E-House Reports Second Quarter 2015 Results

Aug 25, 2015, 05:30 ET from E-House (China) Holdings Limited

SHANGHAI, Aug. 25, 2015 /PRNewswire-FirstCall/ -- E-House (China) Holdings Limited ("E-House" or the "Company") (NYSE: EJ), a leading real estate services company in China, today announced its unaudited financial results for the fiscal quarter ended June 30, 2015.

Second Quarter 2015 Highlights

  • Total revenues increased by 29% year-on-year to $270.5 million
    • Revenues from real estate online services increased by 34% year-on-year to $157.8 million, including $117.4 million in revenues from e-commerce services, which grew by 72% year-on-year
    • Revenues from primary real estate agency services increased by 35% year-on-year to $85.2 million
  • Non-GAAP[1] net income attributable to E-House shareholders was $15.1 million, or $0.10 per diluted American depositary share ("ADS"), compared to $20.6 million or $0.14 per diluted ADS, for the same quarter of 2014

[1]E-House uses in this press release the following non-GAAP financial measures: (1) income (loss) from operations, (2) net income (loss), (3) net income (loss) attributable to E-House shareholders, (4) net income (loss) attributable to E-House shareholders per basic ADS, and (5) net income (loss) attributable to E-House shareholders per diluted ADS, each of which excludes share-based compensation expense and amortization of intangible assets resulting from business acquisitions. See "About Non-GAAP Financial Measures" and "Unaudited Reconciliation of GAAP and Non-GAAP Results" below for more information about the non-GAAP financial measures included in this press release.

First Half 2015 Financial Highlights

  • Total revenues increased by 18% year-on-year to $439.7 million
    • Revenues from real estate online services increased by 28% year-on-year to $251.2 million, including $184.4 million in revenues from e-commerce services, which grew by 56% year-on-year
    • Revenues from primary real estate agency services increased by 16% year-on-year to $141.9 million
  • Non-GAAP net loss attributable to E-House shareholders was $3.1 million, or $0.02 loss per diluted ADS, compared to non-GAAP net income of $32.4 million, or $0.22 per diluted ADS, for the same period of 2014

Xin Zhou, E-House's co-chairman and CEO, said, "As we expected, the overall Chinese property market started to warm up since the end of March, driven in part by the government's loosened credit policies and purchasing restrictions in certain cities. Despite the recent Chinese stock market volatility, the real estate sector has stayed relatively stable so far. As a result, we are on track to achieve our overall revenue target set at the beginning of the year."

Mr. Zhou continued, "We are also solidly executing our previously announced strategies for new business lines. Community value-added service app Shi Hui has now been launched in 40 cities, with a total user base of more than 6.8 million. Last month, Jupai Holdings Limited ("Jupai", NYSE: JP), a leading third-party wealth management services provider in China in which E-House holds approximately 31% stake, was successfully listed in the U.S. The listing of Jupai further strengthens our growing financial services platform."

Second Quarter 2015 Results

Total revenues were $270.5 million, an increase of 29% from $210.1 million for the same quarter of 2014, primarily driven by growth of revenues from real estate online services and real estate brokerage services.

Revenues from real estate online services were $157.8 million, an increase of 34% from $117.3 million for the same quarter of 2014, mainly contributed by growth of revenues from e-commerce services. Revenues from e-commerce services were $117.4 million, an increase of 72% from $68.3 million for the same quarter of 2014, primarily due to increases in both the number of discount coupons redeemed and in the average price per discount coupon redeemed. Revenues from online advertising services were $35.2 million, a decrease of 21% from $44.8 million for the same quarter of 2014, primarily due to decreased online advertising demand from property developers. Revenues from listing services were $5.2 million, compared to $4.2 million for the same quarter of 2014, primarily due to growth in secondary home transactions.

