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Youku Tudou Announces Fourth Quarter and Fiscal Year 2013 Unaudited Financial Results

February 27, 2014

Achieved Quarterly Non-GAAP Profitability; Mobile Monetization Reached 10%

BEIJING, Feb. 27, 2014 /PRNewswire/ — Youku Tudou Inc. (NYSE: YOKU, and formerly Youku Inc. or “Youku”), China’s leading Internet television company (“Youku Tudou” or the “Company”), today announced its unaudited financial results for fourth quarter and fiscal year 2013.

Basis of Presentation

On August 23, 2012, the Company and Tudou Holdings Limited (“Tudou”) announced the completion of the merger between Youku and Tudou. Following the completion of the merger, Tudou’s financial results were consolidated into the Company. Based on Youku’s review with Tudou management of Tudou’s publicly disclosed summary of significant accounting policies prior to the merger, certain adjustments to the historical statement of operations have been made to conform its accounting policies to those of Youku’s. Due to the fact that Tudou’s historical statements of operations for certain period of 2012 consist of stand-alone historical financial information without these adjustments, we do not believe that comparison of the Company’s fiscal year 2013 financial results with that of the fiscal year 2012 can be provided on a consistent basis.

Fourth Quarter 2013 Highlights[1]

    --  Net revenues were RMB901.3 million (US$148.9 million),a 42% increase
        from the corresponding period in 2012.
    --  Gross profit was RMB254.3 million (US$42.0 million), a 119% increase
        from the corresponding period in 2012. Non-GAAP gross profit is herein
        defined as gross profit excluding share-based compensation expenses and
        amortization of intangible assets from business combination in relation
        to user generated content.  Non-GAAP gross profit was RMB268.3 million
        (US$44.3 million) in the fourth quarter of 2013, an increase of 108%
        from the corresponding period in 2012.
    --  Net loss was RMB24.6 million (US$4.1 million), a 78% decrease from the
        corresponding period in 2012. Non-GAAP net profit or loss is herein
        defined as net loss excluding share-based compensation expenses,
        amortization of intangible assets from business combination and business
        combination related expenses. Non-GAAP net profit was RMB44.2 million
        (US$7.3 million) in the fourth quarter of 2013, as compared to a
        non-GAAP net loss of RMB62.3 million (US$10.3 million) for the
        corresponding period in 2012.
    --  Basic and diluted loss per ADS, each representing 18 Class A ordinary
        shares, for the fourth quarter of 2013 amounted to RMB0.15 (US$0.02) and
        RMB0.15 (US$0.02), respectively.
    --  Cash, cash equivalents, restricted cash and short-term investments
        totaled RMB3.2 billion (US$524.7 million) as of December 31, 2013.
    --  Acquisition of property and equipment for the fourth quarter of 2013 was
        RMB15.0 million (US$2.5 million).
    --  Acquisition of intangible assets for the fourth quarter of 2013 was
        RMB227.5 million (US$37.6 million).

Fiscal Year 2013 Highlights

    --  Net revenues were RMB3.0 billion (US$500.3 million).
    --  Gross profit was RMB541.1 million (US$89.4 million). Non-GAAP gross
        profit was RMB601.3 million (US$99.3 million).
    --  Net loss was RMB580.7 million (US$95.9 million). Non-GAAP net loss was
        RMB342.1million (US$56.5million).
    --  Basic and diluted loss per ADS, each representing 18 Class A ordinary
        shares, for 2013 amounted to RMB3.50 (US$0.58) and RMB3.50 (US$0.58),
        respectively.
    --  Acquisition of property and equipment in 2013 was RMB144.1 million
        (US$23.8 million).
    --  Acquisition of intangible assets in 2013 was RMB740.6 million (US$122.3
        million).

“The strong operational and financial performance recorded in the fourth quarter enabled Youku Tudou to achieve profitability on a combined basis for the first time in the company’s history. This milestone was achieved on the back of scale economics, strong operating leverage and solid execution,” stated Victor Koo, Chairman and Chief Executive Officer of Youku Tudou. “With dynamic rise in mobile traffic throughout 2013, our existing comprehensive content library and the two most recognized online video brands set Youku Tudou apart as China’s no. 1 multi-screen video company.”

Dele Liu, President of Youku Tudou, added, “As viewing content from multiple Internet-enabled devices increasingly becomes a social phenomenon in China, a diverse and comprehensive content mix is critical to elevating our media value and further expanding our leadership across China. We believe our most comprehensive content offering provides enlightening entertainment to hundreds of millions of users in China.”

Fourth Quarter 2013 Results

Net revenues were RMB901.3 million (US$148.9 million) in the fourth quarter of 2013, a 42% increase from the corresponding period in 2012 and exceeding the high end of the net revenues guidance previously announced by the Company. Advertising net revenues were RMB801.0 million (US$132.3 million), meeting the advertising net revenues guidance previously announced by the Company. The growth was primarily attributable to the increased use by brand advertisers of our advertising services as evidenced by the rising average spend per advertiser.

Bandwidth costs as a component of cost of revenues were RMB178.8 million (US$29.5 million)in the fourth quarter of 2013, representing 20% of net revenues, as compared to 26% of net revenues for the corresponding period in 2012.

Content costs as a component of cost of revenues were RMB353.7 million (US$58.4 million) in the fourth quarter of 2013, representing 39% of net revenues. Non-GAAP content costs, which is herein defined as content costs excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content, were RMB339.7million (US$56.1 million) in the fourth quarter of 2013, representing 38% of net revenues, as compared to 41% of net revenues for the corresponding period in 2012.

Gross profit was RMB254.3 million (US$42.0 million)in the fourth quarter of 2013, an increase of 119% from the corresponding period in 2012. Non-GAAP gross profit was RMB268.3 million (US$44.3 million) in the fourth quarter of 2013, an increase of 108% from the corresponding period in 2012 due to strong operating leverage.

