SouFun Announces Second Quarter 2013 Results

BEIJING, Aug. 8, 2013 /PRNewswire/ -- SouFun Holdings Limited (NYSE: SFUN) ("SouFun"), the leading real estate Internet portal in China, announced today its unaudited financial results for the second quarter of 2013.

Second Quarter 2013 Highlights

  • Revenue in the second quarter of 2013 was $144.1 million, a 48.6% increase from the corresponding period in 2012.
  • Operating income in the second quarter of 2013 was $75.8 million, a 59.6% increase from the corresponding period in 2012. Non-GAAP operating income in the second quarter of 2013 was $77.6 million, a 59.2% increase from the corresponding period in 2012.
  • Net income attributable to SouFun's shareholders was $55.4 million, or $0.67 per fully diluted share, representing a year-over-year increase of 67.5%. Non-GAAP net income attributable to SouFun's shareholders was $62.5 million, or $0.75 per fully diluted share, representing a year-over-year increase of 56.3%.

First Half 2013 Highlights

  • Revenue in the first half of 2013 was $235.2 million, a 51.3% increase from the corresponding period in 2012.
  • Operating income in the first half of 2013 was $113.0 million, an 83.1% increase from the corresponding period in 2012. Non-GAAP operating income in the first half of 2013 was $116.5 million, an 81.6% increase from the corresponding period in 2012.
  • Net income attributable to SouFun's shareholders was $83.8 million, or $1.01 per fully diluted share, representing a year-over-year increase of 74.1%. Non-GAAP net income attributable to SouFun's shareholders was $95.7 million, or $1.15 per fully diluted share, representing a year-over-year increase of 76.9%.

"We are proud of delivering another solid quarter and our 12th straight growth quarter above our guidance since SouFun's IPO," said Vincent Mo, Executive Chairman of SouFun. "We will continue to focus on products and services and invest in new technologies that will enhance SouFun's websites and mobile applications for SouFun's future growth and create long-term value for our shareholders."

Second Quarter 2013 Results

Revenues

SouFun reported total revenues of $144.1 million for the second quarter of 2013, representing an increase of 48.6% from the corresponding period in 2012, primarily driven by the growth in listing service and SouFun membership service.

Revenue from marketing services was $58.9 million for the second quarter of 2013, an increase of 5.9% from $55.7 million for the corresponding period in 2012.

Revenue from e-commerce services was $45.0 million for the second quarter of 2013, an 84.2% increase from $24.4 million for the same period in 2012, primarily due to the expansion of SouFun membership services in Beijing, Shanghai and other cities, including Chengdu and Chongqing.

Revenue from listing services was $38.4 million for the second quarter of 2013, an increase of 147.3% from $15.5 million for the corresponding period in 2012, primarily due to the substantial growth in agency subscribers.

Revenue from other value-added services was $1.8 million for the second quarter of 2013, an increase of 30.8% from $1.4 million for the corresponding period in 2012.

Cost of Revenue

Cost of revenue was $26.1 million for the second quarter of 2013, an increase of 43.5 % from $18.2 million for the corresponding period in 2012. The increase in cost of revenue was mainly driven by the increase in staff costs and taxes.

Gross margin was 81.9% for the second quarter of 2013, compared to 81.2% for the corresponding period in 2012.

Operating Expenses and Income

Operating expenses were $42.4 million for the second quarter of 2013, an increase of 35.5 % from $31.3 million for the corresponding period in 2012.

Selling expenses were $23.0 million for the second quarter of 2013, an increase of 34.0% from $17.1 million for the corresponding period in 2012, primarily due to increased staff cost.

General and administrative expenses were $19.4 million for the second quarter of 2013, an increase of 37.4% from $14.1 million for the corresponding period in 2012, primarily due to increased staff cost.

Operating income was $75.8 million for the second quarter of 2013, an increase of 59.6% from $47.5 million for the corresponding period in 2012, driven by revenue growth and effective cost control.

Income tax expense was $24.7 million for the second quarter of 2013, a 40.2% increase compared to $17.6 million for the corresponding period in 2012, mainly driven by profit growth.

Net income attributable to SouFun's shareholders was $55.4 million for the second quarter of 2013, a 71.2% increase from $32.3 million for the corresponding period in 2012. Fully diluted earnings per share were $0.67 for the second quarter of 2013, a 67.5% increase from $0.40 for the corresponding period in 2012.

