SOUFUN HOLDINGS LTD BEIJING, Nov. 6, 2014 /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 ended September 30, 2014.
Third Quarter 2014 Highlights
-- Revenue in the third quarter of 2014 was $190.5 million, a 3.0% increase
from the corresponding period in 2013.
-- Operating income in the third quarter of 2014 was $70.7 million, a 36.1%
decrease from the corresponding period in 2013. Non-GAAP operating
income in the third quarter of 2014 was $72.2 million, a 35.8% decrease
from the corresponding period in 2013.
-- Net income attributable to SouFun's shareholders was $61.0 million,
representing a year-over-year decrease of 40.6%. Fully diluted earnings
per ADS were $0.14, a 41.7% decrease from the corresponding period in
2013. Non-GAAP net income attributable to SouFun's shareholders was
$69.7 million, representing a year-over-year decrease of 27.8%. Non-GAAP
fully diluted earnings per ADS were $0.16, a 30.4% decrease from the
corresponding period in 2013.
"SouFun experienced a tough quarter as a result of market change and the company's transformation," said Vincent Mo, Executive Chairman and CEO of SouFun. "Expanding from a pure information platform to broader transaction and financial platforms is a big challenge. However, good signs from our two new platforms are very encouraging and we are determined to carry on the transformation even though this will impact our financial performance in the short term, because we believe eventually and together, our information, transaction and financial platforms, will make SouFun a greater company."
Third Quarter 2014 Results
Revenues
SouFun reported total revenue of $190.5 million in the third quarter of 2014, representing an increase of 3.0% from the corresponding period in 2013. The slow growth is primarily due to the decrease in listing services and marketing services.
Revenue from marketing services was $81.0 million in the third quarter of 2014, a decrease of 6.4% from $86.5 million in the corresponding period in 2013, due to more advertising clients using the e-commerce services versus the marketing services as a result of a difficult real estate market.
Revenue from e-commerce services was $67.6 million in the third quarter of 2014, a 36.0% increase from $49.7 million in the same period in 2013, primarily due to the attractiveness of the new transaction platform to our clients.
Revenue from listing services was $36.7 million in the third quarter of 2014, a decrease of 20.8% from $46.3 million for the corresponding period in 2013, primarily due to discounts which the Company offered to the agency clients since the end of June.
Revenue from other value-added services was $5.3 million in the third quarter of 2014, an increase of 107.8% from $2.6 million in the corresponding period in 2013, primarily due to the recently introduced new internet financial services.
Cost of Revenue
Cost of revenue was $48.8 million in the third quarter of 2014, an increase of 71.1% from $28.5 million in the corresponding period in 2013. The increase in cost of revenue was mainly driven by new e-commerce model, increased staff cost, as well as an increase in taxes and surcharges.
Gross margin was 74.4% in the third quarter of 2014, compared to 84.6% in the corresponding period in 2013.
Operating Expenses
Operating expenses were $71.2 million in the third quarter of 2014, an increase of 54.3% from $46.2 million for the corresponding period in 2013.
Selling expenses were $41.0 million in the third quarter of 2014, an increase of 61.4% from $25.4 million in the corresponding period in 2013, primarily due to the new e-commerce model, increased advertising and promotional expenses and staff cost.
General and administrative expenses were $30.2 million in the third quarter of 2014, an increase of 45.5% from $20.7 million in the corresponding period in 2013, primarily due to increased staff cost.
Operating Income
Operating income was $70.7 million in the third quarter of 2014, a decrease of 36.1% from $110.6 million in the corresponding period in 2013, due to slow growth in revenue and faster increase of expenses.
Income Tax Expenses
Income tax expense was $18.9 million in the third quarter of 2014, a 33.5% increase compared to $14.2 million for the corresponding period in 2013. Income tax in 2013 benefited from a one-time benefit of $15.1 million resulting from a lower dividend-related withholding tax rate for certain subsidiaries.
Net Income and EPS
Net income attributable to SouFun's shareholders was $61.0 million in the third quarter of 2014, a 40.6% decrease from $102.7 million in the corresponding period in 2013. Fully diluted earnings per ADS were $0.14 in the third quarter of 2014, a decrease of 41.7% from $0.24 in the corresponding period in 2013.
