Fangdd Network Group Ltd. (NASDAQ: DUO) (“FangDD” or “the
Company”), a leading property technology company in China, today
announced its unaudited financial results for the first quarter
ended March 31, 2020.
First Quarter 2020 Financial
Highlights
- Revenue in the first quarter of 2020 decreased by 58.5% year
over year to RMB272.1 million (US$38.4 million) from RMB656.0
million in the same quarter of 2019.
- Net loss in the first quarter of 2020 was RMB136.4 million
(US$19.3 million).
- Non-GAAP1 net loss in the first quarter of 2020 was RMB110.0
million (US$15.5 million).
First Quarter 2020 Operating
Highlights
- The number of active
agents2 in the Company’s marketplace in the first quarter of
2020 was 218.5 thousand, representing an increase of 42.8% from
153.0 thousand in the same period of 2019.
- The number of closed-loop
agents3 in the first quarter of 2020 was 6.7 thousand,
representing a decrease of 50.1% from 13.4 thousand in the
same period of 2019.
- Total closed-loop
GMV4 facilitated on the Company’s platform in the first
quarter of 2020 decreased by 46.5% to RMB17.9 billion (US$2.5
billion) from RMB33.5 billion in the same period of 2019. New
property listings and secondary sales listings contributed RMB10.4
billion (US$1.5 billion) and RMB7.5 billion (US$1.1 billion),
respectively, to the total closed-loop GMV in the first quarter of
2020.
Mr. Yi Duan, Chairman and Co-Chief Executive
Officer of FangDD, commented, “Following the Chinese New Year
holidays in the first quarter of 2020, the outbreak of COVID-19
significantly hampered the ability of real estate agents in China
to work offline. As such, both the entire real estate transaction
service industry in China and our business experienced a downturn.
Notably, as a result of the pandemic, which caused a reduction in
real estate agents’ offline business hours to a third of that in
the same period of 2019, agents began to increasingly rely upon
leveraging online platforms to manage their businesses. In
addition, while the trend of industry digitization ramped up in the
quarter, we were able to use our state-of-the-art technology to
capitalize on this opportunity, capturing a larger share of China’s
real estate transaction market. Despite the current uncertainty
regarding the pandemic and its impact on China’s real estate sector
going forward, we remain fully confident in the underlying strength
of our business model as well as the growth potential of the
market, which should continue to receive support from favorable
government policy and the stable demand for property in China.
Mr. Xi Zeng, Co-Chief Executive Officer of
FangDD, stated, “By closely monitoring the industry dynamics and
the ongoing development of the COVID-19 outbreak, we promptly
adjusted our business strategies to adapt to the challenging macro
environment. To maximize our competitive advantages as an
independent third-party marketplace, we upgraded our SaaS solutions
to further empower agents, refined our online agency management
tools to help agency owners manage agents more effectively, and
bolstered our matchmaking algorithms to support sales performance
of our partnered property developers. Our commitment to optimizing
both our SaaS solutions and service offerings has helped to
significantly enhance our platform’s value propositions for
agencies and developers. As a result, in the first quarter of 2020,
the number of active agents on our marketplace increased by 42.8%
year over year to 218.4 thousand. Looking ahead, we plan to
continue refining our SaaS solutions and matchmaking algorithms to
boost the growth of agents and property listings on our platform.
We believe that such efforts should help us to augment our
transaction efficiencies, support our growth trajectory, and
deliver lasting value to our shareholders over the long term.
Ms. Jiaorong Pan, Chief Financial Officer of
FangDD, added, “The COVID-19 pandemic caused a significant
reduction in the overall volume of property transactions in the
period and thus adversely impacted our financial performance in the
first quarter of 2020. As a result, our total revenues in the
quarter decreased by 58.5% year over year to RMB272.1 million. This
decrease in total revenues was primarily attributable to a 46.5%
year-over-year decline in total closed-loop GMV facilitated in the
quarter. Despite these temporary challenges, we plan to continue
investing in the optimization of our SaaS solutions and service
offerings to further solidify our leading position in China’s real
estate transaction service industry. Additionally, we will also
remain focused on refining our cost structures and improving our
operating efficiency. Such work should not only help to ensure that
our underlying fundamentals remain strong, but also enhance our
capabilities to sustain our business expansion over the long
term.”
