Fang Announces Second Quarter 2018 Results
Second Quarter 2018 Highlights
- Total revenues were
$74.4 million , a decrease of 32.4% from the corresponding period in 2017. - Operating income was
$16.7 million . Non-GAAP operating income was$20.8 million . - Net loss attributable to Fang's shareholders was
$26.6 million , which was primarily due to the change in fair value of equity securities of$80.3 million in accordance with new accounting pronouncement, and the income tax benefits of$38.3 million related to the effect of change in fair value of equity securities and the reversal of previously recorded ASC 740 (FIN 48) income tax and interest liability. Fully diluted loss per ADS was$0.06 . - Non-GAAP net income attributable to Fang's shareholders was
$55.9 million . Non-GAAP fully diluted income per ADS was$0.13 . A description of the adjustments from GAAP net loss to non-GAAP net income attributable to Fang's shareholders and fully diluted income per ADS is detailed in the Reconciliation Statement following this press release. - Adjusted EBITDA was
$27.4 million . A description of the adjustments from GAAP net loss to Adjusted EBITDA is detailed in the Reconciliation Statement following this press release.
First Half 2018 Highlights
- Total revenues were
$137.2 million , a decrease of 37.6% from the corresponding period in 2017. - Operating income was
$12.8 million . Non-GAAP operating income was$21.4 million . - Net loss attributable to Fang's shareholders was
$71.4 million , which was primarily due to the change in fair value of equity securities of$122.6 million in accordance with new accounting pronouncement, and the income tax benefits of$42.5 million related to the effect of change in fair value of equity securities and the reversal of previously recorded ASC 740 (FIN 48) income tax and interest liability. Fully diluted loss per ADS was$0.16 . - Non-GAAP net income attributable to Fang's shareholders was
$57.6 million . Non-GAAP fully diluted income per ADS was$0.13 . A description of the adjustments from GAAP net loss to non-GAAP net income attributable to Fang's shareholders and fully diluted income per ADS is detailed in the Reconciliation Statement following this press release. - Adjusted EBITDA was
$34.5 million . A description of the adjustments from GAAP net loss to Adjusted EBITDA is detailed in the Reconciliation Statement following this press release.
"Fang's technology-driven open platform is speeding up its offerings of upgraded products and services to real estate companies and professionals as well as home buyers and sellers," said
Second Quarter 2018 Results
Revenues
Fang reported total revenues of
Revenue from listing services was
Revenue from marketing services was
Revenue from value-added services was
Revenue from Internet financial services was
Revenue from e-commerce services was
Cost of Revenue
Cost of revenue was
Operating Expense
Operating expenses were
Selling expenses were
General and administrative expenses were
Operating Income
Operating income was
Change in fair value of equity securities
Change in fair value of equity securities for the second quarter of 2018 was
Income Tax Benefits
Income tax benefits were
Net Loss and EPS
Net loss attributable to Fang's shareholders was
Adjusted EBITDA
Adjusted EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was
Cash
As of
First Half 2018 Results
Revenues
Fang reported total revenues of
Revenue from listing services was
Revenue from marketing services was
Revenue from value-added services was
Revenue from internet financial services was
Revenue from e-commerce services was
Cost of Revenue
Cost of revenue was
Operating Expenses
Operating expenses were
Selling expenses were
General and administrative expenses were
Operating Loss/Income
Operating income was
Change in fair value of equity securities
Change in fair value of equity securities for the first half of 2018 was
Income Tax Benefits/Expenses
Income tax benefits was
Net Loss and EPS
Net loss attributable to Fang's shareholders was
Cash
As of
Business Outlook
Based on current market conditions and current operations, Fang will increase the expenditure on marketing and promotion, Fang's non-GAAP net income is expected to be profitable for the fiscal year ending
Change of Board Members
Fang has appointed Mr.