Adjusted EBITDA
Adjusted EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was $78.3 million in the third quarter of 2014, a decrease of 33.4% as compared to $117.6 million in the corresponding period in 2013.
Cash
As of September 30, 2014, SouFun had cash, cash equivalents, and short-term investments of $896.9 million, compared to $927.3 million as of June 30, 2014. Cash flow from operating activities was $53.1 million in the third quarter of 2014, a 57.9% decrease from $126.3 million in the same period in 2013, due to less advance payments and increased account receivables.
Business Outlook
SouFun adjusts its revenue guidance for 2014 from between $727.0 million and $739.0 million, or a year-over-year increase of between 14% and 16%, to between $675.0 million and $688.0 million, or a year-over-year increase of between 6% and 8%. SouFun is adjusting its revenue guidance for 2014 in light of the slowdown in the real estate market in China, our reduction in fees we charge for listing services, and longer time for new businesses to contribute significantly to revenue growth. This forecast reflects SouFun's current and preliminary view, which is subject to change and may not reflect actual results.
Conference Call Information
SouFun's management team will host a conference call on the same day 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 6723-9381
Local Toll:
United States +1 866-519-4004/+1
845-675-0437
Hong Kong +852 800-930-346/+852
2475-0994
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 PM U.S. EDT on May 7 through 11:59 PM May 14, 2014. 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 /
+86 800-870-0206
Conference ID number: 2778 4540
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 in 2014. Through our websites, we provide marketing, e-commerce, listing and other value-added services for China's 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 330 cities in China. For more information about SouFun, please visit http://ir.fang.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, including but not limited to revenue guidance, growth prospects and the introduction and success of new products and services and new lines of business,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 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 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, (3) basic and diluted earnings per ordinary share and ADS 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, 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:
Dr. Hua Lei
Deputy CFO
Phone: +86-10-5631-8661
Email: leihua@soufun.com
Ms. Yiwen Zhang
Investor Relations Manager
Phone: +86-10-5631 8659
E-mail: zhangyiwen@soufun.com
SouFun Holdings Limited
Condensed Consolidated Balance Sheet
( in U.S. dollars in thousands )
ASSETS September 30, December 31,
2014 2013
(Unaudited) (Audited)
Current assets:
Cash and cash equivalents 386,244 581,010
Restricted cash, current 97,455 255,917
Short-term investments 510,650 10,138
Accounts receivable, net 54,533 44,541
Funds receivable 43,865 37,124
Prepayment and other current assets 27,850 31,758
Loan receivable 36,504 -
Deferred tax assets, current 3,518 3,165
Total current assets 1,160,619 963,653
========= =======
Non-current assets:
Property and equipment, net 217,167 221,442
Restricted cash, non-current 108,899 257,499
Deferred tax assets, non current 1,243 1,728
Deposit for non-current assets 86,044 38,140
Long-term investments 59,269 -
Other non-current assets 18,843 22,627
Total non-current assets 491,465 541,436
------- -------
Total assets 1,652,084 1,505,089
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term loans 80,750 90,000
Deferred revenue 121,780 115,043
Accrued expenses and other
liabilities 195,626 143,292
Income tax payable 26,039 43,688
Customers' refundable fees 75,653 53,066
Amounts due to a related party 1,499 537
Total current liabilities 501,347 445,626
Non-current liabilities:
Long-term loans 100,000 180,750
Convertible senior notes 400,000 350,000
Deferred tax liabilities, non-current 103,793 84,767
Other non-current liabilities 384 479
Total non-current liabilities 604,177 615,996
