- Quarterly Net Revenues Beat Guidance, up 32.2%
- Diluted Adjusted EBITDA per ADS up 18.1% to US$0.16
GUANGZHOU, China, Nov. 19, 2015 (GLOBE NEWSWIRE) -- CNinsure Inc, (Nasdaq:CISG), (the "Company" or "CNinsure"), a leading independent online-to-offline ("O2O") financial services provider in China, today announced its unaudited financial results for the third quarter ended September 30, 20151.
Financial Highlights for Third quarter of 2015
| 2014 Q3 | 2015 Q3 | 2015 Q3 | ||
| (In thousands, except per ADS) | （RMB） | (RMB) | (US$) | Change % |
| Total net revenues | 542,335 | 716,744 | 112,774 | 32.2% |
| Operating income | 883 | 22,548 | 3,548 | 2,453.6% |
| Online spending expenses (1) | 17,013 | 19,375 | 3,048 | 13.9% |
| Non-GAAP operating income (2) | 17,896 | 41,923 | 6,596 | 134.3% |
| Net income attributable to | 34,788 | 41,876 | 6,589 | 20.4% |
| the Company's shareholders | ||||
| Adjusted EBITDA (3) | 43,463 | 61,351 | 9,652 | 41.2% |
| Basic net income per ADS | 0.70 | 0.73 | 0.11 | 4.6% |
| Diluted Adjusted EBITDA Per ADS | 0.87 | 1.02 | 0.16 | 18.1% |
| (1) Online spending expenses is defined as expenses incurred by online and mobile initiatives, such as expenses relating to the development, implementation and support of CNpad, Baoxian.com, eHuzhu and Chetong.net. Chetong.net was disposed in the third quarter of 2015 and expenses related to Chetong.net were not included in online spending expenses starting from the third quarter of 2015. | ||||
| (2) Non-GAAP operating income is defined as operating income excluding online spending expenses. | ||||
| (3) Adjusted EBITDA is defined as net income before income tax expense, investment income, interest income, depreciation, amortization, compensation expenses associated with stock options, and online spending expenses. | ||||
Business Highlights:
- CNpad Mobile App, a mobile insurance transaction platform: During the third quarter of 2015, an additional 17,127 copies of CNpad application ("CNpad App") were downloaded and activated, increasing the total number of downloaded and activated CNpad Apps to 93,230 as of September 30, 2015. CNpad App had approximately 30,752 active users2 during the third quarter of 2015 compared with 28,000 active users during the second quarter of 2015. In the third quarter of 2015, total insurance premiums generated by CNpad App increased by 127.8% compared to the third quarter of 2014 and 25.4% over the second quarter of 2015 to approximately RMB795.7 million (US$125.2 million).
- Baoxian.com, an online entry portal for comparing and purchasing health, accident, travel and homeowner insurance products: During the third quarter of 2015, Baoxian.com had 13,469 active customer accounts compared with 13,460 active customer accounts during the second quarter of 20153. In the third quarter of 2015, transaction volume from Baoxian.com decreased 50% quarter-over-quarter to RMB10.6 million (US$1.7 million).
- eHuzhu, a non-profit online mutual aid platform in China: During the third quarter of 2015, the total number of registered members of eHuzhu increased 54.3% compared to the second quarter of 2015 to approximately 540,000.
Commenting on the third quarter 2015 financial results, Mr. Chunlin Wang, chief executive officer of CNinsure, said, "Despite slower economic growth in China, we had a strong third quarter. We delivered solid top line growth and our operating margins expanded, which translated into a twenty-five fold year-over-year growth in operating income, reflecting the positive results of our organizational restructuring and strategic transformation.
"Our total net revenues again grew more than expected, increasing by 32.2% year-over-year in the third quarter of 2015, due to the outstanding performance across our various businesses and contribution from CNpad mobile App. A few key driving factors include:
1) Strong growth within our life insurance business. Benefiting from the rising demand for traditional life insurance products in a low interest rate environment, along with the successful implementation of our cross-selling strategy, new term life insurance policy sales went up by 117.8% year-over-year, pushing up revenues from our life insurance business by 91.6% year-over-year;
2) Recovery of our claims adjusting business. Our claims adjusting business rebounded from its downturn in the past three quarters to achieve 17.2% year-over-year growth;
3) Continued robust growth of property and casualty ("P&C") insurance business. Net revenues from P&C insurance agency business and insurance brokerage business grew 27.1% and 34.2% year-over-year, respectively. P&C insurance premiums (which combines our P&C insurance agency and insurance brokerage businesses) were up 15.0% year-over-year, consistently outpacing the 10.1% growth in the overall P&C insurance sector in China; and
4) Increasing contribution from CNpad mobile App. With continued migration to mobile, insurance premiums generated through CNpad App exceeded RMB795.7 million in the third quarter of 2015, an increase of 127.8% year-over-year, and over 60% of our auto insurance business and over 50% of new term life insurance business were transacted through CNpad App. Revenue attributable to CNpad App accounted for 32.9% of our total net revenues, as compared to 25.8% during the previous quarter.