Adjusted EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was $80.7 million for the second quarter of 2013, an increase of 58.7% as compared to $50.8 million for the corresponding period in 2012.

As of June 30, 2013, SouFun had cash, cash equivalents, and short-term investments (excluding the available-for-sale security) of $273.4 million, compared to $143.6 million as of December 31, 2012. Cash flow from operating activities was $79.6 million for the second quarter of 2013, a 79.7% increase from $44.3 million for the same period in 2012.

First Half 2013 Results

Revenues

SouFun reported total revenues of $235.2 million for the first half of 2013, representing an increase of 51.3% from the corresponding period in 2012, primarily driven by the growth in listing services and SouFun membership services.

Revenue from marketing services was $94.8 million for the first half of 2013, an increase of 5.4% from $89.9 million for the corresponding period in 2012.

Revenue from e-commerce services was $71.3 million for the first half of 2013, a 95.6% increase from $36.5 million for the same period in 2012, primarily due to the expansion of SouFun membership services in Beijing, Shanghai and other cities, including Chengdu and Chongqing.

Revenue from listing services was $65.3 million for the first half of 2013, an increase of 146.5% from $26.5 million for the corresponding period in 2012, primarily due to the substantial growth in agency subscribers.

Revenue from other value-added services was $3.8 million for the first half of 2013, an increase of 45.1% from $2.6 million for the corresponding period in 2012.

Cost of Revenue

Cost of revenue was $46.2 million for the first half of 2013, an increase of 32.9 % from $34.7 million for the corresponding period in 2012.  The increase in cost of revenue was primarily due to the increase in staff costs and business taxes.

Gross margin was 80.4% for the first half of 2013, improved from 77.7% for the corresponding period in 2012 as a result of effective cost control and revenue growth.

Operating Expenses and Income

Operating expenses were $76.2 million for the first half of 2013, an increase of 29.1 % from $59.0 million for the corresponding period in 2012.

Selling expenses were $41.7 million for the first half of 2013, an increase of 32.0% from $31.6 million for the corresponding period in 2012, primarily due to increased staff cost.

General and administrative expenses were $34.5 million for the first half of 2013, an increase of 25.7% from $27.4 million for the corresponding period in 2012, primarily due to increased staff cost.

Operating income was $113.0 million for the first half of 2013, an increase of 83.1% from $61.7 million for the corresponding period in 2012, driven by revenue growth and effective cost control.

Income tax expense was $36.4 million for the first half of 2013, an 86.1% increase compared to $19.6 million for the corresponding period in 2012. The increase was primarily due to a $15.2 million incremental tax expense driven by profit growth and a $1.6 million one-time tax benefit in the first half of 2012.

Net income attributable to SouFun's shareholders was $83.8 million for the first half of 2013, an increase of 78.7% from $46.9 million for the corresponding period in 2012. Fully diluted earnings per share were $1.01 for the first half of 2013, a 74.1% increase from $0.58 for the corresponding period in 2012.

Adjusted EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was $121.6 million for the first half of 2013, an increase of 78.0% as compared to $68.3 million for the corresponding period in 2012.

Cash flow from operating activities was $139.4 million for the first half of 2013, a 97.4% increase from $70.7 million for the same period in 2012.

Business Outlook

SouFun raises its total revenue guidance for 2013 from between $527.0 million and $538.0 million to between $538.0 million and $548.0 million, or from a year-over-year increase of between 22.5% and 25.0% to between 25.0% and 27.5%, despite uncertainties in China's property market for the second half of 2013. This forecast reflects SouFun's current and preliminary view, which is subject to change.

Conference Call Information

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

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

International Toll Dial-In Number:

+65 6723 9381

International Toll Free Dial-In Number(s):

Hong Kong

800 930 346

United States

+1 866 519 4004

Local Dial-In Number(s):


Mainland China

400 620 8038 / 800 819 0121

Hong Kong

+852 2475 0994

United States, New York

+845 675 0437

Passcode:

SFUN

Conference ID # 21467448


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 10:00 a.m. U.S. Eastern Daylight Time on August 8 through August 15, 2013. The dial-in details for the telephone replay are:

International:

+61 2 8199 0299

Toll Free:


Mainland China

400 120 0931 / 400 120 0932 / 800 870 0205

Hong Kong

800 963 117

United States

+1 855 452 5696

Local Toll:


