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 third quarter
ended September 30, 2021.
Third Quarter 2021 Financial
Highlights
- Revenue in the
third quarter of 2021 decreased by 57.8% to RMB 169.2 million
(US$26.3 million) from RMB401.4 million in the second quarter of
2021. Because of the continuous downturn status of real estate
market and the corresponding measures that the Company has taken to
reduce its business scale, the revenue in the third quarter of 2021
did not meet our expectation made in the second quarter.
- Net loss was
RMB355.0 million (US$55.1 million) in the third quarter of 2021,
which included a provision of RMB253.0 million (US$39.3 million)
for impairment of certain assets in the third quarter of 2021, such
as impairment of accounts receivable due from developers because of
their tighter financial conditions, as well as impairment of
goodwill, intangible assets and accounts receivable due from
individuals as a result of the Company’s substantial reduction of
its Yuancui business under the situation of continuous downturn of
resale property transactions market. This is compared to a net
loss of RMB139.0 million in the second quarter of 2021.
- Non-GAAP net loss1
was RMB343.4 million (US$53.3 million) in the third quarter of
2021, compared to a non-GAAP net loss of RMB127.9 million in the
second quarter of 2021.
Third Quarter 2021 Operating
Highlights
- The number of
closed-loop agents2 was 10.6 thousand in the third quarter,
representing a decrease of 44.2% from 19.0 thousand in the
second quarter of 2021.
- Total closed-loop
GMV3 facilitated on the Company’s platform decreased by 48.5%
to RMB15.2 billion (US$2.4 billion) in the third quarter of 2021
from RMB29.6 billion in the second quarter of 2021. New property
and resale property contributed RMB9.3 billion (US$1.4 billion) and
RMB5.9 billion (US$0.9 billion), respectively, to the total
closed-loop GMV in the third quarter of 2021. The decline in
closed-loop GMV was mainly due to the continued downturn status of
real estate market and the corresponding measures that the Company
has taken to reduce its business scale.
Mr. Yi Duan, Chairman and Co-Chief Executive
Officer of FangDD, commented, “Impacted by the macroeconomic
regulation and the tightening of mortgage loans, the real estate
market has rapidly cooled off and credit risk for developers has
been intensifying. We expect that new and resale property
transactions will remain vulnerable to macro challenges for an
extended period. However, from a long-term perspective, we believe
that under the current policies guided by the principle that
housing is for living in but not for speculation, the industry will
enter a new era of healthy and steady development following the
market adjustment. Industry participants’ demand for the digital
transformation of real estate assets and in-depth asset management
services will stand strong, and give rise to new growth
opportunities for the industry.”
Mr. Xi Zeng, Co-Chief Executive Officer of
FangDD, stated, “In the third quarter of 2021, we focused on
improving our risk control by placing greater attention on the
credit risk of developers for new property transaction businesses,
actively withdrawing from high-risk projects, and serving
high-quality developers. For our SaaS business, we focused on
cooperating with certain key accounts to establish a benchmark and
achieved an integrated system with a top-tier real estate
developer. For resale property transactions, we implemented
preemptive measures prior to market changes to successfully control
loss and prevent risk escalation. Furthermore, we have expanded the
scope of our real estate asset service business to cover parking
space and service apartments. We continue to add value on top of
asset transactions to revitalize assets and achieve superior
operating efficiency.”
Ms. Jiaorong Pan, Chief Financial Officer of
FangDD, added, “We believe that in the current context of the
industry upgrade and transformation, the development of the
real-estate industry will become more standardized, transparent,
and diverse in the long-term. While the industry is in a short-term
downward trajectory, we will strengthen our cooperation with
developers and secure the accounts receivable based on our
assessment of the credit risks of developers. Meanwhile, we will
focus on effective cost control, optimizing our cost structure,
refining our management procedures, trimming down unnecessary
costs, and enhancing our company’s resilience against risks.”
Third Quarter 2021 Financial
Results
REVENUE
Revenue in the third quarter of 2021 decreased
by 57.8% to RMB169.2 million (US$26.3 million) from RMB401.4
million in the second quarter of 2021. The decrease was mainly due
to: i) the decrease in total closed-loop GMV facilitated on the
Company’s platform by 48.5% to RMB15.2 billion (US$2.4 billion)
from RMB29.6 billion in the second quarter of 2021 resulting from
the real estate market’s continued downturn, and ii) the
corresponding measures that the Company has taken to adjust its
business scale. Specifically, for the new property transaction
service business, the Company strategically reduced its business
scale of providing new property transaction services to avoid
vicious competition; for the resale property transaction service
business, the Company substantially reduced its Yuancui business in
the third quarter to avoid further losses.