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 measures help identify underlying trends in Fang'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 Fang includes in income from operations and net income. Fang 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 Fang'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
In
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
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: |
5587239 |
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
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
Dr. Hua Lei
CFO
Phone: +86-10-5631-8661
Email: leihua@fang.com
Ms. Jessie Yang
Investor Relations Director
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 |
June 30, |
December 31, |
||
2018 |
2017 |
|||
Current assets: |
(Unaudited) |
(Audited) |
||
Cash and cash equivalents |
183,085 |
228,276 |
||
Restricted cash, current |
220,225 |
223,002 |
||
Short-term investments |
39,854 |
55,801 |
||
Accounts receivable, net |
65,605 |
66,884 |
||
Funds receivable |
7,411 |
6,264 |
||
Prepayment and other current assets |
31,248 |
32,704 |
||
Commitment deposits |
198 |
5,876 |
||
Loan receivable, current |
158,625 |
129,438 |
||
Amount due from related parties |
613 |
167 |
||
Total current assets |
706,864 |
748,412 |
||
Non-current assets: |
||||
Property and equipment, net |
767,209 |
622,145 |
||
Prepaid land lease payments |
34,839 |
35,728 |
||
Loan receivable, non-current |
12,300 |
14,674 |
||
Deferred tax assets, non-current |
7,394 |
7,602 |
||
Restricted cash, non-current portion |
38,600 |
39,982 |
||
Deposit for non-current assets |
6,416 |
58,722 |
||
Long-term investments |
340,203 |
470,964 |
||
Other non-current assets |
1,030 |
2,026 |
||
Total non-current assets |
1,207,991 |
1,251,843 |
||
Total assets |
1,914,855 |
2,000,255 |
||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||
Current liabilities: |
||||
Short-term loans |
273,065 |
236,985 |
||
Deferred revenue |
193,746 |
168,884 |
||
Accrued expenses and other liabilities |
121,101 |
158,799 |
||
Customers' refundable fees |
12,653 |
7,070 |
||
Income tax payable |
4,019 |
4,374 |
||
Convertible senior notes |
5,700 |
5,700 |
||
Total current liabilities |
610,284 |
581,812 |
||
Non-current liabilities: |
||||
Long-term loans |
70,674 |
114,109 |
||
Convertible senior notes |
292,210 |
291,365 |
||
Deferred tax liabilities, non-current |
94,778 |
126,641 |
||
Other non-current liabilities |
175,418 |
146,053 |
||
Total non-current liabilities |
633,080 |
678,168 |
||
Total Liabilities |
1,243,364 |
1,259,980 |
||
Equity: |
||||
Class A ordinary shares, par value Hong Kong Dollar ("HK$") 1 2017: 71,775,286 and 71,425,120; outstanding shares as of 2017: 64,649,429 and 64,360,062 |
9,238 |
9,204 |
||
Class B ordinary shares, par value HK$1 per share, 600,000,000 |
3,124 |
3,124 |
||
Treasure stock |
(136,615) |
(136,615) |
||
Additional paid-in capital |
512,035 |
500,666 |
||
Accumulated other comprehensive income |
(35,237) |
137,630 |
||
Retained earnings |
318,253 |
225,574 |
||
Total Fang Holdings Limited shareholders' equity |
670,798 |
739,583 |
||
Non-controlling interests |
693 |
692 |
||
Total equity |
671,491 |
740,275 |
||
TOTAL LIABILITIES AND EQUITY |
1,914,855 |
2,000,255 |
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, |
||||
2018 |
2017 |
2018 |
2017 |
||||
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
||||
Revenues: |
|||||||
Listing services |
33,159 |
42,343 |
59,897 |
76,386 |
|||
Marketing services |
25,105 |
35,035 |
42,431 |
62,370 |
|||
Value-added services |
8,424 |
7,148 |
14,970 |
13,436 |
|||
Financial services |
5,992 |
2,702 |
11,045 |
4,949 |
|||
E-commerce services |
1,727 |
22,865 |
8,895 |
62,755 |
|||
Total revenues |
74,407 |
110,093 |
137,238 |
219,896 |
|||
Cost of Revenues: |
|||||||
Cost of services |
(8,112) |
(48,728) |
(28,354) |
(109,454) |
|||
Total Cost of Revenues |
(8,112) |
(48,728) |
(28,354) |
(109,454) |
|||
Gross Profit |
66,295 |
61,365 |
108,884 |
110,442 |
|||
Operating expenses and income: |
|||||||
Selling expenses |
(19,030) |
(23,099) |
(34,652) |
(46,510) |
|||
General and administrative expenses |
(33,849) |
(43,624) |
(64,589) |
(75,007) |
|||
Other income/(loss) |
3,299 |
(704) |
3,159 |
(1,107) |
|||
Operating Income (loss) |
16,715 |
(6,062) |
12,802 |
(12,182) |
|||
Foreign exchange gain |
4 |
1 |
1 |
214 |
|||
Other-than-temporary impairment on |
- |
(1,817) |
- |
(2,768) |
|||
Interest income |
2,226 |
2,714 |
4,871 |
5,438 |
|||
Interest expense |
(5,615) |
(4,400) |
