’s role as the best known brand in online dating in China.”

Third Quarter 2011 Operational Results

The number of registered user accounts(4) as of September 30, 2011 was 50,512,874, with approximately 5.1 million new users acquired during the quarter.

The number of average monthly active user accounts for the third quarter 2011 was 5,560,387, representing a year-over-year increase of 32.3% from 4,201,952, and a quarter-over-quarter increase of 2.4% from 5,429,176.

The number of average monthly paying user accounts for the third quarter 2011 was 1,250,439, representing a year-over-year increase of 92.6% from 649,250, and a quarter-over-quarter increase of 9.8% from 1,139,171.

Average monthly revenue per paying user (“ARPU”) for online services for the third quarter 2011 was RMB20.2, compared to RMB20.1 for the corresponding period in 2010 and RMB20.0 for the second quarter of 2011.

Third Quarter 2011 Financial Results

Jiayuan reported net revenues of RMB90.9 million (US$14.3 million) for the third quarter of 2011, representing a year-over-year increase of 84.5%, and a quarter-over-quarter increase of 9.1%. The increase in net revenues was primarily due to substantial growth in Jiayuan’s online services.

Online services contributed RMB76.0 million (US$11.9 million), or 83.5% of net revenues for the third quarter of 2011, representing a year-over-year increase of 94.3% from RMB39.1 million, and a quarter-over-quarter increase of 10.9% from RMB68.5 million.

Events and VIP services contributed RMB13.7 million (US$2.1 million), or 15.0% of net revenues for the third quarter of 2011, representing a year-over-year increase of 78.9% from RMB7.6 million, and a slight quarter-over-quarter decrease from RMB14.5 million.

Cost of revenues for the third quarter of 2011 was RMB27.9 million (US$4.4 million), representing a year-over-year increase of 59.5% from RMB17.5 million, and a quarter-over-quarter increase of 10.0% from RMB25.4 million. This increase was primarily attributable to Jiayuan’s business expansion, and is in line with the quarter-over-quarter increase in net revenues.

Gross profit for the third quarter of 2011 was RMB63.0 million (US$9.9 million), representing a year-over-year increase of 98.3% from RMB31.8 million, and a quarter-over-quarter increase of 8.7% from RMB58.0 million. This growth is primarily attributable to a substantial increase in the number of average monthly paying user accounts.

Selling and marketing expenses were RMB25.8 million (US$4.1 million) for the third quarter of 2011, representing a year-over-year increase of 82.5% from RMB14.2 million, and a quarter-over-quarter increase of 18.3% from RMB21.8 million. This was primarily due to an increase in advertising spending to enhance brand awareness and promote Jiayuan’s wireless applications.

General and administrative expenses were RMB12.6 million (US$2.0 million) for the third quarter of 2011, compared to RMB8.2 million for the corresponding quarter of 2010, and RMB27.6 million for the second quarter of 2011. General and administrative expenses for the second quarter of 2011 included IPO-related share-based compensation expenses of RMB17.5 million in relation to the share-based awards granted to contractors, and current and former employees which fully vested upon the completion of Jiayuan’s IPO, as previously disclosed.

Research and development expenses were RMB3.1 million (US$487,000) for the third quarter of 2011, compared to RMB199,000 for the corresponding quarter of 2010 and RMB2.5 million for the second quarter of 2011. This increase was primarily due to an increase in the number of research and development personnel in connection with Jiayuan’s strategy to enhance its research and development capabilities.

Operating income for the third quarter of 2011 was RMB21.5 million (US$3.4 million), representing a year-over-year increase of 132.4% from RMB9.3 million for the corresponding quarter of 2010, and a more than three-fold increase from RMB6.1 million in the previous quarter. Excluding share-based compensation expenses, non-GAAP operating income for the third quarter of 2011 was RMB25.2 million (US$4.0 million), representing a year-over-year increase of 118.1% from RMB11.5 million for the corresponding quarter of 2010, and a slight quarter-over-quarter decrease from RMB26.3 million.

Foreign currency exchange net gain for the third quarter of 2011 was RMB6.5 million (US$1.0 million), compared to a foreign currency exchange net loss of RMB323,000 for the second quarter of 2011 and nil for the corresponding quarter of 2010. The foreign currency exchange net gain for the third quarter of 2011 was mainly attributable to RMB appreciation during the period. The majority of the proceeds from Jiayuan’s IPO have been converted into RMB and are being held by its overseas entities whose functional currencies are the U.S. dollar.

