SouFun Announces Unaudited First Quarter 2012 Results

SouFun Holdings Limited (NYSE: SFUN) (“ SouFun” or the “ Company”), the leading real estate and home furnishing Internet portal in China, today announced its unaudited financial results for the first quarter of 2012.

First Quarter 2012 Highlights

Revenues grew 43.4% to US$58.5 million compared to the first quarter of 2011.

Operating income was US$13.7 million, an increase of 131.3% compared to the first quarter of 2011. Non-GAAP operating income was US$15.0 million, an increase of 89.0% compared to the first quarter of 2011.

Net income attributable to shareholders was US$14.5 million, an increase of 152.9% compared to the first quarter of 2011. Non-GAAP net income attributable to shareholders was US$14.2 million, an increase of 83.3% compared to the first quarter of 2011.

“We are happy to deliver the 6 th consecutive better than guidance results after IPO,” said Vincent Mo, Executive Chairman of SouFun. “SouFun’s strong market leadership and sound fundamental plus its creative innovations made its great performance, even though China’s real estate and home furnishing markets were very dynamic. In addition, we are pleased that SouFun successfully passed its first year SOX 404 audit after IPO and the company will continue its efforts to implement tight internal control.”

Financial Results for First Quarter 2012

Revenues

For the first quarter of 2012, SouFun had total revenues of US$58.5 million, an increase of 43.4% compared to US$40.8 million for the same period of 2011. The increase primarily came from the New Home business line.

Revenue from marketing services was US$34.3 million for the first quarter of 2012, an increase of 21.5% compared to US$28.2 million for the same period of 2011.

Revenue from listing services was US$10.9 million for the first quarter of 2012, a decrease of 3.0% compared to US$11.3 million for the same period of 2011.

Revenue from e-commerce services was US$12.0 million for the first quarter of 2012, a substantial increase from US$0.10 million for the same period in 2011. The increase came mainly from SouFun card membership services. We started offering SouFun card membership service to property buyers to enhance their transactions with property developers since the second quarter of 2011. This has been tested very effective in primary property transactions under competitive market conditions.

Since 2012 we have changed the classification of revenue in our consolidated statements of income by reclassifying revenue from SouFun card membership service from other value-added services to e-commerce service. We believe this reclassification provides better operating information and is in line with current development of our business.

Revenue from other value-added services and products was US$1.3 million for the first quarter of 2012, an increase of 2.6% compared to US$1.2 million for the same period of 2011.

Cost of Revenue

Cost of revenue was US$16.5 million for the first quarter of 2012, an increase of 25.0% compared to US$13.2 million for the same period of last year. The increase is primarily due to the increased staff cost and business tax.

Operating Expenses

Operating expenses for the first quarter of 2012 were US$28.3 million, an increase of 30.6 % compared to US$21.7 million for the same period of 2011.

Selling expenses for the first quarter of 2012 were US$14.5 million, an increase of 18.6% from US$12.2 million for the same period of 2011, primarily due to increased staff cost.

General and administrative expenses for the first quarter of 2012 were US$13.8 million, an increase of 46.0% from US$9.5 million for the same period of 2011, primarily due to the increased staff cost, allowance for doubtful accounts.

Operating Income

Operating income for the first quarter of 2012 was US$13.7 million, an increase of 131.3% compared to US$5.9 million for the same period of 2011. Non-GAAP operating income for the first quarter of 2012 was US$15.0 million, an increase of 89.0% compared to US$7.9 million for the same period in 2011, primarily due to the revenue growth better than cost and expense increase.

Income Tax Expense

Income tax expense for the first quarter of 2012 was US$1.9 million, a slight decrease of 8.8% compared to US$2.1 million for the same period of 2011 . The decrease was primarily due to the fact that two PRC subsidiaries obtained the certificate for “Software Enterprise” in 2012 and began to enjoy tax holiday.

Net Income Attributable to Shareholders

Net income attributable to shareholders for the first quarter of 2012 was US$14.5 million, an increase of 152.9% from US$5.7 million for the same period of 2011. Non-GAAP net income attributable to shareholders for the first quarter of 2012 was US$14.2 million, an increase of 83.3% compared to US$7.7 million for the same period of 2011.

Cash Flow

As of March 31, 2012, SouFun had cash, cash equivalents, and short-term investments (excluding the effect from available-for-sale securities) of US$140.4 million, compared to US$158.3 million as of December 31, 2011, the decrease was primarily due to the dividends paid to shareholders in the first quarter of 2012.

Cash flow from operating activities was US$28.0 million for the first quarter of 2012, compared to US$34.6 million for the same period of 2011. The decrease was primarily due to less advances from customers.

Business Outlook

We maintain and are confident in our revenue guidance for fiscal year of 2012 to be between US$380.0 million and US$400.0 million, even though uncertainties remain in China’s property market.

Conference Call Information

SouFun’ management team will host a conference call on May 15, 2012 at 8 a.m. U.S. Eastern Time (8 p.m. Beijing/Hong Kong time).

