SouFun Announces Fourth Quarter and Fiscal Year 2012 Results

Feb 08, 2013, 06:45 ET from SouFun Holdings Limited

BEIJING, Feb. 8, 2013 /PRNewswire/ -- SouFun Holdings Limited (NYSE: SFUN) ("SouFun"), the leading real estate Internet portal and a leading home furnishing website in China, announced today its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2012. (Amounts are in US dollars, unless otherwise specified.)

Fourth Quarter 2012 Highlights

Revenue in the fourth quarter of 2012 was $147.5 million, a 29.6% increase from the corresponding period in 2011.

Operating income in the fourth quarter of 2012 was $71.6 million, a 52.8% increase from the corresponding period in 2011. Non-GAAP operating income in the fourth quarter of 2012 was $74.8 million, a 53.5% increase from the corresponding period in 2011.

Net income attributable to shareholders recorded a year-over-year increase of 85.3% to $55.8 million, or $0.68 per fully diluted share. Non-GAAP net income attributable to shareholders recorded a year-over-year increase of 66.0% to $65.1 million, or $0.79 per fully diluted share.

Fiscal Year 2012 Highlights

Revenue in 2012 was $430.3 million, a 25.1% increase from 2011.

Operating income in 2012 was $198.6 million, a 41.4% increase from 2011. Non-GAAP operating income in 2012 was $205.7 million, a 39.4% increase from 2011.

Net income attributable to shareholders recorded a year-over-year increase of 49.4% to $151.8 million, or $1.85 per fully diluted share. Non-GAAP net income attributable to shareholders recorded a year-over-year increase of 40.6% to $174.2 million, or $2.13 per fully diluted share.

"Again we delivered strong results for the fourth quarter and the whole year, despite tough market conditions we experienced in the first half of the year," said Vincent Mo, Executive Chairman of SouFun. "Our unwavering focus on SouFun's existing marketing services and its derivative, SouFun membership services, and our listing services allowed us to build a solid foundation to grow our business. Our ability to continuously innovate and successfully create new services, such as SouFun membership services and SouFun Online Shop, will enable SouFun to capture new growth opportunities and enhance its leadership in China's home related internet sector. We are confident that we will continue to grow at a healthy pace in both top-line and bottom-line in 2013."

Fourth Quarter 2012 Results

SouFun reported total revenue of $147.5 million for the fourth quarter of 2012, representing an increase of 29.6% from the corresponding period in 2011, primarily driven by the growth in SouFun membership services and listing services.

Revenue from marketing services was $80.2 million for the fourth quarter of 2012, a slight increase of 1.0% from the corresponding period in 2011, reversing the decreasing trend experienced during the previous two quarters of 2012.

Revenue from e-commerce services was $40.1 million for the fourth quarter of 2012, a substantial increase from $10.0 million for the same period in 2011 due to the increasing market acceptance of the SouFun membership services. We began offering paid SouFun membership services to property buyers to facilitate their transactions with property developers in the second quarter of 2011.

Revenue from listing services was $26.1 million for the fourth quarter of 2012, an increase of 19.8% from the corresponding period in 2011, primarily due to the general recovery in the secondary real estate market during the second half of the year and new revenue from SouFun Online Shop which has been tested mainly in ten major cities in China, including Beijing and Shanghai.

Revenue from other value-added services was $1.1 million for the fourth quarter of 2012, a decrease of 58.1% from the corresponding period in 2011, primarily due to our increased focus on the core marketing and listing services.

Cost of revenue was $25.3 million for the fourth quarter of 2012, an increase of 49.3% from the corresponding period in 2011, primarily due to the increase in staff cost and the expanded implementation of the value-added tax system in China, which results in higher taxes than the traditional business tax due to our cost structure.

Gross margin was 82.8% for the fourth quarter of 2012, a slight decrease from 85.1% for the corresponding period in 2011. The slight decrease was primarily due to the expanded implementation of the value-added tax system during 2012.

Operating expenses were $50.6 million for the fourth quarter of 2012, an increase of 1.1% from the corresponding period in 2011.

