SouFun Announces Third Quarter 2013 Results

BEIJING, Nov. 7, 2013 /PRNewswire/ -- SouFun Holdings Limited (NYSE: SFUN) ("SouFun"), the leading real estate Internet portal in China, announced today its unaudited financial results for the third quarter of 2013.

Third Quarter 2013 Highlights

  • Revenue in the third quarter of 2013 was $185.0 million, a 45.4% increase from the corresponding period in 2012.
  • Operating income in the third quarter of 2013 was $110.6 million, a 65.5% increase from the corresponding period in 2012. Non-GAAP operating income in the third quarter of 2013 was $112.3 million, a 64.3% increase from the corresponding period in 2012.
  • Net income attributable to SouFun's shareholders was $102.7 million, representing a year-over-year increase of 108.9%. Fully diluted earnings per share were $1.22, increased 100% from the corresponding period in 2012.
  • Non-GAAP net income attributable to SouFun's shareholders was $96.6 million, representing a year-over-year increase of 72.0%. Non-GAAP fully diluted earnings per share were $1.15, increased 64.3% from the corresponding period in 2012.

"We are proud of delivering another solid quarter and our 13th straight growth and above guidance quarter since SouFun's IPO," said Vincent Mo, Executive Chairman of SouFun. "Wireless and other new products and services are starting to bring extra income to the company while our leading internet businesses are still in their strong growth seasons and far from reaching maturity. We will continue to explore new lines of businesses by investing in technologies and product development and working with strategic partners for SouFun's future growth and our shareholders' long-term value."

Third Quarter 2013 Results

Revenues

SouFun reported total revenue of $185.0 million in the third quarter of 2013, representing an increase of 45.4% from the corresponding period in 2012, primarily driven by the growth in listing services and SouFun membership e-commerce services.

Revenue from marketing services was $86.5 million in the third quarter of 2013, an increase of 8.5% from $79.7 million in the corresponding period in 2012.

Revenue from e-commerce services was $49.7 million in the third quarter of 2013, a 94.2% increase from $25.6 million in the same period in 2012, primarily due to expansion of SouFun membership services in existing and new cities.

Revenue from listing services was $46.3 million in the third quarter of 2013, an increase of 128.0% from $20.3 million for the corresponding period in 2012, primarily due to increased paying agent subscribers.

Revenue from other value-added services was $2.6 million in the third quarter of 2013, an increase of 57.5% from $1.6 million in the corresponding period in 2012.

Cost of Revenue

Cost of revenue was $28.5 million in the third quarter of 2013, an increase of 37.0 % from $20.8 million in 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 84.6% in the third quarter of 2013, compared to 83.6% in the corresponding period in 2012.

Operating Expenses

Operating expenses were $46.2 million in the third quarter of 2013, an increase of 16.6% from $39.6 million for the corresponding period in 2012, reflecting effective cost control.

Selling expenses were $25.4 million in the third quarter of 2013, an increase of 23.1% from $20.6 million in the corresponding period in 2012, primarily due to increased staff cost.

General and administrative expenses were $20.7 million in the third quarter of 2013, an increase of 9.5% from $18.9 million in the corresponding period in 2012, primarily due to increased staff cost.

Operating Income

Operating income was $110.6 million in the third quarter of 2013, an increase of 65.5% from $66.8 million in the corresponding period in 2012, driven by revenue growth and effective cost control.

Income Tax Expenses

Income tax expense was $14.2 million in the third quarter of 2013, a 29.2% decrease compared to $20.0 million for the corresponding period in 2012. The decrease was primarily due to a one-time benefit of $15.1 million resulting from certain subsidiaries being now subject to a lower dividend-related withholding tax rate.

Net Income and EPS

Net income attributable to SouFun's shareholders was $102.7 million in the third quarter of 2013, a 108.9% increase from $49.2 million in the corresponding period in 2012. Fully diluted earnings per share were $1.22 in the third quarter of 2013, doubled from $0.61 in the corresponding period in 2012.

Adjusted EBITDA

Adjusted EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was $117.6 million in the third quarter of 2013, an increase of 67.4% as compared to $70.2 million in the corresponding period in 2012.

Cash

As of September 30, 2013, SouFun had cash, cash equivalents, and short-term investments (excluding the available-for-sale security) of $320.7 million, compared to $143.6 million as of December 31, 2012. Cash flow from operating activities was $126.3 million in the third quarter of 2013, a 123.7% increase from $56.4 million in the same period in 2012.

Business Outlook

SouFun raises its total revenue guidance for 2013 from between $538.0 million and $548.0 million to between $605.0 million and $615.0 million, or from a year-over-year increase of between 25.0% and 27.5% to between 40.6% and 42.9%. 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 November 7, 2013 at 8 a.m. U.S. Eastern Time (9 p.m. Beijing / Hong Kong time).

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

International Toll:

+65 6723 9381

International Toll-Free:

Hong Kong

800 930 346

United States

+1 866 519 4004

Toll Dial-In:


Mainland China

+86-400-620-8038 / +86-800-819-0121

Conference ID: 89920619


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. Eastern Daylight Time on November 7 through November 14, 2013. The dial-in details for the telephone replay are:

International Toll:

+61-2-8199-0299

Toll-Free:


Mainland China

400-632-2162/ 800-870-0206

Hong Kong

800-963-117

United States

1-855-452-5696

Conference ID: 89920619


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 its websites. Through our websites, we provide marketing, e-commerce, listing and other value-added services for China's fast-growing real estate and home furnishing and improvement sectors. Our user-friendly websites support active online communities and networks of users seeking information on, and other value-added services for, 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. 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 recur in the future.

