Fang Announces Fourth Quarter And Fiscal Year 2018 Results
BEIJING, April 26, 2019 /PRNewswire/ -- Fang Holdings Limited (NYSE: SFUN) ("Fang" or "we"), a leading real estate Internet portal in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2018.
Fourth Quarter 2018 Highlights
-- Total revenues were $82.2 million.
-- Operating income was $11.9 million. Non-GAAP operating income was $ 13.7
million. A description of the adjustments from GAAP to non-GAAP
operating income is detailed in the table captioned "Reconciliation of
GAAP and Non-GAAP Results" following this press release.
-- Net loss attributable to Fang's shareholders was $48.2 million, which
was primarily due to the change in fair value of equity securities of
$34.4 million, and the income tax expense of $9.5 million related to the
effect of change in fair value of equity securities. Loss per ADS was
$0.11.
-- Non-GAAP net loss attributable to Fang's shareholders was $9.1 million.
Non-GAAP fully diluted loss per ADS were $0.02. A description of the
adjustments from GAAP net loss to non-GAAP net loss attributable to
Fang's shareholders and fully diluted income per ADS is detailed in the
table captioned "Reconciliation of GAAP and Non-GAAP Results" following
this press release.
-- Adjusted EBITDA was $19.3 million. A description of the adjustments from
GAAP net loss to Adjusted EBITDA is detailed in the table captioned
"Reconciliation of GAAP and Non-GAAP Results" following this press
release.
Fiscal Year 2018 Highlights
-- Total revenues were $303.0 million.
-- Operating income was $39.9 million. Non-GAAP operating income was $ 54.0
million. A description of the adjustments from GAAP to non-GAAP
operating income is detailed in the table captioned "Reconciliation of
GAAP and Non-GAAP Results" following this press release.
-- Net loss attributable to Fang's shareholders was $117.3 million, which
was primarily due to the change in fair value of equity securities of
$168.7 million, and the income tax benefits of $22.0 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. Loss per ADS was $0.26.
-- Non-GAAP net income attributable to Fang's shareholders was $29.2
million. Non-GAAP fully diluted benefits per ADS were $0.07. 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 table captioned "Reconciliation of GAAP and Non-GAAP
Results" following this press release.
-- Adjusted EBITDA was $81.7 million. A description of the adjustments from
GAAP net loss to Adjusted EBITDA is detailed in the table captioned
"Reconciliation of GAAP and Non-GAAP Results" following this press
release.
"Fang is continuing its restructuring by focusing more on its data and analytics business and internet and advertising and listing services," commented Vincent Mo, Chairman of Fang. "The spin-off of China Index Holdings is underway and Fang is also exploring a separation of its core internet advertising and listing services for an independent listing."
Fourth Quarter 2018 Results
Revenues
Fang reported total revenues of $82.2 million in the fourth quarter of 2018, a decrease of 26.8% from $112.2 million in the corresponding period of 2017, mainly due to the decline in revenues from listing and e-commerce services.
Revenue from marketing services was $41.5 million in the fourth quarter of 2018, a decrease of 16.3% from $49.6 million in the corresponding period of 2017, primarily due to a slowdown in the real estate market and the continued impacts of tightening policies.
Revenue from listing services was $24.4 million in the fourth quarter of 2018, a decrease of 41.6% from $41.8 million in the corresponding period of 2017, caused by the decreased number of paying members.
Revenue from value-added services was $11.1 million in the fourth quarter of 2018, an increase of 28.5% from $8.6 million in the corresponding period of 2017, driven by the increased demand for our database and research services.
Revenue from Financial services was $2.4 million in the fourth quarter of 2018, a decrease of 35.3% from $3.6 million in the corresponding period of 2017.
Revenue from e-commerce services was $2.8 million in the fourth quarter of 2018, a decrease of 67.1% from $8.5 million in the corresponding period of 2017, primarily due to Fang's transformation back to a technology-driven open platform model.
Cost of Revenue
Cost of revenue was $12.4 million in the fourth quarter of 2018, a decrease of 58.1% from $29.7 million in the corresponding period of 2017, primarily due to optimization in our cost structure.
Operating Expenses
Operating expenses were $57.9 million in the fourth quarter of 2018, an increase of 24.4% from $46.5 million in the corresponding period of 2017.
Selling expenses were $13.8 million in the fourth quarter of 2018, a decrease of 50.2% from $27.8 million for the corresponding period of 2017, primarily driven by a decrease in advertising and promotional expenses and deduction of staff cost.