"We also saw back-office efficiency improvement as a result of the increased adoption of CNpad App, evidenced by a drop in non-GAAP operating expense ratio from 18.8% a year-ago to 17.4%, continuing a trend that has been witnessed in the past two quarters.
"Given the strong performance of our business and the Chinese Insurance Regulatory Commission's recent relaxation of regulations over the establishment of insurance intermediary companies and removal of the certificate requirement for sales agents to conduct business, we believe the opportunity for us to consolidate market resources has never looked more promising. During the third quarter of 2015, we made steady progress in further extending our sales network footprint and expanding our sales force. We also showed that our migration to the Internet channel, marked by strong mobile adoption, continued undeterred and ahead of plan, with strong annual and quarterly increases in active users and even faster increase in monetization. As we execute these plans to drive further business growth and gain market share, we remain confident about our growth outlook going forward. "
Financial Results for the Third Quarter of 2015
Total net revenues were RMB716.7 million (US$112.8 million) for the third quarter of 2015, representing an increase of 32.2% from RMB542.3 million for the corresponding period in 2014.
Net revenues for the insurance agency business were RMB543.8 million (US$85.6 million) for the third quarter of 2015, representing an increase of 34.4% from RMB404.7 million for the corresponding period in 2014. The increase was primarily driven by a 27.1% increase in net revenues derived from the P&C insurance agency business, from RMB359.0 million for the third quarter of 2014 to RMB456.2 million (US$71.8 million) for the third quarter of 2015, and a 91.6% increase in net revenues derived from the life insurance agency business, from RMB45.7 million for the third quarter of 2014 to RMB87.6 million (US$13.8 million) for the third quarter of 2015. The growth of the P&C insurance agency business was primarily due to the growth of sales volume and an increase in the commission rates that the Company received from the insurance companies for whom the Company acts as agent. The increase in net revenues generated from the life insurance agency business was primarily due to a 130.2% increase in commissions derived from new long-term life insurance policy sales and an 11.2% increase in renewal commissions, offset by a decline in commissions derived from short term life insurance products. The strong sales of new long-term life insurance products was because life insurance products became more attractive due to a narrowing of the gap in yields between life insurance products and savings deposits or wealth management products because of lower interest rates. Revenues generated from the insurance agency business accounted for 75.9% of total net revenues in the third quarter of 2015.
Net revenues for the insurance brokerage business were RMB91.0 million (US$14.3 million) for the third quarter of 2015, representing an increase of 34.2% from RMB67.8 million for the corresponding period in 2014. This growth was primarily attributable to continued efforts to cultivate markets and build customer relationship. Revenues generated from the insurance brokerage business accounted for 12.7% of total net revenues in the third quarter of 2015.
Net revenues for the claims adjusting business were RMB81.9 million (US$12.9 million) for the third quarter of 2015, representing an increase of 17.2% from RMB69.9 million for the corresponding period in 2014. The increase was primarily due to increased marketing efforts during the quarter. Revenues generated from the claims adjusting business accounted for 11.4% of total net revenues in the third quarter of 2015.
Total operating costs and expenses were RMB694.2 million (US$109.2 million) for the third quarter of 2015, representing an increase of 28.2% from RMB541.5 million for the corresponding period in 2014.
Total operating costs were RMB544.1 million (US$85.6 million) for the third quarter of 2015, representing an increase of 30.1% from RMB418.1 million for the corresponding period in 2014. The increase was primarily due to sales growth.
Costs of insurance agency business were RMB424.0 million (US$66.7 million) for the third quarter of 2015, representing an increase of 33.0% from RMB318.8 million for the corresponding period in 2014, primarily driven by a 27.7% increase in costs for the P&C insurance agency business, from RMB287.0 million for the third quarter of 2014 to RMB366.5 million (US$57.7 million) for the third quarter of 2015, and a 80.8% increase in costs for the life insurance agency business, from RMB31.8 million for the third quarter of 2014 to RMB57.5 million (US$9.1 million) for the third quarter of 2015. Costs incurred by the insurance agency business accounted for 77.9% of total operating costs in the third quarter of 2015.
Costs of insurance brokerage business were RMB72.4 million (US$11.4 million) for the third quarter of 2015, representing an increase of 33.2% from RMB54.4 million for the corresponding period in 2014. The increase largely tracked sales growth. Costs incurred by the insurance brokerage business accounted for 13.3% of total operating costs in the third quarter of 2015.
Costs of claims adjusting business were RMB47.6 million (US$7.5 million) for the third quarter of 2015, representing a slight increase of 6.1% from RMB44.9 million for the corresponding period in 2014. The increase was consistent with the increase in net revenues. Costs incurred by the claims adjusting business accounted for 8.8% of total operating costs in the third quarter of 2015.
