China Finance Online Co. Limited
Q2 2013 Earnings Call Transcript

Published: 15 Oct 2013

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the JRJC Second Quarter 2013 Earnings Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions) I must advise you that this conference is being recorded today, Tuesday 15th of October, 2013. I would now like to hand the conference over to your first speaker today, Mr. Shiwei Yin. Thank you. Please go ahead.

[Shiwei Yin:]

Thank you, Haun, and thank you everyone for joining us today. And before we begin, I will remind all listeners that throughout this call we may present statements that may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words believe, estimate, plan, expect, anticipate, project, target, optimistic, intend, aim, future, will, or similar expressions are intended to identify forward-looking statements. All statements other than historical facts may be deemed forward-looking statements. And these statements are based on current expectations or beliefs, including, but not limited to statements concerning China Finance Online’s operations, financial performance and condition. China Finance Online cautions that these statements by their nature involve risks and uncertainties and actual results may differ materially depending on a variety of important factors, including those discussed in Company’s reports filed with the Securities and Exchange Commission from time-to-time. China Finance Online specifically disclaims any obligation to update the forward-looking information in the future. I will now turn the call over to Mr. Zhao for prepared remarks. As usual we will conduct a question-and-answer session at the end of our presentation. Mr. Zhao, please proceed.

[Zhiwei Zhao:]

[Foreign Language] Hello, everyone. In the second quarter, the Chinese stock market continued to underperform major global indices and showed persistent strong volatility. The investor confidence remains weak. [Foreign Language] Against the challenging business environment, our operations continued to show signs of improvements in the second quarter as our top line has grown sequentially over two consecutive quarters. We remain cautiously optimistic that we are lowering our cash attrition in the second half of the year and continue to have full faith in the long-term prospects of our businesses. [Foreign Language] In China Internet-based finance is gaining traction as more users realize the safety, convenience, and diversity of the financial products available through online platforms. We see this as a good opportunity for us to further develop an internet-based finance business capitalizing on our robust internet capabilities. On that front, I’m pleased to share with you that we have launched Yinglibao, in jrj.com, and stockstar.com, in internet-based financial platform that integrates cash management solutions and mutual fund distribution for trial service. [Foreign Language] With the convenience of banking and deposits and higher yield than bank prime time deposit, Yinglibao is a smart way for users to manage their cash and an excellent alternative to the traditional savings account. [Foreign Language] In addition, Yinglibao users now have the option of purchasing mutual fund products directly through their accounts. Over time, Yinglibao will continue to innovate to become an one-stop shop for online investments and users will gain that access to a variety of investment options. [Foreign Language] Yinglibao builds on a strong user loyalty and our web portals jrj.com and stockstar.com, and our deep understanding of the user demand for our investments. And in a recent study conducted by the authoritative Internet Society of China, jrj.com is awarded ‘China’s Top 100 Internet Sites’ and ranked number one among all financial websites in China. [Foreign Language] As we seek to provide alternative investments to clients within a sluggish stock market, we recently began a service for clients to trade precious metals. [Foreign Language] Leveraging the massive user base of our flagship portals in our professional abilities, we are aiming to provide high-quality financial product and services to our customers. Going forward, we will continue to consolidate and integrate the complementary resources and we look forward to working closely with other industry leaders in the future to bring better products and services to our customers. [Foreign Language] Now, I’ll turn the call over to Mr. Jun Wang, Chief Financial Officer for an overview of our financials.

[Jun Wang:]

Well, thank you, everyone. Let me first briefly review our second quarter 2013 financial results. All financial numbers are presented in U.S. dollars and rounded to one decimal point for approximation. Our net revenues for the second quarter were US$7.6 million, compared with US$8.1 million for the second quarter of 2012, but up from US$5.5 million for the first quarter of 2013. We have re-categorized the components of our net revenues for better reflection of the evolving nature of our business. Going forward, our net revenues will be categorized under

[Operator:]

Ladies and gentlemen, we’ll now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of John Black [ph]. Please ask your question.