First Quarter 2020 Financial
Results
REVENUE
Revenue in the first quarter of 2020 decreased
by 58.5% to RMB272.1 million (US$38.4 million) from RMB656.0
million in the same period of 2019. The decrease was due to the
outbreak of COVID-19 in China and the resulting restraints imposed
on real estate agents, which negatively impacted the ability of
agents to carry out business during the period. The decrease in the
business activity of agents resulted in decreases in both the
number of transactions and GMV facilitated on the Company’s
marketplace and thus significantly inhibited the Company’s revenue
generation capabilities.
COST OF
REVENUE
Cost of revenue in the first quarter of 2020
decreased by 58.3% to RMB222.7 million (US$31.5 million) from
RMB534.5 million in the same period of 2019, mainly attributable to
a decrease in commission fees payable to agents for the services
they rendered, which was in line with the decreased commissions
from transactions.
GROSS
PROFIT
Gross profit in the first quarter of 2020
decreased by 59.3% to RMB49.4 million (US$7.0 million) from
RMB121.5 million in the same period of 2019. Gross margin in the
first quarter of 2020 remained stable at 18.2% compared to the same
period of 2019.
OPERATING
EXPENSES
Operating expenses in the first quarter of 2020,
including share-based compensation expenses of RMB26.4 million
(US$3.7 million), increased by 62.7% to RMB189.4 million (US$26.7
million) from RMB116.4 million in the same period of 2019.
- Sales and marketing expenses in the
first quarter of 2020 decreased by 77.0% to RMB1.4 million (US$0.2
million) from RMB6.1 million in the same period of 2019. The
decrease in sales and marketing expenses was primarily due to the
reduction in spending on brand promotion and marketing activities
to attract property listings from real estate sellers to the
Company’s marketplace.
- Product development expenses in the
first quarter of 2020 were RMB95.0 million (US$13.4 million)
compared to RMB65.7 million in the same period of 2019. The
increase in product development expenses was mainly attributable to
share-based compensation expenses of RMB17.2 million (US$2.4
million) in the first quarter of 2020. The remaining increase of
RMB12.1 million (US$1.7 million) in product development expenses
was primarily due to higher personnel-related expenses resulting
from the increase in average compensation of product development
personnel in the first quarter of 2020 as the Company sought to
enhance its technological infrastructure to attract and retain more
agents.
- General and administrative expenses
in the first quarter of 2020 were RMB93.1 million (US$13.1
million), compared to RMB44.5 million in the same period of 2019.
The increase in general and administrative expenses included
share-based compensation expenses of RMB9.3 million (US$1.3
million) in the first quarter of 2020. The remaining increase of
RMB39.3 million (US$5.6 million) in general and administrative
expenses was primarily attributable to (1) an increased headcount
to improve the Company’s corporate governance and ensure compliance
in relation to the Company’s status as a U.S.-listed company; (2)
certain listing expenses related to the listing of the Company; and
(3) an increase in the account of provisions for doubtful debtors,
which was mainly due to the slowdown in settlements with developers
as a result of the COVID-19 outbreak during the quarter.
INCOME (LOSS) FROM
OPERATIONS
Loss from operations in the first quarter of
2020 was RMB140.0 million (US$19.8 million) compared to an income
from operations of RMB5.1 million in the same period of 2019.
Non-GAAP loss from operations5 in the first
quarter of 2020 was RMB113.6 million (US$16.0 million) compared to
a non-GAAP income from operation of RMB5.1 million in the same
period of 2019.
NET INCOME
(LOSS)
Net loss in the first quarter of 2020 was
RMB136.4 million (US$19.3 million) compared to a net income of
RMB14.8 million in the same period of 2019.
