BEIJING, July 25, 2018 /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 fiscal quarter
ended March 31, 2018.
First Quarter 2018 Highlights
- Total revenues were $62.8
million.
- Operating loss was $3.9
million. Non-GAAP operating income was
$0.6 million. A description of
the adjustments from GAAP to non-GAAP operating income is detailed
in the Reconciliation Statement following this press release.
- Net loss attributable to Fang's shareholders was
$44.9 million, which was primarily
due to the change in fair value of equity securities of a loss of
$42.2 million in accordance with new
accounting pronouncement. Fully diluted loss per ADS was
$0.10.
- Non-GAAP net income attributable to Fang's shareholders
was $1.8 million. Non-GAAP fully
diluted income per ADS were $0.00. A
description of the adjustments from GAAP to non-GAAP net loss
attributable to Fang's shareholders and fully diluted loss per ADS
is detailed in the Reconciliation Statement following this press
release.
- Adjusted EBITDA was $7.1
million. A description of the adjustments from GAAP net
loss to Adjusted EBITDA is detailed in the Reconciliation Statement
following this press release.
"The company is deepening its reform from business lines to full
operations including financial management," commented Vincent Mo, Chairman and CEO of Fang. "We are
fully committed to transforming and upgrading the company for
future growth. The reform has been a bumpy process but I believe
our endless efforts in increasing platform traffic, technology
innovations and product upgrades will be rewarded in the near
future."
First Quarter 2018 Results
Revenues
Fang reported total revenues of $62.8
million in the first quarter of 2018, a 42.8% decrease from
$109.8 million in the corresponding
period of 2017, primarily due to the decline in e-commerce services
revenue.
Revenue from listing services was $26.7
million in the first quarter of 2018, a decrease of 21.5%
from $34.0 million in the
corresponding period of 2017, primarily due to the decreased number
of paying members.
Revenue from marketing services was $17.3
million in the first quarter of 2018, a decrease of 36.6%
from $27.3 million in the
corresponding period of 2017, primarily due to the slowdown in the
real estate market and the continued impact of tightening
government policies.
Revenue from e-commerce services was $7.2
million in the first quarter of 2018, a decrease of 82.0%
from $39.9 million in the
corresponding period of 2017, primarily due to Fang's
transformation back to a technology-driven open platform model.
Revenue from Internet financial services was $5.1 million in the first quarter of 2018, an
increase of 124.9% from $2.2 million
in the corresponding period of 2017, driven by the increased
secured consumer loans.
Revenue from other value-added services was $6.5 million in the first quarter of 2018, an
increase of 4.1% from $6.3 million in
the corresponding period of 2017, primarily due to a rising demand
for our database and research services.
Cost of Revenue
Cost of revenue was $20.2 million
in the first quarter of 2018, a decrease of 66.7% from $60.7 million in the corresponding period of
2017, primarily due to the downsizing of the secondary brokerage
team in the provision of e-commerce services and the optimization
in our cost structure under the technology-driven open platform
model.
Operating Expenses
Operating expenses were $46.5
million in the first quarter of 2018, a decrease of 15.8%
from $55.2 million in the
corresponding period of 2017.
Selling expenses were $15.6
million in the first quarter of 2018, a decrease of 33.3%
from $23.4 million for the
corresponding period of 2017, primarily due to the decrease in
selling expenses associated with our e-commerce services and
advertising and promotional expenses.
General and administrative expenses were $30.7 million in the first quarter of 2018, a
decrease of 2.0% from $31.4 million
for the corresponding period of 2017.
Operating Loss
Operating loss was $3.9 million in
the first quarter of 2018, compared to operating loss of
$6.1 million in the corresponding
period of 2017, primarily due to the downsized e-commerce services
and effective cost control.
Change in fair value of equity securities
Change in fair value of equity securities for the first quarter
of 2018 was a loss of $42.2 million,
among which USD 47.7 million was
related to the fair value change of World Union, an investee
company. The amount represents changes in fair value of equity
securities in accordance with FASB ASU 2016-01, which became
effective on January 1, 2018. See
"New accounting pronouncements and Non-GAAP Financial Measures"
below for more details.