Hong Kong

+852 3051 2780

United States, New York

+646 254 3697

Conference ID # 21467448


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 in China in terms of the number of page views and visitors to our websites in 2012.  Through SouFun's websites, it provides marketing, e-commerce, listing, and other value-added services for China's fast-growing real estate and home-related sectors. SouFun's Internet portal is highly focused on user experience, and supports SouFun's users in seeking information on the real estate and home-related sectors in China. SouFun currently maintains about 100 offices to focus on local market needs and its website and database contains real estate related content covering more than 320 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 revenue outlook for 2013 and statements regarding SouFun's strategic and operational plans and focus, current and future market positions the impact of government policies and China's real estate and home furnishings market. 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, current global economic conditions and their 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, 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 we have 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 and the related tax effects, as well as realized gain on available-for-sale security for the three months ended June 30, 2013, 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:

Mr. Hong Zhao
Vice President of Finance
SouFun Holdings Limited
Phone: +86-10-5631-8707
Email: hongzhao@soufun.com

Or

Ms. Yiwen Zhang
Investor Relations Manager
SouFun Holdings Limited
Phone: +86-10-5631 8659
E-mail: zhangyiwen@soufun.com

 

SouFun Holdings Limited

Condensed Consolidated Balance Sheets

(in U.S. dollars in thousands, except as noted)


ASSETS


June 30,


Dec 31,


2013

2012

Current assets:


(Unaudited)


(Audited)


Cash and cash equivalents


255,557


118,167


Short-term investments


17,803


26,841


Accounts receivable, net


43,282


30,029


Funds receivable


17,635


7,600


Prepayment and other current assets


7,763


9,226


Deferred tax assets, current


2,875


2,734

Total current assets


344,915


194,597

Non-current assets:






Property and equipment, net


221,212


79,564


Restricted cash, non-current


398,181


391,416


Deferred tax assets, non-current


2,084


1,723


Deposit for non-current assets


9,065


8,750


Prepayment for BaoAn acquisition


-


111,367


Other non-current assets


19,234


13,744

Total non-current assets


649,776


606,564

Total assets


994,691


801,161







LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities:






Short-term loans


270,670


270,670


Deferred revenue


113,700


65,871


Accrued expenses and other liabilities


100,766


89,306


Customers' refundable fees


30,187


18,449


Income tax payable


16,851


23,659


Amounts due to a related party


175


-

Total current liabilities


532,349


467,955

Non-current liabilities:






Long-term loans


80,750


80,750


Deferred tax liabilities, non-current


93,714


64,947


Other non-current liabilities


473


-

Total non-current liabilities


174,937


145,697

Total Liabilities


707,286


613,652







Equity:






Class A ordinary shares, par value Hong Kong Dollar ("HK$") 1
  per share, 600,000,000 shares authorized for Class A and
  Class B in aggregate, and 56,532,480 shares and 56,013,735
  shares issued and outstanding as at June 30, 2013 and December
  31, 2012, respectively


7,259


7,192


Class B ordinary shares, par value HK$1 per share, 600,000,000
  shares authorized for Class A and Class B in aggregate, and
  24,336,650 shares and 24,336,650 shares issued and outstanding
  as at June 30, 2013 and December 31, 2012 , respectively


3,124


3,124


Additional paid-in capital


76,671


69,637


Accumulated other comprehensive income


32,913


23,974


Retained earnings


166,729


82,952

Total SouFun shareholders' equity


286,696


186,879


Noncontrolling interests


709


630

Total equity


287,405


187,509

TOTAL LIABILITIES AND EQUITY


994,691


801,161

 

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

Six months ended



June 30,


June 30,


June 30,


June 30,


2013


2012


2013


2012



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)

Revenues:









    Marketing services


58,947


55,658


94,760


89,910

    E-commerce services


44,972


24,417


71,335


36,462

    Listing services


38,423


15,535


65,257


26,469

    Other value-added services


1,802


1,378


3,826


2,637

Total revenues


144,144


96,988


235,178


155,478










Cost of Revenues:









     Cost of services


(26,124)


(18,208)


(46,154)


(34,730)

Total Cost of Revenues


(26,124)


(18,208)


(46,154)


(34,730)










Gross Profit


118,020


78,780


189,024


120,748










Operating expenses and income:









     Selling expenses


(22,965)


(17,136)


(41,697)


