SouFun Announces Third Quarter 2015 Results

18 Nov, 2015, 06:57 ET from SouFun Holdings Limited

BEIJING, Nov. 18, 2015 /PRNewswire/ -- SouFun Holdings Limited (NYSE: SFUN) ("SouFun"), the leading real estate Internet portal in China, announced today its unaudited financial results for the three months ended September 30, 2015.

Third Quarter 2015 Highlights

  • Total Revenue increased by 30.4% year-on-year to $248.5 million. Revenue from e-commerce services increased by 111.0% year-on-year to $142.6million.
  • Operating loss was $31.8 million. Non-GAAP operating loss was $30.6 million. A description of the adjustments from GAAP to non-GAAP operating income is set forth below.
  • Net income attributable to SouFun's shareholders was $1.4 million.
  • Non-GAAP net loss attributable to SouFun's shareholders was $31.9 million, a $0.08 loss per fully-diluted earnings ADS.
  • GMV increased by 56% from $6.8 billion in the second quarter of 2015 to $10.6 billion in the third quarter. The following table shows GMV by quarter for the nine months of 2015.

GMV: Q1-Q3, 2015 (in millions of US dollars)

Q2 vs Q3 Variance

Q1

Q2

Q3

amount

%

New Home *

1,281

3,441

4,580

1,139

33%

Secondary Home

384

3,321

5,951

2,630

79%

Home furnishing

4

23

56

33

143%

Total

1,669

6,785

10,587

3,802

56%

* Only including direct sales services.

New Development

1. Close of Private Placement

On September 18, the Company announced a $400-$700 million private placement. By 9th November 2015, the Company completed a total of $646.77 million from IDG Capital Partners and The Carlyle Group and certain management members (mainly our Chairman and CEO Vincent Mo) and their affiliates.

2. Investment into Sindeo

On October 29, SouFun entered into strategic investment agreements with Sindeo, Inc. with an aggregate cash consideration amounts to approximately US$5 million.

Sindeo is a leading lender-paid online mortgage originator based in San Francisco. Since 2014, Sindeo has been providing a fair, transparent and modern mortgage experience to home buyers and make mortgages simple. Sindeo is transforming the experience to help consumers make smart, informed decisions and get a stress-free mortgage.

3. Agreement to acquire a majority shareholdings of WanLi

On November 13, the Company entered into a framework agreement with Chongqing Wanli New Energy Co., Ltd. ("Wanli"), a company listed on the Shanghai Stock Exchange (stock code: 600847), IDG, Ruidong and Mr. Xicheng Liu to acquire a controlling stake in Wanli's public shell, accompanied by a concurrent direct placement(RMB2.5 billion to RMB5 billion) of Wanli shares to certain investors. SouFun plans to maintain not less than 70% of the equity stake in Wanli following the acquisition and direct share placement.

4. Agreement to acquire Beijing headquarters facilities

On November 8 , the board approved the Company to purchase a headquarters establishment in Beijing with a total price around $243 million. The new headquarters establishment with a total usable office space is around 70,000 square meters will provide strong support to the fast expanding headcounts and Beijing operations.

"We are very pleased as we were able to achieve over 111% growth in our e-commerce sectors and over 30% total revenue growth in this quarter," said Vincent Mo, Chairman and CEO of Fang.com. "The Company's strategies of transforming to transaction-oriented platforms including new, resale, rental homes and home furnishing plus financial services are making things happen. With our successful private placement and planned future arrangement with China's financial market, I am sure the Company is in a better position in aggressively executing its transformations."

Third Quarter 2015 Results

Revenues

SouFun reported total revenues of $248.5 million for the three months ended September 30, 2015, representing an increase of 30.4% from $190.5 million for the corresponding period in 2014, primarily driven by the growth in e-commerce services, partially offset by the decline in marketing services and listing services.

Revenue from marketing services was $65.6 million for the three months ended September 30, 2015, a decrease of 19.0% from $81.0 million for the corresponding period in 2014, primarily due to fewer customers in the market and fewer average amount per advertising contract.