Revenues from real estate brokerage services were $88.4 million, an increase of 35% from $65.5 million for the same quarter of 2014. Real estate brokerage services include primary real estate agency services and secondary real estate brokerage services. Revenues from primary real estate agency services were $85.2 million, an increase of 35% from $63.3 million for the same quarter of 2014. The increase was caused by increases in total gross floor area ("GFA") of new properties sold and total transaction value of new properties sold compared to the same quarter of 2014. (See "Selected Operating Data" below for more details on the total GFA and transaction value of new properties sold.) Revenues from secondary real estate brokerage services were $3.2 million, an increase of 43% from $2.2 million for the same quarter of 2014, primarily due to an increase in the number of sale transactions in secondary properties.

Revenues from real estate information and consulting services were $17.1 million, a slight decrease compared to $17.9 million for the same quarter of 2014, mainly due to decreased average price of consulting contracts during the period.

Revenues from other services were $7.0 million, a decrease of 25% from $9.4 million for the same quarter of 2014. Other services include offline real estate advertising services, promotional events services, real estate fund management services and real estate financial services. The decrease in revenues from other services in the second quarter was primarily attributable to the decreased revenues in offline promotional events services.

No material revenue was generated from community value-added services in the second quarter.

Cost of revenues was $83.4 million, an increase of 15% from $72.7 million for the same quarter of 2014, primarily due to increased commission fees for primary real estate agency services in line with increased revenues, and increased staff costs of editorial department and increased amortization expenses of intangible assets for the exclusive rights in connection with real estate online services.

Selling, general and administrative ("SG&A") expenses were $179.4 million, an increase of 42% from $126.3 million for the same quarter of 2014, primarily due to higher marketing expenses for real estate online services, as well as $11.1 million in expenses related to community value-added services and $1.6 million in expenses related to real estate financial services, both of which commenced in the third quarter of 2014.

Income from operations was $9.4 million, a decrease of 37% from $15.0 million for the same quarter of 2014. Non-GAAP income from operations was $18.2 million, a decrease of 23% from $23.7 million for the same quarter of 2014, mostly due to increased spending related to community value-added services and real estate financial services.

Net income was $8.1 million, a decrease of 51% from $16.4 million for the same quarter of 2014. Non-GAAP net income was $16.1 million, a decrease of 35% from $24.7 million for the same quarter of 2014.

Net income attributable to E-House shareholders was $8.8 million, or $0.06 per diluted ADS, a decrease of 35% from $13.4 million, or $0.09 per diluted ADS, for the same quarter of 2014. Non-GAAP net income attributable to E-House shareholders was $15.1 million, or $0.10 per diluted ADS, a decrease of 27% from $20.6 million, or $0.14 per diluted ADS, for the same quarter of 2014.

First Half 2015 Results

Total revenues were $439.7 million, an increase of 18% from $373.5 million for the same period of 2014, primarily driven by growth of revenues from real estate online services and real estate brokerage services.

Revenues from real estate online services were $251.2 million, an increase of 28% from $195.8 million for the same period of 2014, contributed by growth of revenues from e-commerce services. Revenues from e-commerce services were $184.4 million, an increase of 56% from $118.0 million for the same period of 2014, primarily due to an increase in the average price per discount coupon redeemed. Revenues from online advertising services were $57.8 million, a decrease of 17% from $69.4 million for the same period of 2014, primarily due to decreased online advertising demand from property developers. Revenues from listing services were $9.0 million, an increase of 8% from $8.4 million for the same period of 2014, primarily due to volume growth in secondary home sales.

Revenues from real estate brokerage services were $147.2 million, an increase of 16% from $126.6 million for the same period of 2014. Revenues from primary real estate agency services were $141.9 million, an increase of 16% from $122.6 million for the same period of 2014, due to increases in total GFA and transaction value of new properties sold during the first half of 2015. Revenues from secondary real estate brokerage services were $5.3 million, an increase of 31% from $4.0 million for the same period of 2014, due to an increase in the number of sale transactions in secondary properties.