Operating expenses were RMB333.4 million (US$55.1 million) in the fourth quarter of 2013, as compared to RMB245.0 million (US$40.5 million) of the corresponding period in 2012. Non-GAAP operating expenses, which is herein defined as operating expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to customer relationship, technology and non-compete provisions, were RMB278.5 million (US$46.0 million) in the fourth quarter of 2013, an increase of 35% from the corresponding period in 2012. Detailed discussion of each component of operating expenses is as follows:

Sales and marketing expenses were RMB216.4 million (US$35.8 million) in the fourth quarter of 2013, as compared to RMB107.8 million (US$17.8 million) of the corresponding period in 2012. Non-GAAP sales and marketing expenses, which is herein defined as sales and marketing expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to customer relationship, were RMB195.8 million (US$32.3 million) in the fourth quarter of 2013, an increase of 106% from the corresponding period in 2012. This increase was primarily due to year-end advertising related promotion expenses and marketing expenditures on our mobile products.

Product development expenses were RMB76.5 million (US$12.6 million) in the fourth quarter of 2013, as compared to RMB64.1 million (US$10.6 million) for the corresponding period in 2012. Non-GAAP product development expenses, which is herein defined as product development expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to technology, were RMB61.3 million (US$10.1 million) in the fourth quarter of 2013, an increase of 13% from the corresponding period in 2012. This increase was primarily due to an increase in personnel related expenses for our product development in mobile, search, social and paid-services.

General and administrative expenses were RMB40.4 million (US$6.7 million) in the fourth quarter of 2013, as compared to RMB73.1 million (US$12.1 million) for the corresponding period in 2012. Non-GAAP general and administrative expenses, which is herein defined as general and administrative expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to non-compete provisions, were RMB21.4 million (US$3.5 million) in the fourth quarter of 2013, a decrease of 62% from the corresponding period in 2012.

Net loss was RMB24.6 million (US$4.1 million)in the fourth quarter of 2013, a decrease of 78% compared to RMB113.6 million (US$18.8 million) for the corresponding period in 2012. Non-GAAP net profit was RMB44.2 million (US$7.3 million) in the fourth quarter of 2013, as compared to a non-GAAP net loss of RMB62.3 million (US$10.3 million) for the corresponding period in 2012.

Non-GAAP adjusted EBITDA Profit, which is herein defined as net loss before income taxes, interest expenses, interest income, depreciation and amortization (excluding amortization of acquired content), further adjusted for share-based compensation expenses, amortization of intangible assets from business combination related expenses and other non-operating items, was RMB36.8 million (US$6.1 million) in the fourth quarter of 2013, as compared to a non-GAAP adjusted EBITDA loss of RMB46.1 million (US$7.6 million) for the corresponding period in 2012.

Fiscal Year 2013 Results

Net revenues were RMB3.0 billion (US$500.3 million).

Bandwidth costs as a component of cost of revenues were RMB685.7 million (US$113.3 million), representing 23% of net revenues.

Content costs as a component of cost of revenues were RMB1.4 billion (US$235.0 million), representing 47% of net revenues.

Gross profit was RMB541.1 million (US$89.4 million). Non-GAAP gross profit was RMB601.3 million (US$99.3 million).

Operating expenses were RMB1.2 billion (US$201.7 million). Non-GAAP operating expenses were RMB1.0 billion (US$172.2 million). Detailed discussion of each component of operating expenses is as follows:

Sales and marketing expenses were RMB681.0 million (US$112.5 million). Non-GAAP sales and marketing expenses were RMB619.0 million (US$102.3 million).

Product development expenses were RMB278.0 million (US$45.9 million). Non-GAAP product development expenses were RMB232.0 million (US$38.3 million).

General and administrative expenses were RMB261.8 million (US$43.2 million). Non-GAAP general and administrative expenses were RMB191.5 million (US$31.6 million).

Net loss was RMB580.7 million (US$95.9 million). Non-GAAP net loss was RMB342.1 million (US$56.5 million).

Non-GAAP adjusted EBITDA loss was RMB309.5 million (US$51.1 million).

Business Outlook

For the first quarter of 2014, the Companyexpects net revenues will be between RMB680 million and RMB720 million, with advertising net revenues contributing between RMB600 million and RMB640 million. This forecast reflects the Company’s current and preliminary view, which is subject to change.

Conference Call Information

Youku Tudou’s management will host an earnings conference call at 8:00 p.m. U.S. Eastern Time on February 27, 2014 (9:00 a.m. Beijing/Hong Kong Time on February 28, 2014).

Interested parties may participate in the conference call by dialing one of the following numbers below and entering passcode Youku# (i.e., 96858#) starting 10-15 minutes prior to the beginning of the call.

US Toll Free Dial In: 1-866-519-4004

International Dial In: 1-718-354-1231

Mainland China Toll Free Dial In: 86-4006208038 / 86-8008190121

Hong Kong Dial In: 852-2475-0994

A replay of the call will be available by dialing +61 2 8199 0299 and entering passcode 1592223#. The replay will be available through March 8, 2014.

This call will be webcast live and the replay will be available for 12 months. Both will be available on the Investor Relations section of Youku Tudou’s corporate website at http://ir.youku.com.

About Youku Tudou Inc.

Youku Tudou Inc. (NYSE: YOKU) is China’s leading Internet television company. Its Youku and Tudou Internet television platforms enable users to search, view and share high-quality video content quickly and easily across multiple devices. Its Youku brand and Tudou brand are among the most recognized online video brands in China. Youku Tudou’s American depositary shares, each representing 18 of Youku Tudou’s Class A ordinary shares, are traded on the NYSE under the symbol “YOKU.”

