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Fang Announces First Quarter 2018 Results

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Fang Announces First Quarter 2018 Results

PR Newswire

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

 

 

 

Cision View original content:http://www.prnewswire.com/news-releases/fang-announces-first-quarter-2018-results-300686287.html

SOURCE Fang Holdings Limited

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