Jupai Reports Full Year 2020 Results

SHANGHAI, March 15, 2021 /PRNewswire/ -- Jupai Holdings Limited ("Jupai" or the "Company") (NYSE: JP), a leading third-party wealth management service provider, focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China, today announced its unaudited financial results for the fourth quarter and the full year ended December 31, 2020.

FOURTH QUARTER AND FULL YEAR 2020 FINANCIAL HIGHLIGHTS

• Net revenues in the fourth quarter of 2020 were RMB98.0 million, a decrease of 28.4% from the corresponding period in 2019. For the full year 2020, net revenues were RMB388.2 million, a decrease of 50.6% from 2019.

• Income from operations in the fourth quarter of 2020 was RMB6.6 million, as compared to loss from operations of RMB29.5 million from the corresponding period in 2019. For the full year 2020, loss from operations was RMB34.4 million, as compared to RMB136.7 million from 2019.
• Net income attributable to ordinary shareholders in the fourth quarter of 2020 was RMB2.0 million, as compared to net loss attributable to ordinary shareholders of RMB30.2 million from the corresponding period in 2019. For the full year 2020, net loss attributable to ordinary shareholders was RMB31.4 million, as compared to RMB164.7 million from 2019.
• Adjusted net income attributable to ordinary shareholders (non-GAAP^[1]) in the fourth quarter of 2020 was RMB2.3 million, as compared to adjusted net loss attributable to ordinary shareholders of RMB27.8 million from the corresponding period in 2019. For the full year 2020, non-GAAP net loss attributable to ordinary shareholders was RMB27.8 million, as compared to RMB154.5 million from 2019.

FOURTH QUARTER AND FULL YEAR 2020 OPERATIONAL UPDATES 

• Total number of active clients^[2] for the full year 2020 was 1,700, as compared to 2,973 active clients in 2019.
• The aggregate value of wealth management products distributed by the Company during the fourth quarter of 2020 was RMB1.2 billion, a 38.7% decrease from the corresponding period in 2019. For the full year 2020, the aggregate value of wealth management products distributed by the Company was RMB6.5 billion, a 34.3% decrease from 2019.

• Jupai's coverage network as of December 31, 2020 included 31 client centers covering 30 cities, as compared to 51 client centers covering 43 cities as of December 31, 2019.
• Total assets under management^[3] as of December 31, 2020 were RMB33.8 billion, as compared to RMB41.8 billion from December 31, 2019.

"We were pleased to see our distribution of secondary market products increase to RMB1.17 billion for the full year 2020, compared to RMB290 million in 2019, showing our ability to optimize product offerings," said Mr. Jianda Ni, Jupai's chairman of the board and chief executive officer. "We remain optimistic in the long term prospects of China's wealth management industry, and are confident that our strategy of developing a diverse range of high-quality investment products for China's growing high net worth population positions Jupai for sustainable profitable growth."

Ms. Min Liu, Jupai's chief financial officer, said, "We were encouraged to turn profitable in the fourth quarter of 2020. Jupai's effective cost control measures continued to drive margin improvement as evidenced by our profitable fourth quarter which saw total operating costs decrease by 45.1% on a year over year basis. In 2021, we will continue to improve our productivity while optimizing overall customer experience."

FOURTH QUARTER AND FULL YEAR 2020 FINANCIAL RESULTS

Net Revenues

Net revenues for the fourth quarter of 2020 were RMB98.0 million, a 28.4% decrease from the corresponding period in 2019, primarily due to decreases in one-time commissions and recurring management fees. Net revenues were RMB388.2 million for the full year 2020, a decrease of 50.6% from 2019.

• Net revenues from one-time commissions for the fourth quarter of 2020 were RMB38.6 million, a 45.7% decrease from the corresponding period in 2019, primarily as a result of a decrease in the aggregate value of wealth management products distributed by the Company. For the full year 2020, net revenues from one-time commissions were RMB162.2 million, a decrease of 49.1% from 2019.
• Net revenues from recurring management fees for the fourth quarter of 2020 were RMB17.6 million, a 38.4% decrease from the corresponding period in 2019, primarily due to the decrease in the value of assets under management. RMB1.9 million and RMB0.9 million carried interest was recognized as part of Jupai's recurring management fees in the fourth quarter of 2020 and 2019, respectively. For the full year 2020, net revenues from recurring management fees were RMB98.0 million, a 71.1% decrease from 2019. RMB13.7 million and RMB156.9 million carried interest was recognized as part of Jupai's recurring management fees for the full year 2020 and 2019, respectively.
• Net revenues from recurring service fees for the fourth quarter of 2020 were RMB41.8 million, a 12.1% increase from the corresponding period in 2019. The Company recognized RMB3.3 million and RMB0.3 million variable performance fees in the fourth quarter of 2020 and 2019, respectively. For the full year 2020, net revenues from recurring service fees were RMB128.0 million, an 11.8% increase from 2019. The Company recognized RMB10.6 million and RMB2.1 million variable performance fees for the full year 2020 and 2019, respectively.
• Net revenues from other service fees for the fourth quarter of 2020 and 2019 were both nil. For the full year 2020, net revenues from other service fees were nil, as compared to RMB13.9 million from 2019.