[Unidentified Analyst:]

Yes. So I was wondering, can you say a little more about Yinglibao?

[Jun Wang:]

Sure, thank you. Well, we feel very excited to announce the newly launch of our new Internet financial platform Yinglibao for trial service. And this is a smart way, I mean, Yinglibao for users to manage their cash in an excellent alternative to the traditional savings accounts. To users who maintain Yinglibao account balances, we offer money market rate of return on balances, which is several times of current bank deposit rate placing the selected third-party money market funds. And the money market fund we chosen is managed by our top mutual fund management firm in China as ranked by Morningstar. And besides the high return on cash, the users of Yinglibao can also make a real-time withdrawal and transfer it, enrolling the automatic money monthly deposit program and even scheduled payments from mortgage and car loan for their accounts. I’m sorry, in vision this Yinglibao platform also allows users to find the mutual components and it is our company, the one selected to have received the mutual fund distribution license from the Chinese Securities Regulatory Committee. And so Yinglibao users now have the option of purchasing mutual components directly from their Yinglibao accounts. Over time, we believe Yinglibao will continue to innovate to become a one-stop shop for online investments, and so users can gain access to a variety of investment options. Thank you.

[Unidentified Analyst:]

What is the user base and can you say something about the ISC, what’s that rate game?

[Jun Wang:]

First on the user base for – I believe that you’re talking about user base Yinglibao right? And for Yinglibao, I think that at this stage, because it’s still in a very early stage of the trial period, we are still collecting with ourselves. And so we are now ready to disclose the user rate information yet. So really this [indiscernible] for our understanding. Regarding the ranking of our website especially the jrj.com, first thing, I would like to give you a little background about Internet Society of China, which recently ran jrj.com as the number one financial websites in China. And starting May 2001, as the Internet Society of China is a Chinese non-government organization made up of 140 members of the Chinese Internet industry including the network access carriers, ISPs and private companies, university and research institutes. It’s also supported by the Ministry of Information Industry and the Ministry of Education and also the State Council Information Office of China. This year, the ISC issued a top 100 Internet competitors, 20 million China websites based under annual revenues, online traffic, access fee, and also within that user influences. And we are pleased to announce that actually at jrj.com, one of our top financial portals was awarded ‘China’s Top 100 Internet Sites’ in China in 2013, and also ranked the number one among all financial websites in China. So this prestigious award is an acknowledgment of the quality of our websites, particularly our leadership in our financial web portals, and our efforts in engaging user, end-users in China. So we continued to enhance our Internet capabilities to improve our core competitiveness and also to expand the influence of our financial media platform over the Chinese individual investors and the institutional investors. Thank you.

[Operator:]

Thank you for your question. Your next question comes from the line of Kevin Vincent. Please ask your question.

[Unidentified Analyst:]

Yes. Could you please talk a little bit about your cash outlook for the rest of 2013?

[Jun Wang:]

Well, thank you, Kevin. Well, as we explained in our speech, that on a sequentially basis, we grew our top line in two quarters in a row and then we’ll continue to expecting – the improvement of our cash position in 2013. We anticipate that some of the integrated financial services may further attenuate towards the top line in the second quarter of the year. However, due to the ongoing uncertainties in the global economy and the sluggish Chinese stock market, we would like to remain cautiously optimistic on further lowering of our cash attrition in the second quarter of the year and we will continue to have full faith in the long-term prospect of our business. Thank you.

[Unidentified Analyst:]

Thank you.

[Operator:]

Thank you for your question. There are no further questions at this time. I would now like to hand the conference back to Mr. Shiwei Yin. Please continue.

[Shiwei Yin:]

Thank you all for participating in today’s earnings call and webcast, and we look forward to speaking with you again, and have a good day.

[Operator:]

Ladies and gentlemen that does conclude our conference for today. Thank you for participating. You may all disconnect.