FANG HOLDINGS LTD BEIJING, Aug. 29, 2017 /PRNewswire/ -- Fang Holdings Limited (NYSE: SFUN) ("Fang" or "we"), the leading real estate Internet portal in China, today announced its unaudited financial results for the second quarter ended June 30, 2017.
Second Quarter 2017 Highlights
-- ?Total revenues were $110.1 million, a decrease of 61.6% from the
corresponding period in 2016.
-- Operating loss was $6.1 million. Non-GAAP operating loss was $3.8
million.
-- Net loss attributable to Fang's shareholders was $2.1 million. Fully
diluted loss per ADS was $0.005.
-- Non-GAAP net loss attributable to Fang's shareholders was $5.8 million.
Non-GAAP fully diluted loss per ADS was 0.01.
-- Net cash generating from operating activities was $23.1 million in the
second quarter of 2017, compared to net cash generated from operating
activities of $36.5 million in the same period of 2016.
First Half 2017 Highlights
-- Total revenues were $219.9 million, a decrease of 55.3% from the
corresponding period in 2016.
-- Operating loss was $12.2 million. Non-GAAP operating loss was $8.4
million.
-- Net loss attributable to Fang's shareholders was $14.1 million. Fully
diluted loss per ADS was 0.03.
-- Non-GAAP net loss attributable to Fang's shareholders was $16.3 million.
Non-GAAP fully diluted loss per ADS was 0.04.
-- Net cash generating from operating activities was $12.1million in the
first half of 2017, compared to cash flow used in operating activities
of $30.7 million in the same period of 2016.
"We have experienced our biggest downsizing and consolidation since a year ago. Our transformation back to a technology-driven open platform is reaching its goals," said Vincent Mo, Chairman and CEO of Fang.com. "We expect to be back on track and profitable in the second half of the year."
Second Quarter 2017 Results
Revenues
Fang reported total revenues of $110.1 million in the second quarter of 2017, a 61.6% decrease from $287.0 million in the corresponding period of 2016, primarily due to the decline in e-commerce services revenue by 166.7 million caused by the strategy change.
Revenue from e-commerce services was $22.9 million in the second quarter of 2017, a decrease of 87.9% from $189.5 million in the corresponding period of 2016, primarily due to the changes in revenue structure as a result of transformation from self owned and operated services to franchise business.
Revenue from marketing services was $35.0 million in the second quarter of 2017, a decrease of 31.9% from $51.4 million in the corresponding period of 2016, primarily due to less demand from property developers for online advertising under government regulations in the real estate market of tier-1 and tier-2 cities.
Revenue from listing services was $42.3 million in the second quarter of 2017, an increase of 57.4% from $26.9 million in the corresponding period of 2016, primarily driven by the increased number of paying members in lower tiers of cities.
Revenue from Internet financial services was $2.7 million in the second quarter of 2017, a decrease of 75.7% from $11.1 million in the corresponding period of 2016, primarily due to the decreased secondary transaction volumes of Fang's own franchised brokerage services.
Revenue from other value-added services was $7.1 million in the second quarter of 2017, a decrease of 11.2% from $8.0 million in the corresponding period of 2016.
Cost of Revenue
Cost of revenue was $48.7 million in the second quarter of 2017, a decrease of 78.9% from $231.1 million in the corresponding period of 2016, primarily driven by the agent reduction and cost optimization under the newly adopted open platform strategy.
Operating Expense
Operating expenses were $67.4 million in the second quarter of 2017, a decrease of 23.9% from $88.6 million in the corresponding period of 2016.
Selling expenses were $23.1 million in the second quarter of 2017, a decrease of 55.8% from $52.3 million for the corresponding period of 2016, primarily caused by the decrease of advertising and promotion fee, as well as the e-commerce cost decrease.
General and administrative expenses were $43.6 million in the second quarter of 2017, an increase of 20.0% from $36.4 million for the corresponding period of 2016, primarily due to the increased bad debt and impairment of commitment deposits.