Non-GAAP net loss in the first quarter of 2020
was RMB110.0 million (US$15.5 million) compared to non-GAAP net
income of RMB14.8 million in the same period of 2019.
NET LOSS PER
ADS
Basic and diluted net loss per American
Depositary Share (“ADS”) in the first quarter of 2020 were both
RMB1.75 (US$0.25). In comparison, the Company’s basic and diluted
net loss attributable to ordinary shareholders per ADS in the same
period of 2019 were both RMB1.25. Each ADS represents 25 of the
Company’s Class A ordinary shares.
Liquidity
As of March 31, 2020, the Company had cash and
cash equivalents, restricted cash, and short-term investments of
RMB1,071.7 million (US$151.4 million), short-term bank borrowings
of RMB488 million (US$68.9 million), as well as un-utilized bank
facilities of RMB315.0 million (US$44.5 million). For the first
quarter of 2020, net cash used in operating activities was RMB48.6
million (US$6.9 million).
Business
Outlook
For the second quarter of 2020, the Company
expects its revenue to be between RMB660 million and RMB720
million. This forecast only reflects the Company’s current and
preliminary views on the market and operational conditions, which
are subject to change.
Conference Call
Information
The Company’s management team will hold a Direct
Event conference call on Wednesday, June 10, 2020, at 7:00 A.M.
Eastern Time (or 7:00 P.M. Beijing Time on the same day) to discuss
the financial results. Details for the conference call are as
follows:
Event
Title:
Fangdd Network Group Ltd. First Quarter 2020 Earnings Conference
CallConference ID:
#5488593Registration Link:
http://apac.directeventreg.com/registration/event/5488593
Due to the global outbreak of the novel
coronavirus, operator assisted conference calls are not available
at the moment. All participants must use the link provided above to
complete the online registration process in advance of the
conference call. Upon registering, each participant will receive a
set of participant dial-in numbers, the Direct Event passcode, and
a unique access PIN, which can be used to join the conference
call.
A replay of the conference call will be
accessible through June 18, 2020, by dialing the following
numbers:
United
States:
+1-646-254-3697Hong Kong,
China:
+852-3051-2780Replay Code:
#5488593
A live and archived webcast of the conference
call will also be available at the Company’s investor relations
website at http://ir.fangdd.com/.
Exchange
Rate
This press release contains translations of
certain Renminbi amounts into U.S. dollars at specified rates
solely for the convenience of readers. Unless otherwise noted, all
translations from Renminbi to U.S. dollars, in this press release,
were made at a rate of RMB 7.0808 to US$1.00, the exchange rate set
forth in the H.10 statistical release of the Federal Reserve Board
on March 31, 2020. The Company makes no representation that the
Renminbi or U.S. dollar amounts referred could be converted into
U.S. dollar or Renminbi, as the case may be, at any particular rate
or at all.
Non-GAAP Financial
Measures
To supplement the financial measures prepared in
accordance with generally accepted accounting principles in the
United States, or GAAP, this press release presents non-GAAP
income(loss) from operations, non-GAAP operating margin, non-GAAP
net income (loss) and non-GAAP net margin by excluding share-based
compensation expenses from income (loss) from operations and net
income, respectively. These non-GAAP financial measures are not
defined under U.S. GAAP and are not presented in accordance with
U.S. GAAP. The Company believes these non-GAAP financial measures
are important to help investors understand the Company’s operating
and financial performance, compare business trends among different
reporting periods on a consistent basis and assess the Company’s
core operating results, as they exclude certain expenses that are
not expected to result in cash payments. The use of the above
non-GAAP financial measures has certain limitations. Share-based
compensation expenses have been and will continue to be incurred in
the future and are not reflected in the presentation of the
non-GAAP financial measures, but should be considered in the
overall evaluation of the Company’s results. These non-GAAP
financial measures should be considered in addition to financial
measures prepared in accordance with GAAP, but should not be
considered a substitute for, or superior to, financial measures
prepared in accordance with GAAP. The Company compensates for these
limitations by reconciling these non-GAAP financial measures to the
most directly comparable U.S. GAAP measures, which should be
considered when evaluating the Company’s performance.