Revenues from real estate information and consulting services were $30.2 million, a decrease of 15% from $35.6 million for the same period of 2014, mostly due to a decreased number of customized data reports due to lower real estate investment levels, and a decreased average price of consulting contracts.

Revenues from other services were $10.8 million, a decrease of 30% from $15.5 million for the same period of 2014, primarily due to a decrease in revenues from offline promotional events services.

No material revenue was generated from community value-added services in the first half of 2015.

Cost of revenues was $149.6 million, an increase of 14% from $131.7 million for the same period of 2014, due to increased staff costs associated with primary real estate agency services and real estate online services, increased commission fees and project consulting fees for primary real estate agency services in line with increased revenues, and increased amortization expenses of intangible assets for the exclusive rights in connection with real estate online services.

SG&A expenses were $319.2 million, an increase of 38% from $231.2 million for the same period of 2014, primarily due to an increase in marketing expenses for real estate online services, as well as $18.9 million in expenses related to community value-added services and $2.2 million in expenses related to real estate financial services, both of which commenced in the third quarter of 2014.

Loss from operations was $27.2 million,compared to income from operations of $15.0 million for the same period of 2014. Non-GAAP loss from operations was $8.7 million, compared to non-GAAP income from operations of $33.8 million for the same period of 2014.

Net loss was $22.3 million, compared to net income of $17.7 million for the same period of 2014. Non-GAAP net loss was $5.5 million, compared to non-GAAP net income of $34.9 million for the same period of 2014.

Net loss attributable to E-House shareholders was $16.4 million, or $0.11 loss per diluted ADS, compared to net income attributable to E-House shareholders of $16.3 million, or $0.11 per diluted ADS, for the same period of 2014. Non-GAAP net loss attributable to E-House shareholders was $3.1 million, or $0.02 loss per diluted ADS, compared to non-GAAP net income attributable to E-House shareholders of $32.4 million, or $0.22 per diluted ADS, for the same period of 2014.

Cash Flow

As of June 30, 2015, the Company's cash and cash equivalents balance was $438.5 million.

Second quarter 2015 net cash used in operating activities was $16.1 million, mainly attributable to an increase in accounts receivable of $43.2 million and an increase in customer deposits of $2.5 million, partially offset by non-GAAP net income of $16.1 million, as well as an increase in accrued payroll and welfare of $13.8 million. Net cash used in investing activities was $20.0 million, mainly due to a $14.3 million addition to property and equipment related to new office spaces as well as intangible assets, and a $6.2 million payment for a business acquisition. Net cash provided by financing activities was $14.4 million, mainly comprised of $29.5 million capital contribution from non-controlling interest shareholders of community value-added services and $16.3 million cash received from a short-term borrowing, partially offset by $21.4 million in dividends paid to shareholders, $8.1 million in dividends paid to non-E-House shareholders of the Company's subsidiary, Leju Holdings Limited (NYSE: LEJU), and $2.9 million remaining payment for the 2014 acquisition of non-controlling interests in the Company's online business.

Business Outlook

The Company maintains its fiscal year 2015 total revenues guidance of approximately $1.05 billion to $1.10 billion, which would represent an increase of approximately 16% to 22% from $904.5 million in 2014. This forecast reflects the Company's current and preliminary view, which is subject to change.

Conference Call Information

E-House's management will host an earnings conference call on August 25, 2015 at 8:15 a.m. U.S. Eastern Time (8:15 p.m. Beijing/Hong Kong time).

Dial-in details for the earnings conference call are as follows:

U.S./International:

+1-845-675-0437

Hong Kong:         

+852-3018-6771

Mainland China:   

+86-800-819-0121

Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is "E-House earnings call."

A replay of the conference call may be accessed by phone at the following number until September 2, 2015:

U.S./International:

+1-646-254-3697

Hong Kong:

+852-3051-2780

Mainland China:

+86-800-870-0205

Passcode:     

9704345

Additionally, a live and archived webcast will be available at http://ir.ehousechina.com.

