Jupai Reports First Quarter 2020 Results

SHANGHAI, May 28, 2020 /PRNewswire/ -- Jupai Holdings Limited ("Jupai" or the "Company") (NYSE: JP), a leading third-party wealth management service provider, focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China, today announced its unaudited financial results for the first quarter ended March 31, 2020.

FIRST QUARTER 2020 FINANCIAL HIGHLIGHTS

• Net revenues in the first quarter of 2020 were RMB96.6 million (US$^[1]13.6 million), a decrease of 65.6% from the corresponding period in 2019.

• Loss from operations in the first quarter of 2020 was RMB12.1 million (US$1.7 million), an increase of 2.5% from the corresponding period in 2019.
• Net loss attributable to ordinary shareholders in the first quarter of 2020 was RMB19.9 million (US$2.8 million), a decrease of 22.3% from the corresponding period in 2019.
• Adjusted net loss attributable to ordinary shareholders (non-GAAP^[2]) in the first quarter of 2020 was RMB17.2 million (US$2.4 million), a decrease of 24.0% from the corresponding period in 2019.

FIRST QUARTER 2020 OPERATIONAL UPDATES 

• Total number of active clients^[3] during the first quarter of 2020 was 559, as compared to 1,279 active clients during the first quarter of 2019.
• The aggregate value of wealth management products distributed by the Company during the first quarter of 2020 was RMB1.4 billion (US$0.2 billion), a 48.0% decrease from the corresponding period in 2019.

• Jupai's coverage network as of March 31, 2020 included 44 client centers covering 39 cities, as compared to 65 client centers covering 47 cities as of March 31, 2019.
• Total assets under management^[4] as of March 31, 2020 were RMB39.8 billion (US$5.6 billion), a 24.8% decrease from March 31, 2019.

"Our cost control measures helped to drive improved bottom line results compared to the first quarter of 2019, even as our top-line performance remained under pressure due to the COVID-19 outbreak," said Mr. Jianda Ni, Jupai's chairman of the board and chief executive officer. "We remain confident for the future prospects for Jupai and China's wealth management industry, which has been reflected in the US$10 million share repurchase program we announced in late February 2020. We will continue to focus on our core strategies: improving our cost controls and increasing operating efficiency, enhancing our product portfolio, optimizing our risk control system, improving project transparency and seeking potential overseas growth opportunities."

Ms. Min Liu, Jupai's chief financial officer, said, "Reflecting our continuous efforts to streamline costs, Jupai achieved another sequential reduction in operating expenses in the first quarter of 2020. Our total operating cost and expenses declined by 35% and cost of revenues were down by 32%. We expect to continue improving our bottom-line in the quarters ahead as we further enhance operating efficiencies."

FIRST QUARTER 2020 FINANCIAL RESULTS

Net Revenues

Net revenues for the first quarter of 2020 were RMB96.6 million (US$13.6 million), a 65.6% decrease from the corresponding period in 2019, primarily due to decreases in one-time commissions, recurring management fees and other service fees.

• Net revenues from one-time commissions for the first quarter of 2020 were RMB39.5 million (US$5.6 million), a 32.6% decrease from the corresponding period in 2019, primarily as a result of a decrease in the aggregate value of wealth management products distributed by the Company.
• Net revenues from recurring management fees for the first quarter of 2020 were RMB25.3 million (US$3.6 million), an 86.8% decrease from the corresponding period in 2019, primarily due to the decrease in carried interest and the value of assets under management. RMB31.9 thousand (US$4.5 thousand) and RMB127.4 million carried interest was recognized as part of Jupai's recurring management fees in the first quarter of 2020 and 2019, respectively.
• Net revenues from recurring service fees for the first quarter of 2020 were RMB31.8 million (US$4.5 million), a 95.2% increase from the corresponding period in 2019, primarily because the Company provided ongoing services to more product suppliers. The Company recognized RMB0.4 million (US$0.06 million) and nil variable performance fees in the first quarter of 2020 and 2019, respectively.
• Net revenues from other service fees for the first quarter of 2020 were nil, as compared to RMB13.9 million from the corresponding period in 2019, primarily due to a decrease in sub-advisory fees collected from other companies.

Operating Costs and Expenses

Operating costs and expenses for the first quarter of 2020 were RMB108.7 million (US$15.4 million), a decrease of 62.9% from the corresponding period in 2019.

• Cost of revenues for the first quarter of 2020 was RMB62.0 million (US$8.8 million), a decrease of 64.8% from the corresponding period in 2019, primarily due to decreased compensation to wealth management advisors and client managers, as a result of the decrease in the aggregate value of wealth management products distributed by the Company and the cost control measures the Company adopted.
• Selling expenses for the first quarter of 2020 were RMB19.9 million (US$2.8 million), a decrease of 63.3% from the corresponding period in 2019, primarily due to the decrease in marketing and promotion expenses as a result of cost control and the decrease in revenues.
• General and administrative expenses for the first quarter of 2020 were RMB35.3 million (US$5.0 million), a decrease of 43.7% from the corresponding period in 2019, mainly due to the cost control measures the Company adopted.
• Other operating income (government subsidies) received by the Company for the first quarter of 2020 was RMB8.5 million (US$1.2 million), as compared to nil from the corresponding period in 2019. Government subsidies were recorded when received, with their availability and amount dependent upon government policies.

Operating margin for the first quarter of 2020 was -12.6%, as compared to -4.2% for the corresponding period in 2019.

Income tax expenses for the first quarter of 2020 were RMB12.7 million (US$1.8 million), a 16.6% decrease from the corresponding period in 2019, primarily due to a decrease in taxable income.

