E-House Reports Third Quarter 2015 Results

Nov 18, 2015, 06:00 ET from E-House (China) Holdings Limited

SHANGHAI, Nov. 18, 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 September 30, 2015.

Third Quarter 2015 Highlights

  • Total revenues increased by 18% year-on-year to $258.7 million
    • Revenues from real estate online services increased by 18% year-on-year to $151.2 million, including $106.4 million in revenues from e-commerce services, which grew by 26% year-on-year
    • Revenues from primary real estate agency services increased by 48% year-on-year to $83.2 million
  • Non-GAAP1 net income attributable to E-House shareholders was $18.7 million, or $0.13 per diluted American depositary share ("ADS"), an increase of 48% from $12.6 million, or $0.09 per diluted ADS, for the same quarter of 2014

First Nine Months 2015 Financial Highlights

  • Total revenues increased by 18% year-on-year to $698.4 million
    • Revenues from real estate online services increased by 24% year-on-year to $402.4 million, including $290.9 million in revenues from e-commerce services, which grew by 44% year-on-year
    • Revenues from primary real estate agency services increased by 26% year-on-year to $225.1 million
  • Non-GAAP net income attributable to E-House shareholders was $15.6 million, or $0.10 per diluted ADS, compared to $45.0 million, or $0.30 per diluted ADS, for the same period of 2014

Mr. Xin Zhou, E-House's co-chairman and CEO, said, "During the third quarter, we continued to grow our overall business and deliver solid execution in driving our total revenues. Under a relatively stable and healthy real estate market environment, our real estate brokerage services led the year-on-year top-line growth. Our online services continued to deliver solid growth as well, driven by revenue growth in e-commerce and secondary listings. We merged our real estate fund management business into Jupai Holdings Limited ("Jupai", NYSE: JP) in the third quarter in exchange for additional stakes in Jupai, which closed concurrent with Jupai's IPO in the U.S. The realized gains from the disposition of our real estate fund management business helped drive our profits higher during the quarter."

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.

Third Quarter 2015 Results

Total revenues were $258.7 million, an increase of 18% from $218.7 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 $151.2 million, an increase of 18% from $128.2 million for the same quarter of 2014, mainly contributed by growth of revenues from e-commerce services. Revenues from e-commerce services were $106.4 million, an increase of 26% from $84.2 million for the same quarter of 2014, primarily due to an increase in the average price per discount coupon redeemed. Revenues from online advertising services were $39.4 million, a decrease of 6% from $41.8 million for the same quarter of 2014, primarily due to decreased online advertising demand from property developers. Revenues from listing services were $5.4 million, an increase of 139% from $2.2 million for the same quarter of 2014, primarily due to growth in secondary home transactions.

Revenues from real estate brokerage services were $86.5 million, an increase of 47% from $59.0 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 $83.2 million, an increase of 48% from $56.3 million for the same quarter of 2014. The increase was caused by increases in both 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 $3.3 million, an increase of 24% from $2.7 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 $13.2 million, a decrease of 14% from $15.4 million for the same quarter of 2014, mainly due to decreased demand for customized data reports due to lower real estate investment levels and decreased average price of consulting contracts during the period.

Revenues from other services were $7.6 million, a decrease of 53% from $16.1 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 third quarter was primarily due to a decrease in revenues from offline promotional events services, and the disposition of real estate fund management services business at the beginning of the third quarter of 2015. Revenue from real estate fund management services was nil in the third quarter of 2015, compared to $7.0 million for the same quarter of 2014.

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

Cost of revenues was $82.7 million, an increase of 6% from $77.9 million for the same quarter of 2014, primarily due to increased commission fees and project consulting fees for primary real estate agency services in line with increased revenues.

Selling, general and administrative ("SG&A") expenses were $172.3 million, an increase of 34% from $128.3 million for the same quarter of 2014, primarily due to higher marketing expenses for real estate online services, as well as increased salary and welfare expenses related to community value-added services. Expenses related to community value-added services were $12.2 million, compared to $4.6 million for the same quarter of 2014.

