SouFun Announces First Quarter 2013 Results

BEIJING, May 8, 2013 /PRNewswire/ -- SouFun Holdings Limited (NYSE: SFUN) ("SouFun"), the leading real estate Internet portal and one of the leading home furnishing and improvement websites in China, announced today its unaudited financial results for the first quarter 2013. (Amounts are in US dollars, unless otherwise specified.)

First Quarter 2013 Highlights

• Revenue in the first quarter of 2013 was $91.0 million, a 55.6% increase from the corresponding period in 2012.
• Operating income in the first quarter of 2013 was $37.2 million, a 161.9% increase from the corresponding period in 2012. Non-GAAP operating income in the first quarter of 2013 was $39.0 million, a 151.9% increase from the corresponding period in 2012.
• Net income attributable to SouFun Holdings Limited's shareholders was $28.4 million, or $0.34 per fully diluted share, which was a year-over-year increase of 95.5%. Non-GAAP net income attributable to SouFun Holdings Limited's shareholders was $33.2 million, or $0.40 per fully diluted share, which was a year-over-year increase of 134.3%.

"We had a very strong quarter to start 2013," said Vincent Mo, Executive Chairman of SouFun. "Our focus on expanding existing business and constant innovation has allowed SouFun to deliver solid results quarter after quarter. We will continue to invest in our people, technology, and local city infrastructure. We believe such investments are critical to ensure SouFun's long-term sustainable expansion and will create significant value for our shareholders in the long run."

First Quarter 2013 Results

Revenues

SouFun reported total revenues of $91.0 million for the first quarter of 2013, representing an increase of 55.6% from the corresponding period in 2012, primarily driven by the growth in SouFun membership services and listing services.

Revenue from marketing services was $35.8 million for the first quarter of 2013, an increase of 4.6% from $34.3 million for the corresponding period in 2012, primarily driven by the increase in number of advertisers.

Revenue from e-commerce services was $26.4 million for the first quarter of 2013, a 118.9% increase from $12.0 million for the same period in 2012 due to the increase in property purchases through our SouFun membership service.

Revenue from listing services was $26.8 million for the first quarter of 2013, an increase of 145.4% from $10.9 million for the corresponding period in 2012 primarily due to increased property listings from agency subscribers. The increase in listings was partially driven by the announcement of certain housing-related government policies, which resulted in a significant increase in secondary home market transaction volume.

Revenue from other value-added services was $2.0 million for the first quarter of 2013, an increase of 60.8% from $1.3 million for the corresponding period in 2012, primarily driven by database sales.

Cost of Revenue

Cost of revenue was $20.0 million for the first quarter of 2013, an increase of 21.2% from $16.5 million for the corresponding period in 2012. The increase in cost of revenue was primarily due to the increase in staff costs, business tax, value-added taxes and other surcharges.

Gross margin was 78.0% for the first quarter of 2013, improved from 71.8% for the corresponding period in 2012 as a result of controlled headcount increase as compared to the revenue growth.

Operating Expenses

Operating expenses were $33.8 million for the first quarter of 2013, an increase of 21.7% from $27.8 million for the corresponding period in 2012, primarily due to effective cost control.

Selling expenses were $18.7 million for the first quarter of 2013, an increase of 29.6% from $14.5 million for the corresponding period in 2012, primarily due to increased staff cost and advertising and promotional expenses.

General and administrative expenses were $15.1 million for the first quarter of 2013, an increase of 13.2% from $13.3 million for the corresponding period in 2012, primarily due to increased staff cost and, to a lesser extent, an increase in allowance for doubtful accounts.

Operating income was $37.2 million for the first quarter of 2013, an increase of 161.9% from $14.2 million for the corresponding period in 2012, driven by the revenue growth and effective cost control.

Income tax expense was $11.6 million for the first quarter of 2013, a substantial increase compared to $1.9 million for the corresponding period in 2012. The increase was primarily due to a $5.0 million incremental tax expense driven by profit growth and a $3.1 million accrual of dividend-related withholding tax in the first quarter of 2013, as well as a $1.6 million one-time tax benefit in the first quarter of 2012.

Net income attributable to SouFun Holdings Limited's shareholders was $28.4 million for the first quarter of 2013, an increase of 95.5% from $14.5 million for the corresponding period in 2012. Fully diluted earnings per share were $0.34 for the first quarter of 2013, a 88.9% increase from $0.18 for the corresponding period in 2012.

Non-GAAP EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was $40.9 million for the first quarter of 2013, an increase of 134.4% as compared to $17.4 million for the corresponding period in 2012.

As of March 31, 2013, SouFun had cash, cash equivalents, and short-term investments (excluding the available-for-sale security) of $203.9 million, compared to $143.6 million as of December 31, 2012. Cash flow from operating activities was $59.8 million for the first quarter of 2013, a 127.1% increase from $26.3 million for the same period in 2012.

Business Outlook

SouFun raises its total revenue guidance for 2013 from between $516.0 million and $527.0 million to between $527.0 million and $538.0 million, or from a year-over-year increase of between 20.0% and 22.5% to between 22.5% and 25.0%, despite uncertainties in China's property market. 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 May 8, 2013 at 8 a.m. U.S. Eastern  Daylight Time (8 p.m. Beijing/Hong Kong time).

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

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 10:00 a.m. U.S. Eastern Daylight Time on May 8 through May 15, 2013. The dial-in details for the telephone replay are:

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 our websites in 2012. Through SouFun's websites, it provides marketing, e-commerce, listing, and other value-added services for China's fast-growing real estate and home-related sectors. SouFun's Internet portal is highly focused on user experience, and supports SouFun's users in seeking information on 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. Such forward-looking statements include, without limitation, statements regarding the revenue outlook for 2013 and statements regarding SouFun's strategic and operational plans and focus, current and future market positions the impact of government policies and China's real estate and home furnishings market. 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, current global economic conditions and their 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 occur in the future, challenges in China's real estate market, the impact of competitive market conditions for our services and our ability to maintain and increase our leadership in China's home related internet sector, the uncertain regulatory landscape in China, fluctuations in our quarterly operating results, our continued ability to execute business strategies including our SouFun membership services and SouFun Online Shop, our ability to continue to expand in local markets, our reliance on online advertising sales and listing services for our revenues, any failure to successfully develop and expand our content, service offerings and features, including the success of new features to meet evolving market needs, and the technologies that support them, and, should we in the future make acquisitions, any failure to successfully integrate acquired businesses.

Further information regarding these and other risks and uncertainties is included in our annual report on form 20-F and other documents we have 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 a one-time gain on purchase for the three months ended March 31, 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:

Ms. Yiwen Zhang
Investor Relations Manager
SouFun Holdings Limited
Phone: +86-10-5631 8659
Fax: +86-10-5631 8709
E-mail: [email protected]

Or

Mr. Hong Zhao
Vice President of Finance
SouFun Holdings Limited
Phone: +86-10-5631-8707
Fax: +86-10-5631 8709
E-mail: [email protected]

SOURCE SouFun Holdings Limited