Reconciliation of each of these non-GAAP financial measures to the
most directly comparable GAAP financial measure is set forth at the
end of this release.
About
FangDDFangdd Network Group Ltd. (NASDAQ: DUO)
(“FangDD” or the “Company”) is a leading property technology
company in China,operating one of the largest online real estate
marketplaces in the country. Through innovative use of mobile
internet, cloud and big data, FangDD has fundamentally
revolutionized the way real estate agents conduct business through
a suite of modular products and services powered by SaaS tools,
productions and technology. Of the approximately 2.0 million real
estate agents in China, more than 1,250,000 were on its platform as
of December 31, 2019. For more information, please visit
http://ir.fangdd.com.
Safe Harbor
StatementThis announcement contains
forward-looking statements. These 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 “aim,” “anticipate,” “believe,”
“estimate,” “expect,” “hope,” “going forward,” “intend,” “ought
to,” “plan,” “project,” “potential,” “seek,” “may,” “might,” “can,”
“could,” “will,” “would,” “shall,” “should,” “is likely to” and the
negative form of these words and other similar expressions. Among
other things, statements that are not historical facts, including
statements about FangDD’s beliefs and expectations, the business
outlook and quotations from management in this announcement, as
well as FangDD’s strategic and operational plans, are or contain
forward-looking statements. Forward-looking statements involve
inherent risks and uncertainties. A number of factors could cause
actual results to differ materially from those contained in any
forward-looking statement, including but not limited to the
following. The general economic and business conditions in China
may deteriorate. The growth of Internet and mobile user population
in China might not be as strong as expected. FangDD’s plan to
attract new and retain existing real estate agents, expand property
listings, develop new products and increase service offerings might
not be carried out as expected. FangDD might not be able to
implement all of its strategic plans as expected. Competition in
China may intensify further. All information provided in this press
release is as of the date of this press release and are based on
assumptions that the Company believes to be reasonable as of this
date, and FangDD does not undertake any obligation to update any
forward-looking statement, except as required under applicable
law.
Investor Relations
ContactFangDDMs. Linda LiDirector, Capital Markets
DepartmentPhone: +86-0755-2699-8968E-mail:ir@fangdd.com
ICR, Inc.Jack WangPhone: +1(646) 308-1649E-mail:
FangDD@icrinc.com
Fangdd Network Group Ltd.
SELECTED UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS DATA
(All amounts in thousands, except for
share and per share data)
|
As of December 31, |
As of March 31, |
|
2019 |
|
2020 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
1,103,747 |
|
826,520 |
Restricted cash |
230,125 |
|
233,703 |
Short-term investments |
11,500 |
|
11,500 |
Accounts receivable, net |
2,189,980 |
|
2,013,152 |
Prepayments and other current assets |
194,668 |
|
211,476 |
Total current assets |
3,730,020 |
|
3,296,351 |
|
|
|
|
Total assets |
4,372,125 |
|
4,174,629 |
|
|
|
|
LIABILITIES |
|
|
|
Current liabilities |
|
|
|
Short-term bank borrowings |
490,000 |
|
488,000 |
Accounts payable |
1,897,611 |
|
1,818,460 |
Customers’ refundable
fees |
44,916 |
|
41,292 |
Accrued expenses and other payables |
338,626 |
|
324,447 |
Taxes payable |
7 |
|
150 |
Total current liabilities |
2,771,160 |
|
2,672,349 |
|
|
|
|
Total liabilities |
2,783,070 |
|
2,684,702 |
Total shareholders'
equity |
1,589,055 |
|
1,489,927 |
Total liabilities and
equity |
4,372,125 |
|
4,174,629 |
Fangdd Network Group Ltd.
