Leju Reports Third Quarter 2016 Results

BEIJING, Nov 28, 2016 /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 third quarter ended September 30, 2016.

Third Quarter 2016 Financial Highlights

• Total revenues increased by 21% year-on-year to $183.3 million
  • Revenues from e-commerce services increased by 35% year-on-year to $143.8 million
  • Revenues from online advertising services decreased by 15% year-on-year to $33.6 million
  • Revenues from listing services increased by 9% year-on-year to $5.9 million
• Non-GAAP[1] income from operations increased by 26% year-on-year to $33.6 million
• Non-GAAP net income attributable to Leju shareholders increased by 9% year-on-year to $23.1 million, or $0.17 per diluted American depositary share ("ADS")

First Nine Months 2016 Financial Highlights

• Total revenues increased by 13% year-on-year to $454.6 million
  • Revenues from e-commerce services increased by 20% year-on-year to $348.2 million
  • Revenues from online advertising services decreased by 8% year-on-year to $89.8 million
  • Revenues from listing services increased by 16% year-on-year to $16.7 million
• Non-GAAP income from operations decreased by 10% year-on-year to $42.7 million
• Non-GAAP net income attributable to Leju shareholders decreased by 16% year-on-year to $33.0 million, or $0.24 per diluted ADS

"We are pleased to report solid third quarter results as Leju delivered healthy revenue growth as well as profit margin improvement," said Mr. Geoffrey He, Leju's chief executive officer. "Operationally, we maintained our position as a leader in e-commerce services in the primary market with a new company record for the number of coupons sold, expanded our secondary listing services platform with 270 newly launched local websites, and continued to invest in our home furnishing business with a focus on the contractor platform Qiang Gong Zhang (7gz.com). Financially, we continued to generate strong positive cash flows and further improved our profit margins in the third quarter. We believe these results demonstrate the success of our strategy and the value our platform provides for our developer clients and homebuyers."

"Robust transaction volumes and rapidly rising home prices over the first three quarters of 2016 have led to another wave of aggressive tightening measures in the first weeks of October by local governments in more than 20 cities," continued Mr. He. "In addition to reinstating restrictions on purchases and mortgage loans and raising down payment requirements, the governments in many cities also imposed price ceilings, slowed the pace of issuing pre-sale permits and enforced strict limits on project advertising and other forms of marketing. The combination of tightening policies and close scrutiny of marketing practices had an immediate cooling effect on transaction levels and demand for marketing services, and we expect it will have a significant impact on our e-commerce and online advertising businesses in the fourth quarter. However, we do not believe that the fundamental market demand and supply structure will be affected by these policies in the long run, and we believe that after this period of market correction, Leju will be able to further distinguish its strategy and platform services to generate future growth."

Third Quarter 2016 Results

Total revenues were $183.3million, an increase of 21% from $151.2 million for the same quarter of 2015, mainly driven by revenue growth from e-commerce services and listing services, partially offset by the decrease of online advertising services.

Revenues from e-commerce services were $143.8 million, an increase of 35% from $106.4 million for the same quarter of 2015, primarily due to an increase in the average price per discount coupon redeemed, partially offset by the decrease in the number of discount coupons redeemed.

Revenues from online advertising services were $33.6 million, a decrease of 15% from $39.4 million for the same quarter of 2015, primarily due to a decrease in property developers' online advertising demand.

Revenues from listing services were $5.9 million, an increase of 9% from $5.4 million for the same quarter of 2015, primarily due to growth in secondary home sales.

Cost of revenues was $15.2 million, relatively flat compared to $15.3 million for the same quarter of 2015, primarily due to decreased amortization of intangible assets consisting of exclusive rights that expired in December 2015, partially offset by increased cost on advertising resources purchased from Sina.

Selling, general and administrative expenses were $142.8 million, an increase of 21% from $117.5 million for the same quarter of 2015, primarily due to increased marketing expenses related to the Company's e-commerce business as a result of its efforts to maintain its market share in the increasingly competitive market as well as increased marketing expenses related to the promotion of the Company's listing business and home furnishing business.

Income from operations was $26.8 million, an increase of 29% from $20.8 million for the same quarter of 2015. Non-GAAP income from operations was $33.6 million, an increase of 26% from $26.7 million for the same quarter of 2015.