------- -------
Total Liabilities 1,105,524 1,061,622
--------- ---------
Shareholders' 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 57,568,424 shares and
57,440,895 shares issued and
outstanding as at March 31, 2014 and
December 31, 2013, respectively
7,496 7,376
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 March 31, 2014 and
December 31, 2013 , respectively
3,124 3,124
Additional paid-in capital 99,287 89,071
Accumulated other comprehensive
income 47,803 43,381
Retained earnings 388,850 300,515
Total SouFun Holdings Limited
shareholders' equity 546,560 443,467
Non controlling interests - -
Total shareholders' equity 546,559 443,467
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 1,652,084 1,505,089
========= =========
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,
2014 2013
(Unaudited) (Unaudited)
Revenues:
Marketing services 80,971 86,485
E-commerce services 67,567 49,694
Listing services 36,678 46,311
Other value-added 5,316 2,558
services
Total revenues 190,532 185,048
Cost of Revenues:
Cost of services (48,831) (28,532)
Total Cost of Revenues (48,831) (28,532)
Gross Profit 141,701 156,516
Operating expenses and income:
Selling expenses (41,021) (25,415)
General and administrative expenses (30,175) (20,739)
Other income 180 274
--- ---
Operating Income 70,685 110,636
Foreign exchange loss 3 -
Interest income 10,071 7,532
Interest expense (4,060) (3,632)
Government grants 3,234 2,391
Gain on bargain purchase
Income before income taxes and non controlling interests 79,934 116,927
Income tax expenses
Income tax expense (18,941) (14,186)
------- -------
Net income 60,992 102,741
Net income attributable - 1
to non controlling
interests
Net income attributable to SouFun Holdings Limited shareholders 60,992 102,740
Other comprehensive income, net of tax
Foreign currency (2,391) 3,528
Translation adjustments
Unrealized gain on available-for-sale security 12,562 -
------ ---
Total other comprehensive income, net of tax 10,171 3,528
------ -----
Comprehensive income 71,163 106,269
====== =======
Earnings per share for Class A and Class B ordinary shares
Basic 0.74 1.31
==== ====
Diluted 0.68 1.22
==== ====
Earnings per ADS
Basic 0.15 0.26
Diluted 0.14 0.24
Weighted average number of Class A and Class B ordinary shares outstanding:
Basic 82,258,420 78,217,258
Diluted 93,396,601 84,240,621
Weighted average number of ADSs outstanding:
Basic 411,292,102 391,086,290
=========== ===========
Diluted 466,983,005 421,203,105
=========== ===========
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,
2014 2013
GAAP income from operations 70,685 110,636
Share-based compensation
expense 1,478 1,711
Non-GAAP income from
operations 72,163 112,347
GAAP net income 60,992 102,741
Withholding tax related to
dividends 7,250 (15,101)
Share-based compensation
expense 1,478 7,224
Gain on bargain purchase - 1,711
Non-GAAP net income 69,720 96,575
Net Income attributable to 60,992 102,740
SouFun Holdings Limited
shareholders
Withholding tax related to
dividends 7,250 (15,101)
Share-based compensation
expense 1,478 7,224
Gain on bargain purchase - 1,711
Non-GAAP net Income
attributable to SouFun
Holdings Limited
shareholders 69,720 96,574
GAAP earnings per share for
Class A and Class B
ordinary shares:
Basic 0.74 1.31
Diluted 0.68 1.22
GAAP earnings per share ADS:
Basic 0.15 0.26
Diluted 0.14 0.24
Non-GAAP earnings per share
for Class A and Class B
ordinary shares:
Basic 0.85 1.23
Diluted 0.78 1.15
Non-GAAP earnings per ADS
shares:
Basic 0.17 0.25
Diluted 0.16 0.23
Weighted average number of
Class A and Class B
ordinary shares
outstanding:
Basic 82,258,420 78,217,258
Diluted 93,396,601 84,240,621
Weighted average number of
ADSs outstanding:
Basic 411,292,102 391,086,290
Diluted 466,983,005 421,203,105
SouFun Holdings Limited
Reconciliation of Non-GAAP EBITDA
( in thousands of U.S. dollars)
Three months ended
September 30, 2014 September 30, 2013
Non-GAAP 69,720 96,575
Net income
Add back:
Interest
expense 4,060 3,632
Income tax
expenses 11,691 22,063
Depreciation
expenses 2,881 2,817
Subtract:
Interest
income (10,071) (7,532)
Adjusted
EBITDA 78,281 117,555
SOURCE SouFun Holdings Limited
