China Video Leader Youku Edges Profitability

HONG KONG – China’s top online video firm Youku Tudou edged into profit in the fourth quarter of last year.

The non-GAAP net profit of RMB 44.2 million ($7.3 million) was the first in the company’s history and results for the full 2013 showed losses of RMB342 million ($56.5 million).

The NYSE-listed company emerged in 2012 from the merger of online video leaders Youku and Tudou and the company said that some comparisons between the new enlarged group and the old companies were not possible.

For 2013 it enjoyed net revenues of RMB3 billion ($500.3 million) with ad revenue accounting for the significant majority of income.

Set against that bandwidth costs were RMB686 million ($113 million) or 23% of net revenues and content acquisition costs were RMB1.4 billion ($235 million) or 47% of net revenue.

“The strong operational and financial performance recorded in the fourth quarter enabled Youku Tudou to achieve profitability on a combined basis for the first time in the company’s history. This milestone was achieved on the back of scale economics, strong operating leverage and solid execution,” said Victor Koo, chairman and CEO.

“With a dynamic rise in mobile traffic throughout 2013, our existing comprehensive content library and the two most recognized online video brands set Youku Tudou apart as China’s no. 1 multi-screen video company.”  

For the first quarter of 2014, the company said it expects net revenues will be between RMB680 million and RMB720 million, with advertising net revenues contributing between RMB600 million and RMB640 million.

The company’s shares traded up by 7.6% on the news, at $33.19 apiece, giving a market capitalization of $6.22 billion.

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