Income Tax (benefits) / expenses
Income tax benefits were $4.2
million in the first quarter of 2018, compared to income tax
expenses of $4.8 million in the
corresponding period of 2017, primarily due to the effect of change
in fair value of equity securities.
Net Loss and EPS
Net loss attributable to Fang's shareholders was $44.9 million in the first quarter of 2018,
compared to net loss of $12.0 million
in the corresponding period of 2017, which is primarily caused by
change in fair value of equity securities. Loss per fully-diluted
ordinary share and ADS were $0.51 and
$0.10 in the first quarter of 2018,
compared to loss of $0.14 and
$0.03, respectively, in the
corresponding period of 2017.
Adjusted EBITDA
Adjusted EBITDA, defined as GAAP net income / (loss) before
share-based compensation, investment income, change in fair value
of equity securities, income taxes, interest expenses, interest
income and depreciation, was $7.1
million in the first quarter of 2018, compared to
$1.0 million in the corresponding
period of 2017.
Cash
As of March 31, 2018, Fang had
cash and cash equivalents, restricted cash (current and
non-current) and short-term investments of $492.4 million, compared to $547.1 million as of December 31, 2017. Net cash used in operating
activities was $7.0 million in the
first quarter of 2018, compared to cash flow used in operating
activities $11.0 million in the same
period of 2017.
Business Outlook
Based on current market conditions and current operations, Fang
expects its non-GAAP net income to be profitable for the fiscal
year ending December 31, 2018. These
estimates represent management's current and preliminary view,
which is subject to change.
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.
The Company believes that these non-GAAP measures help identify
underlying trends in the Company's business that could otherwise be
distorted by the effect of the change in fair value of equity
securities, and the expenses and gains that the Company includes in
income from operations and net income. The Company believes that
these non-GAAP measures provide useful information about its
operating results, enhance the overall understanding of its past
performance and future prospects and allow for greater visibility
with respect to key metrics used by the Company's management in its
financial and operational decision-making. A limitation of using
these non-GAAP financial measures is that share-based compensation,
investment income, change in fair value of equity securities,
interest income and expenses, income tax expenses, and depreciation
expenses have been and will continue to be a significant recurring
item 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.
New accounting pronouncements
The new revenue recognition standard (ASU No. 2014-09 'Revenue
from Contracts with Customers') was released in 2014 and becomes
effective for Fang with effect from January
1, 2018. Fang has elected to adopt the new standard (ASC 606
- 'Revenue from Contracts with Customers') using cumulative effect
method for all contracts that are not completed contracts at the
date of initial application. Under this transition method, the new
standard is applied from January 1,
2018 without restatement of comparative period amounts. The
cumulative effect of initially applying the new standard is
reflected as an adjustment to opening retained earnings as of
January 1, 2018 in the amount of
$0.6 million.
In January 2016, the FASB issued
ASU No. 2016-01, Financial Instruments Overall (Subtopic 825-10):
Recognition and Measurement of Financial Assets and Financial
Liabilities, which is an amendment which addresses certain aspects
of recognition, measurement, presentation, and disclosure of
financial instruments. This guidance includes the requirement that
equity investments that do not result in consolidation and are not
accounted for under the equity method be measured at fair value
with changes in the fair value recognized in net income. An entity
may choose to measure equity investments that do not have readily
determinable fair values at cost minus impairment, if any, plus or
minus changes resulting from observable price changes in orderly
transactions for the identical or a similar investment. Fang
adopted this standard from the quarter beginning January 1, 2018, and Fang recognized a
cumulative-effect adjustment to retained earnings of $163.8 million as of January 1, 2018 for the after-tax unrealized
gains of available-for-sale equity securities previously recognized
in accumulated other comprehensive income.