Despite the current challenges, the Company has
continued to optimize its revenue mix and prioritized the
generation of revenues from value-added services and new business
initiatives, including its SaaS solutions for various platform
participants. Revenue from SaaS solutions increased by 38.8% to
RMB3.2 million (US$0.5 million) in the third quarter of 2021 from
RMB2.3million in the second quarter of 2021. The increase was
primarily attributable to an increase in the number of new property
projects which we provide SaaS solutions for developers.
COST OF REVENUE
Cost of revenue in the third quarter of 2021
decreased by 51.8% to RMB163.2 million (US$25.3 million) from
RMB338.9 million in the second quarter of 2021. The decrease was
primarily due to the significant drop in revenue for both new
property and resale property transaction services, which resulted
in a decrease in the commission fees payable to agents for their
services rendered.
GROSS PROFIT
Gross profit in the third quarter of 2021
decreased by 90.4% to RMB6.0 million (US$0.9 million) from RMB62.5
million in the second quarter of 2021. Gross margin in the third
quarter of 2021 decreased to 3.5% from 15.6% in the second quarter
of 2021.
OPERATING EXPENSES
Operating expenses in the third quarter of 2021,
which included RMB11.7 million (US$1.8 million) in share-based
compensation expenses, increased by 54.3% to RMB316.4 million
(US$49.1 million) from RMB205.1 million in the second quarter of
2021, which included RMB11.1 million in share-based compensation
expenses.
- Sales and marketing
expenses in the third quarter of 2021 decreased to RMB8.6 million
(US$1.3 million) from RMB13.1 million in the second quarter of
2021. The decrease was primarily due to an optimized sales
department composition, the reduced spending on marketing
activities related to new property transaction services, reduced
scale of the Yuancui business for resale property transactions, and
increasing focus on new SaaS solutions and other value-added
services offered to various platform participants in the third
quarter of 2021.
- Product development
expenses in the third quarter of 2021 were RMB40.3 million (US$6.3
million) compared to RMB64.5 million in the second quarter of 2021.
This decrease was attributable to the decreases in
personnel-related expenses following the Company’s decision to halt
further investments in research and development for its Yuancui
business and heightened focus on the research and development of
its value-added services and SaaS solutions.
- General and
administrative expenses in the third quarter of 2021 were RMB267.5
million (US$41.5 million) compared to RMB127.5 million in the
second quarter of 2021. This increase was mainly due to: i) the
increase in provision of impairment of certain assets, such as
accounts receivable due from developers and other accounts
receivable of project deposits, to RMB 201.9 million (US$31.3
million) in the third quarter of 2021 from RMB79.1 million in the
second quarter of 2021, and ii) an increase in expenses of dismiss
welfare in connection with the actions that the Company had taken
to improve operating efficiency, including the action to reduce
redundant positions due to the expected continuation of the current
market condition in the foreseeable future.
NET LOSS
Net loss was RMB355.0 million (US$55.1 million)
in the third quarter of 2021, compared to a net loss of RMB139.0
million in the second quarter of 2021.
Non-GAAP net loss was RMB343.4 million (US$53.3
million) in the third quarter of 2021, compared to a non-GAAP net
loss of RMB127.9 million in the second quarter of 2021.
NET LOSS PER
ADS
Basic and diluted net loss per American
Depositary Share (“ADS”) in the third quarter of 2021 were both
RMB4.13 (US$0.64). In comparison, the Company’s basic and diluted
net loss attributable to ordinary shareholders per ADS in the
second quarter of 2021 were both RMB1.64. Each ADS represents 25 of
the Company’s Class A ordinary shares.
LIQUIDITY
As of September 30, 2021, the Company had cash
and cash equivalents, restricted cash, and short-term investments
of RMB632.9 million (US$98.2 million), short-term bank borrowings
of RMB220.2 million (US$34.2 million), and un-utilized bank
facilities of RMB180.0 million (US$27.9 million).In the third
quarter of 2021, net cash used in operating activities decreased to
RMB12.8 million (US$2.0 million) from RMB53.0 million in the second
quarter of 2021.
