Despite an increase in net revenue, Chinese social networking company Renren reported a net loss of US$21.1 million for the fourth quarter of 2012, a drop from a net profit of US$44.3 million in the same period the previous year.
In a statement Monday announcing its earnings for the quarter ended December 31, 2012, the Nasdaq-listed Renren attributed the drop to an increase in expenses in bandwidth, content and social-buying site Nuomi. The 2011 period was also boosted by a one-time US$51 million gain from the disposal of its investment in travel booking site eLong.
Without the results attributable to Nuomi in both quarters, net loss for the fourth quarter of 2012 was US$15.5 million.
Renren's net revenue for the period was US$48.8 million, a 48.8 percent jump from the corresponding period in 2011. Internet value-added services (IVAS) revenues soared 103.8 percent year-on-year to US$36.3 million. However online advertising revenues dipped 16.7 percent year-on-year to US$12.5 million.
The Chinese Internet company's cost of revenues increased 83.7 percent year-on-year to reach US$17.8 million. Renren explained the increased cost for the fourth quarter was largely due to increased bandwidth and content investments for its video streaming site 56.com as well as increased direct operating costs for launched games.
Renren's research and development (R&D) expenses jumped significantly at 84.2 percent year-on-year to reach US$25.5 million. The increase was largely due to headcount and personnel related expense increases, particularly for mobile-related investments, the company said.
Joseph Chen, chairman and CEO of Renren, said: "2012 was a year of investment and transition for Renren. We navigated through the opportunities and disruptions of mobile Internet and came out a stronger mobile-centric company.
"We made progress in our mobile initiatives by rapidly growing our mobile traffic on Renren, driving significant revenues from mobile related games and opening up a whole new dimension for mobile commerce on Nuomi. We are encouraged by these advances and will continue to push forward in expanding existing and new mobile opportunities," Chen said.
In the same statement, Renren announced its earnings for the financial year of 2012. The company saw a loss of US$75 million, compared with a net profit of US$41.3 million in 2011. Total net revenue for Renren in 2012 was US$176.1 million, a 49.3 percent jump year-on-year.
In the third quarter, Renren reported a wider net loss at US$15.4 million, compared with a net loss of US$1.2 in the previous year. It blamed this on an increase in bandwidth investments and game development costs.