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Youku Tudou’s strategic and operational plans, contain forward-looking statements. Youku Tudou may also make written or oral forward-looking statements in its filings with the U.S. Securities and Exchange Commission (“SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Youku Tudou’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our goals and strategies; our future business development, financial condition and results of operations; the expected growth of the online video market in China; our expectations regarding demand for and market acceptance of our services; our expectations regarding the retention and strengthening of our relationships with key advertisers and customers; our plans to enhance user experience, infrastructure and service offerings; competition in our industry in China; and relevant government policies and regulations relating to our industry. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Youku Tudou does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Youku Tudou’s financial results presented in accordance with United States Generally Accepted Accounting Principles (“GAAP”), Youku Tudou uses the following measures defined as non-GAAP financial measures by the SEC in evaluating its business: non-GAAP content costs, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP sales and marketing expenses, non-GAAP product development expenses, non-GAAP general and administrative expenses, non-GAAP profit or loss from operations, non-GAAP net profit or loss and non-GAAP EBITDA profit or loss. We define non-GAAP content costs as content costs excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content. We define non-GAAP gross profit or loss as the respective nearest comparable GAAP financial measure to exclude share-based compensation expenses and amortization of intangible assets from business combination in relation to user generated content. We define non-GAAP operating expenses as operating expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to customer relationship, technology and non-compete provisions. We define non-GAAP sales and marketing expenses as sales and marketing expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to customer relationship. We define non-GAAP product development expense as product development expenses excluding share-based compensation expenses and amortization of intangible assets from business combination in relation to technology. We define non-GAAP general and administrative expenses as general and administrative expenses excluding share-based compensation expenses, business combination related expenses and amortization of intangible assets from business combination in relation to non-compete provisions. We define non-GAAP profit or loss from operations as profit or loss from operations excluding share-based compensation expenses, amortization of intangible assets from business combination and business combination related expenses. We define non-GAAP net profit or loss as net loss excluding share-based compensation expenses, amortization of intangible assets from business combination and business combination related expenses. We define non-GAAP EBITDA profit or loss as net profit or loss before income taxes, interest expenses, interest income, depreciation and amortization (excluding amortization of acquired content), further adjusted for share-based compensation expenses, amortization of intangible assets from business combination, business combination related expenses and other non-operating items.

We present non-GAAP financial measures because they are used by our management to evaluate our operating performance. We also believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies. A limitation of using non-GAAP financial measures is that non-GAAP measures exclude share-based compensation charges that have been and will continue to be significant recurring expenses in Youku Tudou’s business for the foreseeable future.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP financial measures” at the end of this release.

For more information, please contact:

Ryan Cheung

Corporate Finance Director

Youku Tudou Inc.

Tel: (+8610) 5885-1881 x6090

Email: ryan.cheung@youku.com



    [1] The reporting currency of the Company is Renminbi ("RMB"), but for the convenience of the reader, the amounts presented
        throughout the release are in US dollars ("US$"). Unless otherwise noted, all conversions from RMB to US$ are made at a rate of
        RMB6.0537 to US$1.00, the effective noon buying rate as of December 31, 2013 in the City of New York for cable transfers of
        RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB
        amounts could have been, or could be, converted into US$ at such rate.


    YOUKU TUDOU INC.

    CONSOLIDATED BALANCE SHEETS

    (Amounts in thousands, except for number of shares)                                                                              As of December 31,
    --------------------------------------------------                                                                               ------------------

                                                                                                             2012 2013                    2013
                                                                                                             ---- ----                    ----

                                                                                                                   RMB                     RMB                        US$

    ASSETS                                                                                                                         (Unaudited)                (Unaudited)

    Current assets:

                                          Cash and cash equivalents                                                     1,655,857                  1,764,221                291,429

                                          Restricted cash                                                                   9,003                      2,679                    443

                                          Short-term investments                                                        2,110,073                  1,409,439                232,823

                                          Accounts receivable, net                                                        932,796                  1,370,031                226,313

                                          Intangible assets, net                                                           19,607                     51,942                  8,580

                                          Deferred tax assets                                                              10,470                      7,843                  1,296

                                          Prepayments and other assets                                                     64,909                     82,300                 13,595

    Total current assets                                                                                                4,802,715                  4,688,455                774,479

    Non-current assets:

                                          Property and equipment, net                                                     200,681                    222,229                 36,710

                                          Intangible assets, net                                                        1,304,923                  1,197,671                197,841

                                          Capitalized content production costs                                                  -                      1,176                    194

                                          Prepayments and other assets                                                    229,185                    197,856                 32,683

                                          Goodwill                                                                      4,255,570                  4,262,569                704,126

    Total non-current assets                                                                                            5,990,359                  5,881,501                971,554
                                                                                                                        ---------                  ---------                -------

    TOTAL ASSETS                                                                                                       10,793,074                 10,569,956              1,746,033
                                                                                                                       ==========                 ==========              =========

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities:

                                          Accounts payable                                                                181,878                    213,825                 35,321

                                          Advances from customers                                                          21,603                     25,081                  4,143

                                          Accrued expenses and other liabilities                                          981,353                  1,124,342                185,729

                                          Current portion of long-term debt                                                 7,441                          -                      -

    Total current liabilities                                                                                           1,192,275                  1,363,248                225,193

    Non-current liabilities?

                                          Deferred tax liability                                                          224,374                    219,519                 36,262

                                          Other liabilities                                                                19,552                      4,070                    672

    Total non-current liabilities                                                                                         243,926                    223,589                 36,934
                                                                                                                          -------                    -------                 ------

    Total liabilities                                                                                                   1,436,201                  1,586,837                262,127

    Commitments and contingencies

    Shareholders' equity?

                                          Class A Ordinary Shares (US$0.00001 par value, 9,340,238,793                        149                        154                     25

                                          authorized, 2,286,643,502 and 2,356,529,401 issued and outstanding

                                          as of December 31, 2012 and 2013, respectively)

                                          Class B Ordinary Shares (US$0.00001 par value, 659,761,207                           49                         49                      8

                                          authorized, 659,561,893 and 659,561,893 issued and outstanding as

                                          of December 31, 2012 and 2013, respectively)

                                          Additional paid-in capital                                                   10,768,204                 11,058,360              1,826,711

                                          Statutory reserves                                                                1,500                      2,063                    341

                                          Accumulated deficit                                                          (1,297,147)                (1,878,454)              (310,298)

                                          Accumulated other comprehensive loss                                           (115,882)                  (199,053)               (32,881)

    Total shareholders' equity                                                                                          9,356,873                  8,983,119              1,483,906
                                                                                                                        ---------                  ---------              ---------

    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                                         10,793,074                 10,569,956              1,746,033
                                                                                                                       ==========                 ==========              =========


     YOUKU TUDOU INC.

     CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

                                                                                                                                                                                                                                 For the Three Months Ended                                                                                    For the Twelve Months Ended
                                                                                                                                                                                                                                --------------------------                                                                                     ---------------------------

    (Amounts in thousands, except for  number of shares and ADS and per share and per

    ADS data)
    --------

                                                                                                                                                                                          December 31, 2012                                                 September 30, 2013                                                                                                                                                                   December 31, 2012                                                 December 31, 2013                                                 December 31, 2013

                                                                                                                                                                                                                                                                                December 31, 2013                                         December 31, 2013

                                                                                                                                                                                                                                                       RMB                                                                  RMB                                                     RMB                                                     US$                                                               RMB                                                               RMB                                                                                           US$

                                                                                                                                                                                                                                               (Unaudited)                                                          (Unaudited)                                             (Unaudited)                                             (Unaudited)                                                                                                                         (Unaudited)                                                                                   (Unaudited)

    Net revenues                                                                                                                                                                                                                                   635,831                                                              857,743                                                 901,287                                                 148,882                                                         1,795,575                                                         3,028,484                                                                                       500,271

    Cost of revenues (Note 1)                                                                                                                                                                                                                     (519,544)                                                            (775,436)                                               (646,938)                                               (106,867)                                                       (1,499,536)                                                       (2,487,421)                                                                                     (410,893)
                                                                                                                                                                                                                                                  --------                                                             --------                                                --------                                                --------                                                        ----------                                                        ----------                                                                                      --------

    Gross profit                                                                                                                                                                                                                                   116,287                                                               82,307                                                 254,349                                                  42,015                                                           296,039                                                           541,063                                                                                        89,378

    Operating expenses:

           Product development                                                                                                                                                                                                                     (64,099)                                                             (78,622)                                                (76,514)                                                (12,639)                                                         (172,885)                                                         (278,015)                                                                                      (45,925)

           Sales and marketing                                                                                                                                                                                                                    (107,787)                                                            (171,763)                                               (216,444)                                                (35,754)                                                         (363,707)                                                         (681,008)                                                                                     (112,494)

           General and administrative                                                                                                                                                                                                              (73,084)                                                             (62,458)                                                (40,393)                                                 (6,672)                                                         (238,112)                                                         (261,770)                                                                                      (43,241)

    Total operating expenses                                                                                                                                                                                                                      (244,970)                                                            (312,843)                                               (333,351)                                                (55,065)                                                         (774,704)                                                       (1,220,793)                                                                                     (201,660)
                                                                                                                                                                                                                                                  --------                                                             --------                                                --------                                                 -------                                                          --------                                                        ----------                                                                                      --------

    Loss from operations                                                                                                                                                                                                                          (128,683)                                                            (230,536)                                                (79,002)                                                (13,050)                                                         (478,665)                                                         (679,730)                                                                                     (112,282)

    Interest income                                                                                                                                                                                                                                  9,988                                                                7,284                                                   8,419                                                   1,391                                                            45,478                                                            29,972                                                                                         4,950

    Interest expenses                                                                                                                                                                                                                                 (830)                                                                   -                                                       -                                                       -                                                            (3,989)                                                             (545)                                                                                          (90)

    Other, net                                                                                                                                                                                                                                       1,043                                                                4,694                                                  46,878                                                   7,744                                                             9,757                                                            70,573                                                                                        11,658
                                                                                                                                                                                                                                                     -----                                                                -----                                                  ------                                                   -----                                                             -----                                                            ------                                                                                        ------

    Total other income, net                                                                                                                                                                                                                         10,201                                                               11,978                                                  55,297                                                   9,135                                                            51,246                                                           100,000                                                                                        16,518

    Loss before income taxes                                                                                                                                                                                                                      (118,482)                                                            (218,558)                                                (23,705)                                                 (3,915)                                                         (427,419)                                                         (579,730)                                                                                      (95,764)

    Income taxes                                                                                                                                                                                                                                     4,912                                                                  (80)                                                   (876)                                                   (145)                                                            3,416                                                            (1,014)                                                                                         (168)
                                                                                                                                                                                                                                                     -----                                                                  ---                                                    ----                                                    ----                                                             -----                                                            ------                                                                                          ----

    Net loss                                                                                                                                                                                                                                      (113,570)                                                            (218,638)                                                (24,581)                                                 (4,060)                                                         (424,003)                                                         (580,744)                                                                                      (95,932)
                                                                                                                                                                                                                                                  ========                                                             ========                                                 =======                                                  ======                                                          ========                                                          ========                                                                                       =======

    Other comprehensive loss, before tax

                Foreign currency translation adjustments                                                                                                                                                                                           (20,647)                                                             (10,547)                                                (33,201)                                                 (5,484)                                                           (7,304)                                                          (83,171)                                                                                      (13,739)
                                                                                                                                                                                                                                                   -------                                                              -------                                                 -------                                                  ------                                                            ------                                                           -------                                                                                       -------

    Other comprehensive loss, before tax                                                                                                                                                                                                           (20,647)                                                             (10,547)                                                (33,201)                                                 (5,484)                                                           (7,304)                                                          (83,171)                                                                                      (13,739)

    Income tax expense related to components of other comprehensive loss                                                                                                                                                                                 -                                                                    -                                                       -                                                       -                                                                 -                                                                 -                                                                                             -
                                                                                                                                                                                                                                                       ---                                                                  ---                                                     ---                                                     ---                                                               ---                                                               ---                                                                                           ---

