Changyou.com Earnings Cheat Sheet: Profit Rises by Double-Figures for Fifth Consecutive Quarter

Changyou.com Limited (NASDAQ:CYOU) reported net income above Wall Street’s expectations for the second quarter. The company is an online game developer and operator in China.

Get more Earnings Cheat Sheets with our in depth coverage of earnings season >>

Changyou.com Earnings Cheat Sheet for the Second Quarter

Results: Net income for the multimedia and graphics software company rose to $54.2 million ($1.02 per share) vs. $42.1 million (79 cents per share) in the same quarter a year earlier. This marks a rise of 28.8% from the year earlier quarter.

Revenue: Rose 35.1% to $105 million from the year earlier quarter.

Actual vs. Wall St. Expectations: CYOU reported adjusted net income of $1.04 per share. By that measure, the company beat the mean estimate of 92 cents per share. It beat the average revenue estimate of $98.8 million.

Quoting Management: Mr. Tao Wang, Changyou’s Chief Executive Officer, commented, “We posted record performance in the second quarter as total revenues exceeded $100 million. The continued success of our blockbuster Tian Long Ba Bu, or TLBB, has been supported by and carefully nurtured with the release of new content in mid-March and in early July that incorporates user feedback. A major expansion pack, TLBB3, is scheduled to be released in the latter half of this year as we aim to further extend its popularity and life cycle.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 28.2%, with the biggest boost coming in the most recent quarter when revenue rose 35.1% from the year earlier quarter.

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 4.4 percentage points to 86.6% from the year earlier quarter. Over that time, margins have contracted on average 3.4 percentage points per quarter on a year-over-year basis.

The company has now seen net income rise in three straight quarters. In the first quarter, net income rose 33.1% and in the fourth quarter of the last fiscal year, the figure rose 23.1%.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 7 cents in the first quarter, by 4 cents in the fourth quarter of the last fiscal year, and by 4 cents in the third quarter of the last fiscal year.

Competitors to Watch: The9 Limited (NASDAQ:NCTY), Shanda Games Limited (NASDAQ:GAME), Giant Interactive Group Inc (NYSE:GA), Perfect World Co., Ltd. (NASDAQ:PWRD), Shanda Interactive Entertainment Ltd ADR (NASDAQ:SNDA), NetEase.com, Inc. (NASDAQ:NTES), Gravity Co., LTD. (NASDAQ:GRVY), and Sohu.com Inc. (NASDAQ:SOHU).

Get more Earnings Cheat Sheets with our in depth coverage of earnings season >>

(Source: Xignite Financials)