SouFun Announces Fourth Quarter And Fiscal Year 2010 Results

SouFun Holdings Limited (NYSE: SFUN, “ SouFun”), the leading real estate and home furnishing Internet portal in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2010.

Highlights for Fourth Quarter 2010
  • Total revenues in the fourth quarter of 2010 were US$98.9 million, an increase of 68.2% compared to the fourth quarter of 2009.
  • Operating income in the fourth quarter of 2010 was US$43.1 million, an increase of 43.3% compared to the fourth quarter of 2009. Non-GAAP operating income in the fourth quarter of 2010 was US$45.7 million, an increase of 45.9% compared to the fourth quarter of 2009.
  • Net income attributable to shareholders in the fourth quarter of 2010 was US$39.7 million, an increase of 43.1% compared to the fourth quarter of 2009. Non-GAAP net income attributable to shareholders in the fourth quarter of 2010 was US$42.2 million, an increase of 45.9% compared to the fourth quarter of 2009.

Highlights for Fiscal Year 2010
  • Total revenues in fiscal year 2010 were US$224.5 million, an increase of 76.7% compared to fiscal year 2009.
  • Operating income in fiscal year 2010 was US$78.4 million, an increase of 62.2% compared to fiscal year 2009. Non-GAAP operating income in fiscal year 2010 was US$86.3 million, an increase of 64.4% compared to fiscal year 2009.
  • Net income attributable to shareholders in fiscal year 2010 was US$63.1 million, an increase of 19.9% compared to fiscal year 2009. Non-GAAP net income attributable to shareholders in fiscal year 2010 was US$74.4 million, an increase of 57.4% compared to fiscal year 2009.

“SouFun’s strong fourth quarter and full year 2010 financial results testified its long- term sustainable growth strategy and its emphasis on its organic growth as well as its resilient business model,” said Vincent Mo, Executive Chairman of SouFun, “Sustainable growth at a relatively high rate for a long period of time is what SouFun looks for. We have been continuingly emphasizing on internal staff development and expanding to more markets (cities) for the company’s future growth. We hired more than 2,000 new employees in the past year and expanded our coverage from 102 cities in 2009 to 310 cities by the end of January 2011. We are confident that these efforts will provide strong support to SouFun’s future growth.”

Financial Results for Fourth Quarter 2010

Revenues

In the fourth quarter of 2010, SouFun had total revenues of US$98.9 million, an increase of 68.2% compared to US$58.8 million in the same period in 2009.

Revenue from Marketing Services was US$79.3 million in the fourth quarter of 2010, an increase of 65.1% compared to US$48.0 million in the same period of 2009.

Revenue from Listing Services was US$15.7 million in the fourth quarter of 2010, an increase of 108.7% compared to US$7.5 million in the same period of 2009.

Revenue from Other Value-Added Services and Products was US$3.9 million in the fourth quarter of 2010, an increase of 20.0% compared to US$3.2 million in the same period of 2009.

Cost of Revenues

Cost of revenues was US$21.9 million in the fourth quarter of 2010, an increase of 73.3% compared to US$12.7 million in the same period of 2009, primarily due to increased staff cost, business tax and surcharges associated with our revenue growth.

Operating Expense

Operating expenses for the fourth quarter of 2010 were US$33.8 million, an increase of 111.0% compared to US$16.0 million in the same period of 2009.
  • Selling expenses in the fourth quarter were US$15.5 million, an increase of 75.6% from US$8.8 million in the same period of 2009, primarily due to increased staff cost and advertising expenses.
  • General and administrative expenses in the fourth quarter of 2010 were US$18.3 million, an increase of 154.4% from US$7.2 million in the same period of 2009, primarily due to increased staff cost.

Operating Income

Operating income in the fourth quarter was US$43.1 million, an increase of 43.3% compared to US$30.1 million in the same period of 2009. Non-GAAP operating income for the fourth quarter of 2010 was US$45.7 million, an increase of 45.9% compared to US$31.3 million for the same period in 2009.

Income Tax Expense

Income tax expense in the fourth quarter of 2010 was US$4.5 million, an increase of 51.9% compared to US$2.9 million in the same period of 2009.

Net Income Attributable to Shareholders

Net income attributable to shareholders in the fourth quarter of 2010 was US$39.7 million, an increase of 43.1% from US$27.7 million in the same period of 2009. Non-GAAP net income attributable to shareholders in the fourth quarter was US$42.2 million, an increase of 45.9% compared to US$29.0 million in the same period of 2009.

Cash Flow

As of December 31, 2010, SouFun had cash, cash equivalents and short-term investments of US$229.7 million, compared to US$120.8 million as of December 31, 2009.

Cash flow from operating activities was US$58.6 million in the fourth quarter 2010, compared to US$25.3 million in the same period of 2009.

Financial Results for Fiscal Year 2010

Revenues

In fiscal year 2010, SouFun had total revenues of US$224.5 million, an increase of 76.7% compared to US$127.0 million in the same period in 2009.