Operating Costs and Expenses

Operating costs and expenses for the fourth quarter of 2020 were RMB91.4 million, a decrease of 45.1% from the corresponding period in 2019. For the full year 2020, operating costs and expenses were RMB422.6 million, a decrease of 54.2% from 2019.

• Cost of revenues for the fourth quarter of 2020 was RMB39.9 million, a decrease of 56.3% from the corresponding period in 2019. This was primarily due to decrease in headcount of wealth management advisors and client managers, as well as the decrease in the aggregate value of wealth management products distributed by the Company. For the full year 2020, cost of revenues was RMB205.6 million, a decrease of 57.3% from 2019.
• Selling expenses for the fourth quarter of 2020 were RMB18.1 million, a decrease of 64.2% from the corresponding period in 2019, primarily due to the decrease in marketing and promotion activities and the decrease in revenues. For the full year 2020, selling expenses were RMB84.9 million, a decrease of 58.9% from 2019.
• General and administrative expenses for the fourth quarter of 2020 were RMB39.3 million, a decrease of 14.3% from the corresponding period in 2019, mainly due to continuous improvement in operating efficiency. For the full year 2020, general and administrative expenses were RMB153.7 million, a decrease of 42.1% from 2019.
• Other operating income (government subsidies) received by the Company for the fourth quarter of 2020 was RMB5.9 million, a decrease of 72.2% from the corresponding period in 2019. For the full year 2020, other operating income was RMB21.6 million, a decrease of 31.3% from 2019. Government subsidies were recorded when received, with their availability and amount dependent upon government policies.

Operating margin for the fourth quarter of 2020 was 6.8%, as compared to -21.5% for the corresponding period in 2019. For the full year 2020, operating margin was -8.9%, compared to -17.4% for 2019.

Income tax expenses for the fourth quarter of 2020 were RMB41.1 thousand, a decrease of 99.8% from the corresponding period in 2019, primarily due to taxable losses for the fourth quarter of 2020. For the full year 2020, income tax expenses were RMB0.8 million, a decrease of 98.5% from 2019.

Net Income

- Net Income

• Net income attributable to ordinary shareholders for the fourth quarter of 2020 was RMB2.0 million, as compared to net loss attributable to ordinary shareholders of RMB30.2 million from the corresponding period in 2019. For the full year 2020, net loss attributable to ordinary shareholders was RMB31.4 million, as compared to RMB164.7 million in 2019.
• Net margin attributable to ordinary shareholders for the fourth quarter of 2020 was 2.0%, as compared to -22.0% from the corresponding period in 2019. For the full year 2020, net margin attributable to ordinary shareholders was -8.1%, compared to -21.0% in 2019.
• Net income attributable to ordinary shareholders per basic and diluted American depositary share ("ADS") for the fourth quarter of 2020 was RMB0.06 and RMB0.06, respectively, as compared to net loss attributable to ordinary shareholders per basic and diluted ADS of RMB0.90 and RMB0.90, respectively, from the corresponding period in 2019. For the full year 2020, net loss attributable to ordinary shareholders per basic and diluted ADS was RMB0.94 and RMB0.94, respectively, as compared to RMB4.90 and RMB4.90, respectively, in 2019.

- Adjusted Net (Loss) Income (non-GAAP)

• Adjusted net income attributable to ordinary shareholders (non-GAAP) for the fourth quarter of 2020 was RMB2.3 million, as compared to adjusted net loss attributable to ordinary shareholders of RMB27.8 million from the corresponding period in 2019. For the full year 2020, non-GAAP net loss attributable to ordinary shareholders was RMB27.8 million, as compared to RMB154.5 million in 2019.
• Adjusted net margin attributable to ordinary shareholders (non-GAAP) for the fourth quarter of 2020 was 2.3%, as compared to -20.3% from the corresponding period in 2019. For the full year 2020, non-GAAP net margin attributable to ordinary shareholders was -7.2%, as compared to -19.7% in 2019.
• Adjusted net income attributable to ordinary shareholders per diluted ADS (non-GAAP) for the fourth quarter of 2020 was RMB0.07, as compared to adjusted net loss attributable to ordinary shareholders per diluted ADS (non-GAAP) of RMB0.83 from the corresponding period in 2019. For the full year 2020, non-GAAP net loss attributable to ordinary shareholders per diluted ADS was RMB0.83, as compared to RMB4.60 in 2019.