About E-House

E-House (China) Holdings Limited ("E-House") (NYSE: EJ) is China's leading real estate services company with a nationwide network covering more than 260 cities. E-House offers a wide range of services to the real estate industry, including real estate online services through our 70%-owned subsidiary, Leju Holdings Limited (NYSE: LEJU), primary sales agency, secondary brokerage, information and consulting, offline advertising and promotion, real estate investment management and financial services, and mobile community value-added services. E-House has received numerous awards for its innovative and high-quality services, including "China's Best Company" from the National Association of Real Estate Brokerage and Appraisal Companies and "China Enterprises with the Best Potential" from Forbes. For more information about E-House, please visit http://www.ehousechina.com.

Safe Harbor: Forward-Looking Statements

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "may," "intend," "confident," "is currently reviewing," "it is possible," "subject to" and similar statements. Among other things, the Business Outlook section and quotations from management in this press release, as well as E-House's strategic and operational plans, contain forward-looking statements. E-House may also make written or oral forward-looking statements in its reports filed or furnished with the U.S. Securities and Exchange Commission, including Forms 20-F and 6-K, 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 E-House's beliefs and expectations, are forward-looking statements and are subject to change. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained, either expressly or impliedly, in any of the forward-looking statements in this press release. Potential risks and uncertainties include, but are not limited to, a severe or prolonged downturn in the global economy, E-House's susceptibility to fluctuations in the real estate market of China, government measures aimed at China's real estate industry, failure of the real estate services industry in China to develop or mature as quickly as expected, diminution of the value of E-House's brand or image, E-House's inability to successfully execute its strategy of expanding into new geographical markets in China, E-House's failure to manage its growth effectively and efficiently, E-House's failure to successfully execute the business plans for its strategic alliances and other new business initiatives, E-House's loss of its competitive advantage if it fails to maintain and improve its proprietary CRIC system or to prevent disruptions or failure in the system's performance, E-House's failure to compete successfully, fluctuations in E-House's results of operations and cash flows, E-House's reliance on a concentrated number of real estate developers, natural disasters or outbreaks of health epidemics and other risks outlined in E-House's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of this press release, and E-House does not undertake any obligation to update any such information, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement E-House's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), E-House uses in this press release the following non-GAAP financial measures: (1) income (loss) from operations, (2) net income (loss), (3) net income (loss) attributable to E-House shareholders, (4) net income (loss) attributable to E-House shareholders per basic ADS, and (5) net income (loss) attributable to E-House shareholders per diluted ADS, each of which excludes share-based compensation expense and amortization of intangible assets resulting from business acquisitions. The presentation of these non-GAAP financial measures is not intended to be considered in isolation 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 "Unaudited Reconciliation of GAAP and Non-GAAP Results" set forth at the end of this press release.

E-House believes that these non-GAAP financial measures provide meaningful supplemental information to investors regarding its operating performance by excluding share-based compensation expense and amortization of intangible assets resulting from business acquisitions, , which may not be indicative of E-House's operating performance. These non-GAAP financial measures also facilitate management's internal comparisons to E-House's historical performance and assist its financial and operational decision making. A limitation of using these non-GAAP financial measures is that share-based compensation expense and amortization of intangible assets resulting from business acquisitions that may continue to exist in E-House's business for the foreseeable future. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliation between non-GAAP financial measures and their most comparable GAAP financial measures.

