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Leju Reports Fourth Quarter and Full Year 2017 Results

BEIJING, March 19, 2018 /PRNewswire/ -- Leju Holdings Limited ("Leju" or the "Company") (NYSE: LEJU), a leading online-to-offline ("O2O") real estate services provider in China, today announced its unaudited financial results for the fiscal quarter and full year ended December 31, 2017.

Fourth Quarter 2017 Financial Highlights

  • Total revenues increased by 1% year-on-year to $106.4 million.

- Revenues from e-commerce services was $71.2 million, a slight increase from $70.9 million for the same quarter of 2016.
- Revenues from online advertising services increased by 16% year-on-year to $32.7 million.
- Revenues from listing services decreased by 58% year-on-year to $2.4 million.

  • Loss from operations was $25.4 million, a 34% decrease from $38.2 million for the same quarter of 2016. Non-GAAP[1] loss from operations was $21.7 million, a 35% decrease from $33.7 million for the same quarter of 2016.
  • Net loss attributable to Leju shareholders was $22.3 million, or $0.16 per diluted American depositary share ("ADS"), a decrease of 12% from $25.5 million, or $0.19 per diluted ADS, for the same quarter of 2016. Non-GAAP net loss attributable to Leju shareholders was $19.2 million, or $0.14 per diluted ADS, a decrease of 16% from $22.9 million, or $0.17 per diluted ADS, for the same quarter of 2016.

[1] Leju uses in this press release the following non-GAAP financial measures: (1) income (loss) from operations, (2) net income (loss), (3) net income (loss) attributable to Leju shareholders, (4) net income (loss) attributable to Leju shareholders per basic ADS, and (5) net income (loss) attributable to Leju shareholders per diluted ADS, each of which excludes share-based compensation expense, amortization of intangible assets resulting from business acquisitions and goodwill impairment . See "About Non-GAAP Financial Measures" and "Unaudited Reconciliation of GAAP and Non-GAAP Results" below for more information about the non-GAAP financial measures included in this press release.

Full Year 2017 Financial Highlights

  • Total revenues decreased by 35% year-on-year to $362.5 million.

- Revenues from e-commerce services decreased by 44% year-on-year to $234.8 million.
- Revenues from online advertising services decreased by 4% year-on-year to $113.2 million.
- Revenues from listing services decreased by 36% year-on-year to $14.5 million.

  • Loss from operations was $183.9 million, including goodwill impairment charge of $41.2 million, compared to $15.2 million for 2016. Non-GAAP loss from operations was $125.9 million, compared to non-GAAP income from operations of $9.0 million for 2016.
  • Net loss attributable to Leju shareholders was $160.9 million, including goodwill impairment charge of $41.2 million, or $1.19 per diluted American depositary share ("ADS"), compared to $9.8 million, or $0.07 per diluted ADS for 2016. Non-GAAP net loss attributable to Leju shareholders was $105.0 million, or $0.77 per diluted ADS, compared to non-GAAP net income attributable to Leju shareholders of $10.1 million, or $0.07 per diluted ADS for 2016.

"In the fourth quarter, the overall operating environment did not improve under the continued tightening policies imposed by the government," said Mr. Geoffrey He, Leju's Chief Executive Officer. "Throughout 2017, a series of real estate regulatory measures such as price ceilings and restrictive policies on home purchases and mortgages were carried out in major cities where we operate. Marketing demand from developers was significantly reduced, and our e-commerce business, which is based on discount coupons, was severely and negatively impacted. Our online advertising sector, however, benefited from the development of our targeted advertising products and achieved a stable performance."

"Looking forward to 2018, we believe that the restrictive measures will persist. Against this backdrop, we have formulated our new strategy of 'New Media, New Ecosystem, and New E-commerce', aiming to further enhance our media influence and content productivity, and provide accurate and targeted advertising services by leveraging our big data capability. Meanwhile, we have extended our existing e-commerce model by offering coupon services related to a developer's brand rather than a single project, thus expanding the scope of our e-commerce services. In addition, we will continue streamlining our cost structure to improve our bottom line."

