SouFun Announces Third Quarter 2013 Results

BEIJING, Nov. 7, 2013 /PRNewswire/ -- SouFun Holdings Limited SFUN ("SouFun"), the leading real estate Internet portal in China, announced today its unaudited financial results for the third quarter of 2013.

Third Quarter 2013 Highlights

Revenue in the third quarter of 2013 was $185.0 million, a 45.4% increase from the corresponding period in 2012.
Operating income in the third quarter of 2013 was $110.6 million, a 65.5% increase from the corresponding period in 2012. Non-GAAP operating income in the third quarter of 2013 was $112.3 million, a 64.3% increase from the corresponding period in 2012.
Net income attributable to SouFun's shareholders was $102.7 million, representing a year-over-year increase of 108.9%. Fully diluted earnings per share were $1.22, increased 100% from the corresponding period in 2012.
Non-GAAP net income attributable to SouFun's shareholders was $96.6 million, representing a year-over-year increase of 72.0%. Non-GAAP fully diluted earnings per share were $1.15, increased 64.3% from the corresponding period in 2012.

"We are proud of delivering another solid quarter and our 13th straight growth and above guidance quarter since SouFun's IPO," said Vincent Mo, Executive Chairman of SouFun. "Wireless and other new products and services are starting to bring extra income to the company while our leading internet businesses are still in their strong growth seasons and far from reaching maturity. We will continue to explore new lines of businesses by investing in technologies and product development and working with strategic partners for SouFun's future growth and our shareholders' long-term value."

Third Quarter 2013 Results

Revenues

SouFun reported total revenue of $185.0 million in the third quarter of 2013, representing an increase of 45.4% from the corresponding period in 2012, primarily driven by the growth in listing services and SouFun membership e-commerce services.

Revenue from marketing services was $86.5 million in the third quarter of 2013, an increase of 8.5% from $79.7 million in the corresponding period in 2012.

Revenue from e-commerce services was $49.7 million in the third quarter of 2013, a 94.2% increase from $25.6 million in the same period in 2012, primarily due to expansion of SouFun membership services in existing and new cities.

Revenue from listing services was $46.3 million in the third quarter of 2013, an increase of 128.0% from $20.3 million for the corresponding period in 2012, primarily due to increased paying agent subscribers.

Revenue from other value-added services was $2.6 million in the third quarter of 2013, an increase of 57.5% from $1.6 million in the corresponding period in 2012.

Cost of Revenue

Cost of revenue was $28.5 million in the third quarter of 2013, an increase of 37.0 % from $20.8 million in the corresponding period in 2012. The increase in cost of revenue was mainly driven by the increase in staff costs and taxes.

Gross margin was 84.6% in the third quarter of 2013, compared to 83.6% in the corresponding period in 2012.

Operating Expenses

Operating expenses were $46.2 million in the third quarter of 2013, an increase of 16.6% from $39.6 million for the corresponding period in 2012, reflecting effective cost control.

Selling expenses were $25.4 million in the third quarter of 2013, an increase of 23.1% from $20.6 million in the corresponding period in 2012, primarily due to increased staff cost.

General and administrative expenses were $20.7 million in the third quarter of 2013, an increase of 9.5% from $18.9 million in the corresponding period in 2012, primarily due to increased staff cost.

Operating Income

Operating income was $110.6 million in the third quarter of 2013, an increase of 65.5% from $66.8 million in the corresponding period in 2012, driven by revenue growth and effective cost control.

Income Tax Expenses

Income tax expense was $14.2 million in the third quarter of 2013, a 29.2% decrease compared to $20.0 million for the corresponding period in 2012. The decrease was primarily due to a one-time benefit of $15.1 million resulting from certain subsidiaries being now subject to a lower dividend-related withholding tax rate.

Net Income and EPS

Net income attributable to SouFun's shareholders was $102.7 million in the third quarter of 2013, a 108.9% increase from $49.2 million in the corresponding period in 2012. Fully diluted earnings per share were $1.22 in the third quarter of 2013, doubled from $0.61 in the corresponding period in 2012.

