Business

Shanda Reports Q3 Online Game Revenue Results

Chinese online game firm Shanda (SNDA) has announced its unaudited financial results for the third quarter ended September 30, 2008 and stated consolidated net revenues increased 42.7% year-over-year and 11.8% quarter-over-quarter to a record high of CNY936.5 million.

Net income in the third quarter of 2008 was CNY337.1 million, an increase of 41.1% from CNY238.9 million in the third quarter of 2007 and an increase of 20.5% from CNY279.8 million in the second quarter of 2008.

Chen Tianqiao, chairman and CEO of Shanda, stated: "Our third quarter results demonstrate the strength, breadth and balance of our company, as our 3C strategy continued to deliver. We are confident that the online entertainment industry will be more resilient through the economic cycle, and Shanda is well positioned to take advantage of this opportunity to continue to invest in order to grow our business. We are committed to provide our customers with the highest possible quality content and services via superior service platforms."

Online game revenues, including both MMORPGs and casual games, were CNY891.5 million in the third quarter of 2008, representing an increase of 40.7% from CNY633.7 million in the third quarter of 2007 and 11.1% from CNY802.6 million in the second quarter of 2008. Revenues from MMORPGs in the third quarter of 2008 increased 39.9% year- over-year and 11.0% quarter-over-quarter to CNY771.8 million, accounting for 82.4% of total revenues. The sequential growth in MMORPG revenues was primarily driven by continuous release of expansion packs and in-game promotions, as well as the initial contribution from newly launched games in the third quarter of 2008.

Revenues from casual games in the third quarter of 2008 increased 45.7% year-over-year and 11.3% quarter-over-quarter to CNY119.7 million, accounting for 12.8% of total revenues. The quarter-over-quarter increase in casual games revenues was driven by the release of content upgrades, in-game promotions, seasonal strength related to summer holidays. Other revenues in the third quarter of 2008 were CNY45.0 million, compared with CNY22.6 million in the third quarter of 2007 and CNY35.0 million in the second quarter of 2008.

Gross profit for the third quarter of 2008 was CNY683.5 million, representing a 50.4% increase from CNY454.3 million in the third quarter of 2007 and a 12.0% increase from CNY610.1 million in the second quarter of 2008. Gross margin was 73.0% in the third quarter of 2008, compared with 69.2% in the third quarter of 2007 and 72.8% in the second quarter of 2008.

Operating income for the third quarter of 2008 was CNY381.5 million, representing a 50.0% increase from CNY254.3 million in the third quarter of 2007 and a 13.7% increase from CNY335.6 million in the second quarter of 2008. Operating margin was 40.7% in the third quarter of 2008, compared with 38.7% in the third quarter of 2007 and 40.1% in the second quarter of 2008.

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