Selling expenses were $27.8 million for the fourth quarter of 2012, an increase of 33.9% from the corresponding period in 2011 due primarily to increased staff cost and marketing and promotional expenses along with our business expansion.

General and administrative expenses were $22.8 million for the fourth quarter of 2012, a decrease of 22.1% from the corresponding period in 2011 due primarily to a decrease in bad debt expense.

Operating income was $71.6 million for the fourth quarter of 2012, an increase of 52.8% from the corresponding period in 2011. Non-GAAP operating income was $74.8 million, an increase of 53.5% from the corresponding period in 2011.

Income tax expense was $16.3 million for the fourth quarter of 2012, an increase of 21.4% as compared to $13.4 million for the corresponding period in 2011, primarily driven by the growth in taxable earnings.  

Net income attributable to shareholders was $55.8 million for the fourth quarter of 2012, an increase of 85.3% from the corresponding period in 2011, due primarily to the top-line growth and the decrease in bad debt expenses, partially offset by the increase in staff costs and taxes. Fully diluted earnings per share was $0.68 for the fourth quarter of 2012, a 83.8% increase as compared to $0.37 for the corresponding period in 2011. Non-GAAP net income attributable to shareholders was $65.1 million for the fourth quarter of 2012, an increase of 66.0% from the corresponding period in 2011. Non-GAAP fully diluted earnings per share was $0.79 for the fourth quarter of 2012, a 61.2% increase as compared to $0.49 for the corresponding period in 2011.

As of December 31, 2012, SouFun had cash, cash equivalents, and short-term investments (excluding the available-for-sale securities) of $143.6 million, compared to $158.3 million as of December 31, 2011. This reflected the payment of $131.0 million in cash dividend to shareholders in 2012 and prepayment of $111.4 million to acquire a portion of the BaoAn Building in Shanghai to support our expansion in Shanghai and East China area. The acquisition is expected to be completed in the first quarter of 2013. Cash flow from operating activities was $94.2 million for the fourth quarter of 2012, a 102.1% increase as compared to US$46.6 million for the same period of 2011.

Fiscal Year 2012 Results

SouFun reported total revenue of $430.3 million for 2012, representing an increase of 25.1% from 2011, primarily driven by the growth in SouFun membership services and listing services.

Revenue from marketing services was $249.9 million for 2012, a slight increase of 1.3% from 2011.

Revenue from e-commerce services was $102.2 million for 2012, a substantial increase from $24.2 million for 2011 due to the increasing market acceptance of the SouFun membership services. We began offering paid SouFun membership services to property buyers to facilitate their transactions with property developers in the second quarter of 2011.

Revenue from listing services was $72.9 million for 2012, an increase of 8.6% from 2011, primarily due to the general recovery in the secondary real estate market during the second half of the year and new revenue from SouFun Online Shop which has been tested mainly in ten major cities in China, including Beijing and Shanghai.

Revenue from other value-added services was $5.4 million for 2012, a decrease of 9.1% from 2011, primarily due to our increased focus on our core marketing and listing services.

Cost of revenue was $80.9 million for 2012, an increase of 21.5% from 2011.

Gross margin was 81.2% for 2012, slightly improved from 80.6% in 2011.

Operating expenses totaled $150.8 million for 2012, an increase of 10.2% from 2011.

Selling expenses totaled $80.1 million for 2012, an increase of 19.1% from 2011 due primarily to increased staff cost.

General and administrative expenses totaled $70.8 million for 2012, a slight increase of 1.7% from 2011. The small increase was primarily due to an increase in staff cost, which was substantially offset by a decrease in bad debt expense.

Operating income was $198.6 million for 2012, an increase of 41.4% from 2011. Non-GAAP operating income was $205.7 million, an increase of 39.4% from 2011.

Income tax expense was $55.9 million for 2012, an increase of 31.2% compared to $42.6 million for 2011, while the effective tax rate decreased 2.7% to 26.9% from 29.6%. The decrease in effective tax rate was due to greater profit contribution by two subsidiaries with tax exemption status in 2012 and the reversal of previously accrued income taxes totaling $1.6 million resulting from the change in the tax status of these two subsidiaries in 2012.