Operating Income
Operating loss was $6.1 million in the second quarter of 2017, compared to operating loss of $32.8 million in the corresponding period of 2016, primarily attributable to the agent reduction and effective cost control.
Income Tax Benefits/Expenses
Income tax benefits were $0.6 million in the second quarter of 2017, compared to income tax expenses of $8.7 million in the corresponding period of 2016, primarily due to the reversal of previously recorded ASC 740 (FIN 48) tax and interest liability.
Net Income/Loss and EPS
Net loss attributable to Fang's shareholders was $2.1 million in the second quarter of 2017, compared to net loss of $40.6 million in the corresponding period of 2016. Loss per fully-diluted ordinary share and ADS were $0.024 and $0.005 in the second quarter of 2017, compared to loss of $0.43 and $0.09, respectively, in the corresponding period of 2016.
Unrealized Gain on Available for Sale Security
Unrealized gain on available for sale security was $84.6 million in the second quarter of 2017, compared with 1.4 million in the corresponding period of 2016, primarily due to the fair value increase of World Union, a PRC listed company.
Adjusted EBITDA
Adjusted EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was $1.3 million in the second quarter of 2017, compared to the loss of $24.3 million in the corresponding period of 2016.
Cash
As of June 30, 2017, Fang had cash, cash equivalents, and short-term investments of $547.1million, compared to $590.5 million as of December 31, 2016. Net cash generated from operating activities was $23.1 million in the second quarter of 2017, compared to cash flow generated from operating activities of $36.5 million in the same period of 2016. The decrease in cash flows generated from operating activities was primarily due to the decrease of change in loan receivable in operating activities compared to the second quarter of 2016.
First Half 2017 Results
Revenues
Fang reported total revenues of $219.9 million for the first half of 2017, representing a decrease of 55.3% from $491.6 million for the corresponding period in 2016, primarily due to the decline of e-commerce services by 257.7 million caused by the strategy change.
Revenue from e-commerce services was $62.8 million for the first half of 2017, an 80.4% decrease from $320.4 million for the same period in 2016, primarily due to the changes in revenue structure as a result of transformation from self owned and operated services to franchise business.
Revenue from marketing services was $62.4 million for the first half of 2017, a decrease of 23.8% from $81.8 million for the corresponding period in 2016, primarily due to less demand from property developers for online advertising under government regulations in the real estate market of tier-1 and tier-2 cities.
Revenue from listing services was $76.4 million for the first half of 2017, an increase of 49.8% from $51.0 million for the corresponding period in 2016, primarily due to the increased number of paying members in lower tiers of cities.
Revenue from internet financial services was $4.9 million for the first half of 2017, a decrease of 77.2% from $21.7 million for the corresponding period in 2016, primarily due to the decreased secondary transaction volumes of Fang's own franchised brokerage services.
Revenue from value-added services and other services was $13.4 million for the first half of 2017, a decrease of 19.2% in the corresponding period in 2016.
Cost of Revenue
Cost of revenue was $109.5 million for the first half of 2017, a decrease of 75.2% from $441.0 million for the corresponding period in 2016. The decrease in cost of revenue was mainly driven by the agent reduction and cost optimization under the newly adopted open platform strategy.
Operating Expenses
Operating expenses were $122.6 million for the first half of 2017, a decrease of 36.7% from $193.6 million for the corresponding period in 2016.
Selling expenses were $46.5 million for the first half of 2017, a decrease of 59.2% from $113.9 million for the corresponding period in 2016, primarily caused by the decrease of advertising and promotion fee, as well as the e-commerce cost decrease.
General and administrative expenses were $75.0 million for the first half of 2017, a decrease of 5.9% from $79.7 million for the corresponding period in 2016, primarily due to the effective cost control measures partially offset by the increased bad debt and impairment of commitment deposits.