For investor and media inquiries please contact:

Investor Relations Department
E-House (China) Holdings Limited
Phone: +86 (21) 6133-0809
E-mail: ir@ehousechina.com

Mr. Derek Mitchell
Ogilvy Financial
In the U.S.: +1 (646) 867-1888
In China: +86 (10) 8520-6139
E-mail: ej@ogilvy.com

 


E-HOUSE (CHINA) HOLDINGS LIMITED

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars)






December 31,


June 30,



2014


2015

ASSETS





Current assets





Cash and cash equivalents


630,617


438,544

Restricted cash


40,402


42,321

Customer deposits, net


92,797


118,953

Accounts receivable, net


415,150


446,520

Advance payment for properties, current


51,983


14,689

Properties held for sale


34,842


31,958

Deferred tax assets, net


64,805


64,863

Prepaid expenses and other current assets


39,339


53,693

Amounts due from related parties


6,094


1,945

Total current assets


1,376,029


1,213,486

Property and equipment, net


49,109


124,759

Intangible assets, net


120,381


124,761

Investment in affiliates


51,681


54,669

Goodwill


51,540


64,259

Customer deposits, non-current, net


797


618

Investment in preferred shares of a private entity


39,485


64,592

Restricted cash, non-current


-


34,186

Other non-current assets


87,902


113,083

Total assets


1,776,924


1,794,413






LIABILITIES AND EQUITY





Current liabilities





Short-term borrowings


35,954


52,342

Accounts payable


8,261


4,603

Accrued payroll and welfare expenses


116,577


105,842

Income tax payable


117,594


103,358

Other tax payable


49,390


49,860

Amounts due to related parties


7,356


7,755

Advance from property buyers


2,261


7,641

Dividend payables


12,902


-

Advance from customers and deferred revenue


19,013


19,599

Liability for exclusive rights, current


-


8,179

Other current liabilities


85,837


65,392

Total current liabilities


455,145


424,571

Deferred tax liabilities


28,203


29,605

Convertible senior notes


132,752


133,309

Other non-current liabilities


658


30,537

Total liabilities


616,758


618,022

Equity





Ordinary shares ($0.001 par value): 1,000,000,000 and
   1,000,000,000 shares authorized, 142,123,368 and
   142,598,380 shares issued and outstanding, as of December
   31, 2014 and June 30, 2015, respectively


142


143

Additional paid-in capital


991,646


975,343

Subscription receivables


(196)


-

Accumulated deficit


(67,703)


(84,070)

Accumulated other comprehensive income


83,901


109,396

Total E-House equity


1,007,790


1,000,812

Non-controlling interests


152,376


175,579

Total equity


1,160,166


1,176,391

TOTAL LIABILITIES AND EQUITY


1,776,924


1,794,413

 

E-HOUSE (CHINA) HOLDINGS LIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars, except share data and per share data)












Three months ended


Six months ended



June 30,


June 30,



2014


2015


2014


2015










Revenues


210,145


270,538


373,456


439,683

Cost of revenues


(72,705)


(83,396)


(131,728)


(149,596)

Selling, general and administrative expenses


(126,264)


(179,387)


(231,185)


(319,240)

Other operating income


3,789


1,631


4,460


1,931

Income (loss) from operations


14,965


9,386


15,003


(27,222)










Interest expenses


(1,319)


(2,486)


(2,665)


(4,792)

Interest income


640


1,160


1,375


2,426

Other income, net


2,938


371


3,063


1,087

Income (loss) before taxes and equity in 
    affiliates


17,224


8,431


16,776


(28,501)

Income tax benefit (expense)


(2,340)


(2,005)


(2,247)


4,838

Income (loss) before equity in affiliates


14,884


6,426


14,529


(23,663)

Income from equity in affiliates


1,554


1,661


3,129


1,325

Net income (loss)


16,438


8,087


17,658


(22,338)










Less: net income (loss) attributable to

    non-controlling interests 










3,024


(684)


1,342


(5,972)

Net income (loss) attributable to E-House
    shareholders


13,414


8,771


16,316


(16,366)










Earnings (loss) per share:









Basic


0.10


0.06


0.12


(0.11)

Diluted


0.09


0.06


0.11


(0.11)

Shares used in computation:









Basic


138,163,946


142,567,653


138,021,900


142,393,616

Diluted


145,613,580


145,587,148


146,539,322


142,393,616



















Note 1

The conversion of Renminbi ("RMB") amounts into USD amounts is based on the rate of USD1 = RMB6.1136 on June 30, 2015 and USD1 = RMB6.1223 for the three months ended June 30, 2015

