Chinese social networking giant Renren has reported a net loss of US$24.9 million during the second quarter of 2012, down from a net income of US$0.8 million in the same period last year, due to rise in costs such as bandwidth and operating expenses.
On Tuesday, Renren said its revenues increased 47.5 percent year-on-year to reach US$44.8 million. Online game revenues jumped 122.1 percent to reach US$22.5 million, and its group buying service brought in US$3.6 million during the period, it noted. However, online advertising revenues dropped 10.5 percent from the same period in 2011 to reach US$15.1 million.
Joseph Chen, chairman and CEO of RenRen, said in the statement: "We are pleased that our total net revenues this quarter came in above our guidance, supported by strong game growth and a better-than-expected performance by our group-buying business--Nuomi."
However, earnings were dragged down by higher operating expenses, which more than doubled to US$50.1 million for the three months ended June. This was mainly due to a rise in wages, increased headcount and marketing costs.
"Brand advertising remained challenging, due to macro conditions, increased competition and the continued migration of our user traffic from PC to mobile," said Chen.
Thus, the company pointed out it would further invest in mobile opportunities. Chen said: "Looking ahead, our strategy remains focused on mobile opportunities, with increasing effort to experiment different monetization models, including mobile games, mobile advertising and mobile commerce through Nuomi."
The CEO noted that Renren's user base has continued to grow and has reached 162 million in the second quarter of 2012, up from 124 million during the same period in 2011. "Monthly unique log-in users also increased to 45 million in the month of June, representing 31 percent of year-over-year growth," he added.