Net income attributable to shareholders was $151.8 million for 2012, an increase of 49.4% from 2011. Fully diluted earnings per share was $1.85 for 2012, a 49.2% increase as compared to $1.24 for 2011. Non-GAAP net income attributable to shareholders was $174.2 million for 2012, an increase of 40.6% from 2011. Non-GAAP fully diluted earnings per share was $2.13 for 2012, a 41.1% increase as compared to $1.51 for 2011.

Cash flow from operating activities was $218.9 million for 2012, a 41.0% increase as compared to $155.3 million for 2011.

Business Outlook

SouFun estimates its total revenue for 2013 to be around $520.0 million, representing a year-on-year increase of 20.0% to 22.5%. This forecast reflects SouFun's current and preliminary view, which is subject to change.

Notes regarding Unaudited Financial Information

The unaudited financial information disclosed in this press release is preliminary. The audit of the financial statements and related notes to be included in the Company's annual report on Form 20-F for the year ended December 31, 2012 is still in progress. Adjustments to the financial statements could be identified upon completion of the audit work. Such adjustments could result in differences, some of which could be significant, between the Company's audited financial statements and this preliminary unaudited financial information included in this release.

Conference Call Information

SouFun' management team will host a conference call on February 8, 2013 at 8 a.m. U.S. Eastern Standard Time (9 p.m. Beijing/Hong Kong time).

The dial-in details for the live conference call are:

US:

+1 718 354 1231/ 1 866 519 4004

International:

+65 6723 9381

Hong Kong:

+852 2475 0994 /800 930 346

Mainland China:

800 819 0121 / 400 620 8038

Passcode:

SFUN

Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call.

A telephone replay of the call will be available after the conclusion of the conference call at 11:00 a.m. U.S. EST on February 8 through February 15, 2013. The dial-in details for the telephone replay are:

International:

+61 2 8199 0299

US Toll Free:

1855 452 5696

US Toll:

+1 646 254 3697

Conference ID #:

94996321

A live and archived webcast of the conference call will be available on SouFun's website at http://ir.soufun.com.

About SouFun

SouFun operates the leading real estate Internet portal and a leading home furnishing and improvement website in China. Through its main website, www.soufun.com, SouFun offers comprehensive real estate and home furnishing and improvement information to its large and active community of users and provides advertising and listing services for real estate developers and brokers. SouFun currently maintains 106 offices to support local market needs and its website and database contains real estate-related content covering 323 cities in China. For more information about SouFun, please visit http://ir.soufun.com.

Safe Harbor Statements

This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking 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," "is expected to," "anticipates," "aim," "future," "intends," "plans," "believes," "are likely to," "estimates," "may," "should" and similar expressions. Such forward-looking statements include, without limitation, statements regarding the outlook for the fiscal year of 2013 and comments by management in this release about SouFun's strategic and operational plans and focus, current and future market positions, future growth and growth momentum of existing and recently introduced services, ability to continue to innovate and introduce new services, completion of the acquisition, and about China's real estate and home furnishings market. SouFun may also make forward-looking statements in our periodic reports to the U.S. Securities and Exchange Commission, in press releases and other written materials and in oral statements made by our officers, directors or employees to third parties. Statements that are not historical facts, including statements about SouFun's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, SouFun's limited operating history, the current global financial and credit markets crisis and its potential impact on the Chinese economy, measures taken or to be taken by the Chinese government to control real estate growth and prices and other events which could occur in the future, challenges in China's real estate market, the impact of competitive market conditions for our services and our ability to maintain and increase our leadership in China's home related internet sector, the uncertain regulatory landscape in China, completion of the audited financial statements for fiscal 2012, fluctuations in our quarterly operating results, our continued ability to execute business strategies including our SouFun membership services and SouFun Online Shop, our ability to continue to expand in local markets, our reliance on online advertising sales and listing services for our revenues, any failure to successfully develop and expand our content, service offerings and features, including the success of new features to meet evolving market needs, and the technologies that support them, and, should we in the future make acquisitions, any failure to successfully integrate acquired businesses. 