Selling expenses were RMB29.2 million (US$4.6 million) for the third quarter of 2015, representing an increase of 8.4% from RMB27.0 million for the corresponding period in 2014, primarily due to an increase in sales and marketing activities.
General and administrative expenses were RMB120.9 million (US$19.0 million) for the third quarter of 2015, representing an increase of 25.4% from RMB96.4 million for the corresponding period in 2014. The increase was primarily due to a combination of the following factors:
1) an increase of 13.9% in expenses incurred by online and mobile initiatives, from RMB17.0 million in the third quarter of 2014 to RMB19.4 million (US$3.0 million) for the same period in 2015;
2) an increase of 34.9% in share-based compensation expenses from RMB4.6 million for the third quarter of 2014 to RMB6.2 million (US$1.0 million) for the same period in 2015. The increase in share-based compensation expenses was mainly due to a share incentive charge incurred by CNinsure Insurance Surveyors & Loss Adjustors Holding Co., Ltd. ("CISLA"), a subsidiary of CNinsure; offset by
3) a decrease of depreciation expenses from RMB7.1 million for the third quarter of 2014 to RMB3.5 million (US$0.5 million) for the same period in 2015.
As a result of the preceding factors, operating income was RMB22.5 million (US$3.5 million) for the third quarter of 2015, representing an increase of 2,453.6% from RMB0.9 million for the corresponding period in 2014.
Operating margin was 3.1% for the third quarter of 2015, compared with 0.2% for the corresponding period in 2014.
Non-GAAP operating income was RMB41.9 million (US$6.6 million) for the third quarter of 2015, representing an increase of 134.3% from RMB17.9 million for the corresponding period in 2014.
Non-GAAP operating margin was 5.8% for the third quarter of 2015, as compared to 3.3% for the corresponding period in 2014.
Investment income was RMB10.4 million (US$1.6 million) for the third quarter of 2015, representing an increase of 17.6% from RMB8.8 million for the corresponding period in 2014, primarily due to the capital gains derived from the disposal of Shenzhen Chetong Network Co., Ltd., a subsidiary of CNinsure, during the third quarter of 2015, offset by a decrease in investment income derived from the short-term investment in financial products during the quarter. These short-term investments mainly represented inter-bank deposits with a term of one to two years, which pay interests on a semi-annual and annual basis. Because these investments are classified as available for sale and investment income is recognized when received, investment income may fluctuate from quarter to quarter.
Interest income was RMB12.9 million (US$2.0 million) for the third quarter of 2015, representing a decrease of 33.4% from RMB19.4 million for the corresponding period in 2014. The decrease in interest income was primarily due to decreases in interest rates and term deposits as a result of an increase in short-term investments.
Income tax expense was RMB4.0 million (US$0.6 million) for the third quarter of 2015, representing a decrease of 5.7% from RMB4.2 million for the corresponding period in 2014. The decrease was primarily due to non-taxable capital gains generated from the disposal of Chetong.net and utilization of tax loss carryforward which was previously recognized as deferred tax allowance . The effective tax rate for the third quarter of 2015 was 8.1% compared with 13.9% for the corresponding period in 2014.
Share of income of affiliates was RMB4.1 million (US$0.6 million) for the third quarter of 2015, representing a decrease of 48.6% from RMB8.0 million for the corresponding period in 2014, mainly attributable to a decrease of profit from China Financial Services Group, in which the Company owns 20.6% of the equity interests, largely due to 1) narrower interest spread as a result of downwards adjustment in interest rates that it charged its customers for retail loans because of higher liquidity in the market; and 2) increased marketing expenses related to its online platform.
Net income attributable to the Company's shareholders was RMB41.9 million (US$6.6 million) for the third quarter of 2015, representing an increase of 20.4% from RMB34.8 million for the corresponding period in 2014.
Net margin was 5.8% for the third quarter of 2015 compared with 6.4% for the corresponding period in 2014.
Basic and diluted net income per ADS were RMB0.73 (US$0.11) and RMB0.70 (US$0.11) for the third quarter of 2015, respectively, representing an increase of 4.6% and 0.7% from RMB0.70 and RMB0.69 for the corresponding period in 2014, respectively.
Adjusted EBITDA was RMB61.4 million (US$9.7 million) for the third quarter of 2015, representing an increase of 41.2% from RMB43.5 million for the corresponding period in 2014.
Adjusted EBITDA margin was 8.6% for the third quarter of 2015, compared with 8.0% for the corresponding period in 2014.
Diluted adjusted EBITDA per ADS was RMB1.02 (US$0.16) for the third quarter of 2015, representing an increase of 18.1% from RMB0.87 for the corresponding period in 2014. As of September 30, 2015, the Company had RMB1.5 billion (US$238.1 million) in cash and cash equivalents.