Revenue from Marketing Services was US$167.7 million in fiscal year 2010, an increase of 63.8% compared to US$102.4 million in the same period of 2009.

Revenue from Listing Services was US$40.4 million in fiscal year 2010, an increase of 129.8% compared to US$17.6 million in the same period of 2009.

Revenue from Other Value-Added Services and Products was US$16.4 million in fiscal year 2010, an increase of 130.6% compared to US$7.1 million in the same period of 2009.

Cost of Revenues

Cost of revenues was US$62.0 million in fiscal year 2010, an increase of 97.8% compared to US$31.3 million in the same period of 2009, primarily due to the increased staff cost, business tax and surcharges associated with our revenue growth.

Operating Expense

Operating expenses for fiscal year 2010 were US$84.1 million, an increase of 77.5% compared to US$47.4 million in the same period of 2009.
  • Selling expenses in fiscal year were US$42.5 million, an increase of 68.8% from US$25.2 million in the same period of 2009, primarily due to increased staff cost and advertising expenses.
  • General and administrative expenses in fiscal year 2010 were US$41.5 million, an increase of 87.4% from US$22.2 million in the same period of 2009, primarily due to increased staff cost and IPO expenses.

Operating Income

Operating income in fiscal year 2010 was US$78.4 million, an increase of 62.2% compared to US$48.3 million in the same period of 2009. Non-GAAP operating income for fiscal year 2010 was US$86.3 million, an increase of 64.4% compared to US$52.5 million for the same period in 2009.

Income Tax Expense

Income tax expense in fiscal year 2010 was US$18.2 million which included a US$3.4 million one-off tax expense, compared to an income tax benefit of US$2.2 million, which included a US$9.5 million one-off tax credit, in the same period of 2009.

Net Income Attributable to Shareholders

Net income attributable to shareholders in fiscal year 2010 was US$63.1 million, an increase of 19.9% from US$52.7 million in the same period of 2009. The 2009 results benefited from a one time US$9.5 million tax credit. Non-GAAP net income attributable to shareholders in fiscal year 2010 was US$74.4 million, an increase of 57.4% compared to US$47.3 million in the same period of 2009.

Cash Flow

Cash flow from operating activities was US$107.6 million in fiscal year 2010, compared to US$66.0 million in the same period of 2009.

Business Outlook for Fiscal Year 2011

SouFun estimates its total revenues for fiscal year of 2011 to be between US$270.0 million and US$280.0 million, representing a 27.6% to 32.3% growth compared to the total revenues (excluding those from prepaid card business) for fiscal year 2010.

Conference Call Information

SouFun’ management team will host a conference call on February 18, 2011 at 8 a.m. U.S. Eastern Time (9 p.m. Beijing/Hong Kong time).

The dial-in details for the live conference call are:
US: 1 866 356 4441
International: 1 617 597 5396
Hong Kong: 800 96 3844
Mainland China: 10 800 130 0399/ 10 800 152 1490
Passcode: SFUN

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

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 and home furnishing and improvement website in China in terms of the number of page views and visitors to its website in 2010. SouFun had a 58.9% market share of the online real estate advertising market in China in Q4 2010 by estimated revenues. SouFun has built a large and active community of users who are attracted by the comprehensive real estate and home furnishing and improvement content available on its portal that forms the foundation of its service offerings. SouFun currently maintains 74 offices to focus on local market needs and its website and database contains real estate-related content coverage of 310 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,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “may,” “should” and similar expressions. Such forward-looking statements include, without limitation, statements regarding the outlook for the fiscal year of 2010 and comments by management in this release and SouFun’s strategic and operational plans and future market positions. SouFun may also make forward-looking statements in its periodic reports to 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 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, the current global financial and credit markets crisis and its 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 recur in the future, the uncertain regulatory landscape in China, fluctuations in SouFun’s quarterly operating results, its reliance on online advertising sales and listing services for its revenues, any failure to successfully develop and expand its content, service offerings and features, and the technologies that support them, and any failure to successfully integrate acquired businesses.

Further information regarding these and other risks and uncertainties is included in SouFun’s prospectus dated September 16, 2010 and its other filings 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 expense, IPO expense, and one-off income tax benefit, 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.
  SouFun Holdings Limited
Unaudited Condensed Consolidated Balance Sheets
( in U.S. dollars in thousands )
ASSETS   Dec 31,   Dec 31,
2010 2009
Current assets:    
  Cash and cash equivalents 171,520 92,239
Short-term investments 58,133 28,558
Accounts receivable 22,353 13,985
Prepayment and other current assets 21,113 1,952
Amounts due from related parties - 7,629
Available for sales 4,279 -
Deferred tax assets, current 2,129 471
Inventories   -   4,390
Total current assets   279,527   149,224
Property and equipment, net 7,549 4,220
Deposit for PPE 4,600 -

Deferred tax assets, non current
619 507
Other non-current assets   1,472   543
Total assets   293,767   154,494
 