Business Outlook
Due to the impact of Covid-19 on certain core
markets and the resulted uncertainty in the company's business
performance in the near term, the Company expects its revenue to be
between RMB130 million and RMB150 million in the fourth quarter of
2021. 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 Friday, November 19, at 7:30 A.M. Eastern
Time (or 8:30 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 Third Quarter 2021 Earnings Conference Call |
Conference ID: |
#6464869 |
Registration Link: |
http://apac.directeventreg.com/registration/event/6464869 |
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 before 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 November 27, 2021, by dialing the following
numbers:
International: |
+61-2-8199-0299 |
United States: |
+1-855-452-5696 |
Hong Kong, China: |
+800963117 |
Replay Code: |
#6464869 |
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 RMB6.4434 to US$1.00, the exchange rate set
forth in the H.10 statistical release of the Federal Reserve Board
on September 30, 2021. 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 (loss). The 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. Using 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 under GAAP, but should not be considered a
substitute for, or superior to, financial measures prepared under
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 FangDD
Fangdd 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 1.6 million were on its platform
as of December 31, 2020. For more information, please visit
http://ir.fangdd.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 “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 undertakes no obligation to update any
forward-looking statement, except as required under applicable
law.
Investor Relations Contact
FangDDMs. Linda LiDirector, Capital Markets
DepartmentPhone: +86-0755-2699-8968E-mail: ir@fangdd.com
ICR, LLC.Robin YangPhone: +1(646)
308-1649E-mail: FangDD@icrinc.com
Fangdd Network Group Ltd.
SELECTED UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS DATA
(All amounts in thousands of Renminbi,
except for share and per share data)
|
As of December 31, |
|
As of September 30, |
|
|
2020 |
|
2021 |
|
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
843,448 |
|
606,368 |
|
Restricted cash |
92,582 |
|
12,367 |
|
Short-term investments |
9,000 |
|
14,150 |
|
Accounts receivable, net |
2,252,103 |
|
1,314,904 |
|
Loans to equity method investees |
92,116 |
|
- |
|
Prepayments and other current assets |
185,960 |
|
361,169 |
|
Total current assets |
3,475,209 |
|
2,308,958 |
|
|
|
|
|
Total assets |
4,047,952 |
|
2,793,767 |
|
|
|
|
|
LIABILITIES |
|
|
|
Current liabilities |
|
|
|
Short-term bank borrowings |
443,444 |
|
220,180 |
|
Accounts payable |
1,796,304 |
|
1,388,756 |
|
Customers’ refundable
fees |
36,074 |
|
33,269 |
|
Accrued expenses and other payables |
281,648 |
|
224,676 |
|
Income taxes payable |
510 |
|
971 |
|
Total current liabilities |
2,557,980 |
|
1,867,852 |
|
|
|
|
|
Total liabilities |
2,581,954 |
|
1,893,261 |
|
|
|
|
|
Total Fangdd Network
Group Ltd. shareholders' equity |
1,443,463 |
|
906,210 |
|
Non-controlling interests |
22,535 |
|
(5,704 |
) |
Total
equity |
1,465,998 |
|
900,506 |
|
|
|
|
|
Total liabilities and
equity |
4,047,952 |
|
2,793,767 |
|
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 September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
Revenue |
819,091 |
|
|
169,215 |
|
|
1,828,889 |
|
|
861,675 |
|
Cost of revenue |
(626,800 |
) |
|
(163,218 |
) |
|
(1,466,252 |
) |
|
(759,873 |
) |
Gross profit |
192,291 |
|
|
5,997 |
|
|
362,637 |
|
|
101,802 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Sales and marketing expenses |
(1,533 |
) |
|
(8,568 |
) |
|