Operating Loss/Income
Operating loss was $12.2 million for the first half of 2017, compared to operating loss of $142.8 million for the corresponding period in 2016.
Income Tax Expenses
Income tax expense was $4.2 million for the first half of 2017, a 69.3% decrease compared to $13.9 million for the corresponding period in 2016, primarily due to the reversal of previously recorded ASC 740 (FIN 48) tax and interest liability.
Net Loss/Income and EPS
Net loss attributable to Fang's shareholders was $14.1 million for the first half of 2017, compared to net loss attributable to Fang's shareholders $154.3 million for the corresponding period in 2016. Loss per fully diluted ordinary share and ADS were $0.16 and $0.32, respectively, for the first half of 2017, compared to loss per fully diluted ordinary share and ADS of $1.62 and $0.32, respectively, for the corresponding period in 2016.
Cash
Net cash generated from operating activities was $12.1 million in the first half of 2017, compared to net cash used in operating activities of $30.7 million for the same period in 2016, primarily due to a $140.2 million decrease of net loss compared to the first half of 2016.
Business Outlook
The Company is in its last stage of returning to a technology-driven open platform and expects to be profitable in the second half of the year.
Conference Call Information
Fang's management team will host a conference call on the same day at 8:00 AM U.S. EST (8:00 PM Beijing/Hong Kong time). The dial-in details for the live conference call are:
International Toll: +65 67135090
Local Toll:
United States +1 845-675-0437 /+1
866-519-4004
Hong Kong +852 3018-6771 /+852
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 11:00 ET on August 29, 2017 through 9:59 ET September 6, 2017. The dial-in details for the telephone replay are:
+61 2-8199-0299
International Toll:
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: 72745007
A live and archived webcast of the conference call will be available on Fang's website at http://ir.fang.com.
About Fang
Fang 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 e-commerce, marketing, listing, financial 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 furnishing and improvement sectors in China. Fang currently maintains about 100 offices to focus on local market needs and its website and database contains real estate related content covering more than 651 cities in China. For more information about Fang, 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 Fang's future financial performance, revenue guidance for 2016, growth and growth rates, and market position and continued business transformation. Statements that are not historical facts, including statements about Fang'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, without limitation, whether the transactions contemplated by the restructuring of Fang's assets and businesses will receive the requisite approvals, whether such restructuring will be carried out as planned, the impact of such restructuring on Fang's assets and businesses, the impact of Fang's transformation from a pure Internet information platform to a transaction-oriented platform, the impact of Fang's implementation of a "zero tolerance policy" that has resulted in dismissal of employees, the impact of the slowdown in China's real estate market on Fang and the impact on revenues of our existing and new service fees reductions, the ability of Fang to retain real estate listing agencies as customers during challenging economic periods, the success of Fang's new business initiatives, the ability of Fang 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.
About Non-GAAP Financial Measures
To supplement Fang's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Fang 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 (loss)/income, (2) non-GAAP net (loss)/income and (3) non-GAAP basic and diluted (loss)/earnings per ordinary share and per ADS (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.