SELECTED UNAUDITED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) DATA
(All amounts in thousands, except for
share and per share data)
|
For the Three Months Ended
March 31, |
|
2019 |
|
|
2020 |
|
Revenue |
656,006 |
|
|
272,108 |
|
Cost of revenue |
(534,519 |
) |
|
(222,715 |
) |
Gross profit |
121,487 |
|
|
49,393 |
|
|
|
|
|
Operating
expenses: |
|
|
|
Sales and marketing expenses |
(6,118 |
) |
|
(1,387 |
) |
Product development expenses |
(65,736 |
) |
|
(94,979 |
) |
General and administrative expenses |
(44,524 |
) |
|
(93,063 |
) |
Total operating expenses |
(116,378 |
) |
|
(189,429 |
) |
|
|
|
|
Income (loss) from operations |
5,109 |
|
|
(140,036 |
) |
Net income
(loss) |
14,797 |
|
|
(136,445 |
) |
Accretion of Redeemable
Convertible Preferred Shares |
(66,236 |
) |
|
- |
|
Net loss
attributable to ordinary shareholders |
(51,439 |
) |
|
(136,445 |
) |
|
|
|
|
Net income
(loss) |
14,797 |
|
|
(136,445 |
) |
Other
comprehensive income |
|
|
|
Foreign currency
translation adjustment, net of nil income taxes |
60,419 |
|
|
10,887 |
|
Total
comprehensive income (loss), net of income taxes |
75,216 |
|
|
(125,558 |
) |
|
|
|
|
Net loss per share |
|
|
|
- Basic |
(0.05 |
) |
|
(0.07 |
) |
- diluted |
(0.05 |
) |
|
(0.07 |
) |
Net loss per ADS |
|
|
|
- Basic |
(1.25 |
) |
|
(1.75 |
) |
- diluted |
(1.25 |
) |
|
(1.75 |
) |
Weighted average number of ordinary shares used in computing
net loss per share, basic and diluted |
|
|
|
- Basic |
945,712,030 |
|
|
1,984,641,870 |
|
- diluted |
945,712,030 |
|
|
1,984,641,870 |
|
|
|
|
|
Reconciliation of GAAP and Non-GAAP
Results
(All amounts in thousands, except for
share and per share data)
|
For the Three Months Ended
March 31, |
|
2019 |
2020 |
|
|
|
Income(loss) from
operations |
5,109 |
(140,036) |
Share-based compensation
expenses |
- |
26,431 |
Non-GAAP income(loss)
from operations |
5,109 |
(113,605) |
|
|
|
Net
income(loss) |
14,797 |
(136,445) |
Share-based compensation
expenses |
- |
26,431 |
Non-GAAP net
income(loss) |
14,797 |
(110,014) |
|
|
|
Operating
margin6 |
0.8% |
(51.5%) |
Share-based compensation
expenses |
- |
9.7% |
Non-GAAP operating
margin |
0.8% |
(41.7%) |
|
|
|
Net
margin7 |
2.3% |
(50.1%) |
Share-based compensation
expenses |
- |
9.7% |
Non-GAAP net
margin |
2.3% |
(40.4%) |
1 Non-GAAP net loss is defined as net loss excluding share-based
compensation expenses. For more information on these non-GAAP
financial measures, please see the section captioned “Non-GAAP
Financial Measures” and the tables captioned “Reconciliation of
GAAP and Non-GAAP Results” set forth at the end of this
release.
2 “Active agents” refer to real estate agents
who have visited the Company’s marketplace and used one or more of
its functions within a period of time.
3 Closed-loop agents refer to real estate agents
who have completed closed-loop transactions in the Company’s
marketplace under the Company’s monitoring and control.
4 “Closed-loop GMV” refers to the GMV of
closed-loop transactions facilitated in our marketplace during the
specified period.
5 Non-GAAP loss from operations is defined as loss from
operations excluding share-based compensation expenses.
6 Operating margin is defined as income(loss) from operations
divided by revenue.
7 Net margin is defined as net income(loss) attributable to
ordinary shareholders divided by revenue.
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