Recent Developments:
-
On November 9, 2015, CNinsure's subsidiary, CISLA filed an application with the National Equities Exchange and Quotations to list on the New Third Board, an emerging over-the-counter stock exchange in China.
In order to facilitate the listing, CISLA commenced a series of corporate restructurings and issued new shares to CISLA's management and key employees. As a result of the restructuring and the new share issuance, CNinsure's shareholdings in CISLA was diluted from 51% to 44.7% and the remaining equity interests of CISLA were jointly owned by its founders, management and employees. CNinsure remains the largest shareholder of CISLA and will continue to exercise substantial control over CISLA after the proposed listing through agreements made with minority shareholders.
Meanwhile, in order to align the interests of the founding team of Chetong.net with the growth of the platform, Guangdong CNinsure Fangzhong Investment Management Co., Ltd., in which CNinsure owns 51% of the equity interests, transferred its equity interests in Shenzhen Chetong Network Co., Ltd. ("Chetong Network"), the operating entity of Chetong.net, to CISLA and the management and employees of Chetong Network. As a result, CISLA and the management and employees of Chetong Network hold 19.9% and 80.1% of the equity interests of Chetong Network, respectively.
-
On November 7, 2015, in recognition of its outstanding performance in 2015, CNinsure was awarded Insurance Intermediary of the Year 2015 at the 10th China Insurance Innovation Award Ceremony.
- As of September 30, 2015, CNinsure's distribution and service network consisted of 574 sales and services outlets operating in 27 provinces, compared with 548 sales and service outlets operating in 27 provinces as of September 30, 2014. CNinsure had 77,260 sales agents and 1,501 professional claims adjustors as of September 30, 2015, compared with 57,143 sales agents, and 1,473 professional claims adjustors as of September 30, 2014.
Business Outlook
CNinsure expects its total net revenues to grow approximately 30% in the fourth quarter of 2015 compared with the corresponding period in 2014. This forecast reflects CNinsure's current view, which is subject to change.
Conference Call
The Company will host a conference call to discuss its third quarter 2015 results as per the following details.
Time: 8:00 PM Eastern Daylight Time on November 19, 2015
or 9:00 AM Beijing/Hong Kong Time on November 20, 2015
| The toll free dial-in numbers: | |
| United States | 1-855-500-8701 |
| United Kingdom | 0800-015-9724 |
| Canada | 1-855-757-1565 |
| Taiwan | 0080-665-1951 |
| Hong Kong | 800-906-606 |
| The toll dial-in numbers: | |
| China (Mainland) | 400-120-0654 |
| Singapore & Other Areas | +65-6713-5440 |
| Conference ID #:68836026 |
Additionally, a live and archived web cast of this call will be available at:
http://ir.cninsure.net/events.cfm
About CNinsure Inc.
CNinsure Inc. is a leading independent online-to-offline financial services provider. Through our online platforms and offline sales and service network, we offer a wide variety of financial products and services to individuals and businesses, including property and casualty and life insurance products. We also provide insurance claims adjusting services, such as damage assessments, surveys, authentications and loss estimations, as well as value-added services, such as emergency vehicle roadside assistance.
Our online platforms include (1) Baoxian.com, an online entry portal for comparing and purchasing health, accident, travel and homeowner insurance products; (2) CNpad, a mobile sales support application and (3) eHuzhu (www.ehuzhu.com), a non-profit online mutual aid platform in China. Our extensive distribution and service network covers 27 provinces in China, including most economically developed regions and cities.
For more information about CNinsure Inc., please visit http://ir.cninsure.net/.
Forward-looking Statements
This press release contains statements of a forward-looking nature. These statements, including the statements relating to the Company's future financial and operating results, are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "believes," "anticipates," "intends," "estimates" and similar statements. Along with other sections, management quotations and the Business Outlook section contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about CNinsure and the industry. Potential risks and uncertainties include, but are not limited to, those relating to CNinsure's limited operating history, especially its limited experience in selling life insurance products, its ability to attract and retain productive agents, especially entrepreneurial agents, its ability to maintain existing and develop new business relationships with insurance companies, its ability to execute its growth strategy, its ability to adapt to the evolving regulatory environment in the Chinese insurance industry, its ability to compete effectively against its competitors, quarterly variations in its operating results caused by factors beyond its control and macroeconomic conditions in China and their potential impact on the sales of insurance products. All information provided in this press release is as of the date hereof, and CNinsure undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although CNinsure believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by CNinsure is included in CNinsure's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F.