Fang 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 June 30, 2016, which (1) may not be indicative of Fang'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 Fang'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 Fang'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
CFO
Phone: +86-10-5631-8661
Email: leihua@fang.com
Ms. Joyce Tang
Senior Investor Relations Manager
Phone: +86-10-5631 8659
Email: tangjunning@fang.com
Ms. Dana Cheng
Investor Relations Manager
Phone: +86-10-5631 8174
Email: chengyu.bj@fang.com
Fang Holdings Limited
Condensed Consolidated Balance Sheets
(in thousands of U.S. dollars, except share data and per share data)
ASSETS June 30, December 31,
2017 2016
Current assets: (Unaudited) (Audited)
Cash and cash equivalents 235,616 336,528
Restricted cash, current 215,095 211,084
Short-term investments 96,382 42,929
Accounts receivable, net 72,520 93,672
Funds receivable 21,468 20,483
Prepayment and other current assets 35,308 39,824
Commitment deposits 505 6,527
Loan receivable, current 52,386 41,966
Amount due from related parties 759 197
--- ---
Total current assets 730,039 793,210
Non-current assets:
Property and equipment, net 550,002 319,897
Loan receivable, non-current 15,771 16,808
Deferred tax assets, non-current 7,257 4,915
Deposit for non-current assets 72,717 240,712
Long-term investments 335,696 231,880
Other non-current assets 3,010 7,391
----- -----
Total non-current assets 984,453 821,603
------- -------
Total assets 1,714,492 1,614,813
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term loans 278,432 212,734
Deferred revenue 150,544 129,765
Accrued expenses and other liabilities 260,046 318,540
Customers' refundable fees 24,548 28,630
Income tax payable 9,308 6,022
Total current liabilities 722,878 695,691
Non-current liabilities:
Long-term loans 15,696 65,190
Convertible senior notes 296,135 295,268
Deferred tax liabilities, non-current 97,560 70,424
Other non-current liabilities 425 415
--- ---
Total non-current liabilities 409,816 431,297
------- -------
Total Liabilities 1,132,694 1,126,988
========= =========
Equity:
Class A ordinary shares, par value Hong Kong 9,169 9,157
Dollar ("HK$") 1 per share, 600,000,000 shares
authorized for Class A and Class B in aggregate,
and 62,674,810 shares and 70,736,054 shares
issued and outstanding as at June 30, 2017 and
December 31, 2016, respectively
Class B ordinary shares, par value HK$1 per 3,124 3,124
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, 2017 and December 31, 2016
respectively
Treasure stock (136,615) (136,615)
Additional paid-in capital 494,173 488,943
Accumulated other comprehensive income 21,508 (81,349)
Retained earnings 189,759 203,870
------- -------
Total Fang Holdings Limited shareholders' equity 581,118 487,130
------- -------
Non-controlling interests 680 695
--- ---
Total equity 581,798 487,825
------- -------
TOTAL LIABILITIES AND EQUITY 1,714,492 1,614,813
========= =========
Fang Holdings Limited
Condensed Consolidated Statements of Comprehensive Income
(in thousands of U.S. dollars, except share data and per share data)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2017 2016 2017 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues:
E-commerce services 22,865 189,514 62,755 320,418
Marketing services 35,035 51,412 62,370 81,844
Listing services 42,343 26,902 76,386 50,988
Financial services 2,702 11,104 4,949 21,729
Other value-added services and other services 7,148 8,046 13,436 16,622
Total revenues 110,093 286,978 219,896 491,601
Cost of Revenues:
Cost of services (48,728) (231,137) (109,454) (440,780)
Total Cost of Revenues (48,728) (231,137) (109,454) (440,780)
Gross Profit 61,365 55,841 110,442 50,821
Operating expenses and income:
Selling expenses (23,099) (52,264) (46,510) (113,861)
General and administrative expenses (43,624) (36,359) (75,007) (79,736)
