Leju Reports Fourth Quarter and Full Year 2016 Results and Announces Board and Management Changes

BEIJING, Mar. 13, 2017 /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, 2016.

Fourth Quarter 2016 Financial Highlights

• Total revenues decreased by 39% year-on-year to $104.9 million

- Revenues from e-commerce services decreased by 45% year-on-year to $70.9 million
- Revenues from online advertising services decreased by 24% year-on-year to $28.2 million
- Revenues from listing services decreased by 11% year-on-year to $5.8 million

• Non-GAAP^[1] loss from operations was $33.7 million
• Non-GAAP net loss attributable to Leju shareholders was $22.9 million, or $0.17 loss per diluted American depositary share ("ADS")

Full Year 2016 Financial Highlights

• Total revenues decreased by 3% year-on-year to $559.5 million

- Revenues from e-commerce services was $419.0 million
- Revenues from online advertising services decreased by 12% year-on-year to $118.0 million
- Revenues from listing services increased by 7% year-on-year to $22.5 million

• Non-GAAP income from operations was $9.0 million
• Non-GAAP net income attributable to Leju shareholders was $10.1 million, or $0.07 per diluted ADS

"We faced an extremely challenging operating environment during the fourth quarter," said Mr. Geoffrey He, Leju's Chief Executive Officer. "The tightening measures put in place by various local governments at the beginning of October were strictly enforced throughout the fourth quarter and led to sharply reduced transaction volume and demand for marketing activities from developers across all major cities, which had a significant and negative impact on our revenues."

"To adapt to the changing market, we accelerated our product innovation, expanded customer service, and enhanced our efforts to consolidate our market leadership position," continued Mr. He, "In December, we launched our proprietary big-data based suite of advertising products in cooperation with Tencent, Weibo and Focus Media to provide cross-platform and more accurately targeted advertising for developers. We improved and integrated our membership, e-commerce and marketing platforms to provide more streamlined services for homebuyers. During 2016, we also invested in raising Leju's brand awareness and worked with multiple partners to support our efforts in mobile marketing. Despite the current policy headwinds the industry is facing, we remain confident about the long term supply and demand fundamentals of the industry and believe that Leju will be able to capitalize on our investments today to generate growth once the market normalizes."

Fourth Quarter 2016 Results

Total revenues were $104.9 million, a decrease of 39% from $173.4 million for the same quarter of 2015 due to a decrease in revenue from e-commerce services, online advertising services and listing services as a result of reduced transaction volume and advertising demand caused by aggressive tightening measures placed in the fourth quarter by local governments in more than 20 cities.

Revenues from e-commerce services were $70.9 million, a decrease of 45% from $129.7 million for the same quarter of 2015, primarily due to a decrease in both the number and the average price per discount coupon redeemed.

Revenues from online advertising services were $28.2 million, a decrease of 24% from $37.1 million for the same quarter of 2015, primarily due to a decrease in advertising demand from property developers.

Revenues from listing services were $5.8 million, a decrease of 11% from $6.6 million for the same quarter of 2015, primarily due to a decrease in secondary home sales in the fourth quarter of 2016.

Cost of revenues was $14.0 million, a decrease of 3% from $14.5 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 of advertising resources purchased from SINA.

Selling, general and administrative expenses were $131.4 million, a decrease of 9% from $144.2 million for the same quarter of 2015, primarily due to decreased marketing expenses related to the Company's e-commerce business.

Loss from operations was $38.2 million, compared to income from operations of $15.4 million for the same quarter of 2015. Non-GAAP loss from operations was $33.7 million, compared to non-GAAP income from operations of $21.5 million for the same quarter of 2015.

Net loss was $26.4 million, compared to net income of $12.8 million for the same quarter of 2015. Non-GAAP net loss was $23.8 million, compared to non-GAAP net income of $18.2 million for the same quarter of 2015.

Net loss attributable to Leju shareholders was $25.5 million, or $0.19 loss per diluted ADS, compared to net income attributable to Leju shareholders of $12.8 million, or $0.09 per diluted ADS, for the same quarter of 2015. Non-GAAP net loss attributable to Leju shareholders was $22.9 million, or $0.17 loss per diluted ADS, compared to non-GAAP net income attributable to Leju shareholders of $18.1 million, or $0.13 per diluted ADS, for the same quarter of 2015.