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 July 25, 2018 through
9:59 ET August
2, 2018. 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:
|
4658048
|
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 its websites, Fang
provides e-commerce, marketing, listing, financial and other
value-added services for China's
fast-growing real estate and home furnishing and improvement
sectors. Its 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, and include, without limitation, statements regarding
Fang's future financial performance, revenue guidance, growth and
growth rates, market position and continued business
transformation. Such statements are based upon management's current
expectations and current market and operating conditions, and
relate to events that involve known or unknown risks, uncertainties
and other factors, all of which are difficult to predict and many
of which are beyond Fang's control, which may cause its actual
results, performance or achievements to differ materially from
those in the forward-looking statements. Potential risks and
uncertainties include, without limitation, the impact of Fang's
transformation back to a technology-driven Internet platform and
the impact of current and future government policies
affecting China's real estate market. Further information
regarding these and other risks, uncertainties or factors is
included in Fang's filings with the U.S. Securities and
Exchange Commission. Fang does not undertake any obligation to
update any forward-looking statement as a result of new
information, future events or otherwise, except as required under
law.
For investor and media inquiries, please contact:
Dr. Hua
Lei
CFO
Phone: +86-10-5631-8661
Email: leihua@fang.com
Ms. Jessie Yang
Director, Investor Relations
Phone: +86-10-5631-8805
Email: jessieyang@fang.com
Fang Holdings
Limited
|
Condensed
Consolidated Balance Sheets
|
(in thousands of
U.S. dollars, except share data and per share data)
|
|
ASSETS
|
March
31,
|
December
31,
|
|
|
2018
|
2017
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
166,507
|
228,276
|
|
|
Restricted cash,
current
|
231,730
|
223,002
|
|
|
Short-term
investments
|
53,463
|
55,801
|
|
|
Accounts receivable,
net
|
68,266
|
66,884
|
|
|
Funds
receivable
|
7,206
|
6,264
|
|
|
Prepayment and other
current assets
|
34,947
|
32,704
|
|
|
Commitment
deposits
|
2,130
|
5,876
|
|
|
Loan receivable,
current
|
144,852
|
129,438
|
|
|
Amount due from
related parties
|
561
|
167
|
|
Total current
assets
|
709,662
|
748,412
|
|
Non-current
assets:
|
|
|
|
|
Property and
equipment, net
|
687,618
|
622,145
|
|
|
Prepaid land lease
payments
|
36,893
|
35,728
|
|
|
Loan receivable,
non-current
|
13,492
|
14,674
|
|
|
Deferred tax assets,
non-current
|
7,719
|
7,602
|
|
|
Restricted cash,
non-current portion
|
40,749
|
39,982
|
|
|
Deposit for
non-current assets
|
65,629
|
58,722
|
|
|
Long-term
investments
|
445,766
|
470,964
|
|
|
Other non-current
assets
|
1,125
|
2,026
|
|
Total non-current
assets
|
1,298,991
|
1,251,843
|
|
Total
assets
|
2,008,653
|
2,000,255
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Short-term
