CRIC Reports First Quarter 2011 Results

First Quarter 2011 Highlights

• Total revenues for the first quarter of 2011 increased 55% year-over-year to $42.0 million, from $27.2 million for the same quarter of 2010, and exceeded the high end of the Company's guidance range of $39 million to $41 million.
• Non-GAAP(1) income from operations for the first quarter of 2011 was $5.8 million, compared to $9.7 million for the same quarter of 2010. CRIC's first quarter operating income was unfavorably impacted by the Company's spending in several new and expanded real estate channels, including the Baidu, Inc. ("Baidu") channels, commercial real estate channel and secondary home channel, compared with the same quarter of 2010.
• Non-GAAP net income attributable to CRIC shareholders for the first quarter of 2011 was $7.0 million, compared to $10.3 million for the same quarter of 2010.
• Non-GAAP diluted net income per American depositary share ("ADS") for the quarter was $0.05.

"We continued to deliver fast growth in our total revenues in the first quarter of 2011, especially in revenues from our online business, which more than doubled compared to the same period of last year and accounted for almost half of our total revenues. This strong momentum was driven by our gains in market share in existing cities, improved brand awareness, gradual maturity of business in newly entered cities and our new and expanded online real estate channels," said Xin Zhou, CRIC's CEO and co-chairman.

Mr. Zhou added, "Another highlight of our business is that we recently initiated our real estate e-commerce business, further enhancing our profile in the online real estate services segment. Due to the specialty and complexity involved in conducting real estate transactions, it can be difficult for buyers and sellers to complete online real estate transactions. We leveraged our real estate industry expertise, comprehensive database and technological advantage, and spent a considerable amount of time and resources preparing for the launch of this new platform. We have so far successfully tested several real estate e-commerce models through four real estate projects on our new e-commerce website. As a result, we are optimistic about our e-commerce business and will continue investing in and improving this innovative platform while maintaining strong growth in our existing businesses."  

Bin Laurence, CRIC's CFO said, "We had strong and steady revenue growth in the first quarter. Although our operating margin was affected by seasonality and staff expansion, we are confident in achieving profitable growth for the year as our new channels pick up momentum in the next few quarters."

Financial Results for the First Quarter of 2011

Revenues

First quarter total revenues were $42.0 million in 2011, an increase of 55% from $27.2 million for the same quarter of 2010.

Revenues from online services were $20.5 million, an increase of 148% from $8.3 million for the first quarter of 2010. The increase was mainly due to substantial gains in market share in all major cities after CRIC acquired its online business in October 2009, as well as the Company's offering of additional services on the new and expanded online channels, including Baidu real estate channels, commercial real estate services and secondary home channels.

Revenues from information and consulting services were $18.0 million, an increase of 4% from $17.4 million for the same quarter of 2010. The increase was primarily due to an increased number of subscribers to the CRIC database, partly offset by lower real estate project consulting fees recognized in the first quarter of 2011, due to lower land transaction-based consulting fees in the quarter compared to the first quarter of 2010.

Revenues from other services, including offline advertising and promotional events, were $3.5 million for the first quarter of 2011, an increase of 128% from $1.5 million for the same quarter of 2010, mainly due to additional revenues contributed by the real estate promotional event provider acquired in the second quarter of 2010.

Cost of Revenues

First quarter cost of revenues was $10.6 million in 2011, an increase of 79% from $5.9 million for the first quarter of 2010, primarily due to additional expenses associated with CRIC's launch of the new real estate channels on Baidu in August 2010 and costs associated with the services provided by the real estate promotional event provider acquired in the second quarter of 2010.

Selling, General and Administrative ("SG&A") Expenses

First quarter SG&A expenses were $34.8 million in 2011, an increase of 69% from $20.5 million for the same quarter of 2010. The increase in SG&A was primarily due to (1) salary, commission, bonus associated with additional sales and administrative staff, and expenses paid to Baidu for the Company's online business and (2) salary and bonus expenses associated with additional sales and administrative staff of the Company's real estate information and consulting business.

Income (Loss) from Operations

First quarter loss from operations was $3.3 million in 2011, as compared to income of $0.7 million for the same quarter of 2010. Non-GAAP income from operations for the first quarter of 2011 was $5.8 million, compared with $9.7 million for the same quarter of 2010. CRIC's first quarter operating income was unfavorably impacted by the Company's spending in several new and expanded real estate channels, including the Baidu channels, commercial real estate channel and secondary home channel.

Other Income

First quarter other income of $1.1 million primarily represented cash subsidies received by the Company's subsidiaries from local governments as incentives for establishing offices and operating in certain local districts.

Net Income (Loss) Attributable to CRIC Shareholders

Net loss attributable to CRIC shareholders was $1.4 million for the first quarter of 2011, as compared to net income attributable to CRIC shareholders of $1.9 million for the same quarter of 2010. Non-GAAP net income attributable to CRIC shareholders was $7.0 million for the first quarter of 2011, as compared to non-GAAP net income attributable to CRIC shareholders of $10.3 million in the same quarter of 2010.

