Renren widens loss in Q3 to $15.4M

Chinese social networking company Renren has reported a wider net loss for its third quarter due to an increase in bandwidth investments and game development costs.

On Wednesday, Renren posted a net loss of US$15.4 million, compared with a net loss of US$1.2 million in the corresponding period last year.

This was despite a 47.2 percent year-over-year increase in total revenue at US$50.4 million. This was dragged down by cost of revenues which nearly tripled to US$19.5 million.

Higher value added, lower advertising
Growth came largely from Internet value-added services (IVAS) which contributed US$33.4 million, which was a 129.3 percent increase from the corresponding period of 2011.

Online game revenues brought in US$24.2 million which was a 120 percent increase. Renren explained this was driven by the growing popularity of several new in-house developed games which were recently launched.

Its group buy service, Nuomi, gained US$4.6 million in revenue.

However, its other key arm online advertising contributed US$17 million, down by 13.7 percent. Renren attributed the decrease to lower spending by brand advertisers "in a softer macro-environment, coupled by intensifying competition and continued migration of Renren's traffic from PC to mobile".

However, Renren chairman and CEO Joseph Chen, pointed out that the company had a "solid quarter of user growth".

"Our real-name user base continued to show healthy year-over-year expansion of 25 percent, as total activated users this quarter reached over 172 million, an increase of 35 million users from the same period a year ago," Chen said.

"Monthly unique log-in users also reached 48 million in the month of September, representing a 27 percent growth year-over-year," Chen added.

Renren's Chief Financial Officer Huang Hui noted that the company's "investments will continue to outpace the monetization progress in the near-term" but it remains committed to build long-term value.