loans
|
279,242
|
236,985
|
|
|
Deferred
revenue
|
188,662
|
168,884
|
|
|
Accrued expenses and
other liabilities
|
141,943
|
158,799
|
|
|
Customers' refundable
fees
|
2,951
|
7,070
|
|
|
Income tax
payable
|
7,767
|
4,374
|
|
|
Convertible senior
notes
|
5,700
|
5,700
|
|
Total current
liabilities
|
626,265
|
581,812
|
|
Non-current
liabilities:
|
|
|
|
|
Long-term
loans
|
72,604
|
114,109
|
|
|
Convertible senior
notes
|
291,800
|
291,365
|
|
|
Deferred tax
liabilities, non-current
|
118,180
|
126,641
|
|
|
Other non-current
liabilities
|
155,223
|
146,053
|
|
Total non-current
liabilities
|
637,807
|
678,168
|
|
Total
Liabilities
|
1,264,072
|
1,259,980
|
|
|
|
|
|
|
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, issued shares as of December 31, 2017 and
March 31, 2018: 71,425,120 and 71,775,686, outstanding
shares as of December 31, 2017 and March 31, 2018:
64,360,062 and 64,461,037
|
9,213
|
9,204
|
|
|
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, 2018 and December 31,
2017 respectively
|
3,124
|
3,124
|
|
|
Treasure
stock
|
(136,615)
|
(136,615)
|
|
|
Additional paid-in
capital
|
505,980
|
500,666
|
|
|
Accumulated other
comprehensive income
|
17,070
|
137,630
|
|
|
Retained
earnings
|
345,117
|
225,574
|
|
Total Fang
Holdings Limited shareholders' equity
|
743,889
|
739,583
|
|
|
Non controlling
interest
|
692
|
692
|
|
Total
equity
|
744,581
|
740,275
|
|
TOTAL LIABILITIES
AND EQUITY
|
2,008,653
|
2,000,255
|
|
Condensed
Consolidated Statements of Comprehensive Income
|
(in thousands of
U.S. dollars, except share data and per share data)
|
|
|
|
|
|
Three months
ended
|
|
|
March
31,
|
|
March
31,
|
|
|
2018
|
|
2017
|
Revenues:
|
|
|
|
|
Listing
services
|
26,738
|
|
34,043
|
|
Marketing
services
|
17,326
|
|
27,335
|
|
E-commerce
services
|
7,168
|
|
39,890
|
|
Financial
services
|
5,053
|
|
2,247
|
|
Other
value-added services and other services
|
6,546
|
|
6,288
|
Total
revenues
|
62,831
|
|
109,803
|
|
|
|
|
|
Cost of
Revenues:
|
|
|
|
|
Cost of
services
|
(20,242)
|
|
(60,726)
|
Total Cost of
Revenues
|
(20,242)
|
|
(60,726)
|
|
|
|
|
|
Gross
Profit
|
42,589
|
|
49,077
|
|
|
|
|
|
Operating expenses
and income:
|
|
|
|
|
|
|
Selling
expenses
|
(15,622)
|
|
(23,411)
|
|
General and
administrative expenses
|
(30,740)
|
|
(31,383)
|
|
Other loss
|
(140)
|
|
(403)
|
Operating
loss
|
(3,913)
|
|
(6,120)
|
|
Foreign
exchange (loss) / gain
|
(3)
|
|
213
|
|
Other-than-temporary impairment on equity securities
|
-
|
|
(951)
|
|
Interest
income
|
2,645
|
|
2,724
|
|
Interest
expense
|
(5,485)
|
|
(3,841)
|
|
Investment
income
|
102
|
|
-
|
|
Government
grants
|
215
|
|
767
|
|
Other
non-operating loss
|
(370)
|
|
-
|
|
Change in fair
value of equity securities
|
(42,243)
|
|
-
|
Loss before income
taxes and noncontrolling interests
|
(49,052)
|
|
(7,208)
|
Income tax benefit
/ (expenses)
|
|
|
|
|
Income tax
benefit / (expenses)
|
4,176
|
|
(4,809)
|
Net
loss
|
(44,876)
|
|
(12,017)
|
|
Net income
attributable to noncontrolling interests
|
-
|
|
-
|
Net loss
attributable to Fang Holdings Limited shareholders
|