About Non-GAAP Financial Measures
In addition to the Company's consolidated financial results under GAAP, the Company also provides non-GAAP operating income, non-GAAP operating income margin, non-GAAP expense ratio, adjusted EBITDA, adjusted EBITDA margin and diluted adjusted EBITDA per ADS, which are non-GAAP financial measures. Non-GAAP operating income is defined as operating income before expenses associated with the Company's online and mobile initiatives, including expenses relating to the development, implementation and support of CNpad, Baoxian.com, eHuzhu and Chetong.net. Following the disposal of Chetong.net in the third quarter of 2015, expenses related to Chetong.net were not included in online expenses starting from the third quarter of 2015. Non-GAAP operating income margin is defined as non-GAAP operating income divided by total net revenues. Non-GAAP expense ratio is defined as selling expenses and general and administration expenses excluding expenses associated with the Company's online and mobile initiatives and share-based compensation expenses divided by total net revenues. Adjusted EBITDA is defined as net income before income tax expense, investment income, interest income, depreciation, amortization, compensation expenses associated with stock option and expenses incurred on online and mobile initiatives. Adjusted EBITDA margin is defined as adjusted EBITDA divided by total net revenues. Diluted adjusted EBITDA per ADS is defined as adjusted EBITDA divided by total number of ADS on a diluted basis. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company's performance and when planning and forecasting future periods. One limitation of using these non-GAAP financial measures is that such measures exclude items that were significant in the third quarter of 2015 and the corresponding period of 2014, and these items have been, and will continue to be, significant recurring factors in our business.
In light of these limitations, the presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. We encourage investors and other interested persons to review our financial information in its entirety and not rely on a single financial measure. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of Non-GAAP Operating Income and Non-GAAP Operating Income Margin", "Reconciliation of Non-GAAP Expenses Ratio" and "Reconciliations of Net Income to Adjusted EBITDA and Adjusted EBITDA Margin" set forth at the end of this release.
| CNINSURE INC. | |||
| Unaudited Condensed Consolidated Balance Sheets | |||
| (In thousands) | |||
| As of December 31, | As of September 30, | As of September 30, | |
| 2014 | 2015 | 2015 | |
| RMB | RMB | US$ | |
| ASSETS: | |||
| Current assets: | |||
| Cash and cash equivalents | 2,103,068 | 1,513,438 | 238,127 |
| Restricted cash | 7,478 | 15,814 | 2,488 |
| Short term investments | 688,900 | 1,375,000 | 216,345 |
| Accounts receivable, net | 186,150 | 249,111 | 39,195 |
| Insurance premium receivables | 472 | 316 | 50 |
| Other receivables | 88,149 | 75,055 | 11,809 |
| Amounts due from related parties | 209,601 | 105,153 | 16,545 |
| Other current assets | 17,908 | 22,003 | 3,462 |
| Total current assets | 3,301,726 | 3,355,890 | 528,021 |
| Non-current assets: | |||
| Property, plant, and equipment, net | 47,171 | 35,391 | 5,568 |
| Goodwill and intangible assets, net | 165,072 | 155,452 | 24,459 |
| Deferred tax assets | 2,638 | 1,826 | 287 |
| Investment in affiliates | 219,703 | 244,147 | 38,415 |
| Other non-current assets | 12,176 | 24,208 | 3,809 |
| Total non-current assets | 446,760 | 461,024 | 72,538 |
| Total assets | 3,748,486 | 3,816,914 | 600,559 |
| LIABILITIES AND EQUITY: | |||
| Current liabilities: | |||
| Accounts payable (including accounts payable of the consolidated variable interest entities ("VIEs") without recourse to CNinsure Inc. of RMB4,453 and RMB3,087 (US$486) as of December 31, 2014 and September 30, 2015, respectively) | 128,765 | 155,832 | 24,519 |
| Insurance premium payables (including insurance premium payables of the consolidated VIEs without recourse to CNinsure Inc. of RMB268 and RMB1,959 (US$308) as of December 31, 2014 and September 30, 2015, respectively) | 2,942 | 5,089 | 801 |