Adjusted EBITDA

Adjusted EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was $117.6 million in the third quarter of 2013, an increase of 67.4% as compared to $70.2 million in the corresponding period in 2012.

Cash

As of September 30, 2013, SouFun had cash, cash equivalents, and short-term investments (excluding the available-for-sale security) of $320.7 million, compared to $143.6 million as of December 31, 2012. Cash flow from operating activities was $126.3 million in the third quarter of 2013, a 123.7% increase from $56.4 million in the same period in 2012.

Business Outlook

SouFun raises its total revenue guidance for 2013 from between $538.0 million and $548.0 million to between $605.0 million and $615.0 million, or from a year-over-year increase of between 25.0% and 27.5% to between 40.6% and 42.9%. 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 7, 2013 at 8 a.m. U.S. Eastern Time (9 p.m. Beijing / Hong Kong time).

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

International Toll:	+65 6723 9381
International Toll-Free:
Hong Kong	800 930 346
United States	+1 866 519 4004
Toll Dial-In:
Mainland China	+86-400-620-8038 / +86-800-819-0121
Conference ID: 89920619

Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call.

A telephone replay of the call will be available after the conclusion of the conference call at 11:00 a.m. U.S. Eastern Daylight Time on November 7 through November 14, 2013. The dial-in details for the telephone replay are:

International Toll:	+61-2-8199-0299
Toll-Free:
Mainland China	400-632-2162/ 800-870-0206
Hong Kong	800-963-117
United States	1-855-452-5696
Conference ID: 89920619

A live and archived webcast of the conference call will be available on SouFun's website at http://ir.soufun.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. Through our websites, we provide marketing, e-commerce, listing 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-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 320 cities in China. For more information about SouFun, please visit http://ir.soufun.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, 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, SouFun's limited operating history, the current global financial and credit markets crisis and its potential impact on the Chinese economy, measures taken or to be taken by the Chinese government to control real estate growth and prices and other events which could recur in the future.

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 and (3) basic and diluted earnings per ordinary share. 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:

Mr. Hong Zhao
Vice President of Finance
SouFun Holdings Limited
Phone: +86-10-5631-8707
Email: hongzhao@soufun.com

Ms. Yiwen Zhang
Investor Relations Manager
SouFun Holdings Limited
Phone: +86-10-5631 8659
E-mail: zhangyiwen@soufun.com

SouFun Holdings Limited
Condensed Consolidated Balance Sheets
(in U.S. dollars in thousands, except as noted )
ASSETS		Sep 30,		Dec 31,
ASSETS		2013		2012
Current assets:			(Unaudited)		(Audited)
	Cash and cash equivalents		294,382		118,167
	Restricted cash, current		216,623		-
	Short-term investments		26,320		26,841
	Accounts receivable, net		63,400		30,029
	Funds receivable		55,659		7,600
	Prepayment and other current assets		33,349		9,226
	Deferred tax assets, current		2,977		2,734
Total current assets			692,710		194,597
Non-current assets:
	Property and equipment, net		221,258		79,564
	Restricted cash, non-current		292,525		391,416
	Deferred tax assets, non-current		5,526		1,723
	Deposit for non-current assets		-		8,750
	Prepayment for BaoAn acquisition		-		111,367
	Other non-current assets		11,503		13,744
Total non-current assets			530,812		606,564
Total assets			1,223,522		801,161

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Short-term loans		270,670		270,670
	Deferred revenue		129,910		65,871
	Accrued expenses and other liabilities		121,368		89,306
	Customers' refundable fees		79,288		18,449
	Income tax payable		33,766		23,659
	Amounts due to a related party		338		-
Total current liabilities			635,340		467,955
Non-current liabilities:
	Long-term loans		180,750		80,750
	Deferred tax liabilities, non-current		86,167		64,947
	Other non-current liabilities		475		-
Total non-current liabilities			267,392		145,697
Total Liabilities			902,732		613,652