Other income (704) - (1,107) -
Operating Income (loss) (6,062) (32,782) (12,182) (142,776)
Foreign exchange gain (loss) 1 92 214 57
Other-than-temporary impairment on available-for-
sale securities (1,817) - (2,768) -
Interest income 2,714 2,960 5,438 6,473
Interest expense (4,400) (4,596) (8,241) (9,206)
Investment income 5,985 1,355 5,985 1,355
Government grants 932 1,067 1,699 3,667
Income (loss) before income taxes and non-controlling interests (2,647) (31,904) (9,855) (140,430)
Income tax expenses
Income tax expenses 553 (8,698) (4,256) (13,872)
Net income (loss) (2,094) (40,602) (14,111) (154,302)
Net income (loss) attributable to noncontrolling
interests (1) (1) (1) 1
Net income (loss) attributable to Fang Holdings Limited shareholders (2,093) (40,601) (14,110) (154,303)
Other comprehensive income (loss), net of tax
Foreign currency Translation 16,459 (26,737) 19,578 (27,890)
Amounts reclassified from accumulated other
comprehensive (1,674) - (1,674) -
income
Unrealized gain on available-for-sale security 84,611 1,386 85,124 (3,397)
Loss on intra-entity foreign transactions of long-
term-investment (171) - (171) -
nature
Total other comprehensive income (loss), net of tax 99,225 (25,351) 102,857 (31,287)
Comprehensive income (loss) 97,131 (65,952) 88,746 (185,590)
Earnings/(loss) per share for Class A and Class B ordinary shares:
Basic (0.02) (0.43) (0.16) (1.62)
Diluted (0.02) (0.43) (0.16) (1.62)
Earnings/(loss) per ADS:
Basic (0.005) (0.09) (0.03) (0.32)
Diluted (0.005) (0.09) (0.03) (0.32)
Weighted average number of Class A and Class B ordinary
shares outstanding:
Basic 88,437,943 94,816,906 88,398,683 94,980,072
Diluted 88,437,943 94,816,906 88,398,683 94,980,072
Weighted average number of ADSs outstanding:
Basic 442,189,713 474,084,530 441,993,416 474,900,360
Diluted 442,189,713 474,084,530 441,993,416 474,900,360
Fang 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 Six months ended
June 30, June 30, June 30, June 30,
2017 2016 2017 2016
GAAP income from operations (6,062) (32,782) (12,182) (142,776)
Share-based compensation expense 2,233 2,464 3,772 4,369
Non-GAAP income from operations (3,839) (30,318) (8,410) (138,407)
GAAP net income (2,094) (40,602) (14,111) (154,302)
Investment income (5,985) (1,355) (5,985) (1,355)
Share-based compensation expense 2,233 2,464 3,772 4,369
Non-GAAP net income (5,846) (39,493) (16,324) (151,288)
Net Income attributable to Fang shareholders (2,093) (40,601) (14,110) (154,303)
Investment income (5,985) (1,355) (5,985) (1,355)
Share-based compensation expense 2,233 2,464 3,772 4,369
Non-GAAP net Income attributable to Fang Holdings (5,846) (39,492) (16,323) (151,289)
Limited shareholders
GAAP earnings per share for Class A and Class B ordinary shares:
Basic (0.02) (0.43) (0.16) (1.62)
Diluted (0.02) (0.43) (0.16) (1.62)
GAAP earnings per ADS:
Basic (0.005) (0.09) (0.03) (0.32)
Diluted (0.005) (0.09) (0.03) (0.32)
Non-GAAP earnings per share for Class A and Class B ordinary shares:
Basic (0.07) (0.42) (0.18) (1.59)
Diluted (0.07) (0.42) (0.18) (1.59)
Non-GAAP earnings per ADS:
Basic (0.01) (0.08) (0.04) (0.32)
Diluted (0.01) (0.08) (0.04) (0.32)
Weighted average number of Class A and Class B ordinary shares outstanding:
Basic 88,437,943 94,816,906 88,398,683 94,980,072
Diluted 88,437,943 94,816,906 88,398,683 94,980,072
Weighted average number of ADSs outstanding:
Basic 442,189,713 474,084,530 441,993,416 474,900,360
Diluted 442,189,713 474,084,530 441,993,416 474,900,360
Non-GAAP Net income (5,846) (39,493) (16,324) (151,288)
Add back:
Interest expense 4,400 4,596 8,241 9,206
Income tax expenses (553) 8,698 4,256 13,872
Depreciation expenses 6,055 4,906 11,612 9,208
Subtract:
Interest income (2,714) (2,960) (5,438) (6,473)
Adjusted EBITDA 1,342 (24,253) 2,347 (125,475)
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SOURCE Fang Holdings Limited