| Other payables and accrued expenses (including other payables and accrued expense of the consolidated VIEs without recourse to CNinsure Inc. of RMB7,099 and RMB2,978 (US$469) as of December 31, 2014 and September 30, 2015, respectively) | 109,412 | 130,130 | 20,475 |
| Accrued payroll (including accrued payroll of the consolidated VIEs without recourse to CNinsure Inc. of RMB1,083 and RMB1,146 (US$180) as of December 31, 2014 and September 30, 2015, respectively) | 40,096 | 41,341 | 6,504 |
| Income tax payable (including income tax payable of the consolidated of VIEs without recourse to CNinsure Inc. of RMB2,571 and RMB1,520 (US$239) as of December 31, 2014 and September 30, 2015, respectively) | 54,225 | 56,553 | 8,898 |
| Total current liabilities | 335,440 | 388,945 | 61,197 |
| Non-current liabilities: | |||
| Other tax liabilities | 53,855 | 66,331 | 10,437 |
| Deferred tax liabilities | 24,931 | 22,619 | 3,559 |
| Total non-current liabilities | 78,786 | 88,950 | 13,996 |
| Total liabilities | 414,226 | 477,895 | 75,193 |
| Ordinary shares | 8,563 | 8,573 | 1,349 |
| Additional paid-in capital | 2,601,401 | 2,465,131 | 387,868 |
| Statutory reserves | 198,422 | 197,702 | 31,107 |
| Retained earnings | 764,963 | 920,680 | 144,861 |
| Accumulated other comprehensive loss | (105,106) | (93,697) | (14,743) |
| Subscription receivables | (257,491) | (263,757) | (41,500) |
| Total CNinsure Inc. shareholders' equity | 3,210,752 | 3,234,632 | 508,942 |
| Non-controlling interests | 123,508 | 104,387 | 16,424 |
| Total equity | 3,334,260 | 3,339,019 | 525,366 |
| Total liabilities and equity | 3,748,486 | 3,816,914 | 600,559 |
| CNINSURE INC. | ||||||
| Unaudited Condensed Consolidated Statements of Income and Comprehensive Income | ||||||
| (In thousands, except for shares and per share data) | ||||||
| For The Three Months Ended | For The Nine Months Ended | |||||
| September 30, | September 30, | |||||
| 2014 | 2015 | 2015 | 2014 | 2015 | 2015 | |
| RMB | RMB | US$ | RMB | RMB | US$ | |
| Net revenues: | ||||||
| Agency | 404,694 | 543,846 | 85,570 | 1,135,697 | 1,486,908 | 233,953 |
| Brokerage | 67,761 | 90,969 | 14,313 | 173,948 | 274,164 | 43,137 |
| Claims adjusting | 69,880 | 81,929 | 12,891 | 207,747 | 207,233 | 32,606 |
| Total net revenues | 542,335 | 716,744 | 112,774 | 1,517,392 | 1,968,305 | 309,696 |
| Operating costs and expenses: | ||||||
| Agency | (318,806) | (424,048) | (66,720) | (875,739) | (1,160,911) | (182,659) |
| Brokerage | (54,364) | (72,415) | (11,394) | (138,500) | (218,255) | (34,340) |
| Claims adjusting | (44,898) | (47,621) | (7,493) | (122,431) | (128,679) | (20,247) |
| Total operating costs | (418,068) | (544,084) | (85,607) | (1,136,670) | (1,507,845) | (237,246) |
| Selling expenses | (26,955) | (29,231) | (4,599) | (75,523) | (86,670) | (13,637) |
| General and administrative expenses | (96,429) | (120,881) | (19,020) | (272,389) | (328,095) | (51,623) |
| Total operating costs and expenses | (541,452) | (694,196) | (109,226) | (1,484,582) | (1,922,610) | (302,506) |
| Income from operations | 883 | 22,548 | 3,548 | 32,810 | 45,695 | 7,190 |
| Other income, net: | ||||||
| Investment income | 8,811 | 10,358 | 1,630 | 33,062 | 44,738 | 7,039 |
| Interest income | 19,446 | 12,947 | 2,037 | 63,462 | 48,028 | 7,557 |
| Others, net | 1,075 | 3,062 | 481 | 1,735 | 8,009 | 1,260 |
| Income before income taxes and income of affiliates | 30,215 | 48,915 | 7,696 | 131,069 | 146,470 | 23,046 |
| Income tax expense | (4,190) | (3,950) | (621) | (18,726) | (16,989) | (2,673) |
| Share of income of affiliates | 7,952 | 4,087 | 643 | 22,421 | 24,444 | 3,846 |
| Net income | 33,977 | 49,052 | 7,718 | 134,764 | 153,925 | 24,219 |
| Less: net (loss) gain attributable to noncontrolling interests | (811) | 7,176 | 1,129 | 72 | (1,072) | (168) |
| Net income attributable to the Company's shareholders | 34,788 | 41,876 | 6,589 | 134,692 | 154,997 | 24,387 |
| Net income per share: | ||||||
| Basic | 0.03 | 0.04 | 0.01 | 0.13 | 0.13 | 0.02 |
| Diluted | 0.03 | 0.03 | 0.01 | 0.13 | 0.13 | 0.02 |