Revenue from e-commerce services was $142.6 million for the three months ended September 30, 2015, a 111.0% increase from $67.6 million for the same period in 2014, primarily due to the growth of the direct sales services for new home and the growth of the real estate brokerage services for secondary home, as well as rapid growth of the home decorating services.

Revenue from listing services was $27.4 million for the three months ended September 30, 2015, a decrease of 25.3% from $36.7 million for the corresponding period in 2014, primarily due to our reduction of unit price per paying subscriber.

Revenue from Internet financial services was $6.4 million for the three months ended September 30, 2015, an increase of 545.3% from $1.0 million for the corresponding period in 2014. SouFun began to offer Internet financial services in August 2014. We extracted revenue from financing services from other value-added services, to show this is a separate revenue source starting from the first quarter of 2015.

Revenue from other value-added services was $6.5 million for the three months ended September 30, 2015, an increase of 51.2% from $4.3 million for the corresponding period in 2014, primarily due to the rapid growth of our research related products.

Cost of Revenue

Cost of revenue was $188.5 million for the three months ended September 30, 2015, an increase of 286.0% from $48.8 million for the corresponding period in 2014. The increase in cost of revenue was mainly attributable to increased staff. In addition, increased e-commerce cost including potion of proceeds remitted to real estate brokers and subsidies to home buyers related to E-commerce services, and increased decorating cost related to the home decorating services also contributed to the increase in cost of revenues.

Gross margin was 24.2% for the three months ended September 30, 2015, compared to 74.4% for the corresponding period in 2014.

Operating Expenses 

Operating expenses were $91.8 million for the three months ended September 30, 2015, an increase of 29.0 % from $71.2 million for the corresponding period in 2014.

Selling expenses were $52.8 million for the three months ended September 30, 2015, an increase of 28.8% from $41.0 million for the corresponding period in 2014, primarily due to increased expenses paid to our marketing agents for  SouFun membership services, and increased advertising and promotional expenses.

General and administrative expenses were $39.0 million for the three months ended September 30, 2015, an increase of 29.1% from $30.2 million for the corresponding period in 2014, primarily due to increased staff cost and increased rental expenses.

Operating Income/Loss

Operating loss was $31.8 million for the three months ended September 30, 2015, compared to operating income of $70.7 million for the corresponding period in 2014.

Income Tax Benefit/Expenses

Income tax benefit was $29.2 million for the three months ended September 30, 2015, compared to income tax expenses of $18.9 million for the corresponding period in 2014.  The income tax benefit was primarily due to the reversal of withholding tax arising from the undistributed earnings.

Net Income/Loss and EPS

Net Income attributable to SouFun's shareholders was $1.4 million for the three months ended September 30, 2015, compared to net income $61.0 million for the corresponding period in 2014. $0.02 and nil per fully-diluted ordinary share and ADS, respectively, for the three months ended September 30, 2015, compared to $0.68 and $0.14 for the corresponding period in 2014.

Adjusted EBITDA

Adjusted EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was $24.3 million loss for the three months ended September 30, 2015, compared to $78.3 million for the corresponding period in 2014.

Cash

As of September 30, 2015, SouFun had cash, cash equivalents, and short-term investments of $622.0 million, compared to $533.6 million as of June 30, 2015. Net cash used in operating activities was $83.2 million for the three months ended September 30, 2015, compared to net cash generated from operating activities was $53.2 million for the same period in 2014. The decline in cash flows from operating activities was primarily due to a $59.6 million decrease of net income as compared to the third quarter of 2014, and a $72.6 million decrease in cash flows due to an increase of loans provided to home buyers under our internet financial services program.