Income from operations was $7.6 million, a decrease of 53% from $16.2 million for the same quarter of 2014. Non-GAAP income from operations was $16.2 million, a decrease of 37% from $25.5 million for the same quarter of 2014, mostly due to increased spending related to community value-added services and real estate financial services.

Investment income was $23.1 million, comprised of a gain from the disposition of the real estate fund management services to Jupai.

Net income was $12.2 million, compared to $13.1 million for the same quarter of 2014. Non-GAAP net income was $20.0 million, compared to $21.9 million for the same quarter of 2014.

Net income attributable to E-House shareholders was $12.5 million, or $0.09 per diluted ADS, an increase of 146% from $5.1 million, or $0.03 per diluted ADS, for the same quarter of 2014. Non-GAAP net income attributable to E-House shareholders was $18.7 million, or $0.13 per diluted ADS, an increase of 48% from $12.6 million, or $0.09 per diluted ADS, for the same quarter of 2014.

First Nine Months 2015 Results

Total revenues were $698.4 million, an increase of 18% from $592.2 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 $402.4 million, an increase of 24% from $324.1 million for the same period of 2014, contributed by growth of revenues from e-commerce services and listing services. Revenues from e-commerce services were $290.9 million, an increase of 44% from $202.2 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 $97.2 million, a decrease of 13% from $111.2 million for the same period of 2014, primarily due to decreased online advertising demand from property developers. Revenues from listing services were $14.4 million, an increase of 35% from $10.7 million for the same period of 2014, primarily due to the growth in secondary home sales.

Revenues from real estate brokerage services were $233.7 million, an increase of 26% from $185.6 million for the same period of 2014. Revenues from primary real estate agency services were $225.1 million, an increase of 26% from $178.9 million for the same period of 2014, due to increases in both total GFA and transaction value of new properties sold during the first nine months of 2015. Revenues from secondary real estate brokerage services were $8.6 million, an increase of 28% from $6.7 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 $43.5 million, a decrease of 15% from $51.0 million for the same period of 2014, mostly due to decreased demand for customized data reports due to lower real estate investment levels, and a decreased average price of consulting contracts.

Revenues from other services were $18.3 million, a decrease of 42% from $31.5 million for the same period of 2014, primarily due to a decrease in revenues from offline promotional events services, and the disposition of real estate fund management services business at the beginning of the third quarter of 2015.

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

Cost of revenues was $232.3 million, an increase of 11% from $209.6 million for the same period of 2014, due to increased commission fees and project consulting fees for primary real estate agency services in line with increased revenues, increased staff costs and increased amortization expenses of intangible assets for the exclusive rights in connection with real estate online services.

SG&A expenses were $491.6 million, an increase of 37% from $359.5 million for the same period of 2014, primarily due to an increase in marketing expenses for real estate online services, as well as increases of $23.3 million in expenses related to community value-added services and $3.1 million in expenses related to real estate financial services, both of which commenced in the third quarter of 2014.

Loss from operations was $19.7 million,compared to income from operations of $31.2 million for the same period of 2014. Non-GAAP income from operations was $7.4 million, a decrease of 87% from $59.4 million for the same period of 2014.

Investment income was $23.1 million, comprised of a gain from the disposition of the real estate fund management services to Jupai.

Net loss was $10.1 million, compared to $30.7 million net income for the same period of 2014. Non-GAAP net income was $14.5 million, compared to $56.8 million for the same period of 2014.

Net loss attributable to E-House shareholders was $3.8 million, or $0.03 loss per diluted ADS, compared to net income attributable to E-House shareholders of $21.4 million, or $0.14 per diluted ADS, for the same period of 2014. Non-GAAP net income attributable to E-House shareholders was $15.6 million, or $0.10 per diluted ADS, compared to $45.0 million, or $0.30 per diluted ADS, for the same period of 2014.

Cash Flow

As of September 30, 2015, the Company's cash and cash equivalents balance was $481.7 million.