Net income attributable to Jiayuan(5) for the third quarter of 2011 was RMB24.9 million (US$3.9 million), representing a year-over-year increase of 242.6% from RMB7.3 million for the corresponding quarter of 2010 and a 1635.5% quarter-over-quarter increase from RMB1.4 million. Net income attributable to Jiayuan for the second quarter of 2011 included share-based compensation expenses of RMB17.5 million in relation to the share-based awards granted to contractors, and current and former employees which fully vested upon the completion of Jiayuan’s IPO. Excluding share-based compensation expenses, non-GAAP net income attributed to Jiayuan for the third quarter of 2011 was RMB28.6 million (US$4.5 million), representing a year-over-year increase of 198.9% from RMB9.6 million for the corresponding quarter of 2010, and a quarter-over-quarter increase of 32.0% from RMB21.6 million.

Basic and diluted net income per ADS(6) for the third quarter of 2011 was RMB0.80 (US$0.12) and RMB0.75 (US$0.12), respectively, compared to basic and diluted net loss per ADS of RMB0.09 for the corresponding quarter of 2010, and basic and diluted net loss per ADS of RMB0.01 for the second quarter of 2011.

Excluding share-based compensation expenses, non-GAAP basic and diluted net income per ADS for the third quarter of 2011 were RMB0.91 (US$0.14) and RMB0.86 (US$0.13) respectively, compared to non-GAAP basic and diluted net income per ADS of RMB0.03 for the corresponding quarter of 2010 and non-GAAP basic and diluted net income per ADS of RMB0.81 and RMB0.76, respectively, for the second quarter of 2011.

As of September 30, 2011, Jiayuan had cash and cash equivalents and short-term deposits of RMB595.2 million (US$93.3 million). Cash flows from operating activities for the third quarter of 2011 were RMB22.5 million (US$3.5 million).

Fourth Quarter 2011 Outlook

Jiayuan currently expects to generate net revenues in the range of RMB88 million to RMB90 million for the fourth quarter of 2011. This forecast reflects Jiayuan’s current and preliminary view, which is subject to change.

Conference Call Information

Jiayuan’s management will host a conference call to discuss its results and outlook today, November 17, 2011, at 8 a.m. U.S. Eastern Time (9 p.m. Beijing/Hong Kong time).

Dial-in details for the earnings conference call are as follows:

        International:  +65-6723-9381
        United States:  +1-718-3541-231
        Hong Kong:      800-930-346
        United Kingdom: 0808-234-6646
        China:          800-8190-121
        Passcode:       24935950

A replay of the conference call may be accessed by phone at the following number until November 24, 2011:

        International: +61-2-8235-5000
        Passcode:      24935950

A live and archived webcast of the conference call will be available at ir.jiayuan.com.

About Jiayuan

Jiayuan.com International Ltd. (“Jiayuan”) DATE -3.78% operates the largest online dating platform in China. Jiayuan is committed to providing a trusted, effective, and user-focused online dating platform that addresses the dating and marriage needs of China’s rapidly growing urban singles population. As a pioneer in China’s online dating market, Jiayuan ranked first in terms of number of unique visitors, average time spent per user and average page views per user among all online dating websites in China in 2010, according to iResearch. As of September 30, 2011, Jiayuan had 50.5 million registered user accounts, with an average of 5.6 million monthly active user accounts in the third quarter of 2011. Every two of Jiayuan’s American Depositary Shares represent three ordinary shares.

For more information, please visit http://ir.jiayuan.com .

Forward-Looking Statements

This press release 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,” “confident” and similar statements. Jiayuan may also make written or verbal forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in verbal statements made by its officers, directors or employees to fourth parties. Statements that are not historical facts, including statements about our 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 growth strategies; our future business development, including development of new products and services; our ability to attract and retain users; competition in the Chinese online dating markets; changes in our revenues and certain cost or expense items as a percentage of our revenues; the outcome of any litigation or arbitration; the expected growth of the number of Internet and broadband users in China; Chinese governmental policies relating to the Internet and online dating websites and general economic conditions in China and elsewhere. Further information regarding these and other risks is included in our documents filed with the U.S. Securities and Exchange Commission. Jiayuan does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release is as of the date of the press release, and Jiayuan undertakes no duty to update such information, except as required under applicable law.

