SouFun Announces Third Quarter 2015 Results

BEIJING, Nov. 18, 2015 /PRNewswire/ -- SouFun Holdings Limited (NYSE: SFUN) ("SouFun"), the leading real estate Internet portal in China, announced today its unaudited financial results for the three months ended September 30, 2015.

Third Quarter 2015 Highlights

• Total Revenue increased by 30.4% year-on-year to $248.5 million. Revenue from e-commerce services increased by 111.0% year-on-year to $142.6million.
• Operating loss was $31.8 million. Non-GAAP operating loss was $30.6 million. A description of the adjustments from GAAP to non-GAAP operating income is set forth below.
• Net income attributable to SouFun's shareholders was $1.4 million.
• Non-GAAP net loss attributable to SouFun's shareholders was $31.9 million, a $0.08 loss per fully-diluted earnings ADS.
• GMV increased by 56% from $6.8 billion in the second quarter of 2015 to $10.6 billion in the third quarter. The following table shows GMV by quarter for the nine months of 2015.

New Development

1. Close of Private Placement

On September 18, the Company announced a $400-$700 million private placement. By 9th November 2015, the Company completed a total of $646.77 million from IDG Capital Partners and The Carlyle Group and certain management members (mainly our Chairman and CEO Vincent Mo) and their affiliates.

2. Investment into Sindeo

On October 29, SouFun entered into strategic investment agreements with Sindeo, Inc. with an aggregate cash consideration amounts to approximately US$5 million.

Sindeo is a leading lender-paid online mortgage originator based in San Francisco. Since 2014, Sindeo has been providing a fair, transparent and modern mortgage experience to home buyers and make mortgages simple. Sindeo is transforming the experience to help consumers make smart, informed decisions and get a stress-free mortgage.

3. Agreement to acquire a majority shareholdings of WanLi

On November 13, the Company entered into a framework agreement with Chongqing Wanli New Energy Co., Ltd. ("Wanli"), a company listed on the Shanghai Stock Exchange (stock code: 600847), IDG, Ruidong and Mr. Xicheng Liu to acquire a controlling stake in Wanli's public shell, accompanied by a concurrent direct placement(RMB2.5 billion to RMB5 billion) of Wanli shares to certain investors. SouFun plans to maintain not less than 70% of the equity stake in Wanli following the acquisition and direct share placement.

4. Agreement to acquire Beijing headquarters facilities

On November 8 , the board approved the Company to purchase a headquarters establishment in Beijing with a total price around $243 million. The new headquarters establishment with a total usable office space is around 70,000 square meters will provide strong support to the fast expanding headcounts and Beijing operations.

"We are very pleased as we were able to achieve over 111% growth in our e-commerce sectors and over 30% total revenue growth in this quarter," said Vincent Mo, Chairman and CEO of Fang.com. "The Company's strategies of transforming to transaction-oriented platforms including new, resale, rental homes and home furnishing plus financial services are making things happen. With our successful private placement and planned future arrangement with China's financial market, I am sure the Company is in a better position in aggressively executing its transformations."

Third Quarter 2015 Results

Revenues

SouFun reported total revenues of $248.5 million for the three months ended September 30, 2015, representing an increase of 30.4% from $190.5 million for the corresponding period in 2014, primarily driven by the growth in e-commerce services, partially offset by the decline in marketing services and listing services.

Revenue from marketing services was $65.6 million for the three months ended September 30, 2015, a decrease of 19.0% from $81.0 million for the corresponding period in 2014, primarily due to fewer customers in the market and fewer average amount per advertising contract.

Revenue from e-commerce services was $142.6 million for the three months ended September 30, 2015, a 111.0% increase from $67.6 million for the same period in 2014, primarily due to the growth of the direct sales services for new home and the growth of the real estate brokerage services for secondary home, as well as rapid growth of the home decorating services.

Revenue from listing services was $27.4 million for the three months ended September 30, 2015, a decrease of 25.3% from $36.7 million for the corresponding period in 2014, primarily due to our reduction of unit price per paying subscriber.

Revenue from Internet financial services was $6.4 million for the three months ended September 30, 2015, an increase of 545.3% from $1.0 million for the corresponding period in 2014. SouFun began to offer Internet financial services in August 2014. We extracted revenue from financing services from other value-added services, to show this is a separate revenue source starting from the first quarter of 2015.

Revenue from other value-added services was $6.5 million for the three months ended September 30, 2015, an increase of 51.2% from $4.3 million for the corresponding period in 2014, primarily due to the rapid growth of our research related products.