    Other comprehensive loss, net of tax                                                                                                                                                                                                           (20,647)                                                             (10,547)                                                (33,201)                                                 (5,484)                                                           (7,304)                                                          (83,171)                                                                                      (13,739)
                                                                                                                                                                                                                                                   =======                                                              =======                                                 =======                                                  ======                                                            ======                                                           =======                                                                                       =======

                                                                                                                                                                                                                                                                                                                                                                                                                                              0                                                                                                                                                                                                                                 0

    Net loss per share, basic and diluted                                                                                                                                                                                                            (0.04)                                                               (0.07)                                                  (0.01)                                                  (0.00)                                                            (0.18)                                                            (0.19)                                                                                        (0.03)

    Net loss per ADS (each ADS represents 18 class A ordinary shares),                                                                                                                                                                               (0.69)                                                               (1.31)                                                  (0.15)                                                  (0.02)                                                            (3.20)                                                            (3.50)                                                                                        (0.58)
            basic and diluted

    Shares used in computation, basic and diluted                                                                                                                                                                                            2,944,902,156                                                        2,995,701,280                                           3,010,627,513                                           3,010,627,513                                                     2,386,474,188                                                     2,986,223,088                                                                                 2,986,223,088

    ADSs used in computation, basic and diluted                                                                                                                                                                                                163,605,675                                                          166,427,848                                             167,257,084                                             167,257,084                                                       132,581,899                                                       165,901,282                                                                                   165,901,282


    The accompanying notes are an integral part of the press release.

    Note 1. Cost of Revenues                                                         For the Three Months Ended                                                For the Twelve Months Ended
                                                                                     --------------------------                                                ---------------------------

                                                                      December 31, 2012                             September 30, 2013                                                                                         December 31, 2012           December 31, 2013             December 31, 2013

                                                                                                                                                   December 31, 2013                             December 31, 2013
                                                                                                                                                   -----------------                             -----------------

                                                                                                                RMB                            RMB                                           RMB                           US$                         RMB                           RMB                           US$

    (Amounts in thousands)                                                                              (Unaudited)                    (Unaudited)                                   (Unaudited)                   (Unaudited)                                               (Unaudited)                   (Unaudited)

     Cost of revenues:

     Value added, business taxes and surcharges                                                              59,337                         75,480                                        77,758                        12,845                     169,283                       276,497                        45,674

     Bandwidth costs                                                                                        162,959                        181,670                                       178,824                        29,540                     524,623                       685,650                       113,261

     Depreciation of servers and other equipment                                                             26,303                         21,827                                        36,686                         6,060                      68,569                       102,367                        16,910

     Content costs                                                                                          270,945                        496,459                                       353,670                        58,422                     737,061                     1,422,907                       235,048

     Total Cost of Revenues                                                                                 519,544                        775,436                                       646,938                       106,867                   1,499,536                     2,487,421                       410,893
                                                                                                            =======                        =======                                       =======                       =======                   =========                     =========                       =======


     YOUKU TUDOU INC.

     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                                                                                              For the Three Months Ended                            For the Twelve Months Ended
                                                                                                                                                                              --------------------------                           ---------------------------

    (Amounts in thousands)
    ---------------------

                                                                                              December 31, 2012                                                                                          September 30, 2013              December 31, 2013               December 31, 2013               December 31, 2012               December 31, 2013       December 31, 2013
                                                                                              -----------------                                                                                          ------------------              -----------------               -----------------               -----------------               -----------------       -----------------

                                                                                                                                                                                                                                    RMB                              RMB                             RMB                             US$                     RMB                             RMB                     US$

                                                                                                                                                                                                                            (Unaudited)                      (Unaudited)                     (Unaudited)                     (Unaudited)                                             (Unaudited)             (Unaudited)

    Cash flows from operating activities:

    Net loss                                                                                                                                                                                                                                       (113,570)                       (218,638)                        (24,581)                         (4,060)               (424,003)               (580,744)              (95,932)

    Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

                                                                                              Depreciation and impairment of fixed assets                                                                                                            31,249                          30,342                          46,972                           7,759                  81,609                 131,611                21,741

                                                                                              Bad debt expense                                                                                                                                       (1,828)                         19,945                          25,547                           4,220                   9,887                  62,603                10,341

                                                                                              Amortisation and impairment of intangible assets and capitalized content production costs                                                             135,508                         327,334                         225,109                          37,185                 416,396                 867,957               143,376

                                                                                              Amortization of long-term debt discounts                                                                                                                  336                               -                               -                               -                   1,928                     313                    52

                                                                                              Gain on disposal of  property and equipment                                                                                                                 -                             788                            (353)                            (58)                     52                     485                    80

                                                                                              Foreign exchange loss (gain)                                                                                                                              826                           2,540                         (15,336)                         (2,533)                    469                 (13,318)               (2,200)

                                                                                              Share-based compensation                                                                                                                               38,779                          48,918                          53,061                           8,764                 118,218                 188,358                31,114

                                                                                              Gain form remeasurement of previously held investment in acquired subsidiary                                                                                -                               -                               -                               -                  (3,344)                      -                     -

                                                                                              Deferred income tax benefits                                                                                                                           (7,675)                              -                          (4,414)                           (729)                 (9,953)                 (4,414)                 (729)

                                                                                              Write-off of prepayment                                                                                                                                 8,510                               -                               -                               -                       -                       -                     -

                                                                                              Gain from de-recognition of off-market liabilities                                                                                                          -                               -                         (16,540)                         (2,732)                      -                 (16,540)               (2,732)

                                                                                              Changes in operating assets and liabilities:

                                                                                                       Restricted cash                                                                                                                                    -                           6,759                          (1,129)                           (186)                 (9,003)                  6,324                 1,045

                                                                                                      Accounts receivable                                                                                                                            73,149                        (161,184)                        (10,312)                         (1,703)               (223,772)               (499,838)              (82,567)

                                                                                                      Prepayments and other assets                                                                                                                  (20,831)                         37,051                         (58,751)                         (9,705)                 20,182                   1,441                   238