Non-GAAP Financial Measures

We disclose non-GAAP financial measures of operating income, net income to Jiayuan.com International Ltd, net (loss)/income attributable to ordinary shareholders and net (loss)/income per ADS, each of which is adjusted to exclude share-based compensation expense. We review non-GAAP financial measures to obtain a better understanding of our operating performance. We also believe it is useful supplemental information for investors and analysts to assess our operating performance without the effect of non-cash share-based compensation expense, which have been and will continue to be significant recurring expenses in our business. For a reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see “Reconciliation To Unaudited Condensed Consolidated Statement of Operations” included in this press release.

However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that it does not include all items that impact our non-GAAP financial measures during the period. In addition, because non-GAAP financial measures are not calculated in the same manner by all companies, it may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measures in isolation from or as an alternative to GAAP financial measures. Management compensates for this limitation by providing specific information regarding the GAAP amount excluded from the non-GAAP measure.

        (1) This announcement contains translations of certain Renminbi ("RMB") amounts into U.S. dollar ("US$") amounts at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from RMB amounts into US$ amounts as of and for the quarter ended September 30, 2011, were made at an exchange rate of RMB6.3780 to US$1.00, representing the rate as certified by the H.10 weekly statistical release of Federal Reserve Board on September 30, 2011. Jiayuan's functional currency is US$ and reporting currency is RMB.
        (2) Explanation of Jiayuan's non-GAAP financial measures and related reconciliations to GAAP financial measures are included in the accompanying ''Non-GAAP Financial Measures'' and ''Reconciliations to Unaudited Condensed Consolidated Statements of Operations''.
        (3) Active user accounts are registered user accounts through which registered users have logged in to the Jiayuan.com website at least once within a calendar month, in the case of user accounts registered in prior months, or on at least two separate days within a calendar month, including the day of completion of the registration process, in the case of user accounts newly registered in the calendar month.
        (4) Registered user accounts are accumulated amounts.
        (5) Net income attributable to Jiayuan.com is equivalent to net income attributable to ordinary shareholders since the third quarter of 2011 as all outstanding preferred shares were converted into ordinary shares upon the completion of Jiayuan's IPO in May 2011.
        (6) Basic and diluted net income per ADS are calculated based on net income attributable to ordinary shareholders and the corresponding basic and diluted number of ADSs, assuming that, during each period presented, every two ADSs represent three ordinary shares of Jiayuan.
        For investor and media inquiries, please contact:
        Beijing
        Melody Liu
        Jiayuan.com International Ltd.
        +86 (10) 6442-2321
        ir@jiayuan.com
        Martin Reidy
        Brunswick Group LLP
        +86 (10) 5960-8600
        jiayuan@brunswickgroup.com
        New York
        Cindy Zheng
        Brunswick Group LLP
        +1 (212) 333-3810
        jiayuan@brunswickgroup.com
        JIAYUAN.COM INTERNATIONAL LTD.
        UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
        (IN THOUSANDS)
                                                                                             June 30,  September 30,
                                                                                             --------  ----------------
                                                                                             2011      2011     2011
                                                                                             --------  -------  -------
                                                                                             RMB       RMB      US$
        ASSETS
        Current assets:
        Cash and cash equivalents                                                            583,703   480,660  75,362
        Short-term deposits                                                                  -         114,500  17,952
        Accounts receivable, net                                                             10,288    12,374   1,940
        Deferred tax assets                                                                  2,017     1,943    305
        Prepaid expenses and other current assets                                            7,971     9,652    1,513
        Total current assets                                                                 603,979   619,129  97,072
        Non-current assets:
        Property and equipment, net                                                          22,360    24,364   3,820
        Total assets                                                                         626,339   643,493  100,892
        LIABILITIES
        Current liabilities:
        Deferred revenue                                                                     76,715    79,569   12,476
        Accrued expenses and other current liabilities                                       22,612    18,335   2,875
        Income tax payable                                                                   15,446    12,657   1,984
        Total current liabilities                                                            114,773   110,561  17,335
                                                                                             --------  -------  -------
        Total Liabilities                                                                    114,773   110,561  17,335
                                                                                             --------  -------  -------
        Series A redeemable convertible preferred shares                                     -         -        -
        SHAREHOLDERS' EQUITY
        Ordinary shares                                                                      338       338      53
        Additional paid-in capital                                                           513,608   517,300  81,107
        Statutory reserves                                                                   392       392      61
        Retained earnings/(Accumulated deficit)                                              (10,308)  14,561   2,283
        Foreign currency translation adjustments                                             7,536     341      53
                                                                                             --------  -------  -------
