Renren announces third quarter loss

By Yang Jing Source:Global Times Published: 2013-11-28 23:13:02



Renren Inc, a Chinese social networking Internet company listed on the New York Stock Exchange, announced its unaudited financial report of the third quarter of 2013 on Thursday, which indicated a net loss of $24.6 million with falling revenues from online gaming and advertising.

Renren earned total net revenue of $47.6 million, 5.6 percent lower than the corresponding period in 2012, including $41.1 million from the social network website and $6.5 million from, a group-buying website, according to the financial report.

The decreased revenue led to Renren incurring a net loss of $24.6 million in the third quarter, which was an increase of 59.7 percent from its loss in the same period in 2012.

"Revenues came within guidance in the third quarter," Joseph Chen Yizhou, chairman and CEO of Renren, said in the report.

The net revenue of in the third quarter of 2013 was $41.1 million, a decrease of 9.9 percent year-on-year, including $20.1 million gained by online gaming, 16.9 percent lower than the third quarter of last year, the report said.

The decrease of online gaming revenue was attributed to the company's games having reached mature stages and new games not having started to make profits, according to the report.

Currently, has about 67 online games, of which 16 are self-developed, Chen said in an earning conference call Thursday, noting all self-developed games have mobile app versions, news portal reported Thursday.

Compared with online advertising, online games can bring in profits faster after investment, Yang Xuebin, an analyst at Internet service consultancy iResearch, told the Global Times Thursday.

However, gaming service requires continuous investment for development and promotion, so it may be hard to last as a main profit source for, Yang said.

Online advertising brought in $14.9 million revenue in the third quarter, a decrease of 11.2 percent year-on-year, the report said, noting this was due to fierce competition and migration traffic to mobile Internet from PC.

The profitability of online advertising is decided by the value of the website [the ads are hosted on], Yang said, noting advertisers are willing to pay when the website's user population is big enough.

China's Twitter-like Weibo, which has a wide range of users, has put great pressure on, of which the majority of its users are students, Yang said.

Facebook was not threatened by Twitter as much as was by Weibo because, which started from imitating Facebook, has not built a solid development model, Li Meng, an analyst at consultancy Analysys International, told the Global Times Thursday.

In addition to online gaming and advertising, the company is also making inroads in mobile Internet with its latest mobile app released Tuesday, reported Wednesday, noting the new app is designed to attract the younger generations, implying plans to refocus on student users.

In the first half of this year, the company put a lot of efforts into developing the new app, which features special communication functions such as group talk and animation icons, Chen said at the earning conference.

But advertising on mobile Internet has not really started yet because there are not many customers willing to pay for mobile advertisements, Chen said, noting that commercialization of the mobile Internet will be a slow process.

Few Internet companies have mature business models for mobile Internet advertising, according to Yang, who also noted Renren will not make a quick move in the sector in order to avoid damaging users' experience.

It will be hard to promote advertisements on mobile Internet, with competitors such as WeChat make profits by charging for games and animated icons rather than advertisements, said Li.

Renren has covered many aspects, starting from social networking service mainly for students then to general users, moving on to online gaming and now mobile Internet, but it looks like it has not developed an outstanding selling point, Li said.

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