Net income was $17.2 million, an increase of 9% from $15.8 million for the same quarter of 2015. Non-GAAP net income was $23.2 million, an increase of 11% from $20.9 million for the same quarter of 2015.

Net income attributable to Leju shareholders was $17.1 million, or $0.13 per diluted ADS, an increase of 7% from $16.0 million, or $0.12 per diluted ADS, for the same quarter of 2015. Non-GAAP net income attributable to Leju shareholders was $23.1 million, or $0.17 per diluted ADS, an increase of 9% from $21.1 million, or $0.16 per diluted ADS, for the same quarter of 2015.

First Nine Months 2016 Results

Total revenues were $454.6 million, an increase of 13% from $402.4 million for the same period of 2015, mainly driven by growth of revenues from e-commerce services and listing services, partially offset by the decrease of online advertising services.

Revenues from e-commerce services were $348.2 million, an increase of 20% from $290.9 million for the same period of 2015, primarily due to an increase in the average price per discount coupon redeemed, partially offset by the decrease in the number of discount coupons redeemed.

Revenues from online advertising services were $89.8 million, a decrease of 8% from $97.2 million for the same period of 2015, primarily due to a decrease in property developers' online advertising demand.

Revenues from listing services were $16.7 million, an increase of 16% from $14.4 million for the same period of 2015, primarily due to the growth in secondary home sales.

Cost of revenues was $43.5 million, a decrease of 5% from $45.8 million for the same period of 2015, primarily due to decreased amortization of intangible assets consisting of exclusive rights that expired in December 2015, partially offset by the increased resource cost purchased from Sina.

Selling, general and administrative expenses were $390.4 million, an increase of 18% from $331.2 million for the same period of 2015, primarily due to increased marketing expenses related to the growth of the Company's e-commerce business as a result of its efforts to maintain its market share in the increasingly competitive market as well as increased marketing expenses related to the promotion of the Company's listing business and home furnishing business.

Income from operations was $23.0 million, a decrease of 18% from $28.3 million for the same period of 2015. Non-GAAP income from operations was $42.7 million, a decrease of 10% from $47.3 million for the same period of 2015.

Net income was $14.8 million, a decrease of 33% from $22.0 million for the same period of 2015. Non-GAAP net income was $32.1 million, a decrease of 17% from $38.7 million for the same period of 2015.

Net income attributable to Leju shareholders was $15.7 million, or $0.12 per diluted ADS, a decrease of 31% from $22.6 million, or $0.17 per diluted ADS, for the same period of 2015. Non-GAAP net income attributable to Leju shareholders was $33.0 million, or $0.24 per diluted ADS, a decrease of 16% from $39.3 million, or $0.29 per diluted ADS, for the same period of 2015.

Cash Flow

As of September 30, 2016, the Company's cash and cash equivalents balance was $317.0 million.

Third quarter 2016 net cash provided by operating activities was $46.9 million, mainly attributable to non-GAAP net income of $23.2 million, a decrease in customer deposits of $2.1 million, a decrease in accounts receivable of $1.9 million, an increase in income tax payable and other tax payable of $12.1 million, and an increase in accrued payable and welfare expenses of $3.3 million.

Business Outlook

The Company is now revising its fiscal 2016 total revenue guidance to approximately $510 million to $530 million, which would represent a decrease of approximately 8% to 11% from $575.8 million in 2015. This forecast reflects the Company's current and preliminary view, which is subject to change.

Conference Call Information

Leju's management will host an earnings conference call on November 28, 2016 at 7 a.m. U.S. Eastern Time (8 p.m. Beijing/Hong Kong time).

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

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 December 5, 2016:

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 reliance on SINA, Tencent, Baidu, 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 controlling interest in Leju and Leju's reliance on E-House for various corporate services; 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 and amortization of intangible assets resulting from business acquisitions. 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, and amortization of intangible assets resulting from business acquisitions, 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. Annie Huang
Leju Holdings Limited
Phone: +86 (10) 5895-1062
E-mail: ir@leju.com

Philip Lisio
Foote Group
Phone: +86 (10) 8429-9544
E-mail: phil@thefootegroup.com

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