Fang Holdings Limited (SFUN) Q4 2020 Earnings Call Transcript

Fang Holdings Limited (NYSE: SFUN) Q4 2020 earnings call dated Mar. 26, 2021

Corporate Participants:

Jessie Yang — Investor Relations Director

Jian Liu — Chief Executive Officer

Analysts:

Richard Smith — Smith Capital — Analyst

Presentation:

Operator

Good day, and thank you for standing by. Welcome to the Q4 2020 Fang Holdings Limited Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to speaker today, Ms. Jessie Yang. Thank you. Please go ahead, ma’am.

Jessie Yang — Investor Relations Director

Thank you, operator. Hello, everyone, and welcome to Fang Holdings fourth quarter 2020 earnings conference call. Joining us today to discuss Fang’s results are CEO, Mr. Jian Liu and Acting CFO Mr. Wang Ke. After the prepared remarks, management will answer your questions.

Before we get started, I would like to remind you that during the course of this conference call we may make forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations. Forward-looking statements involve inherent risks and uncertainty. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Fang assumes no obligation to update the forward-looking statements in this conference call and elsewhere. Potential risks and uncertainties include, but are not limited, to those outlined in our public filings with the SEC, including our Form 20-F.

Now I would like to walk you through our fourth quarter 2020 financials, after which Mr. Liu and Mr. Ke will answer your questions. In the fourth quarter of 2020, Fang reported total revenues of $56.5 million, an increase of 14.6% from $49.3 million in the corresponding period of 2019. Revenue from marketing services was $30.1 million in the fourth quarter of 2020, an increase of 59.1% from $18.9 million in the corresponding period of 2019.

Revenue from listing services was $9.7 million in the fourth quarter of 2020, a decrease of 23.1% from $12.7 million in the corresponding period of 2019, mainly due to the decrease in the number of paying customers. Revenue from leads generation services was $11.5 million in the fourth quarter of 2020, a decrease of 20% from $14.4 million in the corresponding period of 2019. Revenue from financial services was $3.9 million in the fourth quarter of 2020, an increase of 175.9% from $1.4 million in the corresponding period of 2019, mainly due to the increase in average loan receivable balances.

Cost of revenue was $3.5 million in the fourth quarter of 2020, a decrease of 13.2% from $4.1 million in the corresponding period of 2019, mainly due to the optimization in cost structure. Operating expenses were $42.2 million in the fourth quarter of 2020, a decrease of 38.3% from $68.4 million in the corresponding period of 2019. Selling expenses were $16.4 million in the fourth quarter of 2020, a decrease of 37.8% from $26.3 million in the corresponding period of 2019, mainly due to the decrease in staff cost and promotional expenses.

General and administrative expenses were $25.8 million in the fourth quarter of 2020, a decrease of 38.6% from $42.1 million in the corresponding period of 2019, mainly due to the decrease in staff-related costs. Operating income from continuing operations was $5.9 million in the fourth quarter of 2020 compared to an operating loss of $21 million in the corresponding period of 2019. The change in fair value of securities for the fourth quarter of 2020 was a loss of $2.3 million compared to a loss of $3.5 million in the corresponding period of 2019, mainly due to the fluctuation in market price of investments in equity securities.

Income tax benefits were $4.2 million in the fourth quarter of 2020, an increase of 24.3% from $3.4 million in the corresponding period of 2019. Net loss was $76,000 in the fourth quarter of 2020 compared to a net loss of $26.2 million in the corresponding period of 2019. In the fiscal year 2020, Fang reported total revenues of $216.2 million, a decrease of 1.6% from $219.7 million in 2019.

Revenue from marketing services was $109.1 million in 2020, an increase of 15.2% from $94.6 million in 2019. Revenue from listing services was $44.2 million in 2020, a decrease of 30.4% from $63.5 million in 2019, mainly due to the decreased number of paying members in listing services. Revenue from leads generation services was $47.8 million in 2020, an increase of 10.4% from $43.3 million in 2019, driven by the increase in the effectiveness of services and customer acceptance. Revenue from financial services was $9.1 million in 2020, a decrease of 5% from $9.6 million in 2019.