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

US: +1 718 354 1231/ 1 866 519 4004International: +65 6723 9381Hong Kong: +852 2475 0994 /800 930 346Mainland China: 800 819 0121 / 400 620 8038Passcode: SFUN

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 11:00 a.m. U.S. Eastern Time on May 15 through May 22, 2012. The dial-in details for the telephone replay are:

US Toll Free: 1866 214 5335US Toll: +1 718 354 1232Conference ID # 79535282

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 2012. 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 105 offices to focus on local market needs and its website and database contains real estate-related content coverage of 314 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 outlook for the fiscal year of 2012 and comments by management in this release about SouFun’s strategic and operational plans and focus, internal controls, current and future market positions, growth momentum, and e-commerce initiatives and card membership services, and about China’s real estate and home furnishings market. 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 our annual report on form 20-F and other documents 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 expense, 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   March 31,   December 31,
2012 2011
Current assets:    
  Cash and cash equivalents 114,934 150,414
Restricted cash, current 35,851 35,814
Short-term investments 26,063 8,592
Accounts receivable, net 29,359 27,697
Prepayment and other current assets 11,782 9,695
Loan receivable 12,691 26,143
Amounts due from related parties 1,397 1,595
Deferred tax assets, current 1,334 1,602
Total current assets 233,411 261,552
Non-current assets:
Property and equipment, net 67,322 68,064
Restricted cash, non-current portion 263,199 247,631
Deferred tax assets, non current 1,251 1,407
Deposit for non-current assets 13,107 -
Other non-current assets 1,687 1,717
Total non-current assets 346,566 318,819
Total assets 579,977 580,371
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term loans 270,570 255,570
Deferred revenue 83,000 73,620
Accrued expenses and other liabilities 61,047 52,490
Dividend payable 1,780 51,969
Income tax payable 13,810 16,158
Total current liabilities 430,207 449,807
Non-current liabilities:
Deferred tax liabilities, non-current 38,602 38,581
Total non-current liabilities 38,602 38,581
Total Liabilities 468,809 488,388
 

Shareholders' equity:

Class A and Class B Ordinary shares (par value of HK$1 per share: 600,000,000 shares authorized; 78,150,568 (Class A-53,813,918 and Class B-24,336,650 ) with par value of US$10,032 (Class A-US$6,908 and Class B-US$3,124) and 78,840,890 (Class A-54,504,240 and Class B 24,336,650 ) with par value of US$10,121 (Class A-US$6,997 and Class B-US$3,124) shares issued and outstanding as of December 31, 2011 and March 31, 2012)

 

10,121

 

10,032
Additional paid-in capital 54,336 49,838
Accumulated other comprehensive income 21,992 21,853
Retained earnings 24,719 10,185
Total SouFun Holdings Limited shareholders' equity 111,168

 
91,908
Noncontrolling interests - 75
Total shareholders’ equity 111,168 91,983
   
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY 579,977 580,371
SouFun Holdings Limited Unaudited Condensed Consolidated Statements of Operations ( in U.S. dollars in thousands, except share data )
     
For the three months ended

March 31,

2012

March 31,

2011
Revenues:  
Marketing services 34,252 28,190
Listing services 10,934 11,277

E-commerce services
12,045 95
Other value-added services 1,259 1,227
Total revenues 58,490 40,789
 
Cost of revenues:

Cost of services
(16,522) (13,218)
Total cost of revenues (16,522) (13,218)
 
Gross Profit 41,968 27,571
 
Operating expenses:
Selling expenses (14,458) (12,187)
General and administrative expenses (13,823) (9,466)
Total operating expenses (28,281) (21,653)
 
Operating Income 13,687 5,918
Foreign exchange (loss) gain (2) 26
Interest income 4,427 1,377
Interest expenses (2,093) (42)
Realized gain—trading securities - 55
Government grants 437 499
Other-than-temporary impairment on available-for-sale securities (14) -
Income before income taxes and noncontrolling interests 16,442 7,833
Income tax expenses
Income tax expense (1,908) (2,091)
Net income 14,534 5,742
Net loss attributable to noncontrolling interests - 5
Net income attributable to SouFun Holdings Limited shareholders

 
14,534 5,747

Other comprehensive income, net of tax
Foreign currency translation 139 2,313
Total other comprehensive income, net of tax 139 2,313
 
Comprehensive income 14,673 8,055
 
Earnings per share for Class A and Class B ordinary shares:
Basic 0.19 0.08
Diluted 0.18 0.07
Weighted average number of Class A and Class B ordinary shares outstanding:
Basic 76,805,249 76,065,755
Diluted 81,068,135 82,768,286
SouFun Holdings Limited Reconciliation of GAAP and Non-GAAP Results ( in U.S. dollars in thousands, except share data )
 
  For the three months ended
March 31, 2012     March 31, 2011
   
GAAP income from operations 13,687 5,918
Share-based compensation 1,263 1,991
Non-GAAP income from operations 14,950 7,909
 
GAAP net income 14,534 5,742
One-off tax benefit (1,631) -
Other-than-temporary impairment on available-for-sale securities 14 -
Share-based compensation 1,263 1,991
Non-GAAP net income 14,180 7,733
 
Net Income attributable toSouFun Holdings Limited shareholders 14,534 5,747
One-off tax benefit (1,631) -
Other-than-temporary impairment on available-for-sale securities 14 -
Share-based compensation expense 1,263 1,991
Non-GAAP net Income attributable to SouFun Holdings Limited shareholders 14,180 7,738
 
GAAP earnings per share for Class A and Class B ordinary shares:
Basic 0.19 0.08
Diluted 0.18 0.07
Non-GAAP earnings per share for Class A and Class B ordinary shares:
Basic 0.18 0.10
Diluted 0.17 0.09
Weighted average number of Class A and Class B ordinary shares outstanding:
Basic 76,805,249 76,065,755
Diluted 81,068,135 82,768,286

Copyright Business Wire 2010

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