                                                                                                      Capitalized content production costs                                                                                                            5,761                          (3,004)                         22,687                           3,748                  (9,891)                 (6,738)               (1,113)

                                                                                                      Accounts payable                                                                                                                              (22,506)                            702                         (15,572)                         (2,572)                (39,023)                (13,555)               (2,239)

                                                                                                      Advances from customers                                                                                                                       (23,022)                          9,918                         (40,717)                         (6,726)                 (7,244)                  3,478                   576

                                                                                                      Accrued expenses and other liabilities                                                                                                         53,987                          20,027                          21,519                           3,553                 214,912                 142,060                23,464

    Net cash provided by  operating activities                                                                                                                                                                                                      158,673                         121,498                         207,190                          34,225                 137,420                 269,483                44,515

    Cash flows from investing activities:

                                                                                              Acquisition of property and equipment                                                                                                                 (24,364)                        (67,252)                        (14,955)                         (2,470)                (90,204)               (144,120)              (23,807)

                                                                                              Proceeds received from maturity of short-term investments                                                                                           1,170,519                       1,358,761                       1,018,628                         168,265               2,826,023               2,989,628               493,851

                                                                                              Short-term investments placed with financial institutions                                                                                          (2,113,464)                     (1,405,173)                              -                               -              (3,536,711)             (2,283,410)             (377,192)

                                                                                              Proceeds from disposal of property and equipment                                                                                                            1                               -                            (824)                           (136)                      9                     458                    76

                                                                                              Cash acquired, net of cash paid for acquired subsidiaries                                                                                                   -                               -                          (6,999)                         (1,156)                378,666                  (6,999)               (1,156)

                                                                                              Acquisition of intangible assets from related party                                                                                                     7,200                               -                               -                               -                       -                       -                     -

                                                                                              Acquisition of intangible assets                                                                                                                     (118,256)                       (171,620)                       (227,540)                        (37,587)               (361,976)               (740,581)             (122,335)

    Net cash (used in) provided by investing activities                                                                                                                                                                                          (1,078,364)                       (285,284)                        768,310                         126,916                (784,193)               (185,024)              (30,563)

    Cash flows from financing activities:

                                                                                              Exercise of employee stock options                                                                                                                      3,561                          27,676                           9,084                           1,501                  22,485                 101,435                16,756

                                                                                              Proceeds from restricted cash                                                                                                                          25,364                               -                               -                               -                  38,069                       -                     -

                                                                                              Principal repayments on long-term debt                                                                                                                (23,685)                         (1,111)                              -                               -                 (11,145)                 (7,677)               (1,268)

                                                                                              Principal repayments on short-term loan                                                                                                                     -                               -                               -                               -                 (31,544)                      -                     -

    Net cash  provided by financing activities                                                                                                                                                                                                        5,240                          26,565                           9,084                           1,501                  17,865                  93,758                15,488

    Effect of exchange rate changes on cash and cash equivalents                                                                                                                                                                                    (21,474)                        (13,087)                        (17,865)                         (2,951)                 (7,773)                (69,853)              (11,539)
                                                                                                                                                                                                                                                    -------                         -------                         -------                          ------                  ------                 -------               -------

    Net (decrease) increase in cash and cash equivalents                                                                                                                                                                                           (935,925)                       (150,308)                        966,719                         159,691                (636,681)                108,364                17,901

    Cash and cash equivalents at the beginning of the period                                                                                                                                                                                      2,591,782                         947,810                         797,502                         131,738               2,292,538               1,655,857               273,528

    Cash and cash equivalents at the end of the period                                                                                                                                                                                            1,655,857                         797,502                       1,764,221                         291,429               1,655,857               1,764,221               291,429
                                                                                                                                                                                                                                                  =========                         =======                       =========                         =======               =========               =========               =======


    Reconciliations of Non-GAAP results of operations measures to the nearest comparable GAAP financial measures (1)(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"), unaudited)

     1. Non-GAAP Content Costs                                                                                                                                                          For the Three Months Ended                                          For the Twelve Months Ended
                                                                                                                                                                                       --------------------------                                           ---------------------------

                                                                                                                                                                        December 31, 2012                              September 30, 2013           December 31, 2013                              December 31, 2013          December 31, 2012           December 31, 2013            December 31, 2013
                                                                                                                                                                        -----------------                              ------------------           -----------------                              -----------------          -----------------           -----------------            -----------------

                                                                                                                                                                                                                  RMB                          RMB                                          RMB                          US$                         RMB                          RMB                         US$

    Content costs                                                                                                                                                                                             270,945                      496,459                                      353,670                       58,422                     737,061                    1,422,907                     235,048

     Deduct: share-based compensation                                                                                                                                                                           4,536                       12,136                                        7,846                        1,296                      12,751                       32,110                       5,304

     Deduct: amortization of intangible assets from business combination                                                                                                                                        8,235                        5,984                                        6,100                        1,008                      26,472                       28,156                       4,651

    Non-GAAP content costs                                                                                                                                                                                    258,174                      478,339                                      339,724                       56,118                     697,838                    1,362,641                     225,093
                                                                                                                                                                                                              =======                      =======                                      =======                       ======                     =======                    =========                     =======

    2. Non-GAAP Gross Profit                                                                                                                                                          For the Three Months Ended                                       For the Twelve Months Ended
                                                                                                                                                                                     --------------------------                                        ---------------------------

                                                                                                                                                                        December 31, 2012                              September 30, 2013           December 31, 2013                              December 31, 2013          December 31, 2012           December 31, 2013            December 31, 2013
                                                                                                                                                                        -----------------                              ------------------           -----------------                              -----------------          -----------------           -----------------            -----------------

                                                                                                                                                                                                                  RMB                          RMB                                          RMB                          US$                         RMB                          RMB                         US$

    Gross profit                                                                                                                                                                                              116,287                       82,307                                      254,349                       42,015                     296,039                      541,063                      89,378