Fourth Quarter 2017 Results

Total revenues were $106.4 million, an increase of 1% from $104.9 million for the same quarter of 2016.

Revenues from e-commerce services were $71.2 million, a slight increase from $70.9 million for the same quarter of 2016.

Revenues from online advertising services were $32.7 million, an increase of 16% from $28.2 million for the same quarter of 2016, primarily due to an increase in property developers' demand for online advertising.

Revenues from listing services were $2.4 million, a decrease of 58% from $5.8 million for the same quarter of 2016, primarily due to a decrease in secondary real estate brokers' demand.

Cost of revenues was $19.6 million, an increase of 40% from $14.0 million for the same quarter of 2016, primarily due to increased cost of advertising resources purchased, partially offset by decreased staffing cost as a result of headcount change.

Selling, general and administrative expenses were $112.3 million, a decrease of 15% from $131.4 million for the same quarter of 2016, primarily due to decreased marketing expenses related to the Company's e-commerce business, and decreased salary as a result of headcount change.

Loss from operations was $25.4 million, compared to $38.2 million for the same quarter of 2016. Non-GAAP loss from operations was $21.7 million, compared to $33.7 million for the same quarter of 2016.

Net loss was $22.5 million, compared to 26.4 million for the same quarter of 2016. Non-GAAP net loss was $19.4 million, compared to $23.8 million for the same quarter of 2016.

Net loss attributable to Leju shareholders was $22.3 million, or $0.16 per diluted ADS, compared to $25.5 million, or $0.19 per diluted ADS, for the same quarter of 2016. Non-GAAP net loss attributable to Leju shareholders was $19.2 million, or $0.14 per diluted ADS, compared to $22.9 million, or $0.17 per diluted ADS, for the same quarter of 2016.

Full Year 2017 Results

Total revenues were $362.5 million, a decrease of 35% from $559.5 million for 2016 as a result of restrictions implemented by local governments.

Revenues from e-commerce services were $234.8 million, a decrease of 44% from $419.0 million for 2016, primarily due to decreases in both the number of discount coupons redeemed and in the average price per discount coupon.

Revenues from online advertising services were $113.2 million, a decrease of 4% from $118.0 million for 2016, primarily due to a decrease in property developers' demand for online advertising.

Revenues from listing services were $14.5 million, a decrease of 36% from $22.5 million for 2016, primarily due to a decrease in secondary real estate brokers' demand.

Cost of revenues was $74.1 million, an increase of 29% from $57.5 million for 2016, primarily due to increased cost of advertising resources purchased, partially offset by decreased staffing cost as a result of headcount change.

Selling, general and administrative expenses were $434.3 million, a decrease of 17% from $521.8 million for 2016, primarily due to decreased marketing expenses related to the Company's e-commerce business, decreased commission expenses in line with the decrease of revenues and decreased salary as a result of headcount change.

Goodwill impairment charge was $41.2 million. Since changes in market environment continued to have a negative impact on the Company's operating conditions and business outlook, an impairment loss of goodwill of $41.2 million was recognized based on the impairment assessment review.

Loss from operations was $183.9 million, compared to $15.2 million for 2016. Non-GAAP loss from operations was $125.9 million, compared to non-GAAP income from operations of $9.0 million for 2016.

Net loss was $162.0 million, compared to 11.6 million for 2016. Non-GAAP net loss was $106.1 million, compared to non-GAAP net income of $8.4 million for 2016.

Net loss attributable to Leju shareholders was $160.9 million, or $1.19 per diluted ADS, compared to $9.8 million, or $0.07 per diluted ADS for 2016. Non-GAAP net loss attributable to Leju shareholders was $105.0 million, or $0.77 per diluted ADS, compared to non-GAAP net income attributable to Leju shareholders of $10.1 million, or $0.07 per diluted ADS for 2016.

Cash Flow

As of December 31, 2017, the Company's cash and cash equivalents balance was $151.0 million.

Fourth quarter 2017 net cash used in operating activities was $57.6 million, mainly attributable to non-GAAP net loss of $19.4 million, an increase of $7.4 million in accounts receivable, a decrease in other current liabilities of $24.9 million, and a decrease in advance from customers and deferred revenue of $4.7 million.