 

 

 

E-HOUSE (CHINA) HOLDINGS LIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands of U.S. dollars)




Three months ended


Six months ended



June 30,


June 30,



2014


2015


2014


2015










Net income (loss)


16,438


8,087


17,658


(22,338)

Other comprehensive income (loss), net of tax of nil:









    Foreign currency translation adjustment


(44)


3,537


(5,741)


746

    Unrealized holding gains for investment in preferred shares of a private entity


-


23,411


-


25,107

Comprehensive income


16,394


35,035


11,917


3,515










Less: Comprehensive income (loss) attributable to non-controlling interests


3,051


(390)


1,049


(5,914)

Comprehensive income attributable to E-House shareholders


13,343


35,425


10,868


9,429

 


E-HOUSE (CHINA) HOLDINGS LIMITED

Unaudited Reconciliation of GAAP and Non-GAAP Results

(In thousands of U.S. dollars, except share data and per ADS data)












Three months ended


Six months ended



June 30,


June 30,



2014


2015


2014


2015



(unaudited)


(unaudited)


(unaudited)


(unaudited)


GAAP income (loss) from operations 


14,965


9,386


15,003


(27,222)

Share-based compensation expense


5,335


5,432


10,450


11,764

Amortization of intangible assets resulting from business 
    acquisitions


3,448


3,374


8,371


6,724

Non-GAAP income (loss) from operations


23,748


18,192


33,824


(8,734)










GAAP net income (loss) 


16,438


8,087


17,658


(22,338)

Share-based compensation expense (net of tax)


5,335


5,432


10,450


11,764

Amortization of intangible assets resulting from
    business acquisitions (net of tax)


2,894


2,531


6,813


5,043

Non-GAAP net income (loss)


24,667


16,050


34,921


(5,531)










Net income (loss) attributable to E-House shareholders


13,414


8,771


16,316


(16,366)

Share-based compensation expense
   (net of tax and non-controlling interests) 


4,923


4,543


10,038


9,676

Amortization of intangible assets resulting from business
   acquisitions (net of tax and non-controlling interests)


2,237


1,782


6,084


3,561

Non-GAAP net income (loss) attributable to E-House
   shareholders


20,574


15,096


32,438


(3,129)










GAAP earnings (loss) per ADS — basic


0.10


0.06


0.12


(0.11)










GAAP earnings (loss) per ADS — diluted


0.09


0.06


0.11


(0.11)










Non-GAAP earnings (loss) per ADS — basic


0.15


0.11


0.24


(0.02)










Non-GAAP earnings (loss) per ADS — diluted


0.14


0.10


0.22


(0.02)










Shares used in calculating basic GAAP / non-GAAP net
    income (loss) attributable to shareholders per ADS


138,163,946


142,567,653


138,021,900


142,393,616










Shares used in calculating diluted GAAP / non-GAAP net
    income (loss) attributable to shareholders per ADS


145,613,580


145,587,148


146,539,322


142,393,616

 

 

E-HOUSE (CHINA) HOLDINGS LIMITED



SELECTED OPERATING DATA







Three months ended



Six months ended




June 30,



June 30,




2014



2015



2014



2015















Primary real estate agency services













Total Gross Floor Area ("GFA") of new
    properties sold (thousands of square meters)


5,361



6,630



9,833



 

11,049


Total value of new properties sold (millions of
    RMB)


46,755



66,447



88,629



 

104,295


Total value of new properties sold (millions of $)


7,628



10,884



14,471



17,052















E-commerce services

 













Number of discount coupons issued to
    prospective purchasers (number of
    transactions)


89,524



94,489



137,964



 

135,254


Number of discount coupons redeemed (number
    of transactions)


49,724



52,413



83,596



 

84,524



 

SOURCE E-House (China) Holdings Limited



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