Third quarter 2015 net cash provided by operating activities was $12.4 million, mainly attributable to non-GAAP net income of $20.0 million, as well as a $14.4 million decrease in customer deposits, partially offset by a $23.1 million non-cash gain from the disposition of the real estate fund management services. Net cash used in investing activities was $37.1 million, mainly comprised of a $12.6 million payment for investments in affiliate, a $9.2 million payment for a business acquisition deposit, a $7.9 million payment for the exclusive rights with Baidu, and a $6.0 million cash decrease associated with the disposition of real estate fund management services. Net cash provided by financing activities was $79.3 million, mainly comprised of a $71.3 million bank loan, and a $25.6 million loan from a related party, partially offset by $9.6 million paid for the repurchase of the convertible bond, and a $6.6 million 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 November 18, 2015 at 8:15 a.m. U.S. Eastern Time (9:15 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 November 26, 2015:

U.S./International:

+1-646-254-3697

Hong Kong:

+852-3051-2780

Mainland China:

+86-800-870-0205

Passcode:

75256378

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,


September 30,


2014


2015

ASSETS







Current assets







Cash and cash equivalents


630,617




481,706

Restricted cash


40,402




40,067

Customer deposits, net


92,797




102,804

Accounts receivable, net


415,150




447,396

Advance payment for properties, current


51,983




14,255

Properties held for sale


34,842




30,665

Deferred tax assets, net


64,805




61,937

Prepaid expenses and other current assets


39,339




45,265

Amounts due from related parties


6,094




1,888

Total current assets


1,376,029




1,225,983

Property and equipment, net


49,109




125,400

Intangible assets, net


120,381




116,312

Investment in affiliates


51,681




114,560

Goodwill


51,540




63,101

Customer deposits, non-current, net


797




1,380

Investment in preferred shares of a private entity


39,485




-

Restricted cash, non-current


-




32,855

Other non-current assets


87,902




118,417

Total assets


1,776,924




1,798,008








LIABILITIES AND EQUITY







Current liabilities







Short-term borrowings


35,954




75,456

Accounts payable


8,261




5,640

Accrued payroll and welfare expenses


116,577




95,071

Income tax payable


117,594




102,312

Other tax payable


49,390




50,541

Amounts due to related parties


7,356




31,760

Advance from property buyers


2,261




8,101

Dividend payables


12,902




-

Advance from customers and deferred revenue


19,013




19,166

Other current liabilities


85,837




61,865

Total current liabilities


455,145




449,912

Deferred tax liabilities


28,203




28,548

Convertible senior notes


132,752




123,697

Other non-current liabilities


658




74,867

Total liabilities


616,758




677,024

Equity







Ordinary shares ($0.001 par value): 1,000,000,000 and
     1,000,000,000 shares authorized, 142,123,368 and
     142,620,205 shares issued and outstanding, as of December
     31, 2014 and September 30, 2015, respectively


142




143

Additional paid-in capital


991,646




979,648

Subscription receivables


(196)




(61)

Accumulated deficit


(67,703)




(71,523)

Accumulated other comprehensive income


83,901




45,148

Total E-House equity


1,007,790




953,355

Non-controlling interests


152,376




167,629

Total equity


1,160,166




1,120,984

TOTAL LIABILITIES AND EQUITY


1,776,924




1,798,008

 

 

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


Nine months ended



September 30,


September 30,



2014


2015


2014


2015

















Revenues



218,718




258,691




592,174




698,374

Cost of revenues



(77,890)




(82,745)




(209,618)




(232,341)

Selling, general and administrative expenses



(128,332)




(172,323)




(359,517)




(491,563)

Other operating income



3,674




3,939




8,134




5,870

Income (loss) from operations



16,170




7,562




31,173




(19,660)

















Interest expenses



(1,326)




(2,797)




(3,991)




(7,589)

Interest income



805




1,211




2,180




3,637

Other income (loss), net



117




(2,215)




3,180




(1,128)

Investment Income



-




23,104




-




23,104

Income (loss) before taxes and equity in affiliates



15,766




26,865




32,542




(1,636)