Business Outlook

The Company estimates that its total revenues for the first quarter of 2018 will be approximately $75 million to $77 million, which would represent an increase of approximately 10% to 13% from $68.3 million for the same quarter in 2017. This forecast reflects the Company's current and preliminary view, which is subject to change.

Management Changes

The Company also announced that Ms. Qiong Zuo has been appointed as Chief Operating Officer of the Company while Mr. Keyi Chen, former Chief Operating Officer of the Company, has been appointed as Leju's Chief Strategy Officer. Before joining Leju, Ms. Zuo was chief executive officer of the Innovation and Research Center of E-House (China) Holdings LimitedLeju's major shareholder. Prior to that, she was a vice president of human resources of Rastar Group (A share symbol: 300043), a leading culture and entertainment company in China, and deputy general manager of southern China branch in SINA.com, a leading Internet portal in China.

"Ms. Zuo brings us rich experiences in online technology, operations and cost control," said Mr. Geoffrey He. "We are pleased that she has agreed to take on these responsibilities at Leju and I expect to work closely with her to further optimize our operations and management across all business lines."

Conference Call Information

Leju's management will host an earnings conference call on March 19, 2018 at 7 a.m. U.S. Eastern Time (7 p.m. Beijing/Hong Kong time).

Dial-in details for the earnings conference call are as follows:

U.S./International: +1-845-675-0437
Hong Kong:           +852-3018-6771
Mainland China:    +400-620-8038

Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is "Leju earnings call."

A replay of the conference call may be accessed by phone at the following number until March 27, 2018:

U.S./International: +1-855-452-5696
Hong Kong:           +800-963-117
Mainland China:    +400-632-2162
Passcode:             4688545

Additionally, a live and archived webcast will be available at http://ir.leju.com.

About Leju

Leju Holdings Limited ("Leju") (NYSE: LEJU) is a leading online-to-offline, or O2O, real estate services provider in China, offering real estate e-commerce, online advertising and online listing services. Leju's integrated online platform comprises various mobile applications along with local websites covering more than 370 cities, enhanced by complementary offline services to facilitate residential property transactions. In addition to the Company's own websites, Leju operates the real estate and home furnishing websites of SINA Corporation, and maintains a strategic partnership with Tencent Holdings Limited. For more information about Leju, please visit http://ir.leju.com.

Safe Harbor: Forward-Looking Statements

This announcement contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995.  These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "going forward," "outlook" and similar statements. Leju may also make written or oral forward-looking statements in its reports filed or furnished with the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Leju's beliefs and expectations, are forward-looking statements that involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained, either expressly or impliedly, in any of the forward-looking statements. Such factors include, but are not limited to, fluctuations in China's real estate market; the highly regulated nature of, and government measures affecting, the real estate and internet industries in China; Leju's ability to compete successfully against current and future competitors; its ability to continue to develop and expand its content, service offerings and features, and to develop or incorporate the technologies that support them; its limited operating history and lack of experience as a stand-alone public company, given its carve-out from E-House and prior reliance on E-House for various corporate services; its reliance on SINA and others with which it has developed, or may develop in the future, strategic partnerships; substantial revenue contribution from a limited number of real estate markets; complexities resulting from its ongoing relationships with E-House, due to E-House's principal shareholding interest in Leju; and relevant government policies and regulations relating to the corporate structure, business and industry of Leju. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release, and the Company 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 applicable law.

About Non-GAAP Financial Measures

To supplement Leju's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Leju uses in this press release the following non-GAAP financial measures: (1) income (loss) from operations, (2) net income (loss), (3) net income (loss) attributable to Leju shareholders, (4) net income (loss) attributable to Leju shareholders per basic ADS, and (5) net income (loss) attributable to Leju shareholders per diluted ADS, each of which excludes share-based compensation expense, amortization of intangible assets resulting from business acquisitions and goodwill impairment. The presentation of these non-GAAP financial measures 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 "Unaudited Reconciliation of GAAP and Non-GAAP Results" set forth at the end of this press release.