        Total shareholders' equity                                                           511,566   532,932  83,557
                                                                                             --------  -------  -------
        Total liabilities, redeemable convertible preferred shares and shareholders' equity  626,339   643,493  100,892
        JIAYUAN.COM INTERNATIONAL LTD.
        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
        (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                                                   Three months ended,
                                                                   ---------------------------------------------------------
                                                                   September 30, 2010  June 30, 2011  September 30, 2011
                                                                   ------------------  -------------  ----------------------
                                                                   RMB                 RMB            RMB         US$
        Net revenues                                               49,271              83,347         90,910      14,253
        Cost of revenues                                           (17,498)            (25,376)       (27,910)    (4,375)
                                                                   ------------------  -------------  ----------  ----------
        Gross profit                                               31,773              57,971         63,000      9,878
        Operating expenses:
        Selling and marketing expenses                             (14,162)            (21,847)       (25,845)    (4,052)
        General and administrative expenses                        (8,160)             (27,570)       (12,552)    (1,968)
        Research and development expenses                          (199)               (2,452)        (3,103)     (487)
                                                                                       -------------
        Total operating expenses                                   (22,521)            (51,869)       (41,500)    (6,507)
                                                                   ------------------                 ----------  ----------
        Operating income                                           9,252               6,102          21,500      3,371
                                                                   ------------------  -------------  ----------  ----------
        Interest income/(expense), net                             519                 (8)            1,660       260
        Foreign currency exchange  gain/(losses), net              -                   (323)          6,473       1,015
        Other income/(expense), net                                553                 (209)          94          15
                                                                   ------------------  -------------  ----------  ----------
        Income before income tax                                   10,324              5,562          29,727      4,661
        Income tax expenses                                        (3,065)             (4,129)        (4,858)     (762)
                                                                   ------------------                 ----------  ----------
        Net income attributable to Jiayuan.com International Ltd.  7,259               1,433          24,869      3,899
        Accretion of redeemable convertible preferred shares       (2,197)             (979)          -           -
        Income allocated to participating preferred shareholders   (6,767)             (648)          -           -
                                                                   ------------------  -------------  ----------  ----------
        Net (loss)/income attributable to ordinary shareholders    (1,705)             (194)          24,869      3,899
        Net (loss)/income per ADS - Basic                          (0.09)              (0.01)         0.80        0.12
        Net (loss)/income per ADS - Diluted                        (0.09)              (0.01)         0.75        0.12
        ADSs used in computing basic net (loss)/income per ADS     18,181,818          24,792,563     31,259,596  31,259,596
        ADSs used in computing diluted net (loss)/income per ADS   18,181,818          24,792,563     33,224,779  33,224,779
        JIAYUAN.COM INTERNATIONAL LTD.
        RECONCILIATIONS TO UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
        (IN RMB THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                                                   Three Months Ended September 30, 2010     Three Months Ended June 30, 2011          Three Months Ended September 30, 2011
                                                                   ---------------------------------------   ---------------------------------------   ---------------------------------------
                                                                   GAAP        Non-GAAP         Non-GAAP     GAAP        Non-GAAP         Non-GAAP     GAAP        Non-GAAP         Non-GAAP
                                                                               Adjustments (a)                           Adjustments (a)                           Adjustments (a)
                                                                   ----------  ---------------  ----------   ----------  ---------------  ----------   ----------  ---------------  ----------
        Operating income                                           9,252       2,297            11,549       6,102       20,199           26,301       21,500      3,692            25,192
        Net income attributable to Jiayuan.com International Ltd.  7,259       2,297            9,556        1,433       20,199           21,632       24,869      3,692            28,561
        Net (loss)/income attributable to ordinary shareholders    (1,705)     2,297            592          (194)       20,199           20,005       24,869      3,692            28,561
        Basic net (loss)/income per ADS                            (0.09)                       0.03         (0.01)                       0.81         0.80                         0.91
        Diluted net (loss)/income per ADS                          (0.09)                       0.03         (0.01)                       0.76         0.75                         0.86
        ADSs used in computing basic net (loss)/income per ADS     18,181,818                   18,181,818   24,792,563                   24,792,563   31,259,596                   31,259,596
        ADSs used in computing diluted (loss)/net income per ADS   18,181,818                   18,902,471   24,792,563                   26,368,955   33,224,779                   33,224,779
        Note:
        (a) To adjust for share-based compensation expense.

SOURCE Jiayuan.com International Ltd.

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