General and administrative expenses were $43.8 million in the fourth quarter of 2018, an increase of 131.5% from $18.9 million for the corresponding period of 2017, primarily due to an increase in bad debts.
Operating Income
Operating income was $11.9 million in the fourth quarter of 2018, compared to $36.0 million in the corresponding period of 2017, caused by the decline in revenue from listing and e-commerce services and increase in bad debts.
Investment Income
Change in fair value of securities included in investment income for the fourth quarter of 2018 was a loss of $34.4 million. The amount represents changes in fair value of securities in accordance with FASB ASU 2016-01, which became effective on January 1, 2018.
Income Tax Expenses
Income tax expenses were $27.5 million in the fourth quarter of 2018, compared to income tax expenses of $13.1 million in the corresponding period of 2017.
Net Income/Loss and EPS
Net loss attributable to Fang's shareholders was $48.2 million in the fourth quarter of 2018, compared to net income of $20.6 million in the corresponding period of 2017. Loss per ordinary share and ADS were $0.54 and $0.11 in the fourth quarter of 2018, compared to net income per fully-diluted ordinary share and ADS of $0.23 and $0.04, respectively, in the corresponding period of 2017.
Adjusted EBITDA
Adjusted EBITDA, defined as GAAP net income before share-based compensation, investment income, change in fair value of securities, income taxes, interest expenses, interest income and depreciation, was $19.3 million in the fourth quarter of 2018, compared to the $41.0 million in the corresponding period of 2017.
Cash
As of December 31, 2018, Fang had cash and cash equivalents, restricted cash (current and non-current) and short-term investments of $463.6 million, compared to $547.1 million as of December 31, 2017.
Fiscal Year 2018 Results
Revenues
Fang reported total revenues of $303.0 million for 2018, representing a decrease of 31.8% from $444.3 million for 2017, mainly due to the decline in revenues from e-commerce and listing services.
Revenue from marketing services was $119.7 million for 2018, a decrease of 19.8% from $149.3 million for 2017, primarily due to slowdown in the real estate market and the continued impacts of tightening policies.
Revenue from listing services was $113.5 million for 2018, a decrease of 31.3% from $165.4 million for 2017, caused by a decreased number of paying members.
Revenue from other value-added services was $36.4 million for 2018, an increase of 22.0% from $29.8 million for 2017, primarily driven by the increase demand for our database and research services.
Revenue from financial services was $18.1 million for 2018, an increase of 49.8% from $12.1 million for 2017, driven by increased average balance of loans receivable.
Revenue from e-commerce services was $15.4 million for 2018, a decrease of 82.5% from $87.8 million for 2017, primarily due to Fang's transformation back to a technology-driven open platform model.
Cost of Revenue
Cost of revenue was $58.6 million for 2018, a decrease of 66.5% from $174.6 million for 2017, primarily driven by the closing of the self-owned brokerage stores, deduction of e-commerce staff and cost optimization under the technology-driven open platform model.
Operating Expenses
Operating expenses were $204.5 million for 2018, a decrease of 10.1% from $227.5 million for 2017.
Selling expenses were $69.5 million for 2018, a decrease of 23.8% from $91.3 million for 2017, primarily due to the decrease of advertising and promotion fee and deduction of staff cost.
General and administrative expenses were $138.2 million for 2018, an increase of 1.9% from $135.7 million for 2017.
Operating Income
Operating income was $39.9 million for 2018, compared with operating income of $42.2 million for 2017.
Investment Income
Change in fair value of securities included in investment income for the fiscal year was a loss of $168.7 million. The amount represents changes in fair value of securities in accordance with FASB ASU 2016-01, which became effective on January 1, 2018.
Income Tax Expenses
Income tax benefits were $11.9 million for 2018, compared to Income tax expenses of $21.4 million for the corresponding period in 2017, primarily due to the reversal of previously recorded ASC 740 (FIN 48) tax and interest liability.
Net Loss/Income and EPS
Net loss attributable to Fang's shareholders was $117.3 million for 2018, compared to net income of $21.7 million for 2017. Loss per fully-diluted ordinary share and ADS were $1.31 and $0.26 in 2018, compared to net income per fully-diluted ordinary share and ADS of $0.24 and $0.05 in 2017, respectively.
Adjusted EBITDA
Adjusted EBITDA, defined as GAAP net income before share-based compensation, investment income, change in fair value of securities, income taxes, interest expenses, interest income and depreciation, was $81.7 million for 2018, compared to $68.9 million for 2017.