Cost of revenue was $17.6 million in 2020, a decrease of 37.7% from $28.3 million in 2019, primarily due to the optimization in cost structure. Operating expenses were $163.4 million in 2020, a decrease of 5.6% from $173.1 million in 2019. Selling expenses were $59.2 million in 2020, a decrease of 19.6% from $73.7 million in 2019. General and administrative expenses were $104.1 million in 2020, an increase of 4.7% from $99.4 million in 2019. Operating income from continuing operations was $32.7 million in 2020, an increase of 31.4% from $24.9 million in the corresponding period of 2019.

Change in fair value of securities in 2020 was a loss of $26.2 million compared to a loss of $46.1 million in 2019, mainly due to the fluctuation in market price of investments in equity securities. Income tax benefits were $4.5 million in 2020, a decrease of 53.1% from $9.5 million in 2019, mainly due to the effect of the change in fair value of equity securities. Net loss was $6.5 million in 2020 compared to a net loss of $10.3 million in 2019. Based on current operations and market conditions, Fang’s management predicts a positive net income for the year of 2020, 2021, which represents management’s current and preliminary view and is subject to change.

With that, we are now open for questions. Operator, please go ahead.

Questions and Answers:

Operator

Certainly. [Operator Instructions] We have the first question from the line of Rick [Phonetic] Smith from Smith Capital. Please go ahead.

Richard Smith — Smith Capital — Analyst

Hey, how are you? I apologize. I hopped on a couple of minutes late here. Maybe you hit this already. Any comment please on the General Atlantic situation? Thank you.

Jian Liu — Chief Executive Officer

Hi, Jessie. You might want to translate.

Jessie Yang — Investor Relations Director

Yes, I will translate.

Jian Liu — Chief Executive Officer

Hello?

Jessie Yang — Investor Relations Director

Yes, please go ahead.

Jian Liu — Chief Executive Officer

Thanks, Rick. I’m sorry, would you repeat your question again?

Richard Smith — Smith Capital — Analyst

Sure. Can you hear me okay?

Jian Liu — Chief Executive Officer

Now it’s fine, yeah.

Richard Smith — Smith Capital — Analyst

Okay, good. You may have hit this already, I apologize if you did. Can you comment on the General Atlantic situation please? Thank you.

Jian Liu — Chief Executive Officer

Okay. [Foreign Speech] Jessie, you can translate.

Jessie Yang — Investor Relations Director

Okay. So I’ll briefly translate management’s response. I believe your question is regarding the privatization offer that we received from General Atlantic in November of last year. Currently, management, including the board, we are analyzing the offer. And if there are any updates, we will be sure to make press releases as soon as possible. Thank you.

Richard Smith — Smith Capital — Analyst

Is there any timeline for that, please?

Jian Liu — Chief Executive Officer

No so far. We are still assessing the offer and it may take some time. And once we have a solution or we have a decision, we will make the public release as soon as possible. So yeah, I recommend you to follow our public release. Thanks.

Richard Smith — Smith Capital — Analyst

Okay. Last thing if I could. Other than — I mean, look, it’s been a while. It’s been three or four months now, is there a process to sell the company or are we just in a holding pattern and we should expect something hopefully in the next several weeks?

Jian Liu — Chief Executive Officer

At this moment, all I can say is that it’s in process. And once we have the solution, we will make the public release as soon as possible. Thanks. Yeah, we will keep — we’re trying to update it.

Richard Smith — Smith Capital — Analyst

Understood. Have a good day everyone. Thank you.

Jian Liu — Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] As there are no further questions, I would like to hand the call back to the presenters for any closing remarks. Thank you.

Jessie Yang — Investor Relations Director

Thank you, operator. I would like to thank everyone for joining our call today, and we look forward to speaking with you again for our first quarter 2021 earnings call. Thank you.

Operator

[Operator Closing Remarks]