| Net income per ADS: | ||||||
| Basic | 0.70 | 0.73 | 0.11 | 2.69 | 2.69 | 0.42 |
| Diluted | 0.69 | 0.70 | 0.11 | 2.68 | 2.58 | 0.41 |
| Shares used in calculating net income per share: | ||||||
| Basic | 1,000,565,906 | 1,151,945,764 | 1,151,945,764 | 999,928,000 | 1,151,327,395 | 1,151,327,395 |
| Diluted | 1,004,883,981 | 1,200,958,840 | 1,200,958,840 | 1,004,700,996 | 1,202,347,993 | 1,202,347,993 |
| Net income | 33,977 | 49,052 | 7,718 | 134,764 | 153,925 | 24,219 |
| Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments | (2,434) | 5,318 | 837 | 3,203 | 5,143 | 809 |
| Comprehensive income | 31,543 | 54,370 | 8,555 | 137,967 | 159,068 | 25,028 |
| Less: Comprehensive income attributable to the noncontrolling interests | (811) | 7,176 | 1,129 | 72 | (1,072) | (168) |
| Comprehensive income attributable to the CNinsure Inc's shareholders | 32,354 | 47,194 | 7,426 | 137,895 | 160,140 | 25,196 |
| CNINSURE INC. | ||||||
| Unaudited Condensed Consolidated Statements of Cash Flow | ||||||
| (In thousands) | ||||||
| For The Three Months Ended | For The Nine Months Ended | |||||
| September 30, | September 30, | |||||
| 2014 | 2015 | 2015 | 2014 | 2015 | 2015 | |
| RMB | RMB | US$ | RMB | RMB | US$ | |
| OPERATING ACTIVITIES | ||||||
| Net income | 33,977 | 49,052 | 7,718 | 134,764 | 153,925 | 24,219 |
| Adjustments to reconcile net income to net cash generated from operating activities: | ||||||
| Depreciation | 7,088 | 3,469 | 546 | 22,227 | 14,308 | 2,251 |
| Amortization of intangible assets | 4,864 | 2,620 | 412 | 12,098 | 9,301 | 1,463 |
| Allowance for doubtful receivables | 784 | 2,291 | 360 | 3,912 | 2,903 | 457 |
| Compensation expenses associated with stock options | 4,588 | 6,190 | 974 | 18,914 | 14,824 | 2,332 |
| Investment income | (3,983) | (10,152) | (1,597) | (14,653) | (29,739) | (4,679) |
| (Gain) loss on disposal of property, plant and equipment | 134 | 22 | 3 | 49 | 17 | 3 |
| Share of income of affiliates | (7,952) | (4,087) | (643) | (22,421) | (24,444) | (3,846) |
| Changes in operating assets and liabilities | 15,948 | 6,908 | 1,087 | 33,316 | (33,191) | (5,222) |
| Net cash generated from operating activities | 55,448 | 56,313 | 8,860 | 188,206 | 107,904 | 16,978 |
| Cash flows used in investing activities: | ||||||
| Purchase of property, plant and equipment | (1,638) | (1,654) | (260) | (4,583) | (3,818) | (601) |
| Proceeds from disposal of property and equipment | 8 | 63 | 10 | 366 | 380 | 60 |
| Proceeds from disposal of short term investment | 53,983 | 22,300 | 3,509 | 70,842 | 290,787 | 45,753 |
| Disposal of subsidiaries, net of cash | — | 18,892 | 2,972 | — | 15,476 | 2,435 |
| Purchase of short term investments | (170,000) | (405,000) | (63,723) | (530,000) | (955,000) | (150,261) |
| Acquisition of subsidiaries, net of cash | (63,724) | — | — | (62,709) | — | — |
| Decrease (increase) in restricted cash | 463 | (2,251) | (354) | 945 | (8,336) | (1,312) |
| Decrease in other receivables | 127,687 | — | — | 122,632 | — | — |
| Purchase of intangible assets | — | — | — | (118) | — | — |
| Return of investment in non-current assets | 3,500 | — | — | 3,900 | — | — |
| Addition in investment in non-current assets | (7,019) | (9,000) | (1,416) | (7,019) | (10,000) | (1,573) |
| Decrease (increase) in amounts due from related parties | 13,739 | 27,712 | 4,360 | (58,850) | 111,939 | 17,613 |
| Net cash used in investing activities | (43,001) | (348,938) | (54,902) | (464,594) | (558,572) | (87,886) |
| Cash flows generated from (used in) financing activities: | ||||||
| Acquisition of additional interests in subsidiaries | (11,000) | (45,500) | (7,159) | (11,000) | (153,500) | (24,152) |
| Increase in capital injection by noncontrolling interests | — | 17,000 | 2,675 | — | 17,000 | 2,675 |
| Repurchase of ordinary shares | — | (6,276) | (987) | — | (6,276) | (987) |
| Dividend distributed to noncontrolling interests | — | — | — | — | (2,450) | (386) |
| Proceeds on exercise of stock options | — | 2 | — | 3,183 | 1,121 | 176 |
| Net cash used in financing activities | (11,000) | (34,774) | (5,471) | (7,817) | (144,105) | (22,674) |