Cash
As of December 31, 2018, Fang had cash and cash equivalents, restricted cash (current and non-current) and short-term investments of $463.6 million, compared to $547.1 million as of December 31, 2017.
Business Outlook
Based on current operations and market conditions, Fang's non-GAAP net income is expected to be profitable for the fiscal year ending December 31, 2019. These estimates represent management's current and preliminary view, which are 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, (3) non-GAAP basic and diluted (loss)/earnings per ordinary share and per ADS, and (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, 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 $2.9 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 7:30 AM U.S. EST (7:30 PM Beijing/Hong Kong time). The dial-in details for the live conference call are:
International Toll:
+65 67135090
Toll-Free/Local Toll:
United States +1 866-519-4004 /+1
845-675-0437
Hong Kong +852 800-906-601 /+852
3018-6771
Mainland China +86 800-819-0121 /+86
400-620-8038
Passcode:
SFUN
A telephone replay of the call will be available after the conclusion of the conference call from 10:30 ET on April 26, 2019 through 9:59 ET May 3, 2019. The dial-in details for the telephone replay are:
International Toll: +61 2-8199-0299
Toll-Free/Local Toll:
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: 8999638
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 a 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 primarily 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 65 offices to focus on local market needs and its website and database contains real estate related content covering 657 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:
Mr. Zijin Li
Acting CFO
Phone: +86-10-5631 8805
Email: lizijin.bj@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 December 31,
December 31,
2018 2017
Current assets:
(Unaudited)
(Audited)
Cash and cash equivalents 195,108 228,276
Restricted cash, current 245,474 223,002
Short-term investments 16,043 55,801
Accounts receivable, net 60,950 66,884
Funds receivable 5,474 6,264
Prepayment and other current assets 25,378 32,704
Commitment deposits 191 5,876
Loan receivable, current 117,602 129,438
Amount due from related parties 138 167
Total current assets 666,358 748,412
Non-current assets:
Property and equipment, net 730,774 622,145
Prepaid land lease payments 33,153 35,728
Loan receivable, non-current 6,249 14,674
Deferred tax assets, non-current 2,339 7,602
Deposit for non-current assets 902 58,722
Restricted cash, non-current portion 6,990 39,982
Long-term investments 373,233 470,964
Other non-current assets 4,558 2,026
Total non-current assets 1,158,198 1,251,843
---
Total assets 1,824,556 2,000,255
===
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term loans 297,811 236,985
Deferred revenue and other current liabilities 294,359 327,683
Customers' refundable fees 3,976 7,070
Income tax payable 4,493 4,374
Due to a related party 19
Convertible senior notes 5,700
Total current liabilities 600,658 581,812
Non-current liabilities:
Long-term loans 123,215 114,109
Convertible senior notes 254,435 291,365
Deferred tax liabilities, non-current 100,214 126,641
Other non-current liabilities 152,800 146,053
Total non-current liabilities 630,664 678,168
---
Total Liabilities 1,231,322 1,259,980
===
Equity:
Class A ordinary shares, par value Hong Kong Dollar ("HK$") 1 per share, 9,286 9,204
600,000,000 shares authorized for Class A and Class B in aggregate, issued
shares as of December 31, 2018 and 2017: 72,069,645 and 71,425,120;
outstanding shares as of December 31, 2018 and 2017: 65,004,587 and
64,360,062
Class B ordinary shares, par value HK$1 per share, 600,000,000 shares 3,124 3,124
authorized for Class A and Class B in aggregate, and 24,336,650 shares
and 24,336,650 shares issued and outstanding as at December 31, 2018 and
December 31, 2017, respectively
Treasure stock (136,615) (136,615)
Additional paid-in capital 517,802 500,666
Accumulated other comprehensive income (73,426) 137,630
Retained earnings 272,370 225,574
Total Fang Holdings Limited shareholders' equity 592,541 739,583
---
Non-controlling interests 693 692
Total equity 593,234 740,275
---