Full Year 2016 Results

Total revenues were $559.5 million, a decrease of 3% from $575.8 million for 2015, mainly due to devaluation of the RMB. Total revenues demonstrated in RMB were RMB3,753.2 million, an increase of 3% from RMB3,628.0 million for 2015.

Revenues from e-commerce services were $419.0 million, relatively flat compared to $420.6 million for 2015. Revenues from e-commerce services demonstrated in RMB were RMB2,810.8 million, an increase of 6% from RMB2,649.8 million for 2015, primarily due to an increase in the average price per discount coupon redeemed, partially offset by a decrease in the number of discount coupons redeemed.

Revenues from online advertising services were $118.0 million, a decrease of 12% from $134.2 million for 2015, primarily due to a decrease in property developers' online advertising demand.

Revenues from listing services were $22.5 million, an increase of 7% from $21.0 million for 2015, primarily due to growth in secondary home sales in the first three quarters of 2016, partially offset by a decrease in secondary home sales in the fourth quarter of 2016.

Cost of revenues was $57.5 million, a decrease of 5% from $60.3 million for 2015, primarily due to decreased amortization of intangible assets consisting of exclusive rights that expired in December 2015, partially offset by increased cost of advertising resources purchased from SINA.

Selling, general and administrative expenses were $521.8 million, an increase of 10% from $475.4 million for 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.

Loss from operations was $15.2 million, compared to income from operations of $43.6 million for 2015. Non-GAAP income from operations was $9.0 million, a decrease of 87% from $68.9 million for 2015.

Net loss was $11.6 million, compared to net income of $34.8 million for 2015. Non-GAAP net income was $8.4 million, a decrease of 85% from $56.9 million for 2015.

Net loss attributable to Leju shareholders was $9.8 million, or $0.07 loss per diluted ADS, compared to net income attributable to Leju shareholders of $35.3 million, or $0.26 per diluted ADS, for 2015. Non-GAAP net income attributable to Leju shareholders was $10.1 million, or $0.07 per diluted ADS, a decrease of 82% from $57.4 million, or $0.42 per diluted ADS, for 2015.

Cash Flow

As of December 31, 2016, the Company's cash and cash equivalents balance was $274.3 million.

Fourth quarter 2016 net cash used in operating activities was $36.6 million, mainly attributable to non-GAAP net loss of $23.8 million, a decrease of $13.0 million in other tax payable, a decrease of $8.8 million in other current liabilities and accrued expenses, and an increase of $15.4 million in net deferred tax assets and liabilities, partially offset by a decrease of $22.5 million in accounts receivable.

Business Outlook

The Company estimates that its total revenues for the first quarter of 2017 will be approximately $59 million to $64 million, which would represent a decrease of approximately 48% to 43% from $113.0 million in the same period in 2016. This forecast reflects the Company's current and preliminary view, which is subject to change.

Board and Management Changes

The Company also announced several board and management changes. Mr. Hongchao Zhu, a managing partner of Shanghai United Law Firm, has been appointed to be an independent director of Leju's board of directors and Mr. Li-Lan Cheng, Chief Operating Officer of E-House (China) Holdings Limited, Leju's largest shareholder, has resigned from Leju's board. "Mr. Zhu is a highly respected attorney in the legal field and has over 30 years of experience practicing corporate law in China," commented Mr. Xin Zhou, co-chairman of the board. "We are delighted to have Mr. Zhu join the board and, with this addition, improve the Company's corporate governance with a majority of independent directors on the board."

The Company also announced that Mr. Keyi Chen, Co-President of the Company, has been appointed as Chief Operating Officer of the Company while Mr. Weijie Ma, Co-President of the Company, has resigned from the position due to his new responsibilities at E-House. "Mr. Chen has been an integral part of the Company's growth in the past few years overseeing operations of the new homes business," said Mr. Geoffrey He, Leju's Chief Executive Officer. "We are pleased that Mr. Chen has agreed to take on the expanded responsibilities in this new role and I expect to work closely with Mr. Chen to further our growth across all business lines."

Conference Call Information

Leju's management will host an earnings conference call on March 13, 2017 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:

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 20, 2017:

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 its major shareholders including E-House, SINA and Tencent; 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: +86 135-0116-6560
E-mail: phil@thefootegroup.com

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