| Net increase (decrease) in cash and cash equivalents | 1,447 | (327,399) | (51,513) | (284,205) | (594,773) | (93,582) |
| Cash and cash equivalents at beginning of period | 2,008,608 | 1,835,519 | 288,803 | 2,288,623 | 2,103,068 | 330,900 |
| Effect of exchange rate changes on cash and cash equivalents | (2,434) | 5,318 | 837 | 3,203 | 5,143 | 809 |
| Cash and cash equivalents at end of period | 2,007,621 | 1,513,438 | 238,127 | 2,007,621 | 1,513,438 | 238,127 |
| Interest paid | — | — | — | — | — | — |
| Income taxes paid | 3,480 | 1,104 | 174 | 17,870 | 3,849 | 606 |
| CNINSURE INC. | ||||||
| Reconciliations of Non-GAAP Operating Income and Non-GAAP Operating income Margin | ||||||
| (In thousands, unaudited) | ||||||
| For The Three Months Ended | For The Nine Months Ended | |||||
| September 30, | September 30, | |||||
| 2014 | 2015 | 2015 | 2014 | 2015 | 2015 | |
| RMB | RMB | US$ | RMB | RMB | US$ | |
| Operating income | 883 | 22,548 | 3,548 | 32,810 | 45,695 | 7,190 |
| Online spending expenses | 17,013 | 19,375 | 3,048 | 32,008 | 61,427 | 9,665 |
| Non-GAAP Operating Income | 17,896 | 41,923 | 6,596 | 64,818 | 107,122 | 16,855 |
| Total net revenues | 542,335 | 716,744 | 112,774 | 1,517,392 | 1,968,305 | 309,696 |
| Non-GAAP Operating Income Margin | 3.3% | 5.8% | 5.8% | 4.3% | 5.4% | 5.4% |
| CNINSURE INC. | ||||||
| Reconciliation of Non-GAAP Expenses Ratio | ||||||
| (In thousands, unaudited) | ||||||
| For The Three Months Ended | For The Nine Months Ended | |||||
| September 30, | September 30, | |||||
| 2014 | 2015 | 2015 | 2014 | 2015 | 2015 | |
| RMB | RMB | US$ | RMB | RMB | US$ | |
| Selling expenses | 26,955 | 29,231 | 4,599 | 75,523 | 86,670 | 13,637 |
| General and administrative expenses | 96,429 | 120,881 | 19,020 | 272,389 | 328,095 | 51,623 |
| Total expenses | 123,384 | 150,112 | 23,619 | 347,912 | 414,765 | 65,260 |
| Online spending expenses | (17,013) | (19,375) | (3,048) | (32,008) | (61,427) | (9,665) |
| Compensation expenses associated with stock options | (4,588) | (6,190) | (974) | (18,914) | (14,824) | (2,332) |
| Non-GAAP expenses | 101,783 | 124,547 | 19,597 | 296,990 | 338,514 | 53,263 |
| Total net revenues | 542,335 | 716,744 | 112,774 | 1,517,392 | 1,968,305 | 309,696 |
| Non-GAAP Operating expenses ratio | 18.8% | 17.4% | 17.4% | 19.6% | 17.2% | 17.2% |
| CNINSURE INC. | ||||||
| Reconciliations of Net Income to Adjusted EBITDA and Adjusted EBITDA Margin | ||||||
| (In thousands, unaudited) | ||||||
| For The Three Months Ended | For The Nine Months Ended | |||||
| September 30, | September 30, | |||||
| 2014 | 2015 | 2015 | 2014 | 2015 | 2015 | |
| RMB | RMB | US$ | RMB | RMB | US$ | |
| Net income | 33,977 | 49,052 | 7,718 | 134,764 | 153,925 | 24,219 |
| Income tax expense | 4,190 | 3,950 | 621 | 18,726 | 16,989 | 2,673 |
| Investment income | (8,811) | (10,358) | (1,630) | (33,062) | (44,738) | (7,039) |
| Interest income | (19,446) | (12,947) | (2,037) | (63,462) | (48,028) | (7,557) |
| Depreciation | 7,088 | 3,469 | 546 | 22,227 | 14,308 | 2,251 |
| Amortization of intangible assets | 4,864 | 2,620 | 412 | 12,098 | 9,301 | 1,463 |
| Compensation expenses associated with stock options | 4,588 | 6,190 | 974 | 18,914 | 14,824 | 2,332 |
| Online spending expenses | 17,013 | 19,375 | 3,048 | 32,008 | 61,427 | 9,665 |
| Adjusted EBITDA | 43,463 | 61,351 | 9,652 | 142,213 | 178,008 | 28,007 |
| Total net revenues | 542,335 | 716,744 | 112,774 | 1,517,392 | 1,968,305 | 309,696 |
| Adjusted EBITDA Margin | 8.0% | 8.6% | 8.6% | 9.4% | 9.0% | 9.0% |
1 This announcement contains currency conversions of certain Renminbi (RMB) amounts into U.S. dollars (US$) at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.3556 to US$1.00, the effective noon buying rate as of September 30, 2015 in The City of New York for cable transfers of RMB as set forth in H.10 weekly statistical release of the Federal Reserve Board.
2 Active users are defined as users who made at least one purchase through CNpad App during the specified period.
3 Active customer accounts are defined as customer accounts that made at least one purchase directly through www.baoxian.com or its mobile application during the specified period.