(5,815 |
) |
|
(59,563 |
) |
Product development expenses |
(65,031 |
) |
|
(40,314 |
) |
|
(230,505 |
) |
|
(142,057 |
) |
General and administrative expenses |
(102,265 |
) |
|
(267,536 |
) |
|
(275,845 |
) |
|
(460,213 |
) |
Total operating expenses |
(168,829 |
) |
|
(316,418 |
) |
|
(512,165 |
) |
|
(661,833 |
) |
|
|
|
|
|
|
|
|
Loss from operations |
23,462 |
|
|
(310,421 |
) |
|
(149,528 |
) |
|
(560,031 |
) |
|
|
|
|
|
|
|
|
Net loss |
21,905 |
|
|
(355,047 |
) |
|
(128,527 |
) |
|
(598,914 |
) |
Net loss attributable to
minority shareholders |
- |
|
|
18,323 |
|
|
- |
|
|
27,973 |
|
Net loss attributable
to ordinary shareholders |
21,905 |
|
|
(336,724 |
) |
|
(128,527 |
) |
|
(570,941 |
) |
|
|
|
|
|
|
|
|
Net loss |
21,905 |
|
|
(355,047 |
) |
|
(128,527 |
) |
|
(598,914 |
) |
Other comprehensive
(loss) income |
|
|
|
|
|
|
|
Foreign currency translation
adjustment, net of nil income taxes |
(17,499 |
) |
|
1,272 |
|
|
(7,719 |
) |
|
(2,643 |
) |
Total comprehensive
loss, net of income taxes |
4,406 |
|
|
(353,775 |
) |
|
(136,246 |
) |
|
(601,557 |
) |
Total comprehensive loss
attributable to minority shareholders |
- |
|
|
18,323 |
|
|
- |
|
|
27,973 |
|
Total comprehensive
loss attributable to ordinary shareholders |
4,406 |
|
|
(335,452 |
) |
|
(136,246 |
) |
|
(573,584 |
) |
|
|
|
|
|
|
|
|
Net loss per share |
|
|
|
|
|
|
|
- Basic |
0.01 |
|
|
(0.17 |
) |
|
(0.06 |
) |
|
(0.28 |
) |
- Diluted |
0.01 |
|
|
(0.17 |
) |
|
(0.06 |
) |
|
(0.28 |
) |
Net loss per ADS |
|
|
|
|
|
|
|
- Basic |
0.28 |
|
|
(4.13 |
) |
|
(1.61 |
) |
|
(7.08 |
) |
- Diluted |
0.26 |
|
|
(4.13 |
) |
|
(1.61 |
) |
|
(7.08 |
) |
Weighted average number of ordinary shares used in computing net
loss per share, basic and diluted |
|
|
|
|
|
|
|
- Basic |
1,996,169,094 |
|
|
2,037,242,247 |
|
|
1,992,368,906 |
|
|
2,016,469,242 |
|
- Diluted |
2,093,879,582 |
|
|
2,037,242,247 |
|
|
1,992,368,906 |
|
|
2,016,469,242 |
|
Reconciliation of GAAP and Non-GAAP
Results
(All amounts in thousands, except for
share and per share data)
|
For the Three Months Ended September
30, |
|
|
For the Nine Months Ended September
30, |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
GAAP loss from
operations |
23,462 |
|
|
(310,421) |
|
|
(149,528) |
|
|
(560,031) |
|
Share-based compensation
expenses |
26,100 |
|
|
11,663 |
|
|
78,447 |
|
|
34,619 |
|
Non-GAAP loss from
operations |
49,562 |
|
|
(298,758) |
|
|
(71,081) |
|
|
(525,412) |
|
|
|
|
|
|
|
|
|
GAAP net
loss |
21,905 |
|
|
(355,047) |
|
|
(128,527) |
|
|
(598,914) |
|
Share-based compensation
expenses |
26,100 |
|
|
11,663 |
|
|
78,447 |
|
|
34,619 |
|
Non-GAAP net income/
(loss) |
48,005 |
|
|
(343,384) |
|
|
(50,080) |
|
|
(564,295) |
|
|
|
|
|
|
|
|
|
GAAP operating
margin |
2.9% |
|
|
(183.4%) |
|
|
(8.2%) |
|
|
(65.0%) |
|
Share-based compensation
expenses |
3.2% |
|
|
6.9% |
|
|
4.3% |
|
|
4.0% |
|
Non-GAAP operating
margin |
6.1% |
|
|
(176.6%) |
|
|
(3.9%) |
|
|
(61.0%) |
|
|
|
|
|
|
|
|
|
GAAP net
margin |
2.7% |
|
|
(209.8%) |
|
|
(7.0%) |
|
|
(69.5%) |
|
Share-based compensation
expenses |
3.2% |
|
|
6.9% |
|
|
4.3% |
|
|
4.0% |
|
Non-GAAP net
margin |
5.9% |
|
|
(202.9%) |
|
|
(2.7%) |
|
|
(65.5%) |
|
____________________________________
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 Closed-loop transactions refer to property
transactions in which the major steps are completed or managed by
real estate agents in the Company’s marketplace.
3 “Closed-loop GMV” refers to the GMV of
closed-loop transactions facilitated in the Company’s marketplace
during the specified period. Closed-loop transactions refer to
property transactions in which the major steps are completed or
managed by real estate agents in the Company’s marketplace.
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