Cash Flow

As of March 31, 2011, the Company had a cash balance of $324.8 million. The Company has so far repurchased, under its $50 million share repurchase program announced in March 2011, approximately two million ADSs in the open market at an average price of $7.86 per ADS.

First quarter net cash used in operating activities was $0.7 million. Non-GAAP net income attributable to CRIC shareholders of $7.0 million and a decrease in prepaid expenses of $3.0 million was offset by an increase in accounts receivable of $6.5 million and amount due from related parties of $4.5 million.

First quarter net cash used in investing activities was $12.5 million. This amount was mainly attributable to the payment of $10.3 million for the acquisition of Firmway Holdings Limited, an entity that holds a 20-year lease for an office building under construction in the same complex of CRIC's existing headquarters in Shanghai. The Company intends to use the building as additional office space upon completion of its construction. Cash used in investing activities in the first quarter also included a $2.4 million investment in affiliates.

Business Outlook

CRIC estimates that its total revenues for the second quarter of 2011 will be in the range of $52 million to $54 million, compared to $37.4 million in the same quarter of 2010. Total revenues estimate includes estimated revenues from real estate information and consulting services and other services of $23 million to $24 million, compared to $23.1 million in the same quarter of 2010, and estimated revenues from real estate online services of $29 million to $30 million, compared to $14.3 million in the same quarter of 2010. The above forecast reflects the Company's current and preliminary view, which is subject to change.

Conference Call Information

CRIC's management will host an earnings conference call on May 31, 2011 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 "CRIC."

A live and archived webcast will be available at http://ir.cric.com.

About CRIC

China Real Estate Information Corporation ("CRIC") (NASDAQ: CRIC) is a leading provider of real estate information, consulting and online services with a presence in over 140 cities across China. CRIC, a subsidiary of E-House (China) Holdings Limited (NYSE: EJ), merged with the online real estate business of SINA Corporation (NASDAQ: SINA) upon the completion of CRIC's initial public offering and listing of its ADSs on the NASDAQ Global Select Market in October 2009. Leveraging its proprietary, advanced and comprehensive real estate information database and analysis system, CRIC provides a broad range of real estate-related services to all participants in the real estate value chain, including developers, suppliers, agents, brokers, service providers and individual consumers. CRIC's services include subscription-based information services, customized consulting services and online services through several real estate websites that provide region-specific real estate information and access to online communities. For more information about CRIC, please visit http://www.cric.com.

Safe Harbor: Forward-Looking Statements

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by terminology such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "likely to" or other similar expressions. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. Among other things, the Business Outlook section and quotations from management in this press release, as well as CRIC's strategic and operational plans, contain forward-looking statements. CRIC may also make written or oral forward-looking statements in its reports filed or furnished with the U.S. Securities and Exchange Commission, 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 CRIC's beliefs and expectations, are forward-looking statements and are subject to change, and such change may be material and may have a material adverse effect on the Company's financial condition and results of operations for one or more periods. Forward-looking statements 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 in this press release. Potential risks and uncertainties include, but are not limited to, a severe or prolonged downturn in the global economy, CRIC's susceptibility to fluctuations in the real estate market of China, government measures aimed at China's real estate industry, failure of the real estate services industry in China to develop or mature as quickly as expected, diminution of the value of CRIC's brand or image, CRIC's inability to successfully execute its strategy of expanding into new geographical markets in China, CRIC's failure to manage its growth effectively and efficiently, CRIC's failure to successfully execute the business plans for its strategic alliances and other new business initiatives, CRIC's loss of its competitive advantage if it fails to maintain and improve its proprietary CRIC system or to prevent disruptions or failure in the system's performance, CRIC's failure to compete successfully, fluctuations in CRIC's results of operations and cash flows, CRIC's reliance on a concentrated number of real estate developers, natural disasters and outbreaks of health epidemics and other risks outlined in CRIC's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of this press release, and CRIC does not undertake any obligation to update any such information, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement CRIC's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), CRIC uses the following non-GAAP financial measures: (1) net income attributable to CRIC shareholders (2) net income attributable to CRIC shareholders per diluted ADS and (3) income from operations, each of which excludes expenses relating to share-based compensation 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 "Reconciliation of GAAP and Non-GAAP Results" set forth at the end of this press release.

CRIC believes that these non-GAAP financial measures provide meaningful supplemental information regarding its operating performance by excluding expenses relating to share-based compensation and amortization of intangible assets resulting from business acquisitions that may not be indicative of its operating performance. CRIC believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its operating performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to CRIC's historical performance. CRIC computes its non-GAAP financial measures using the same consistent method from quarter to quarter. CRIC believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP financial measures excluding expenses relating to share-based compensation and amortization of intangible assets resulting from business acquisitions is that these expenses charges have been and will continue to be significant recurring expenses in CRIC's business for the foreseeable future. Management compensates for these limitations by providing specific information regarding the GAAP amount excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliation between non-GAAP financial measures and their most comparable GAAP financial measures.