China's Focus Media (FMCN) posted its unaudited financial results for the second quarter ended June 30, 2008 and said total revenues grew 106.8% year-over-year and 31.1% quarter-over-quarter to USD211.7 million.
"We saw strong revenue and earnings growth in the second quarter of 2008. As a result of our focus on core businesses, our operating cash flow increased significantly from the previous quarter. Although our business was negatively impacted by the earthquake in May, business conditions rebounded quickly in June. In addition, we expanded our network capacity significantly in the second quarter. For example, the total installed base of digital poster frames exceeded 25,000 units as of June 30, 2008 and is well on its way towards our goal of a 50,000 to 60,000 installation base by the year end," stated Dr. Tan Zhi, CEO of Focus Media.
Focus Media's total digital out-of-home advertising revenue was USD135.4 million in the second quarter of 2008, an increase of 76.2% from USD76.9 million in the second quarter of 2007, and a sequential increase of 24.4% from USD108.9 million in the first quarter of 2008. In the second quarter of 2008, commercial location advertising revenue was USD81.1 million, contributing 59.9% of total digital out-of-home advertising revenue. Advertising service revenue from its in-store network was USD17.0 million, or 12.6% of total digital out-of-home advertising revenue. Advertising service revenue from the company's in-elevator poster frame network placed primarily in the elevators of residential buildings was USD37.3 million in the second quarter of 2008, or 27.5% of total digital out-of-home advertising revenue.
As of June 30, 2008, the total installed base of LCD displays and digital frames in Focus Media's commercial location network was 123,140 across China, including 117,440 displays through its directly owned networks, and 5,700 displays through regional distributors. The total number of displays installed in the in-store network including CGEN was 58,493 as of June 30, 2008, decreasing slightly from 61,420 as of March 31, 2008 due to Focus Media's continuing effort to optimize the combined in-store network coverage during the integration of CGEN following its recent acquisition.
Internet advertising service revenue was USD76.1 million in the second quarter of 2008, an increase of 201.7% compared to USD25.2 million for the second quarter of 2007, and an increase of 53.6% compared to USD49.6 million for the first quarter of 2008.
Gross profit for the second quarter of 2008 was USD89.4 million, representing an increase of 61.5% compared to USD55.3 million in the second quarter of 2007 and a 36.5% increase compared to USD65.5 million in the first quarter of 2008. In the second quarter of 2008, operating expenses totaled USD46.1 million, including USD3.3 million in acquired intangible asset amortization resulting from acquisitions and non-cash share-based compensation expense of USD10.0 million.
Net income for the second quarter of 2008 was USD36.1 million, and Focus Media's operating cash flow was USD45.3 million.
Focus Media now estimates its total revenues for the third quarter of 2008 will range from USD225 million to USD235 million.