Cost of Revenue

Cost of revenue was $188.5 million for the three months ended September 30, 2015, an increase of 286.0% from $48.8 million for the corresponding period in 2014. The increase in cost of revenue was mainly attributable to increased staff. In addition, increased e-commerce cost including potion of proceeds remitted to real estate brokers and subsidies to home buyers related to E-commerce services, and increased decorating cost related to the home decorating services also contributed to the increase in cost of revenues.

Gross margin was 24.2% for the three months ended September 30, 2015, compared to 74.4% for the corresponding period in 2014.

Operating Expenses 

Operating expenses were $91.8 million for the three months ended September 30, 2015, an increase of 29.0 % from $71.2 million for the corresponding period in 2014.

Selling expenses were $52.8 million for the three months ended September 30, 2015, an increase of 28.8% from $41.0 million for the corresponding period in 2014, primarily due to increased expenses paid to our marketing agents for  SouFun membership services, and increased advertising and promotional expenses.

General and administrative expenses were $39.0 million for the three months ended September 30, 2015, an increase of 29.1% from $30.2 million for the corresponding period in 2014, primarily due to increased staff cost and increased rental expenses.

Operating Income/Loss

Operating loss was $31.8 million for the three months ended September 30, 2015, compared to operating income of $70.7 million for the corresponding period in 2014.

Income Tax Benefit/Expenses

Income tax benefit was $29.2 million for the three months ended September 30, 2015, compared to income tax expenses of $18.9 million for the corresponding period in 2014.  The income tax benefit was primarily due to the reversal of withholding tax arising from the undistributed earnings.

Net Income/Loss and EPS

Net Income attributable to SouFun's shareholders was $1.4 million for the three months ended September 30, 2015, compared to net income $61.0 million for the corresponding period in 2014. $0.02 and nil per fully-diluted ordinary share and ADS, respectively, for the three months ended September 30, 2015, compared to $0.68 and $0.14 for the corresponding period in 2014.

Adjusted EBITDA

Adjusted EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was $24.3 million loss for the three months ended September 30, 2015, compared to $78.3 million for the corresponding period in 2014.

Cash

As of September 30, 2015, SouFun had cash, cash equivalents, and short-term investments of $622.0 million, compared to $533.6 million as of June 30, 2015. Net cash used in operating activities was $83.2 million for the three months ended September 30, 2015, compared to net cash generated from operating activities was $53.2 million for the same period in 2014. The decline in cash flows from operating activities was primarily due to a $59.6 million decrease of net income as compared to the third quarter of 2014, and a $72.6 million decrease in cash flows due to an increase of loans provided to home buyers under our internet financial services program.

Business Outlook

SouFun remains its revenue guidance for 2015 at $843.4 million, representing a year-on-year increase of 20%. 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 November 18, 2015 at 8:00 AM U.S. EST (9:00 PM Beijing / Hong Kong time). The dial-in details for the live conference call are:

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

A telephone replay of the call will be available after the conclusion of the conference call from 00:00 AM HKT on November 19 through 23:59 PM HKT November 26, 2015. 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.fang.com.

About SouFun

SouFun operates the leading real estate Internet portal in China in terms of the number of page views and visitors to its websites and mobile apps in 2014.  Through its websites and mobile apps, SouFun provides marketing, e-commerce, listing, finance and other value-added services for China's real estate and home-related sectors. SouFun's Internet portal and mobile apps are highly focused on user experience, and support 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 websites, mobile apps and database contain real estate related content covering more than 370 cities in China. For more information about SouFun, 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. Such forward-looking statements include, without limitation, statements regarding  business momentum, the transition to a transaction oriented platform and confidence in strategy, the success of various business strategies in the short and long-term, conditions in the PRC real estate market and the success of SouFun's strategic and operational plans and focus, continued growth of the transactions and ecommerce businesses, the impact of increased expenses, the impact of government policies and conditions in 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, the impact of the slowdown in the PRC real estate market on SouFun and the impact on revenues of our existing and new service fees reductions, the ability of SouFun to retain real estate listing agencies as customers during challenging economic periods, the success of SouFun's new business initiatives, the ability of SouFun to manage its operating expenses,  the impact of, 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, economic challenges in China's real estate market, the impact of competitive market conditions for our services, 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 and transactions 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, the quality of the loans we originate and resell and the performance of those loans in the future, our ability to successfully service and process customer loans for our own benefit and for the purchasers of those loans 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) non-GAAP operating income, (2) non-GAAP net income and (3) non-GAAP basic and diluted earnings per ordinary share 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.

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, realized gain on available-for-sale security, interest income and expenses, income tax expenses, and depreciation expense for the three months ended September 30, 2015, 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, 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 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:

Mr. Kent Cangsang Huang
Deputy CFO
Phone: +86-10-5631-9668
Email: [email protected]

SOURCE SouFun Holdings Limited

Related Links

http://ir.fang.com