Further information regarding these and other risks and uncertainties is included in SouFun's 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 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


Sep 30,


Dec 31,


2013

2012

Current assets:



(Unaudited)



(Audited)


Cash and cash equivalents



294,382



118,167


Restricted cash, current



216,623



-


Short-term investments



26,320



26,841


Accounts receivable, net



63,400



30,029


Funds receivable



55,659



7,600


Prepayment and other current assets



33,349



9,226


Deferred tax assets, current



2,977



2,734

Total current assets



692,710



194,597

Non-current assets:








Property and equipment, net



221,258



79,564


Restricted cash, non-current



292,525



391,416


Deferred tax assets, non-current



5,526



1,723


Deposit for non-current assets



-



8,750


Prepayment for BaoAn acquisition



-



111,367


Other non-current assets



11,503



13,744

Total non-current assets



530,812



606,564

Total assets



1,223,522



801,161









LIABILITIES AND SHAREHOLDERS' EQUITY







Current liabilities:








Short-term loans



270,670



270,670


Deferred revenue



129,910



65,871


Accrued expenses and other liabilities



121,368



89,306


Customers' refundable fees



79,288



18,449


Income tax payable



33,766



23,659


Amounts due to a related party



338



-

Total current liabilities



635,340



467,955

Non-current liabilities:








Long-term loans



180,750



80,750


Deferred tax liabilities, non-current



86,167



64,947


Other non-current liabilities



475



-

Total non-current liabilities



267,392



145,697

Total Liabilities



902,732



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 57,196,844 shares and
56,013,735 shares issued and outstanding as at
September 30, 2013 and December 31, 2012,
respectively



7,344



 

 

 

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 September 30, 2013 and
December 31, 2012 , respectively



3,124



 

 

 

3,124


Additional paid-in capital



84,748



69,637


Accumulated other comprehensive income



36,437



23,974


Retained earnings



188,423



82,952

Total SouFun shareholders' equity



320,076



186,879


Noncontrolling interests



714



630

Total equity



320,790



187,509

TOTAL LIABILITIES AND EQUITY



1,223,522



801,161

 


SouFun Holdings Limited

Condensed Consolidated Statements of Comprehensive Income

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









Three months ended



September 30, 2013


September 30, 2012

Revenues:







     Marketing services



86,485



79,717

E-commerce services



49,694



25,590

     Listing services



46,311



20,312

     Other value-added services



2,558



1,624

Total revenues



185,048



127,243








Cost of revenues:







     Cost of services



(28,532)



(20,819)

Total cost of revenues



(28,532)



(20,819)








Gross Profit



156,516



106,424








Operating expenses and income:







      Selling expenses



(25,415)



(20,647)

      General and administrative expenses



(20,739)



(18,938)

      Other income



274



-








Operating Income



110,636



66,839

 Foreign exchange gain



-



23

 Interest income



7,532



4,995

Interest expense



(3,632)



(2,826)

 Government grants



2,391



181

Income before income taxes and
noncontrolling interests



116,927



69,212

Income tax expenses







 Income tax expenses



(14,186)



(20,042)

Net income



102,741



49,170

Net income attributable to noncontrolling interests


1



-

Net income attributable to SouFun Holdings
Limited's shareholders



102,740



49,170

 

Other comprehensive income, net of tax







Foreign currency translation



3,524



(842)

Unrealized gain on available-for-sale security



-



200

Other comprehensive income, net of tax



3,524



(642)








Comprehensive income



106,265



48,528

Comprehensive income attributable to
noncontrolling interests



1



-








Comprehensive income attributable to SouFun
Holdings Limited's shareholders



106,264



48,528








Basic



1.31



0.64

Diluted



1.22



0.61

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







Basic



78,217,258



76,906,873

Diluted



84,240,621



80,532,484

 

SouFun Holdings Limited

Reconciliation of GAAP and Non-GAAP Results

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

 



Three months ended



Sep. 30, 2013


Sep. 30, 2012








GAAP income from operations



110,636



66,839

Share-based compensation expense



1,711



1,531

Non-GAAP income from operations



112,347



68,370








GAAP net income



102,741



49,170

One-off tax benefit



(15,101)



-

Withholding tax related to dividends



7,224



5,463

Share-based compensation expense



1,711



1,531

Non-GAAP net income



96,575



56,164








Net Income attributable to
SouFun Holdings Limited shareholders  



102,740



49,170

One-off tax benefit



(15,101)



-

Withholding tax related to dividends



7,224



5,463

Share-based compensation expense



1,711



1,531

Non-GAAP net Income attributable to
SouFun Holdings Limited shareholders



96,574



56,164








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







Basic



1.31



0.64

Diluted



1.22



0.61

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







Basic



1.23



0.73

Diluted



1.15



0.70

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







Basic



78,217,258



76,906,873

Diluted



84,240,621



80,532,484

 

SouFun Holdings Limited

Reconciliation of Non-GAAP and Adjusted EBITDA

( in U.S. dollars in thousands)




Three months ended



Sep. 30, 2013


Sep. 30, 2012








Non-GAAP

Net income



96,575



56,164

Add back:







Interest expense



3,632



2,826

Income tax expenses



22,063



14,579

Depreciation expenses



2,817



1,659

Subtract:







Interest income



(7,532)



(4,995)

Adjusted EBITDA

 



117,555



70,233

SOURCE SouFun Holdings Limited



RELATED LINKS
http://ir.soufun.com

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