Further information regarding these and other risks and uncertainties is included in our annual report on form 20-F and other documents filed with the U.S. Securities and Exchange Commission. SouFun does not assume any obligation to update any forward-looking statements in this release and elsewhere, which apply only as of the date of this press release.  

About Non-GAAP Financial Measures

To supplement SouFun's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), SouFun uses in this press release the following measures defined as non-GAAP financial measures by the United States Securities and Exchange Commission: (1) operating income, (2) net income and (3) basic and diluted earnings per ordinary share. The presentation of the non-GAAP financial information 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 "Reconciliation of GAAP and non-GAAP Results" set forth at the end of this press release.

SouFun believes that these non-GAAP financial measures provide meaningful supplemental information to investors regarding its operating performance by excluding share-based compensation expenses, which (1) may not be indicative of SouFun's recurring core business operating results or (2) are not expected to result in future cash payments. These non-GAAP financial measures also facilitate management's internal comparisons to SouFun'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 has been and will continue to be a significant recurring expense that will continue to exist in SouFun'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 directly comparable GAAP financial measures.

For investor and media inquiries, please contact:

Dr. Hua Lei IR Director Tel: +86 (10) 5631 8661 E-mail: Leihua@soufun.com

Jing Wang IR Manager Tel: +86 (10) 5631 8660 E-mail: Bj.wangjing@soufun.com

 

SouFun Holdings Limited

Condensed Consolidated Balance Sheet

 ( in U.S. dollars in thousands )

ASSETS

December 31,

December 31,

2012

2011

(Unaudited)

(Audited)

Current assets:

Cash and cash equivalents

118,167

150,414

Restricted cash, current

-

35,814

Short-term investments

26,841

8,592

Accounts receivable, net

30,029

27,697

Funds receivable

7,600

-

Prepayment and other current assets

9,226

9,695

Loans receivable

-

26,143

Amounts due from a related party

-

1,595

Deferred tax assets, current

2,734

1,602

Total current assets 

194,597

261,552

Non-current assets:

Property and equipment, net

79,564

68,064

Restricted cash, non-current

391,416

247,631

Deferred tax assets, non current

1,723

1,407

Deposit for non-current assets

8,750

-

Prepayment for business acquisition

111,367

-

Other non-current assets

13,744

1,717

Total non-current assets

606,564

318,819

Total assets

801,161

580,371

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term loans

270,670

255,570

Deferred revenue

65,871

61,208

Accrued expenses and other liabilities

89,306

52,490

Dividend payable

-

51,969

Income tax payable

23,659

16,158

Customers' refundable fees

18,449

12,412

Total current liabilities

467,955

449,807

Non-current liabilities:

Long-term loans

80,750

-

Deferred tax liabilities, non-current

64,947

38,581

Total non-current liabilities

145,697

38,581

Total Liabilities  

613,652

488,388

Shareholders' equity:

Class A and Class B Ordinary shares (par value of HK$1 per share: 600,000,000 total shares authorized; 78,150,568 (Class A-53,813,918 and Class B-24,336,650 ) with aggregated par value of US$10,032 (Class A-US$6,908 and Class B-US$3,124) and 80,350,385 (Class A-56,013,735 and Class B 24,336,650 ) with aggregated par value of US$10,316 (Class A-US$7,191 and Class B-US$3,125) shares issued and outstanding as of December 31, 2011 and December 31, 2012))

 

 

 

10,316

 

 

 

10,032

Additional paid-in capital

69,637

49,838

Accumulated other comprehensive income

23,974

21,853

Retained earnings

82,952

10,185

Total SouFun Holdings Limited shareholders' equity

186,879

91,908

Noncontrolling interests

630

75

Total shareholders' equity

187,509

91,983

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

801,161

580,371

 

SouFun Holdings Limited

Condensed Consolidated Statements of Comprehensive Income

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

Three months ended

Twelve months ended

December 31,

December 31,

December 31,

December 31,

2012

2011

2012

2011

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenues:

  Marketing services

80,234

79,433

249,861

246,634

  E-commerce services

40,111

10,030

102,162

24,170

  Listing services

26,092

21,778

72,874

67,125

  Other value-added

  services

1,100

2,624

5,361

5,897

Total revenues

147,537

113,865

430,258

343,826

Cost of Revenues:

