Monday, Shanghai, China-based online game developer Giant Interactive Group Inc. (GA)reported lower earnings for the first quarter, hurt by disruptions caused by the adjustments to ZT Online's monetization structure. The company also provided revenue guidance for the second quarter of 2009.
Net income for the quarter was RMB231.9 million or US$33.9 million, down 31.5% from RMB338.7 million in the corresponding period last year. Net income per American Depositary Share (ADS) were RMB0.99 or US$0.15 compared with RMB1.33 for the same period last year. The company attributed the decline to the disruptions caused by the adjustments to ZT Online's monetization structure during the third quarter 2008.
Non-GAAP net income excluding non-cash share-based compensation decreased 19.5% quarter-over-quarter to RMB240.2 million or US$35.2 million. Non-GAAP net income, excluding non-cash share-based compensation per ADS, was RMB1.03 or US$0.15 compared to RMB1.38 per ADS for the first quarter 2008. On average, nine analysts polled by Thomson Reuters expected the company to earn $0.14 per ADS for the quarter. Analysts' estimates typically exclude special items.
Net revenue declined 20.8% to RMB373.5 million or US$54.7 million from RMB471.6 million in the same period last year. On average, nine Street analysts expected the company to report revenues of $55.49 million for the quarter.
Active Paying Accounts for online games reached about 1.24 million, down 14.5% from the first quarter 2008. Average Revenue Per User for online games was RMB299.7, a decrease of 7.8% from the first quarter 2008. Average Concurrent Users for online games was 531 thousands, down 2.8% over the first quarter 2008.
Research and product development expenses surged 172.9% year-over-year from RMB11.8 million as a result of the expansion of Giant's R&D department in order to facilitate the development of new games and enhancement of existing games.
In August 2008, Giant implemented a share repurchase plan, to buyback up to US$150.0 million of its ADSs. As of March 31, 2009, Giant had repurchased an aggregate of 16,517,985 ADSs on the open market, for US$106.9 million under this plan.
The company said ZT Online-Giant has continued to introduce many in-game features and activities to further enhance ZT Online's interactivity, In the second quarter 2009, the company will focus on the feedback of the first quarter 2009's test results, Giant Interactive noted.
In anticipation of the July 2009 release of the expansion pack for ZT Online, the company said it has significantly de-emphasized sales and marketing activities in the near term. Based on the current estimates, the company expects to generate total net revenue for the second quarter 2009 in the range of RMB343 million to RMB373 million.
GA rose $0.06 or 0.73% and closed Friday's regular trading session at $8.26. After hours, GA advanced further $0.19 or 2.30% to trade at $8.45.
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