Income tax expense



(3,132)




(15,221)




(5,379)




(10,383)

Income (loss) before equity in affiliates



12,634




11,644




27,163




(12,019)

Income from equity in affiliates



424




594




3,553




1,919

Net income (loss)



13,058




12,238




30,716




(10,100)

















Less: net income (loss) attributable to
















non-controlling interests



7,968




(307)




9,310




(6,279)

Net income (loss) attributable to E-House 
shareholders



5,090




12,545




21,406




(3,821)

















Earnings (loss) per share:
















Basic



0.04




0.09




0.15




(0.03)

Diluted



0.03




0.09




0.14




(0.03)

Shares used in computation:
















Basic



139,374,967




142,604,949




138,472,922




142,464,061

Diluted



146,962,092




145,253,119




146,680,245




142,464,061


Note 1

The conversion of Renminbi ("RMB") amounts into USD amounts is based on the rate
of USD1 = RMB6.3613 on September 30, 2015 and USD1 = RMB6.2378 for the nine
months ended September 30, 2015

 

 

E-HOUSE (CHINA) HOLDINGS LIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands of U.S. dollars)



Three months ended


Nine months ended




September 30,


September 30,




2014


2015


2014


2015












Net income (loss)


13,058


12,238


30,716


(10,100)


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










Foreign currency translation adjustment


300


(28,057)


(5,441)


(27,311)


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


4,629


(38,872)


4,629


(13,765)


Comprehensive income (loss)


17,987


(54,691)


29,904


(51,176)












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


7,931


(2,990)


8,980


(8,904)


Comprehensive income (loss) attributable to E-House shareholders


10,056


(51,701)


20,924


(42,272)












 

 

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


Nine months ended



September 30,


September 30,



2014


2015


2014


2015



(unaudited)


(unaudited)


(unaudited)


(unaudited)













GAAP income (loss) from operations



16,170



7,562



31,173


(19,660)

Share-based compensation expense



5,919



5,162



16,369


16,926

Amortization of intangible assets resulting from business
      acquisitions



3,448



3,456



11,819


10,180

Non-GAAP income from operations



25,537



16,180



59,361


7,446













GAAP net income (loss)



13,058



12,238



30,716


(10,100)

Share-based compensation expense (net of tax)



5,919



5,162



16,369


16,926

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



2,894



2,592



9,707


7,635

Non-GAAP net income



21,871



19,992



56,792


14,461













Net income (loss) attributable to E-House shareholders



5,090



12,545



21,406


(3,821)

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



5,329



4,328



15,367


14,004

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



2,179



1,816



8,263


5,377

Non-GAAP net income attributable to E-House
    
shareholders



12,598



18,689



45,036


15,560













GAAP earnings (loss)  per ADS -- basic



0.04



0.09



0.15


(0.03)













GAAP earnings (loss)  per ADS -- diluted



0.03



0.09



0.14


(0.03)













Non-GAAP earnings per ADS -- basic



0.09



0.13



0.33


0.11













Non-GAAP earnings per ADS -- diluted



0.09



0.13



0.30


0.10













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



139,374,967



142,604,949



138,472,922


142,464,061













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



146,962,092



145,253,119



146,680,245


142,464,061













Shares used in calculating diluted non-GAAP net income
     attributable to shareholders per ADS



146,962,092



153,999,177



146,680,245


145,489,652













 

 

E-HOUSE (CHINA) HOLDINGS LIMITED

SELECTED OPERATING DATA



Three months ended


Nine months ended



September 30,


September 30,



2014


2015


2014


2015

















Primary real estate agency services
















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



4,991




6,411




14,824




17,460

Total value of new properties sold (millions of
     RMB)



42,986




66,700




131,615




170,995

Total value of new properties sold (millions of $)



7,019




10,361




21,490




27,413

















E-commerce services

 
















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



85,843




70,641




223,807




205,895

Number of discount coupons redeemed (number
     of transactions)



59,811




57,303




143,407




141,827

 

 


SOURCE E-House (China) Holdings Limited



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