Repurchase of Shares

As of March 9, 2021, we had repurchased 539,142 ADSs as part of the Company's share repurchase program of up to US$10 million announced in February 2020, at a total cost of US$741,554, inclusive of transaction charges.

Balance Sheet and Cash Flow

As of December 31, 2020, the Company had RMB657.2 million in cash, cash equivalents and restricted cash, as compared to RMB712.3 million as of December 31, 2019.

Net cash used in operating activities during the fourth quarter of 2020 was RMB18.7 million, as compared to RMB47.0 million from the corresponding period in 2019. For the full year 2020, net cash used in operating activities was RMB15.6 million, as compared to RMB224.6 million in 2019.

Net cash provided by investing activities during the fourth quarter of 2020 was RMB10.0 million, as compared to RMB100.4 million net cash used in investing activities from the corresponding period in 2019. For the full year 2020, net cash used in investing activities was RMB32.4 million, as compared to RMB365.7 million in 2019.

Net cash used in financing activities during the fourth quarter of 2020 was nil, as compared to nil from the corresponding period in 2019. For the full year 2020, net cash used in financing activities was RMB7.1 million, as compared to RMB29.6 thousand net cash provided by financing activities in 2019.

CONFERENCE CALL

Jupai's management will host an earnings conference call on March 15, 2021 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing/Hong Kong time).

Please register in advance for the conference call using the link provided below. Upon registering, you will be provided with a calendar invite with participant dial-in numbers, passcode, and a unique access pin by email. To join the conference, simply dial the number you receive after preregistering, enter the passcode followed by your pin, and you will join the conference instantly.

PRE-REGISTER LINK: http://apac.directeventreg.com/registration/event/7090695 

A replay of the conference call may be accessed by phone at the following number until March 23, 2021:

Additionally, a live and archived webcast will be available at http://jupai.investorroom.com.

DISCUSSION OF NON-GAAP FINANCIAL MEASURES

In addition to disclosing financial results prepared in accordance with U.S. GAAP, the Company's earnings release contains non-GAAP financial measures that exclude the effects of all forms of share-based compensation and amortization of intangible assets related to acquisition. The reconciliation of these non-GAAP financial measures to the nearest GAAP measures as set forth in the table captioned "Reconciliation of GAAP to Non-GAAP Results" below.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for financial measures prepared in accordance with U.S. GAAP. The financial results reported in accordance with U.S. GAAP and reconciliation of GAAP to non-GAAP results should be carefully evaluated. The non-GAAP financial measure used by the Company may be prepared differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

When evaluating the Company's operating performance in the periods presented, management reviewed non-GAAP net income results reflecting adjustments to exclude the impacts of share-based compensation and amortization of intangible assets related to acquisition, to supplement U.S. GAAP financial data. As such, the Company believes that the presentation of the non-GAAP net income attributable to ordinary shareholders, non-GAAP net income attributable to ordinary shares per diluted ADS and non-GAAP net margin attributable to ordinary shareholders provides important supplemental information to investors regarding financial and business trends relating to the Company's financial condition and results of operations in a manner consistent with that used by management. Pursuant to U.S. GAAP, the Company recognized significant amounts of expenses for the restricted shares, share options and amortization of intangible assets related to acquisition. The Company utilized the non-GAAP financial results to make financial results comparable period to period and to better understand its historical business operations.

ABOUT JUPAI HOLDINGS LIMITED

Jupai Holdings Limited ("Jupai") (NYSE: JP) is a leading third-party wealth management service provider focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China. Jupai's comprehensive and personalized client service and broad range of carefully selected third-party and self-developed products have made it a trusted brand among its clients. Jupai maintains extensive and targeted coverage of China's high-net-worth population.

For more information, please visit http://jupai.investorroom.com.

SAFE HARBOR STATEMENT

This 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 "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Jupai's strategic and operational plans, contain forward-looking statements. Jupai may also make written or oral 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 Jupai's beliefs and expectations, are 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 goals and strategies of the Company and the Company's ability to manage its growth and implement its business strategies; future business development, financial condition and results of operations of the Company; condition of the wealth management market in China and internationally; the demand for and market acceptance of the products the Company distributes; the Company's ability to maintain and further grow its active high-net-worth client base and maintain or increase the amount of investment by clients; developments in relevant government policies and regulations relating to the Company's industry and the Company's ability to comply with those policies and regulations; the Company's ability to attract and retain quality employees; the Company's ability to adapt to potential uncertainties in China's real estate industry and stay abreast of market trends and technological advances; the results of the Company's investments in research and development to enhance its product choices and service offerings; general economic and business conditions in China; and the Company's ability to protect its reputation and enhance its brand recognition. Further information regarding these and other risks is included in Jupai's filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and Jupai does not undertake any obligation to update any such information, including forward-looking statements, as a result of new information, future events or otherwise, except as required under applicable law.

— FINANCIAL AND OPERATIONAL TABLES FOLLOW —

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