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News Release
Fang Announces Third Quarter 2017 Results

BEIJING, Nov. 17, 2017 /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 September 30, 2017.

Third Quarter 2017 Highlights

  • Total revenues were $112.2 million, a decrease of 55.1% from the corresponding period in 2016.
  • Operating income was $18.4 million. Non-GAAP operating income was $19.8 million.
  • Net income attributable to Fang's shareholders was $15.2 million. Fully diluted earnings per ADS were $0.03.
  • Non-GAAP net income attributable to Fang's shareholders was $14.8 million. Non-GAAP fully diluted earnings per ADS were $0.03.
  • Net cash generated from operating activities was $57.8 million in the third quarter of 2017.

"After seven non-profit quarters, I'm glad that Fang has started to turn profitable," said Vincent Mo, Chairman and CEO of Fang. "With our ongoing focus on transformation back to a technology-driven open platform model, I'm confident that Fang will return to a sustainable and healthy growth track."

Third Quarter 2017 Results

Revenues

Fang reported total revenues of $112.2 million in the third quarter of 2017, a decrease of 55.1% from $250.1 million in the corresponding period of 2016, primarily due to the decline in e-commerce services revenue by 150.8 million.   

Revenue from listing services was $47.2 million in the third quarter of 2017, an increase of 65.6% from $28.5 million in the corresponding period of 2016, primarily driven by the increased number of paying members.

Revenue from marketing services was $37.3 million in the third quarter of 2017, an increase of 4.8% from $35.6 million in the corresponding period of 2016.

Revenue from e-commerce services was $16.6 million in the third quarter of 2017, a decrease of 90.1% from $167.4 million in the corresponding period of 2016, primarily due to Fang's transformation back to a technology-driven open platform model.

Revenue from Internet financial services was $3.5 million in the third quarter of 2017, a decrease of 52.4% from $7.3 million in the corresponding period of 2016, primarily due to the decreased transaction volumes of secondary homes.

Revenue from other value-added services was $7.7 million in the third quarter of 2017, a decrease of 12.1% from $11.4 million in the corresponding period of 2016.

Cost of Revenue

Cost of revenue was $35.4 million in the third quarter of 2017, a decrease of 77.4% from $157.0 million in the corresponding period of 2016, primarily driven by the closing of the self-owned brokerage stores and cost optimization under the open platform model.

Operating Expense

Operating expenses were $58.4 million in the third quarter of 2017, a decrease of 37.2% from $92.9 million in the corresponding period of 2016.

Selling expenses were $16.9 million in the third quarter of 2017, a decrease of 70.2% from $56.7 million for the corresponding period of 2016, primarily driven by the decrease of advertising and promotion fee, sales commission fee and staff cost.

General and administrative expenses were $41.8 million in the third quarter of 2017, an increase of 15.4% from $36.2 million for the corresponding period of 2016, primarily due to increased bad debt and disposal fee related to closing the self-owned brokerage stores for secondary home transactions.

Operating income

Operating income was $18.4 million in the third quarter of 2017, compared to $0.2 million in the corresponding period of 2016, primarily attributable to the agent reduction and effective cost control.

Income Tax Expenses

Income tax expenses were $4.1 million in the third quarter of 2017, compared to income tax expenses of $8.0 million in the corresponding period of 2016.

Net income and EPS

Net income attributable to Fang's shareholders was $15.2 million in the third quarter of 2017, compared to net loss of $4.9 million in the corresponding period of 2016. Earnings per fully-diluted ordinary share and ADS were $0.16 and $0.03 in the third quarter of 2017, compared to loss of $0.05 and $0.01, respectively, in the corresponding period of 2016.

Adjusted EBITDA

Adjusted EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was $25.6 million in the third quarter of 2017, compared to $1.6 million in the corresponding period of 2016.