(11,100) |
(8,241) |
|||
Investment income |
1,950 |
5,985 |
2,052 |
5,985 |
|||
Government grants |
283 |
932 |
498 |
1,699 |
|||
Other non-operating loss |
(95) |
- |
(465) |
- |
|||
Change in fair value of equity securities |
(80,326) |
- |
(122,569) |
- |
|||
Loss before income taxes and |
(64,858) |
(2,647) |
(113,910) |
(9,855) |
|||
Income tax expenses |
|||||||
Income tax expenses |
38,292 |
553 |
42,468 |
(4,256) |
|||
Net loss |
(26,566) |
(2,094) |
(71,442) |
(14,111) |
|||
Net loss attributable to noncontrolling |
(1) |
(1) |
(1) |
(1) |
|||
Net loss attributable to Fang Holdings |
(26,565) |
(2,093) |
(71,441) |
(14,110) |
|||
Other comprehensive income (loss), net of tax |
|||||||
Foreign currency Translation |
(51,272) |
16,459 |
(9,484) |
19,578 |
|||
Amounts reclassified from accumulated |
- |
(1,674) |
- |
(1,674) |
|||
Unrealized gain on available-for-sale |
- |
84,611 |
- |
85,124 |
|||
Loss (income) on intra-entity foreign |
(860) |
(171) |
402 |
(171) |
|||
Total other comprehensive loss (income), |
(52,132) |
99,225 |
(9,082) |
102,857 |
|||
Comprehensive income loss (income) |
(78,698) |
97,131 |
(80,524) |
88,746 |
|||
Loss per share for Class A and Class B ordinary shares |
|||||||
Basic |
(0.30) |
(0.02) |
(0.80) |
(0.16) |
|||
Diluted |
(0.30) |
(0.02) |
(0.80) |
(0.16) |
|||
Loss per ADS |
|||||||
Basic |
(0.06) |
(0.005) |
(0.16) |
(0.03) |
|||
Diluted |
(0.06) |
(0.005) |
(0.16) |
(0.03) |
|||
Weighted average number of Class A and Class B ordinary shares outstanding: |
|||||||
Basic |
88,851,842 |
88,437,943 |
88,809,904 |
88,398,683 |
|||
Diluted |
88,851,842 |
88,437,943 |
88,809,904 |
88,398,683 |
|||
Weighted average number of ADSs outstanding: |
|||||||
Basic |
444,259,212 |
442,189,713 |
444,049,519 |
441,993,416 |
|||
Diluted |
444,259,212 |
442,189,713 |
444,049,519 |
441,993,416 |
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, |
|||||
2018 |
2017 |
2018 |
2017 |
|||||
GAAP income/(loss) from operations |
16,715 |
(6,062) |
12,802 |
(12,182) |
||||
Share-based compensation expense |
4,068 |
2,233 |
8,567 |
3,772 |
||||
Non-GAAP income/(loss) from operations |
20,783 |
(3,839) |
21,369 |
(8,410) |
||||
GAAP net loss |
(26,566) |
(2,094) |
(71,442) |
(14,111) |
||||
Share-based compensation expense |
4,068 |
2,233 |
8,567 |
3,772 |
||||
Investment income |
(1,950) |
(5,985) |
(2,052) |
(5,985) |
||||
Change in fair value of equity securities |
80,326 |
- |
122,569 |
- |
||||
Non-GAAP net income/(loss) |
55,878 |
(5,846) |
57,642 |
(16,324) |
||||
Net loss attributable to Fang shareholders |
(26,565) |
(2,093) |
(71,441) |
(14,110) |
||||
Share-based compensation expense |
4,068 |
2,233 |
8,567 |
3,772 |
||||
Investment income |
(1,950) |
(5,985) |
(2,052) |
(5,985) |
||||
Change in fair value of equity securities |
80,326 |
- |
122,569 |
- |
||||
Non-GAAP net Income/(loss) attributable to |
55,879 |
(5,845) |
57,643 |
(16,323) |
||||
GAAP earnings per share for Class A and Class |
||||||||
Basic |
(0.30) |
(0.02) |
(0.80) |
(0.16) |
||||
Diluted |
(0.30) |
(0.02) |
(0.80) |
(0.16) |
||||
GAAP earnings per ADS: |
||||||||
Basic |
(0.06) |
(0.005) |
(0.16) |
(0.03) |
||||
Diluted |
(0.06) |
(0.005) |
(0.16) |
(0.03) |
||||
Non-GAAP earnings per share for Class A and |
||||||||
Basic |
0.63 |
(0.07) |
0.65 |
(0.18) |
||||
Diluted |
0.63 |
(0.07) |
0.65 |
(0.18) |
||||
Non-GAAP earnings per ADS: |
||||||||
Basic |
0.13 |
(0.01) |
0.13 |
(0.04) |
||||
Diluted |
0.13 |
(0.01) |
0.13 |
(0.04) |
||||
Weighted average number of Class A and Class |
||||||||
Basic |
88,851,842 |
88,437,943 |
88,809,904 |
88,398,683 |
||||
Diluted |
88,851,842 |
88,437,943 |
88,809,904 |
88,398,683 |
||||
Weighted average number of ADSs outstanding: |
||||||||
Basic |
444,259,212 |
442,189,713 |
444,049,519 |
441,993,416 |
||||
Diluted |
444,259,212 |
442,189,713 |
444,049,519 |
441,993,416 |
||||
GAAP Net loss |
(26,566) |
(2,094) |
(71,442) |
(14,111) |
||||
Add back: |
||||||||
Share-based compensation expense |
4,068 |
2,233 |
8,567 |
3,772 |
||||
Change in fair value of equity securities |
80,326 |
- |
122,569 |
|||||
Interest expense |
5,615 |
4,400 |
11,100 |
8,241 |
||||
Depreciation expenses |
6,404 |
6,055 |
13,107 |
11,612 |
||||
Subtract: |
||||||||
Investment income |
(1,950) |
(5,985) |
(2,052) |
(5,985) |
||||
Interest income |
(2,226) |
(2,714) |
(4,871) |
(5,438) |
||||
Income tax (benefits)/expenses |
(38,292) |
(553) |
(42,468) |
4,256 |
||||
Adjusted EBITDA |
27,379 |
1,342 |
34,510 |
2,347 |
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