Changyou.com Profit Drops, CFO To Leave - Update

(RTTNews) - Chinese online game developer Changyou.com (CYOU) Monday said fourth-quarter profit declined from the prior year, amid higher expenses, despite a rise in revenues. Separately, Changyou announced the resignation of its Chief Financial Officer Alex Ho.

Net income attributable to the company fell to $43.0 million or $0.81 per ADS from $75.16 million or $1.41 per ADS in the prior year.

On a non-GAAP basis, net income attributable to Changyou.com Ltd. totaled $0.82 per ADS, while it was $1.42 per ADS last year.

On average, 6 analysts polled by Thomson Reuters expected earnings per share of $0.38 for the quarter. Analysts' estimates typically exclude one-time items.

Total revenues grew to $194.9 million from $173.54 million last year. Analysts estimated revenues of $195.79 million for the quarter.

Online game revenues increased 9 percent to $172.0 million due to increased revenue from TLBB after the release of the major expansion pack "New TLBB."

Online advertising revenues jumped 35 percent to $16.9 million, as a result of an increase in advertising rates of the 17173 website during 2013.

Internet value-added services or IVAS revenues were 85 percent higher at $1.45 million owing to more web games and a higher number of users playing web games operated by the 17173 business.

Total operating expenses jumped to $130.44 million from $51 million in the prior year, largely due to increased expenses for Sales and marketing. Total average monthly active accounts of the company's games declined 34 percent to 25 million, mainly driven by a decline in active accounts of TLBB after the company closed down certain game accounts during the year to enhance the balance of the in-game economic system.

A decrease in active accounts of DDTank as the game has entered into a relatively mature phase, and a fall in active accounts of Wartune in China also contributed to the overall drop.

Total average monthly active accounts of the platform channels surged 93 percent to 149 million, due to the promotion, acquisition and launch of multiple software applications for PCs and mobile devices in the fourth quarter of 2013.

For the first quarter of 2014, non-GAAP net loss attributable to Changyou.com Ltd. is expected to be between $16 million and $22 million or between $0.30 and $0.42 per ADS.

Total revenues are expected to be between $174 million and $180 million, including online game revenues of $160 million - $165 million and online advertising revenues of $8 million - $9 million.

Analysts project first-quarter earnings per share of $1.00 on revenues of $198.79 million.

In a separate statement, Changyou announced the resignation of its Chief Financial Officer Alex Ho, who is leaving his position to start his own business. The resignation is effective March 4.

Erin Sheng, currently finance director at Changyou, would assume the role of interim CFO following Ho's departure. Changyou said it is searching for a permanent CFO.

Erin Sheng has been with Changyou since May 2008. She leads the finance department and is responsible for managing Changyou's daily financial operations in terms of financial reporting and planning, tax and treasury.

CYOU closed up 6.6 percent on Friday at $29.95.