  Cost of services

(25,314)

(16,959)

(80,863)

(66,571)

Total Cost of Revenues

(25,314)

(16,959)

(80,863)

(66,571)

Gross Profit

122,223

96,906

349,395

277,255

Operating expenses:

  Selling expenses

(27,815)

(20,770)

(80,056)

(67,207)

  General and

  administrative expenses

(22,800)

(29,286)

(70,780)

(69,611)

Total Operating Expenses

(50,615)

(50,056)

(150,836)

(136,818)

Operating Income

71,608

46,850

198,559

140,437

  Foreign exchange gain

  (loss)

12

(1)

90

1

  Interest income

5,455

3,609

19,406

10,483

  Interest expense

(5,199)

(2,912)

(11,630)

(4,026)

  Realized gain-trading

  securities

-

11

-

263

Government grants

194

308

1,298

1,399

  Other-than-temporary

  impairment on

  available-for-sale

  securities

-

(4,343)

(14)

(4,343)

Income before income taxes and noncontrolling interests

72,070

43,522

207,709

144,214

Income tax expenses

  Income tax expense

(16,310)

(13,430)

(55,905)

(42,617)

Net income

55,760

30,092

151,804

101,597

  Net (loss) attributable

  to noncontrolling

  interests

(6)

(8)

(6)

 

(28)

Net income attributable to SouFun Holdings Limited shareholders

55,766

30,100

151,810

 

101,625

 

 

 

Other comprehensive income, net of tax

Foreign currency

  translation

3,823

1,599

1,378

10,839

Reclassification adjustment for loss included in net income

-

3,506

-

721

  Unrealized losses on available-for-sale security

43

-

743

-

Total other comprehensive income, net of tax

3,866

5,105

2,121

11,560

Comprehensive income

59,626

35,198

153,925

113,157

Earnings per share for Class A and Class B ordinary shares

Basic

0.72

0.39

1.96

1.33

Diluted

0.68

0.37

1.85

1.24

Weighted average number of Class A and Class B ordinary shares outstanding:

Basic

77,555,412

76,854,946

77,365,156

76,492,272

Diluted

82,433,256

81,105,017

81,924,565

82,215,832

 

SouFun Holdings Limited

Reconciliation of GAAP and Non-GAAP Results

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

Three months ended

Twelve months ended

December 31,

December 31,

December 31,

December 31,

2012

2011

2012

2011

GAAP income from operations

71,608

46,850

198,559

140,437

Share-based compensation

3,153

1,869

7,149

7,170

Non-GAAP income from operations

74,761

48,719

205,708

147,607

GAAP net income

55,760

30,092

151,804

101,597

One-off tax benefit

-

(7,645)

(1,631)

(7,645)

Withholding tax related to dividends

6,196

10,557

16,867

18,414

Other-than-temporary impairment on available-for-sale securities

-

4,343

14

4,343

Share-based compensation

3,153

1,869

7,149

7,170

Non-GAAP net income

65,109

39,216

174,203

123,879

Net Income attributable to SouFun Holdings Limited shareholders                                   

55,766

30,100

151,810

101,625

One-off tax benefit

-

(7,645)

(1,631)

(7,645)

Withholding tax related to dividends

6,196

10,557

16,867

18,414

Other-than-temporary impairment on available-for-sale securities

-

4,343

14

4,343

Share-based compensation expense

3,153

1,869

7,149

7,170

Non-GAAP net Income attributable to SouFun Holdings Limited shareholders

65,115

39,224

174,209

123,907

GAAP earnings per share for Class A and Class B ordinary shares:

Basic

0.72

0.39

1.96

1.33

Diluted

0.68

0.37

1.85

1.24

Non-GAAP earnings per share for Class A and Class B ordinary shares:

Basic

0.84

0.51

2.25

1.62

Diluted

0.79

0.49

2.13

1.51

Weighted average number of Class A and Class B ordinary shares outstanding:

Basic

77,555,412

76,854,946

77,365,156

76,492,272

Diluted

82,433,256

81,105,017

81,924,565

82,215,832

SOURCE SouFun Holdings Limited



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