Leju believes that these non-GAAP financial measures provide meaningful supplemental information to investors regarding its operating performance by excluding share-based compensation expense, amortization of intangible assets resulting from business acquisitions, and goodwill impairment which may not be indicative of Leju's operating performance. These non-GAAP financial measures also facilitate management's internal comparisons to Leju'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 expense and amortization of intangible assets resulting from business acquisitions may continue to exist in Leju'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 provide more details on the reconciliation between non-GAAP financial measures and their most comparable GAAP financial measures.

For investor and media inquiries please contact:

Ms. Christina Wu
Leju Holdings Limited
Phone: +86 (10) 5895-1062
E-mail: ir@leju.com

Philip Lisio
Foote Group
Phone: +86 135-0116-6560
E-mail: phil@thefootegroup.com

LEJU HOLDINGS LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)





December 31,


December 31,




2016


2017

ASSETS








Current assets









Cash and cash equivalents




274,338




150,968

Restricted cash







337

Accounts receivable, net




71,390




80,606

Marketable securities




2,181




3,077

Prepaid expenses and other current assets




12,756




9,945

Customer deposits




39,702




35,823

Amounts due from related parties




6,019




4,077

Total current assets




406,386




284,833

Property and equipment, net




7,923




14,240

Intangible assets, net




78,374




70,631

Investment in affiliates




409




146

Goodwill




39,018




Deferred tax assets




41,698




67,084

Other non-current assets




2,059




2,010

Total assets




575,867




438,944










LIABILITIES AND EQUITY









Current liabilities









Accounts payable




1,574




2,950

Accrued payroll and welfare expenses




41,728




37,082

Income tax payable




66,148




63,380

Other tax payable




16,678




11,654

Amounts due to related parties




1,581




3,093

Advance from customers and deferred revenue




5,058




10,565

Accrued marketing and advertising expenses




9,355




18,852

Other current liabilities




8,516




16,315

Total current liabilities




150,638




163,891

Deferred tax liabilities




18,869




18,016

Total liabilities




169,507




181,907

Equity









Ordinary shares ($0.001 par value): 1,000,000,000 shares 
    authorized, 135,503,958 and 135,763,962 shares issued
    and outstanding, as of December 31, 2016 and
    December 31, 2017, respectively




136




136

Additional paid-in capital




785,019




788,589

Accumulated deficit




(354,365))




(515,344)

Accumulated other comprehensive income




(22,321)




(13,078)

Total Leju equity




408,469




260,303

Non-controlling interests




(2,109)




(3,266)

Total equity




406,360




257,037

TOTAL LIABILITIES AND EQUITY




575,867




438,944










 


LEJU HOLDINGS LIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

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




Three months ended


Year ended



December 31,


December 31,



2016


2017


2016


2017


















Revenues

















E-commerce



70,872




71,217




419,024




234,836


Online advertising services



28,180




32,719




117,949




113,235


Listing services



5,846




2,432




22,538




14,461


Total revenues



104,898




106,368




559,511




362,532


Cost of revenues



(14,027)




(19,617)




(57,492)




(74,054)


Selling, general and administrative expenses



(131,418)




(112,293)




(521,797)




(434,276)


Goodwill impairment charge












(41,223)


Other operating income



2,313




171




4,587




3,072


Loss from operations



(38,234)




(25,371)




(15,191)




(183,949)


Investment income (loss)



3







(186)





Interest income



388




326




1,313




1,314


Other income, net



57




1,103




620




480


Loss before taxes and equity in affiliates



(37,786)




(23,942)




(13,444)




(182,155)


Income tax benefits



11,410




1,510




2,068




20,328


Loss before equity in affiliates



(26,376)




(22,432)




(11,376)




(161,827)


Loss from equity in affiliates



(9)




(28)




(225)




(216)


Net loss



(26,385)




(22,460)




(11,601)




(162,043)


Less: net loss attributable to non-controlling 
      interests



(933)




(158)




(1,812)




(1,142)


Net loss attributable to Leju shareholders



(25,452)




(22,302)




(9,789)