     Add back: share-based compensation                                                                                                                                                                         4,536                       12,136                                        7,846                        1,296                      12,751                       32,110                       5,304

     Add back: amortization of intangible assets from business combination                                                                                                                                      8,235                        5,984                                        6,100                        1,008                      26,472                       28,156                       4,651

    Non-GAAP gross profit                                                                                                                                                                                     129,058                      100,427                                      268,295                       44,319                     335,262                      601,329                      99,333
                                                                                                                                                                                                              =======                      =======                                      =======                       ======                     =======                      =======                      ======

     3. Non-GAAP Operating Expenses                                                                                                                                                   For the Three Months Ended                                       For the Twelve Months Ended
                                                                                                                                                                                     --------------------------                                        ---------------------------

                                                                                                                                                                        December 31, 2012                              September 30, 2013           December 31, 2013                              December 31, 2013          December 31, 2012           December 31, 2013            December 31, 2013
                                                                                                                                                                        -----------------                              ------------------           -----------------                              -----------------          -----------------           -----------------            -----------------

                                                                                                                                                                                                                  RMB                          RMB                                          RMB                          US$                         RMB                          RMB                         US$

    Operating expenses                                                                                                                                                                                        244,970                      312,843                                      333,351                       55,065                     774,704                    1,220,793                     201,660

     Deduct: share-based compensation                                                                                                                                                                          34,243                       36,782                                       45,215                        7,468                     105,467                      156,248                      25,810

     Deduct: business combination related expenses                                                                                                                                                                127                            -                                            -                            -                      28,754                            -                           -

     Deduct: amortization of intangible assets from business combination                                                                                                                                        4,176                        4,155                                        9,623                        1,589                       5,885                       22,088                       3,648

    Non-GAAP  operating expenses                                                                                                                                                                              206,424                      271,906                                      278,513                       46,008                     634,598                    1,042,457                     172,202
                                                                                                                                                                                                              =======                      =======                                      =======                       ======                     =======                    =========                     =======

    4. Non-GAAP Sales and Marketing Expenses                                                                                                                                          For the Three Months Ended                                       For the Twelve Months Ended
                                                                                                                                                                                     --------------------------                                        ---------------------------

                                                                                                                                                                        December 31, 2012                              September 30, 2013           December 31, 2013                              December 31, 2013          December 31, 2012           December 31, 2013            December 31, 2013
                                                                                                                                                                        -----------------                              ------------------           -----------------                              -----------------          -----------------           -----------------            -----------------

                                                                                                                                                                                                                  RMB                          RMB                                          RMB                          US$                         RMB                          RMB                         US$

    Sales and marketing expenses                                                                                                                                                                              107,787                      171,763                                      216,444                       35,754                     363,707                      681,008                     112,494

     Deduct: share-based compensation                                                                                                                                                                          10,606                       12,366                                       15,577                        2,573                      28,741                       50,712                       8,377

     Deduct: amortization of intangible assets from business combination                                                                                                                                        2,087                        2,077                                        5,077                          839                       2,941                       11,308                       1,867

    Non-GAAP  sales and marketing expenses                                                                                                                                                                     95,094                      157,320                                      195,790                       32,342                     332,025                      618,988                     102,250
                                                                                                                                                                                                               ======                      =======                                      =======                       ======                     =======                      =======                     =======

    5. Non-GAAP Product Development Expenses                                                                                                                                          For the Three Months Ended                                       For the Twelve Months Ended
                                                                                                                                                                                     --------------------------                                        ---------------------------

                                                                                                                                                                        December 31, 2012                              September 30, 2013           December 31, 2013                              December 31, 2013          December 31, 2012           December 31, 2013            December 31, 2013
                                                                                                                                                                        -----------------                              ------------------           -----------------                              -----------------          -----------------           -----------------            -----------------

                                                                                                                                                                                                                  RMB                          RMB                                          RMB                          US$                         RMB                          RMB                         US$

    Product development expenses                                                                                                                                                                               64,099                       78,622                                       76,514                       12,639                     172,885                      278,015                      45,925

     Deduct: share-based compensation                                                                                                                                                                           8,408                        9,748                                       11,795                        1,948                      26,157                       38,400                       6,343

     Deduct: amortization of intangible assets from business combination                                                                                                                                        1,402                        1,395                                        3,411                          563                       1,976                        7,596                       1,255

    Non-GAAP  product development expenses                                                                                                                                                                     54,289                       67,479                                       61,308                       10,128                     144,752                      232,019                      38,327
                                                                                                                                                                                                               ======                       ======                                       ======                       ======                     =======                      =======                      ======

    6. Non-GAAP General and Administrative Expenses                                                                                                                                   For the Three Months Ended                                       For the Twelve Months Ended
                                                                                                                                                                                     --------------------------                                        ---------------------------

                                                                                                                                                                        December 31, 2012                              September 30, 2013           December 31, 2013                              December 31, 2013          December 31, 2012           December 31, 2013            December 31, 2013
                                                                                                                                                                        -----------------                              ------------------           -----------------                              -----------------          -----------------           -----------------            -----------------

                                                                                                                                                                                                                  RMB                          RMB                                          RMB                          US$                         RMB                          RMB                         US$

    General and administrative expenses                                                                                                                                                                        73,084                       62,458                                       40,393                        6,672                     238,112                      261,770                      43,241

     Deduct: share-based compensation                                                                                                                                                                          15,229                       14,668                                       17,843                        2,947                      50,569                       67,136                      11,090

     Deduct: business combination related expenses                                                                                                                                                                127                            -                                            -                            -                      28,754                            -                           -

     Deduct: amortization of intangible assets from business combination                                                                                                                                          687                          683                                        1,135                          187                         968                        3,184                         526

    Non-GAAP  general and administrative expenses                                                                                                                                                              57,041                       47,107                                       21,415                        3,538                     157,821                      191,450                      31,625
                                                                                                                                                                                                               ======                       ======                                       ======                        =====                     =======                      =======                      ======