Business Outlook

SouFun remains its revenue guidance for 2015 at $843.4 million, representing a year-on-year increase of 20%. 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 18, 2015 at 8:00 AM U.S. EST (9:00 PM Beijing / Hong Kong time). The dial-in details for the live conference call are:

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

International Toll:

+65 6713-5090

Local Toll:

United States

+1 845-675-0437/+1 866-519-4004

Hong Kong

+852 3018-6771/800-906-601

Mainland China

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

Passcode:

SFUN

A telephone replay of the call will be available after the conclusion of the conference call from 00:00 AM HKT on November 19 through 23:59 PM HKT November 26, 2015. The dial-in details for the telephone replay are:

International Toll:

+61 2-8199-0299

Toll-Free:

United States

+1 855-452-5696 / +1 646-254-3697

Hong Kong

+852 800-963-117 / +852 3051-2780

Mainland China

+86 400-602-2065 / +86 800-870-0205

Conference ID number:

76430800

A live and archived webcast of the conference call will be available on SouFun's website at http://ir.fang.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 and mobile apps in 2014.  Through its websites and mobile apps, SouFun provides marketing, e-commerce, listing, finance and other value-added services for China's real estate and home-related sectors. SouFun's Internet portal and mobile apps are highly focused on user experience, and support 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 websites, mobile apps and database contain real estate related content covering more than 370 cities in China. For more information about SouFun, please visit http://ir.fang.com.

Safe Harbor Statements

This press release 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  business momentum, the transition to a transaction oriented platform and confidence in strategy, the success of various business strategies in the short and long-term, conditions in the PRC real estate market and the success of SouFun's strategic and operational plans and focus, continued growth of the transactions and ecommerce businesses, the impact of increased expenses, the impact of government policies and conditions in 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, the impact of the slowdown in the PRC real estate market on SouFun and the impact on revenues of our existing and new service fees reductions, the ability of SouFun to retain real estate listing agencies as customers during challenging economic periods, the success of SouFun's new business initiatives, the ability of SouFun to manage its operating expenses,  the impact of, 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, economic challenges in China's real estate market, the impact of competitive market conditions for our services, 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 and transactions 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, the quality of the loans we originate and resell and the performance of those loans in the future, our ability to successfully service and process customer loans for our own benefit and for the purchasers of those loans 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) non-GAAP operating income, (2) non-GAAP net income and (3) non-GAAP basic and diluted earnings per ordinary share and (4) adjusted EBITDA. 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, realized gain on available-for-sale security, interest income and expenses, income tax expenses, and depreciation expense for the three months ended September 30, 2015, 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, interest income and expenses, income tax expenses, and depreciation expenses have 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. Kent Cangsang Huang Deputy CFO Phone: +86-10-5631-9668 Email: huangcangsang@soufun.com

SouFun Holdings Limited

Condensed Consolidated Balance Sheets

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

ASSETS

September 30,

December 31,

2015

2014

Current assets:

(Unaudited)

(Audited)

Cash and cash equivalents

516,167

354,760

Restricted cash, current

184,719

97,988

Short-term investments

105,843

455,184

Accounts receivable, net

120,799

49,691

Funds receivable

42,858

62,163

Prepayment and other current assets

49,851

30,161

Commitment deposits

17,049

47,312

Loan receivable, current

244,293

79,641

Amount due from related parties

365

-

Deferred tax assets, current

3,831

2,991

Total current assets 

1,285,775

1,179,891

Non-current assets:

Property and equipment, net

220,223

217,105

Prepaid land lease payments

794

-

Loan receivable, non-current

40,970

2,009

Restricted cash, non-current

-

109,495

Deferred tax assets, non-current

1,362

1,570

Deposit for non-current assets

102,648

86,515

Long-term investments

234,070

121,292

Prepayment for business acquisition

9,806

9,806

Other non-current assets

7,007

16,556

Total non-current assets

616,880

564,348

Total assets

1,902,655

1,744,239

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term loans

172,750

80,750

Deferred revenue

110,342

119,042

Accrued expenses and other liabilities

318,118

221,901

Income tax payable

4,817

35,394

Customers' refundable fees

80,184

42,392

Amounts due to a related party

-

660

Total current liabilities 

686,211

500,139

Non-current liabilities:

Long-term loans

-

100,000

Convertible senior notes

500,000

400,000

Deferred tax liabilities, non-current

78,178

111,026

Other non-current liabilities

350

385

Total non-current liabilities

578,528

611,411

Total Liabilities  

1,264,739

1,111,550

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        62,071,190  shares and 58,364,924 shares issued     and outstanding as at September 30, 2015 and     December 31, 2014, respectively

7,973

7,495

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, 2015 and December 31, 2014 ,     respectively

 

 

 