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 57,196,844 shares and 56,013,735 shares issued and outstanding as at September 30, 2013 and December 31, 2012, respectively		7,344		7,192
	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, 2013 and December 31, 2012 , respectively		3,124		3,124
	Additional paid-in capital		84,748		69,637
	Accumulated other comprehensive income		36,437		23,974
	Retained earnings		188,423		82,952
Total SouFun shareholders' equity			320,076		186,879
	Noncontrolling interests		714		630
Total equity			320,790		187,509
TOTAL LIABILITIES AND EQUITY			1,223,522		801,161

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, 2013		September 30, 2012
Revenues:
Marketing services		86,485		79,717
E-commerce services		49,694		25,590
Listing services		46,311		20,312
Other value-added services		2,558		1,624
Total revenues		185,048		127,243

Cost of revenues:
Cost of services		(28,532)		(20,819)
Total cost of revenues		(28,532)		(20,819)

Gross Profit		156,516		106,424

Operating expenses and income:
Selling expenses		(25,415)		(20,647)
General and administrative expenses		(20,739)		(18,938)
Other income		274		-

Operating Income		110,636		66,839
Foreign exchange gain		-		23
Interest income		7,532		4,995
Interest expense		(3,632)		(2,826)
Government grants		2,391		181
Income before income taxes and noncontrolling interests		116,927		69,212
Income tax expenses
Income tax expenses		(14,186)		(20,042)
Net income		102,741		49,170
Net income attributable to noncontrolling interests		1		-
Net income attributable to SouFun Holdings Limited's shareholders		102,740		49,170
Other comprehensive income, net of tax
Foreign currency translation		3,524		(842)
Unrealized gain on available-for-sale security		-		200
Other comprehensive income, net of tax		3,524		(642)

Comprehensive income		106,265		48,528
Comprehensive income attributable to noncontrolling interests		1		-

Comprehensive income attributable to SouFun Holdings Limited's shareholders		106,264		48,528

Basic		1.31		0.64
Diluted		1.22		0.61
Weighted average number of Class A and Class B ordinary shares outstanding:
Basic		78,217,258		76,906,873
Diluted		84,240,621		80,532,484

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
	Sep. 30, 2013		Sep. 30, 2012

GAAP income from operations		110,636		66,839
Share-based compensation expense		1,711		1,531
Non-GAAP income from operations		112,347		68,370

GAAP net income		102,741		49,170
One-off tax benefit		(15,101)		-
Withholding tax related to dividends		7,224		5,463
Share-based compensation expense		1,711		1,531
Non-GAAP net income		96,575		56,164

Net Income attributable to SouFun Holdings Limited shareholders		102,740		49,170
One-off tax benefit		(15,101)		-
Withholding tax related to dividends		7,224		5,463
Share-based compensation expense		1,711		1,531
Non-GAAP net Income attributable to SouFun Holdings Limited shareholders		96,574		56,164

GAAP earnings per share for Class A and Class B ordinary shares:
Basic		1.31		0.64
Diluted		1.22		0.61
Non-GAAP earnings per share for Class A and Class B ordinary shares:
Basic		1.23		0.73
Diluted		1.15		0.70
Weighted average number of Class A and Class B ordinary shares outstanding:
Basic		78,217,258		76,906,873
Diluted		84,240,621		80,532,484

SouFun Holdings Limited
Reconciliation of Non-GAAP and Adjusted EBITDA
( in U.S. dollars in thousands)

	Three months ended
	Sep. 30, 2013		Sep. 30, 2012

Non-GAAP Net income		96,575		56,164
Add back:
Interest expense		3,632		2,826
Income tax expenses		22,063		14,579
Depreciation expenses		2,817		1,659
Subtract:
Interest income		(7,532)		(4,995)
Adjusted EBITDA		117,555		70,233

SOURCE SouFun Holdings Limited

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