Renren Swings To Q4 Profit On Gains, But Provides Weak Outlook

(RTTNews) - Chinese online social networking site Renren, Inc. (RENN) Wednesday reported a profit for the fourth quarter, compared to loss last year, despite lower revenues and higher expenses, reflecting a hefty gain on deconsolidation of subsidiaries. The company also provided revenue guidance for the first quarter, well below Street view, sending its shares down about eight percent in after-hours trading.

Renren's financial statements will reflect the deconsolidation of daily-deal site Nuomi.com's operating results, which are included under discontinued operations. Baidu, Inc. (BIDU), the largest Internet search provider in China, acquired a 59 percent stake in Nuomi last year for $160 million, and agreed to buy the remaining 41 percent stake in late January.

"We have repositioned Renren to be a real-name mobile social network with communication services, focused on our core user base of college students and the young generation. Overall, we have streamlined our businesses and organizations, including divesting Nuomi, in order to concentrate our resources on strengthening our SNS foundation," Chairman and CEO Joseph Chen said in a statement.

Beijing, China-based Renren posted net income of $101.54 million or $0.27 per American Depositary Share, or ADS, for the fourth quarter, compared to a net loss of $21.08 million or $0.06 per ADS in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $105.39 million, compared to a loss of $16.68 million in the year-ago quarter.

On average, six analysts polled by Thomson Reuters expected the company to report a loss of $0.04 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenue for the quarter declined 29.1 percent to $30.69 million from $43.30 million in the same quarter last year. Seven Wall Street had a consensus revenue estimate of $30.15 million for the quarter.

Renren net revenues declined 13.7 percent to $15.13 million, and game net revenues decreased 39.6 percent to $15.56 million from the year-ago quarter.

Monthly unique log-in users decreased to about 45 million from about 56 million in prior-year quarter.

Operating expenses for the quarter increased 14.5 percent to $55.5 million from last year.

Looking ahead to the first quarter, the company expects to generate revenues in the range of $23 million to $25 million, while Street is currently looking $30.41 million.

"Looking into 2014, we will further invest in our core business and cement our strength in China's university and young user demographics, a segment we have always served best. We aim to continue to build the intrinsic value of our company assets that can bring long-term, sustainable value to our shareholders," Chen added.

RENN closed Tuesday's regular trading session at $3.77, down $0.02 or 0.53% on a volume of 3.40 million shares. The stock lost a further $0.30 or 7.96% in after-hours trading.