3,124

 

 

 

3,124

Additional paid-in capital

207,074

101,072

Accumulated other comprehensive income

6,701

49,566

Retained earnings

412,279

471,352

Total SouFun Holdings Limited shareholders' equity

637,151

632,609

Noncontrolling interests

765

80

Total equity

637,916

632,689

TOTAL LIABILITIES AND  EQUITY

1,902,655

1,744,239

 

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,

September 30,

2015

2014

(Unaudited)

(Unaudited)

Revenues:

    Marketing services

65,604

80,971

    E-commerce services

142,576

67,567

    Listing services

27,406

36,678

    Financial services

6,376

988

    Other value-added services

6,546

4,328

Total revenues

248,508

190,532

Cost of Revenues:

    Cost of services

(188,462)

(48,831)

Total Cost of Revenues

(188,462)

(48,831)

Gross Profit

60,046

141,701

Operating expenses and income:

     Selling expenses

(52,819)

(41,021)

General and administrative expenses

(38,966)

(30,175)

     Other income

5

180

Operating Income

(31,734)

70,685

     Foreign exchange gain (loss)

86

3

     Interest income

4,680

10,071

     Interest expense

(3,927)

(4,060)

Investment income

660

-

Government grants

2,405

3,234

Income before income taxes and     noncontrolling interests

(27,830)

79,934

Income tax expenses

    Income tax expenses

29,230

(18,941)

Net income

1,400

60,992

    Net income attributable to noncontrolling interests

(5)

-

Net income attributable to SouFun     Holdings Limited shareholders

1,405

60,992

Other comprehensive income, net of tax

Foreign currency     Translation

(34,180)

(2,391)

Unrealized gain on available-for-sale security

(23,085)

12,562

Total other comprehensive income, net of tax

(57,265)

10,171

Comprehensive income

(55,865)

71,163

Earnings per share for Class A and     Class B ordinary shares

Basic

0.02

0.74

Diluted

0.02

0.68

Earnings per ADS

Basic

-

0.15

Diluted

-

0.14

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

Basic

83,215,146

82,258,420

Diluted

90,617,966

93,396,601

Weighted average number of ADSs     outstanding:

Basic

416,075,730

411,292,102

Diluted

453,089,830

466,983,005

 

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

September 30,

September 30,

2015

2014

GAAP income from operations

(31,734)

70,685

Share-based compensation expense

1,125

1,478

Non-GAAP income from operations

(30,609)

72,163

GAAP net income

1,400

60,992

One-off tax benefit

(30,578)

-

Withholding tax related to dividends

(3,146)

7,250

Investment income

(660)

-

Share-based compensation expense

1,125

1,478

Non-GAAP net income

(31,859)

69,720

Net Income attributable to SouFun shareholders

1,405

60,992

One-off tax benefit

(30,578)

-

Withholding tax related to dividends

(3,146)

7,250

Investment income

(660)

-

Share-based compensation expense

1,125

1,478

Non-GAAP net Income attributable to     SouFun Holdings Limited shareholders

(31,854)

69,720

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

Basic

0.02

0.74

Diluted

0.02

0.68

GAAP earnings per ADS:

Basic

-

0.15

Diluted

-

0.14

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

Basic

(0.38)

0.85

Diluted

(0.38)

0.78

Non-GAAP earnings per ADS:

Basic

(0.08)

0.17

Diluted

(0.08)

0.16

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

Basic

83,215,146

82,258,420

Diluted

90,617,966

93,396,601

Weighted average number of ADSs outstanding:

Basic

416,075,730

411,292,102

Diluted

453,089,830

466,983,005

 

SouFun Holdings Limited 

Reconciliation of Non-GAAP and Adjusted EBITDA

(in thousands of U.S. dollars)

Three months ended

September 30,

September 30,

2015

2014

Non-GAAP

Net  income

(31,859)

69,720

Add back:

Interest expense

3,927

4,060

Income tax expenses

4,494

11,691

Depreciation expenses

3,813

2,881

Subtract:

Interest income 

(4,680)

(10,071)

Adjusted EBITDA

(24,305)

78,281

SOURCE SouFun Holdings Limited



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