Net Loss

- Net Loss

• Net loss attributable to ordinary shareholders for the first quarter of 2020 was RMB19.9 million (US$2.8 million), a 22.3% decrease from the corresponding period in 2019.
• Net margin attributable to ordinary shareholders for the first quarter of 2020 was -20.6%, as compared to -9.1% from the corresponding period in 2019.
• Net loss attributable to ordinary shareholders per basic and diluted American depositary share ("ADS") for the first quarter of 2020 was RMB0.59 (US$0.08) and RMB0.59 (US$0.08), respectively, as compared to RMB0.76 and RMB0.76, respectively, from the corresponding period in 2019.

- Adjusted Net Loss (non-GAAP)

• Adjusted net loss attributable to ordinary shareholders (non-GAAP) for the first quarter of 2020 was RMB17.2 million (US$2.4 million), a 24.0% decrease from the corresponding period in 2019.
• Adjusted net margin attributable to ordinary shareholders (non-GAAP) for the first quarter of 2020 was -17.8%, as compared to -8.1% from the corresponding period in 2019.
• Adjusted net loss attributable to ordinary shareholders per diluted ADS (non-GAAP) for the first quarter of 2020 was RMB0.51 (US$0.07), as compared to RMB0.67 from the corresponding period in 2019.

Repurchase of Shares

As of May 22, 2020, we had repurchased 292,112 ADSs as part of the share repurchase program of up to US$10 million announced in February 2020, at a total cost of US$316,453, inclusive of transaction charges.

Balance Sheet and Cash Flow

As of March 31, 2020, the Company had RMB682.0 million (US$96.3 million) in cash, cash equivalents and restricted cash, as compared to RMB712.3 million as of December 31, 2019.

Net cash used in operating activities during the first quarter of 2020 was RMB21.2 million (US$3.0 million).

Net cash used in investing activities during the first quarter of 2020 was RMB2.0 million (US$0.3 million).

Net cash used in financing activities during the first quarter of 2020 was RMB7.1 million (US$1.0 million).

CONFERENCE CALL

Jupai's management will host an earnings conference call on May 28, 2020 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing/Hong Kong time).

Please register in advance for the conference call using the link provided below. Upon registering, you will be provided with a calendar invite with participant dial-in numbers, passcode, and a unique access pin by email. To join the conference, simply dial the number you receive after preregistering, enter the passcode followed by your pin, and you will join the conference instantly.

PRE-REGISTER LINK: https://s1.c-conf.com/diamondpass/10007204-invite.html

A replay of the conference call may be accessed by phone at the following number until June 4, 2020:

Additionally, a live and archived webcast will be available at http://jupai.investorroom.com.

DISCUSSION OF NON-GAAP FINANCIAL MEASURES

In addition to disclosing financial results prepared in accordance with U.S. GAAP, the Company's earnings release contains non-GAAP financial measures that exclude the effects of all forms of share-based compensation and amortization of intangible assets related to acquisition. The reconciliation of these non-GAAP financial measures to the nearest GAAP measures as set forth in the table captioned "Reconciliation of GAAP to Non-GAAP Results" below.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for financial measures prepared in accordance with U.S. GAAP. The financial results reported in accordance with U.S. GAAP and reconciliation of GAAP to non-GAAP results should be carefully evaluated. The non-GAAP financial measure used by the Company may be prepared differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

When evaluating the Company's operating performance in the periods presented, management reviewed non-GAAP net income results reflecting adjustments to exclude the impacts of share-based compensation and amortization of intangible assets related to acquisition, to supplement U.S. GAAP financial data. As such, the Company believes that the presentation of the non-GAAP net income attributable to ordinary shareholders, non-GAAP net income attributable to ordinary shares per diluted ADS and non-GAAP net margin attributable to ordinary shareholders provides important supplemental information to investors regarding financial and business trends relating to the Company's financial condition and results of operations in a manner consistent with that used by management. Pursuant to U.S. GAAP, the Company recognized significant amounts of expenses for the restricted shares, share options and amortization of intangible assets related to acquisition. The Company utilized the non-GAAP financial results to make financial results comparable period to period and to better understand its historical business operations.

ABOUT JUPAI HOLDINGS LIMITED

Jupai Holdings Limited ("Jupai") (NYSE: JP) is a leading third-party wealth management service provider focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China. Jupai's comprehensive and personalized client service and broad range of carefully selected third-party and self-developed products have made it a trusted brand among its clients. Jupai maintains extensive and targeted coverage of China's high-net-worth population.

For more information, please visit http://jupai.investorroom.com.

SAFE HARBOR STATEMENT

This announcement contains forward-looking statements. These 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," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Jupai's strategic and operational plans, contain forward-looking statements. Jupai may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, 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 Jupai's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the goals and strategies of the Company and the Company's ability to manage its growth and implement its business strategies; future business development, financial condition and results of operations of the Company; condition of the wealth management market in China and internationally; the demand for and market acceptance of the products the Company distributes; the Company's ability to maintain and further grow its active high-net-worth client base and maintain or increase the amount of investment by clients; developments in relevant government policies and regulations relating to the Company's industry and the Company's ability to comply with those policies and regulations; the Company's ability to attract and retain quality employees; the Company's ability to adapt to potential uncertainties in China's real estate industry and stay abreast of market trends and technological advances; the results of the Company's investments in research and development to enhance its product choices and service offerings; general economic and business conditions in China; and the Company's ability to protect its reputation and enhance its brand recognition. Further information regarding these and other risks is included in Jupai's filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and Jupai does not undertake any obligation to update any such information, including forward-looking statements, as a result of new information, future events or otherwise, except as required under applicable law.

-- FINANCIAL AND OPERATIONAL TABLES FOLLOW --

SOURCE Jupai Holdings Limited