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term loans 3,600 -
Deferred revenue 56,968 28,795
Accrued expenses and other liabilities 46,349 37,342
Dividend payable 39,635 43,906
Share based compensation liability - 11,129
Income tax payable   14,329   3,134

Total current liabilities
  160,881   124,306
Deferred tax liability, non-current   10,219   5,687
Total Liabilities   171,100   129,993
 
Shareholders' equity:
Ordinary shares 9,743 9,489
Additional paid-in capital 39,402 9,279
Accumulated other comprehensive income 10,311 5,670
Accumulated deficits   63,108   -
Total SouFun Holdings Limited shareholders' equity 122,564 24,438
Noncontrolling interest   103   63
Total shareholders’ equity   122,667   24,501
 
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY  

293,767
 

154,494
 
SouFun Holdings Limited
Unaudited Condensed Consolidated Statements of Operations
( in U.S. dollars in thousands, except share data and per ADS data )
           
Three months ended

Twelve months ended
December 31,   December 31,   December 31, December 31,
2010 2009 2010   2009
 
Revenues:
Marketing services $ 79,309 $ 48,032 $ 167,711 $ 102,367
Listing services 15,722 7,532 40,355 17,559
Other value-added services and products   3,863     3,219     16,424     7,123  
Total revenues 98,894 58,783 224,490 127,049
 
Cost of Revenues:
Cost of services (18,862 ) (10,565 ) (49,120 ) (26,484 )
Cost of other value-added services and products   (3,060 )   (2,085 )   (12,891 )   (4,863 )
Total Cost of Revenues (21,922 ) (12,650 ) (62,011 ) (31,347 )
 
Gross Profit 76,972 46,133 162,479 95,702
 
Operating expenses:
Selling expenses (15,527 ) (8,843 ) (42,512 ) (25,186 )
General and administrative expenses   (18,315 )   (7,199 )   (41,547 )   (22,176 )
Total Operating Expenses (33,842 ) (16,042 ) (84,059 ) (47,362 )
               
Income from operations 43,130 30,091 78,420 48,340
 
Foreign exchange gain (loss) 16 (23 ) (461 ) (59 )
Interest income 724 327 2,390 1,205
Realized gain—trading securities 59 - 282 195
Government grants   277     268     740     730  
Income before income tax 44,206 30,663 81,371 50,411
Income tax benefits / (expenses)
Income tax (expense) benefit   (4,461 )   (2,936 )   (18,222 )   2,199  
Net income 39,745 27,727 63,149 52,610
Net income(loss) attributable to non-controlling interests   (56 )  

12
   

(41

)
 

42
 
Net Income attributable to SouFun Holdings Limited shareholders

$
39,689  

$

27,739
 

$

63,108
 

$

52,652
 
 

Net income per ADS*:
Basic $ 0.52     0.37     0.85     0.71  
Diluted $ 0.48     0.36     0.79     0.68  
 
Weighted average number of shares outstanding:
Basic   76,065,755     73,932,217     74,683,593     73,986,129  
Diluted   82,238,298     77,650,287     80,220,633     77,418,960  
 

* Starting from February 18, 2011, the ratio of SouFun’s American Depositary Receipts representing Class A ordinary shares will be changed from one for four to one for one.
 
SouFun Holdings Limited
Reconciliation of GAAP and Non-GAAP Results
( in U.S. dollars in thousands, except share data and per ADS data)
 
  Three months ended Twelve months ended
December 31,   December 31,     December 31,     December 31,
2010 2009 2010 2009
   
GAAP income from operations 43,130 30,091 78,420 48,340
Share-based compensation 2,477 1,212 5,105 4,140
IPO expense 72 - 2,760 -
Non-GAAP income from operations 45,679 31,303 86,285 52,480
 
GAAP net income 39,745 27,727 63,149 52,610
One-off tax expense (benefit) - - 3,406 (9,525 )
Share-based compensation 2,477 1,212 5,105 4,140
IPO expense 72 - 2,760 -
Non-GAAP net income 42,294 28,939 74,420 47,225
 
Net Income attributable toSouFun Holdings Limited shareholders 39,689 27,739 63,108 52,652
One-off tax benefit - - 3,406 (9,525 )
Share-based compensation expense 2,477 1,212 5,105 4,140
IPO expense 72 - 2,760 -
Non-GAAP net Income attributable to SouFun Holdings Limited shareholders 42,238 28,951 74,379 47,267
 

GAAP net income per ADS*:
Basic 0.52 0.37 0.85 0.71
Diluted 0.48 0.36 0.79 0.68
Non-GAAP net income per ADS*:
Basic 0.56 0.39 1.00 0.64
Diluted 0.51 0.37 0.93 0.61
Weighted average number of
shares outstanding:
Basic 76,065,755 73,932,217 74,683,593 73,986,129
Diluted 82,238,298 77,650,287 80,220,633 77,418,960
 

*Starting from February 18, 2011, the ratio of SouFun’s American Depositary Receipts representing Class A ordinary shares will be changed from one for four to one for one.

Copyright Business Wire 2010

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