TOTAL LIABILITIES AND EQUITY 1,824,556 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 Year ended
December
December
December
December
31, 31, 31,
31,
2018 2017 2018 2017
(Unaudited)
(Unaudited)
(Unaudited)
(Audited)
Revenues:
Marketing services 41,524 49,632 119,680 149,267
Listing services 24,400 41,813 113,534 165,374
Value-added services 11,110 8,647 36,358 29,791
Financial services 2,357 3,645 18,060 12,055
E-commerce services 2,787 8,480 15,384 87,809
Total revenues 82,178 112,217 303,016 444,296
Cost of Revenues:
Cost of services (12,436) (29,702) (58,570) (174,599)
Total Cost of Revenues (12,436) (29,702) (58,570) (174,599)
Gross Profit 69,742 82,515 244,446 269,697
Operating expenses and income:
Selling expenses (13,845) (27,819) (69,532) (91,250)
General and administrative expenses (43,815) (18,923) (138,249) (135,688)
Other income (loss) (202) 238 3,275 (567)
Operating Income 11,880 36,011 39,940 42,192
Foreign exchange gain (loss) (606) (198) (598) 15
Interest income 554 2,688 10,302 11,322
Interest expense (4,264) (3,374) (21,174) (16,153)
Investment income (28,858) 2,104 (159,093) 9,946
Government grants 614 975 1,435 3,154
Other non-operating loss (7) (4,562) (30) (4,562)
Other-than-temporary impairment on
available-for-sale securities
- (2,768)
(Loss) income before income taxes and noncontrolling interests (20,687) 33,644 (129,218) 43,146
Income tax expenses
Income tax (expenses) benefits (27,475) (13,062) 11,892 (21,442)
Net (loss) income (48,162) 20,582 (117,326) 21,704
Net loss attributable to noncontrolling interests (2) (2) (3)
Net (loss) income attributable to Fang Holdings Limited shareholders (48,160) 20,584 (117,324) 21,707
Total other comprehensive (loss) income, net of tax (2,593) (4,392) (47,271) 218,979
Comprehensive (loss) income (50,755) 16,190 (164,597) 240,683
Earnings per share for Class A and Class B ordinary shares:
Basic (0.54) 0.23 (1.31) 0.25
Diluted (0.54) 0.23 (1.31) 0.24
Earnings per ADS:
Basic (0.11) 0.05 (0.26) 0.05
Diluted (0.11) 0.04 (0.26) 0.05
Weighted average number of Class A and Class B ordinary shares outstanding:
Basic 89,512,488 89,060,615 89,384,955 88,475,665
Diluted 89,512,488 95,347,781 89,384,955 91,585,677
Weighted average number of ADSs outstanding:
Basic 447,562,440 445,303,077 446,924,775 442,378,324
Diluted 447,562,440 476,738,907 446,924,775 464,319,935
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 Year ended
December
December
December
December
31, 31,
31, 31,
2018 2017 2018 2017
GAAP income from operations 11,880 36,011 39,940 42,192
Share-based compensation expense 1,844 2,056 14,082 7,218
Non-GAAP income from operations 13,724 38,067 54,022 49,410
GAAP net income (48,162) 20,582 (117,326) 21,704
Reconciliation items:
Share-based compensation 1,844 2,056 14,082 7,218
Investment income (28,858) 2,104 (159,093) 9,946
Impairment on investments 2,768
Subtotal (17,460) 20,534 55,849 21,744
Tax impact of reconciliation items 8,383 (388) (26,688) (1,062)
Non-GAAP net income (9,077) 20,146 29,161 20,682
GAAP earnings per share for Class A and Class B
ordinary shares:
Basic (0.54) 0.23 (1.31) 0.25
Diluted (0.54) 0.23 (1.31) 0.24
GAAP earnings per ADS:
Basic (0.11) 0.05 (0.26) 0.05
Diluted (0.11) 0.04 (0.26) 0.05
Non-GAAP earnings per share for Class A and Class
B ordinary shares:
Basic (0.10) 0.28 0.33 0.30
Diluted (0.10) 0.26 0.33 0.29
Non-GAAP earnings per ADS
Basic (0.02) 0.06 0.07 0.06
Diluted (0.02) 0.05 0.07 0.06
Weighted average number of Class A and Class B
ordinary shares outstanding:
Basic 89,512,488 89,060,615 89,384,955 88,475,665
Diluted 89,512,488 95,347,781 89,384,955 91,585,677
Weighted average number of ADSs outstanding:
Basic 447,562,440 445,303,077 446,924,775 442,378,324
Diluted 447,562,440 476,738,907 446,924,775 464,319,935
GAAP net income (48,162) 20,582 (117,326) 21,704
Add back:
Share-based compensation expense 1,844 2,056 14,082 7,218
Investment income (28,858) 2,104 (159,093) 9,946
Interest expense 4,264 3,374 21,174 16,153
Income tax expenses (benefits) 27,475 13,062 (11,892) 21,442
Depreciation expenses 5,619 6,763 26,856 23,737
Subtract:
Interest income (554) (2,688) (10,302) (11,322)
Adjusted EBITDA 19,344 41,045 81,685 68,986
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SOURCE Fang Holdings Limited