Cash

As of September 30, 2017, Fang had cash, cash equivalents, and short-term investments of $543.3 million, compared to $590.5 million as of December 31, 2016. Net cash generated from operating activities was $57.8 million in the third quarter of 2017, compared to cash flow generated from operating activities of $76.8 million in the same period of 2016. The decrease of cash generated from operating activities was primarily due to the reclassification of certain loan receivable to investment activities compared to the third quarter of 2016.

Business Outlook

Fang is continuing its transformation back to a technology-driven open platform model and expects a profitable fourth quarter.

This forecast does not assume significant adverse market development during the fourth quarter of 2017 and reflects Fang's current and preliminary views, which are subject to change.

Conference Call Information

Fang'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:

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 November 17, 2017 through 7:59 ET November 25, 2017. 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:        

3384709

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 our websites, we provide e-commerce, marketing, listing, financial 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 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 for its online brokerage business to a franchise model 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.

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 financial measures provide meaningful supplemental information to investors regarding its operating performance by excluding share-based compensation expenses and the related tax effects, realized gain on available-for-sale security, interest income and expenses, income tax expenses, and depreciation expense for the relevant period, which (1) may not be indicative of Fang'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 Fang'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, interest income and expenses, income tax expenses, and depreciation expenses have been and will continue to be a significant recurring expense 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.

For investor and media inquiries, please contact:

Dr. Hua Lei 
CFO 
Phone: +86-10-5631-8661 
Email: leihua@fang.com

Ms. Dana Cheng 
Senior Manager, Investor Relations 
Phone: +86-10-5631 8174 
Email: chengyu.bj@fang.com  

 

Fang Holdings Limited 

Condensed Consolidated Balance Sheets

(in thousands of U.S. dollars, except share data and per share data)

ASSETS

September 30,

December 31,


2017

2016

Current assets:

(Unaudited)

(Audited)

     Cash and cash equivalents

153,176

336,528

     Restricted cash, current

290,367

211,084

     Short-term investments

99,740

42,929

     Accounts receivable, net 

62,482

93,672

     Funds receivable

28,079

20,483

     Prepayment and other current assets 

48,692

39,824

     Commitment deposits

504

6,527

     Loan receivable, current

92,274

41,966

     Amount due from related parties

294

197

Total current assets  

775,608

793,210

Non-current assets:



     Property and equipment, net

553,487

319,897

     Loan receivable, non-current

17,152

16,808

     Deferred tax assets, non-current

6,668

4,915

     Deposit for non-current assets

147,740

240,712

     Long-term investments

466,896

231,880

     Other non-current assets

2,323

7,391

Total non-current assets

1,194,266

821,603

Total assets 

1,969,874

1,614,813




LIABILITIES AND SHAREHOLDERS' EQUITY



Current liabilities:



     Short-term loans

277,544

212,734

     Deferred revenue

153,278

129,765

     Accrued expenses and other liabilities

286,018

318,540

     Customers' refundable fees

22,574

28,630

     Income tax payable

13,414

6,022

Total current liabilities 

752,828

695,691

Non-current liabilities:



     Long-term loans

75,895

65,190

     Convertible senior notes

296,598

295,268

     Deferred tax liabilities, non-current

124,077

70,424

     Other non-current liabilities

434

415

Total non-current liabilities

497,004

431,297

Total Liabilities   

1,249,832

1,126,988




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 64,248,253 shares and
     70,736,054 shares issued and outstanding as
     at September 30, 2017 and December 31,
     2016, respectively

9,181

9,157

     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,
     2017 and December 31, 2016 respectively

3,124

3,124

     Treasure stock

(136,615)

(136,615)

     Additional paid-in capital

496,648

488,943

     Accumulated other comprehensive income

142,023

(81,349)

     Retained earnings

204,994

203,870

Total Fang Holdings Limited shareholders' equity

719,355

487,130

     Non-controlling interests

687

695

Total equity

720,042

487,825

TOTAL LIABILITIES AND EQUITY 

1,969,874

1,614,813

 

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


September 30,


September 30,


2017


2016


(Unaudited)


(Unaudited)

Revenues:




     Listing services

47,175


28,493

     Marketing services

37,265


35,574

     E-commerce services

16,574


167,413

     Financial services

3,461


7,267

     Other value-added services and other services

7,708


11,380

Total revenues

112,183


250,127





Cost of Revenues:




     Cost of services

(35,443)


(157,001)

Total Cost of Revenues

(35,443)


(157,001)





Gross Profit

76,740


93,126





Operating expenses and income:



    Selling expenses 

(16,921)


(56,729)

    General and administrative expenses 

(41,758)


(36,177)

    Other income 

302


-





 Operating Income (loss) 

18,363


220

      Foreign exchange gain (loss) 

(1)


(8,390)

      Interest income 

3,196


2,010

      Interest expense 

(4,538)


(4,071)

      Investment income 

1,857


11,453

      Government grants 

480


1,862

 Income (loss) before income taxes and  non-controlling
interests 

19,357


3,084

 Income tax expenses 




      Income tax expenses 

(4,124)


(8,032)

 Net income (loss) 

15,233


(4,848)

      Net income (loss) attributable to noncontrolling interests 

-


1

 Net income (loss) attributable to Fang Holdings Limited
shareholders 

15,233


(4,849)

 Other comprehensive income (loss), net of tax 


    Foreign currency Translation  

17,739


41,804

    Amounts reclassified from accumulated other
     comprehensive income 

(801)


-

    Unrealized gain on available-for-sale security 

102,032


1,197

    Loss on intra-entity foreign transactions of long-term-
     investment nature 

1,544


-

 Total other comprehensive income (loss), net of tax 

120,514


43,001

 Comprehensive income (loss) 

135,747


38,052

Earnings/(loss) per share for Class A and Class B ordinary shares:

     Basic

0.17


(0.05)

     Diluted

0.16


(0.05)

Earnings/(loss) per ADS:




     Basic

0.03


(0.01)

     Diluted

0.03


(0.01)

Weighted average number of Class A and Class B ordinary shares outstanding:

     Basic

88,486,099


93,798,520

     Diluted

94,093,312


93,798,520

Weighted average number of ADSs outstanding:


     Basic

442,430,494


468,992,600

     Diluted

470,466,562


468,992,600

 

 

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


September 30,


September 30,


2017


2016

     GAAP income from operations

18,363


220

     Share-based compensation expense

1,390


2,223

     Non-GAAP income from operations

19,753


2,443





     GAAP net income

15,233


(4,948)

     Investment income

(1,857)


(11,453)

     Share-based compensation expense

1,390


2,233

     Non-GAAP net income

14,766


(14,178)





     Net Income attributable to Fang shareholders

15,233


(4,949)

     Investment income

(1,857)


(11,453)

     Share-based compensation expense

1,390


2,233

     Non-GAAP net Income attributable to Fang
     Holdings Limited shareholders

14,766


(14,179)





     GAAP earnings per share for Class A and Class B ordinary
shares:



     Basic

0.17


(0.05)

     Diluted

0.16


(0.05)

     GAAP earnings per ADS:




     Basic

0.03


(0.01)

     Diluted

0.03


(0.01)

     Non-GAAP earnings per share for Class A and Class B
ordinary shares:



     Basic

0.17


(0.15)

     Diluted

0.16


(0.15)

     Non-GAAP earnings per share for Class A and Class B
ordinary shares:



     Basic

0.03


(0.03)

     Diluted

0.03


(0.03)

     Weighted average number of Class A and Class B ordinary
shares outstanding:

     Basic

88,486,099


93,789,520

     Diluted

94,093,312


93,789,520

Weighted average number of ADSs outstanding:



     Basic

442,430,494


468,992,600

     Diluted

470,466,562


468,992,600





     Non-GAAP net income

14,766


(14,178)

Add back:




     Interest expense

4,538


4,071

     Income tax expenses

4,124


8,032

     Depreciation expenses

5,398


5,672

Subtract:




     Interest income

(3,196)


(2,010)

     Adjusted EBITDA

25,630


1,587

 

 

 

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SOURCE Fang Holdings Limited

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