(160,901)



















Loss per share:

















Basic



(0.19)




(0.16)




(0.07)




(1.19)


Diluted



(0.19)




(0.16)




(0.07)




(1.19)


Shares used in computation:

















Basic



135,367,001




135,763,962




135,220,210




135,708,350


Diluted



135,367,001




135,763,962




135,220,210




135,708,350



















Note 1

The conversion of Renminbi ("RMB") amounts into USD amounts is based on the rate
of USD1 = RMB6.5342 on December 31, 2017 and USD1 = RMB6.7296 for the year ended
December 31, 2017

 

LEJU HOLDINGS LIMITED

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(In thousands of U.S. dollars)




Three months ended



Year ended



December 31,



December 31,



2016


2017


2016



2017



















Net loss



(26,385)




(22,460)




(11,601)





(162,043)


Other comprehensive income (loss), net of tax
      of nil


















Foreign currency translation adjustment



(11,234)




3,516




(16,761)





9,137


Comprehensive loss



(37,619)




(18,944)




(28,362)





(152,906)




















Less: Comprehensive loss attributable to
      non-controlling interest



(896)




(187)




(1,771)





(1,249)


Comprehensive loss attributable to 
      Leju shareholders



(36,723)




(18,757)




(26,591)





(151,657)




















 

LEJU HOLDINGS LIMITED

Unaudited Reconciliation of GAAP and Non-GAAP Results

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




Three months ended


Year ended



December 31,


December 31,




2016




2017



2016



2017

















GAAP loss from operations



(38,234)




(25,371)



(15,191)



(183,949)


Share-based compensation expense



1,483




151



11,910



3,525


Amortization of intangible assets resulting from business
    acquisitions



3,079




3,485



12,329



13,333


Goodwill impairment










41,223


Non-GAAP income (loss) from operations



(33,672)




(21,735)



9,048



(125,868)

















GAAP net loss



(26,385)




(22,460)



(11,601)



(162,043)


Share-based compensation expense (net of tax)



1,483




151



11,910



3,525


Amortization of intangible assets resulting from
   
business acquisitions (net of tax)



1,120




2,911



8,057



11,189


Goodwill impairment (net of tax)










41,223


Non-GAAP net income (loss)



(23,782)




(19,398)



8,366



(106,106)

















Net loss attributable to Leju Shareholder



(25,452)




(22,302)



(9,789)



(160,901)


Share-based compensation expense
   
(net of tax and non-controlling interests)



1,475




142



11,877



3,491


Amortization of intangible assets resulting from business
    acquisitions (net of tax and non-controlling interests)



1,120




2,911



8,057



11,189


Goodwill impairment (net of tax and non-controlling interests)










41,223


Non-GAAP net income (loss) attributable to Leju 
     shareholders



(22,857)




(19,249)



10,145



(104,998)

















GAAP net loss per ADS — basic/diluted



(0.19)




(0.16)



(0.07)



(1.19)

















Non-GAAP net income (loss) per ADS — basic



(0.17)




(0.14)



0.08



(0.77)

















Non-GAAP net income (loss) per ADS — diluted



(0.17)




(0.14)



0.07



(0.77)

















Shares used in calculating basic GAAP/non-GAAP net
    income (loss) attributable to shareholders per ADS



135,367,001




135,763,962



135,220,210



135,708,350

















Shares used in calculating diluted GAAP net loss
    attributable to shareholders per ADS



135,367,001




135,763,962



135,220,210



135,708,350

















Shares used in calculating diluted non-GAAP net income
    (loss) attributable to shareholders per ADS



135,367,001




135,763,962



135,349,212



135,708,350
































 

LEJU HOLDINGS LIMITED

SELECTED OPERATING DATA




Three months ended


Year ended



December 31,


December 31,



2016


2017


2016


2017


















Operating data for e-commerce services

















Number of discount coupons issued to
    prospective purchasers (number of
    transactions)



59,047




47,419




326,874




246,318


Number of discount coupons redeemed
    (number of transactions)



37,678




31,046




175,505




113,420



















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SOURCE Leju Holdings Limited