    7. Non-GAAP Loss from Operations                                                                                                                                                  For the Three Months Ended                                       For the Twelve Months Ended
                                                                                                                                                                                     --------------------------                                        ---------------------------

                                                                                                                                                                        December 31, 2012                              September 30, 2013           December 31, 2013                              December 31, 2013          December 31, 2012           December 31, 2013            December 31, 2013
                                                                                                                                                                        -----------------                              ------------------           -----------------                              -----------------          -----------------           -----------------            -----------------

                                                                                                                                                                                                                  RMB                          RMB                                          RMB                          US$                         RMB                          RMB                         US$

    Loss from operations                                                                                                                                                                                     (128,683)                    (230,536)                                     (79,002)                     (13,050)                   (478,665)                    (679,730)                   (112,282)

     Add back: share-based compensation                                                                                                                                                                        38,779                       48,918                                       53,061                        8,764                     118,218                      188,358                      31,114

     Add back: business combination related expenses                                                                                                                                                              127                            -                                            -                            -                      28,754                            -                           -

     Add back: amortization of intangible assets from business combination                                                                                                                                     12,411                       10,139                                       15,723  -                     2,597                      32,357                       50,244                       8,299

    Non-GAAP  loss from operations                                                                                                                                                                            (77,366)                    (171,479)                                     (10,218)                      (1,689)                   (299,336)                    (441,128)                    (72,869)
                                                                                                                                                                                                              =======                     ========                                      =======                       ======                    ========                     ========                     =======

    8. Non-GAAP  Net (Loss) Profit                                                                                                                                                    For the Three Months Ended                                       For the Twelve Months Ended
                                                                                                                                                                                     --------------------------                                        ---------------------------

                                                                                                                                                                        December 31, 2012                              September 30, 2013           December 31, 2013                              December 31, 2013          December 31, 2012           December 31, 2013            December 31, 2013
                                                                                                                                                                        -----------------                              ------------------           -----------------                              -----------------          -----------------           -----------------            -----------------

                                                                                                                                                                                                                  RMB                          RMB                                          RMB                          US$                         RMB                          RMB                         US$

     Net loss                                                                                                                                                                                                (113,570)                    (218,638)                                     (24,581)                      (4,060)                   (424,003)                    (580,744)                    (95,932)

     Add back: share-based compensation                                                                                                                                                                        38,779                       48,918                                       53,061                        8,764                     118,218                      188,358                      31,114

     Add back: business combination related expenses                                                                                                                                                              127                            -                                            -                            -                      28,754                            -                           -

     Add back: amortization of intangible assets from business combination                                                                                                                                     12,411                       10,139                                       15,723                        2,597                      32,357                       50,244                       8,299

     Non-GAAP net (loss) profit                                                                                                                                                                               (62,253)                    (159,581)                                      44,203                        7,301                    (244,674)                    (342,142)                    (56,519)
                                                                                                                                                                                                              =======                     ========                                       ======                        =====                    ========                     ========                     =======

    9.  Non-GAAP EBITDA (Loss) Profit                                                                                                                                                 For the Three Months Ended                                       For the Twelve Months Ended
                                                                                                                                                                                     --------------------------                                        ---------------------------

                                                                                                                                                                        December 31, 2012                              September 30, 2013           December 31, 2013                              December 31, 2013          December 31, 2012           December 31, 2013            December 31, 2013
                                                                                                                                                                        -----------------                              ------------------           -----------------                              -----------------          -----------------           -----------------            -----------------

                                                                                                                                                                                                                  RMB                          RMB                                          RMB                          US$                         RMB                          RMB                         US$

     Net loss                                                                                                                                                                                                (113,570)                    (218,638)                                     (24,581)                      (4,060)                   (424,003)                    (580,744)                    (95,932)

     Add back:

     Depreciation and amortization (excluding amortization

          of acquired content )(2)                                                                                                                                                                             31,263                       30,356                                       46,986                        7,762                      81,667                      131,668                      21,750

     Interest income                                                                                                                                                                                           (9,988)                      (7,284)                                      (8,419)                      (1,391)                    (45,478)                     (29,972)                     (4,950)

     Interest expenses                                                                                                                                                                                            830                            -                                            -                            -                       3,989                          545                          90

     Income taxes                                                                                                                                                                                              (4,912)                          80                                          876                          145                      (3,416)                       1,014                         168
                                                                                                                                                                                                               ------                          ---                                          ---                          ---                      ------                        -----                         ---

     EBITDA (loss) profit                                                                                                                                                                                     (96,377)                    (195,486)                                      14,862                        2,456                    (387,241)                    (477,489)                    (78,874)

     Adjustments:

     Share-based compensation                                                                                                                                                                                  38,779                       48,918                                       53,061                        8,764                     118,218                      188,358                      31,114

     Business combination related expenses                                                                                                                                                                        127                            -                                            -                            -                      28,754                            -                           -

     Amortization of intangible assets from business combination                                                                                                                                               12,411                       10,139                                       15,723                        2,597                      32,357                       50,244                       8,299

     Others, net                                                                                                                                                                                               (1,043)                      (4,694)                                     (46,878)                      (7,744)                     (9,757)                     (70,573)                    (11,658)
                                                                                                                                                                                                               ------                       ------                                      -------                       ------                      ------                      -------                     -------

    Non-GAAP EBITDA (loss) profit                                                                                                                                                                             (46,103)                    (141,123)                                      36,768                        6,073                    (217,669)                    (309,460)                    (51,119)
                                                                                                                                                                                                              =======                     ========                                       ======                        =====                    ========                     ========                     =======

    (1)     For more information on the Non-GAAP financial measures, please see the section captioned "About Non-GAAP Financial Measures" in this earnings
    release.

    (2)    The amortization expense was related to an advertising license acquired in April 2010. The amortization of acquired content was not treated as a Non-GAAP adjustment.

SOURCE Youku Tudou Inc.


Source: PR Newswire



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