(31,594)

General and administrative expenses


(19,424)


(14,138)


(34,484)


(27,437)

     Other income


167


-


167


-

Operating Income


75,798


47,506


113,010


61,717

     Foreign exchange gain


2


57


2


55

     Interest income


6,315


4,529


11,993


8,956

     Interest expense


(3,218)


(2,593)


(6,555)


(5,210)

Government grants


432


486


854


923

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


-


-


-


(14)

Realized gain on available-for-sale security 
     (includes $821 accumulated other
     comprehensive income reclassifications for
     unrealized net gains on available-for-sale
     security)


821


-


821


-

   Gain on bargain purchase


-


-


102


-

Income before income taxes and
  noncontrolling interests


80,150


49,985


120,227


66,427

Income tax expenses









     Income tax expenses


(24,747)


(17,645)


(36,380)


(19,553)

Net income


55,403


32,340


83,847


46,874

     Net income attributable to noncontrolling interests


35


-


70


-

Net income attributable to SouFun
  shareholders


55,368


32,340


83,777


46,874

Other comprehensive income, net of tax









Foreign currency Translation


8,323


(1,742)


9,691


(1,603)

Realized gain on available-for-sale security


(821)


-


(821)


-

Unrealized gain on available-for-sale security


-


500


78


500

Total other comprehensive income, net of tax


7,502


(1,242)


8,948


(1,103)

Comprehensive income


62,905


31,098


92,795


45,771

Earnings per share for Class A and Class B
  ordinary shares









Basic


0.71


0.42


1.07


0.61

Diluted


0.67


0.40


1.01


0.58

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









Basic


77,923,911


76,878,518


77,962,391


77,241,192

Diluted


83,124,647


81,392,881


83,266,708


81,328,134

 

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

Six months ended



June 30,


June 30,


June 30,


June 30,


2013


2012


2013


2012

GAAP income from operations


75,798


47,506


113,010


61,717

Share-based compensation expense


1,761


1,202


3,524


2,464

Non-GAAP income from operations


77,559


48,708


116,534


64,181










GAAP net income


55,403


32,340


83,847


46,874

One-off tax benefit


-


-


-


(1,631)

Withholding tax related to dividends


6,156


5,208


9,305


5,208

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


-


-


-


14

Realized gain on available-for-sale
  security (includes $821 accumulated
  other comprehensive income
  reclassifications for unrealized net
  gains on available-for-sale security)


(821)


-


(821)


-

Share-based compensation expense


1,761


1,202


3,524


2,464

Gain on bargain purchase


-


-


(102)


-

Non-GAAP net income


62,499


38,750


95,753


52,929










Net Income attributable to
SouFun shareholders


55,368


32,340


83,777


46,874

One-off tax benefit


-


-


-


(1,631)

Withholding tax related to dividends


6,156


5,208


9,305


5,208

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


-


-


-


14

Realized gain on available-for-sale
  security (includes $821 accumulated
  other comprehensive income
  reclassifications for unrealized net
  gains on available-for-sale security)


(821)


-


(821)


-

Share-based compensation expense


1,761


1,202


3,524


2,464

Gain on bargain purchase


-


-


(102)


-

Non-GAAP net Income attributable to
  SouFun Holdings Limited shareholders


62,464


38,750


95,683


52,929










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









Basic


0.71


0.42


1.07


0.61

Diluted


0.67


0.40


1.01


0.58

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









Basic


0.80


0.50


1.23


0.69

Diluted


0.75


0.48


1.15


0.65

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









Basic


77,923,911


76,878,518


77,962,391


77,241,192

Diluted


83,124,647


81,392,881


83,266,708


81,328,134

 

SouFun Holdings Limited

Reconciliation of Non-GAAP and Adjusted EBITDA

(in U.S. dollars in thousands)




Three months ended

Six months ended



June 30,


June 30,


June 30,


June 30,


2013


2012


2013


2012










Non-GAAP

Net income


62,499


38,750


95,753


52,929

Add back:









Interest expense


3,218


2,593


6,555


5,210

Income tax expenses


18,591


12,437


27,075


15,976

Depreciation expenses


2,663


1,573


4,162


3,110

Subtract:









Interest income


(6,315)


(4,529)


(11,993)


(8,956)

Adjusted EBITDA


80,656


50,824


121,552


68,269

SOURCE SouFun Holdings Limited



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