China Finance Online Co., Ltd. :JRJC-US: Earnings Analysis: Q1, 2017 By the Numbers : June 16, 2017

China Finance Online Co., Ltd. reports financial results for the quarter ended March 31, 2017.

We analyze the earnings along side the following peers of China Finance Online Co., Ltd. – Bankrate, Inc., SINA Corp., Zhaopin Ltd. Sponsored ADR Class A, TheStreet, Inc., Baidu, Inc. Sponsored ADR Class A and China Telecom Corp. Ltd. Sponsored ADR Class H (RATE-US, SINA-US, ZPIN-US, TST-US, BIDU-US and CHA-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 8.48 million, Net Earnings of USD -11.35 million.
  • Gross margins narrowed from 84.35% to 46.38% compared to the same period last year, operating (EBITDA) margins now -146.83% from 21.20%.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31
Relevant Numbers (Quarterly)
Revenues (mil) 8.48 18.6 16.71 15.73 29.9
Revenue Growth (%YOY) -71.65 -43.67 -54.11 -31.82 119.86
Earnings (mil) -11.35 -9.87 -3.55 12.51 1.96
Earnings Growth (%YOY) -677.82 -200.39 -137.02 207.9 247.96
Net Margin (%) -133.87 -53.05 -21.26 79.56 6.57
EPS -0.49 -0.44 -0.15 0.49 0.1
Return on Equity (%) -59.8 -44.09 -14.4 48.1 7.59
Return on Assets (%) -28.2 -23.24 -9.07 34.88 5.43

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Market Share Versus Profits

Revenues History
Earnings History

JRJC-US‘s change in revenue this period compared to the same period last year of -71.65% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that JRJC-US is holding onto its market share. Also, for comparison purposes, revenues changed by -54.42% and earnings by -15.02% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 84.35% to 46.38%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 21.20% to -146.83% in this time frame. For comparison, gross margins were 62.49% and EBITDA margins were -61.95% in the previous period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

JRJC-US‘s decline in gross margins has not produced any significant offsetting improvement in its working capital . This leads Capital Cube to conclude that the decline in gross margins are likely from operating issues and not trade-offs with the balance sheet. Working capital days are currently 643.29 days, compared to last year’s level of 250.82 days.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich


The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from 21.20% to -146.83% and (2) one-time items that contributed to a decrease in pretax margins from 23.76% to -153.34%

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

China Finance Online Co., Ltd. engages in the provision of vertically integrated financial information and services includes news, data, analytics, securities investment advisory and brokerage-related services. The company offers subscription for individuals and institutions, advertising, and financial services. It operates through the following segments: Commodities Brokerage Services, Subscription Services and Other Related Services, and Hong Kong Brokerage Services. The company was founded on November 2, 1998 and is headquartered in Beijing, China.

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