(44,876)
|
|
(12,017)
|
Other
comprehensive income, net of tax
|
|
|
|
Foreign currency
Translation
|
41,963
|
|
3,119
|
|
Gain on intra-entity
foreign transactions of long-term-investment
nature
|
1,262
|
|
-
|
|
Unrealized gain on
available-for-sale securities
|
-
|
|
513
|
Total other
comprehensive income, net of tax
|
43,225
|
|
3,632
|
Comprehensive
loss
|
(1,651)
|
|
(8,385)
|
Earnings per share
for Class A and Class B ordinary shares
|
|
Basic
|
(0.51)
|
|
(0.14)
|
|
Diluted
|
(0.51)
|
|
(0.14)
|
Earnings per
ADS
|
|
|
|
|
Basic
|
(0.10)
|
|
(0.03)
|
|
Diluted
|
(0.10)
|
|
(0.03)
|
Weighted average
number of Class A and Class B ordinary shares
outstanding:
|
|
Basic
|
88,730,798
|
|
88,364,639
|
|
Diluted
|
88,730,798
|
|
88,364,639
|
Weighted average
number of ADSs outstanding:
|
|
|
|
Basic
|
443,653,988
|
|
441,823,194
|
|
Diluted
|
443,653,988
|
|
441,823,194
|
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
|
|
|
March
31,
|
|
March
31,
|
|
|
2018
|
|
2017
|
|
GAAP loss from
operations
|
(3,913)
|
|
(6,120)
|
|
Share-based
compensation expense
|
4,499
|
|
1,539
|
|
Non-GAAP
income/(loss) from operations
|
586
|
|
(4,581)
|
|
|
|
|
|
|
GAAP net
loss
|
(44,876)
|
|
(12,017)
|
|
Share-based
compensation expense
|
4,499
|
|
1,539
|
|
Investment
income
|
(102)
|
|
-
|
|
Change in fair value
of equity securities
|
42,243
|
|
-
|
|
Non-GAAP net
income/(loss)
|
1,764
|
|
(10,478)
|
|
|
|
|
|
|
Net loss
attributable to Fang shareholders
|
(44,876)
|
|
(12,017)
|
|
Share-based
compensation expense
|
4,499
|
|
1,539
|
|
Investment
income
|
(102)
|
|
-
|
|
Change in fair value
of equity securities
|
42,243
|
|
-
|
|
Non-GAAP net
Income/(loss) attributable to Fang Holdings
Limited shareholders
|
1,764
|
|
(10,478)
|
|
|
|
|
|
|
GAAP earnings per
share for Class A and Class B ordinary
shares:
|
|
|
|
|
Basic
|
(0.51)
|
|
(0.14)
|
|
Diluted
|
(0.51)
|
|
(0.14)
|
|
GAAP earnings per
ADS:
|
|
|
|
|
Basic
|
(0.10)
|
|
(0.03)
|
|
Diluted
|
(0.10)
|
|
(0.03)
|
|
Non-GAAP earnings per
share for Class A and Class B ordinary
shares:
|
|
|
|
|
Basic
|
0.02
|
|
(0.12)
|
|
Diluted
|
0.02
|
|
(0.12)
|
Non-GAAP
earnings per ADS:
|
|
|
|
|
Basic
|
0.00
|
|
(0.02)
|
|
Diluted
|
0.00
|
|
(0.02)
|
|
Weighted average
number of Class A and Class B ordinary
shares outstanding:
|
|
|
|
|
Basic
|
88,730,798
|
|
88,364,639
|
|
Diluted
|
88,730,798
|
|
88,364,639
|
Weighted average
number of ADSs outstanding:
|
|
|
|
Basic
|
443,653,988
|
|
441,823,194
|
|
Diluted
|
443,653,988
|
|
441,823,194
|
|
|
|
|
|
|
GAAP Net
loss
|
(44,876)
|
|
(12,017)
|
Add
back:
|
|
|
|
|
Share-based
compensation expense
|
4,499
|
|
1,539
|
|
Change in fair value
of equity securities
|
42,243
|
|
-
|
|
Interest
expense
|
5,485
|
|
3,841
|
|
Depreciation
expenses
|
6,703
|
|
5,557
|
Subtract:
|
|
|
|
|
Investment
income
|
(102)
|
|
-
|
|
Interest
income
|
(2,645)
|
|
(2,724)
|
|
Income tax (benefit)
/ expenses
|
(4,176)
|
|
4,809
|
|
Adjusted
EBITDA
|
7,131
|
|
1,005
|
View original
content:http://www.prnewswire.com/news-releases/fang-announces-first-quarter-2018-results-300686287.html
SOURCE Fang Holdings Limited