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 six months ended
June 30, 2022.
First Half 2022 Financial
Highlights
- The Company ceased
business cooperation with high credit risk developers, which
resulted in a 79.1% decrease in revenue to RMB144.8 million
(US$21.6 million) for the six months ended June 30, 2022 from
RMB692.5 million for the same period of 2021.
- Net loss for the
six months ended June 30, 2022 decreased by 21.2% to RMB192.1
million (US$28.7 million) from RMB243.9 million for the same period
of 2021.
- Non-GAAP net loss1
for the six months ended June 30, 2022 was 182.9 million (US$27.3
million), compared to non-GAAP net loss of RMB220.9 million for the
same period of 2021.
First Half 2022 Operating
Highlights
- The number of
closed-loop agents2 was 9.4 thousand for the six months ended
June 30, 2022, representing a decrease of 74.9% from
37.4 thousand for the same period of 2021.
- Total closed-loop
GMV3 facilitated on the Company’s platform decreased by 81.2%
to RMB11.2billion (US$1.7 billion) for the six months ended June
30, 2022 from RMB59.5 billion for the same period of 2021. New
property and resale property contributed RMB9.2 billion (US$1.4
billion) and RMB2.0 billion (US$0.3 billion), respectively, to the
total closed-loop GMV in the first half 2022. 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, including cessation of
business cooperation with high credit risk developers to avoid
further losses caused by developer credit risk.
Mr. Xi Zeng, Chairman and Chief Executive
Officer of FangDD, commented, “In the first half of 2022, new
property sales decreased by 28.9% year-over-year in China, which
represents the largest decline in the recent two decades, and the
real estate industry is exposed to accelerating risks of a sharp
downward trend. With the relaxation of property market cooling
measures, the market is expected to bottom out. In the first half
of 2022, the Company continued to control risks and seek
development to survive the market downturn. Going forward, the
Company will strengthen cooperation with high-quality developers,
improve account-receivables management, and ensure healthy cash
flow. At the same time, the Company will continue to explore the
second growth curve in digitalization and asset services.”
Ms. Jiaorong Pan, Chief Operating Officer of
FangDD, added, “In sustained downturn of the real estate market in
China, the Company continued to implement the strategy of reducing
cost and improving efficiency, and the effect gradually emerged. In
the first half of 2022, cost of revenue decreased by 76.5% and net
loss narrowed gradually. The Company will continue to enhance its
operational capabilities, improve the ability to resist risks, and
be ready to embrace market changes.”
First Half 2022 Financial
Results
REVENUE Revenue for the six
months ended June 30, 2022 decreased by 79.1% to RMB144.8 million
(US$21.6 million) from RMB692.5 million for the same period of
2021. The decrease was mainly due to the decrease in total
closed-loop GMV facilitated on the Company’s platform by 81.2% to
RMB11.2 billion (US$1.7 billion) for the six months ended June 30,
2022 from RMB59.5 billion for the same period of 2021, which in
turn resulted from i) the continued property market downturn and
the Company’s actions to cease business cooperation with high
credit risk developers to avoid further losses caused by developer
credit risk, ii) the resurgence of COVID-19 outbreaks in China,
which caused strict containment measures by the government to
prevent the spread of the virus and as a result significantly
affected the Company's business development, and iii) the measures
that the Company has taken to reduce its business scale of new
property and resale property transaction service business to
minimize its exposure to the systematic risk of real estate
industry in the continued downturn.
Despite the current challenges, the Company has
continued to optimize its revenue mix and prioritized the
value-added services and new business initiatives, including its
SaaS solutions for various platform participants. Revenue from SaaS
solutions increased by 7.3% to RMB3.18 million (US$0.48 million) in
the first half of 2022 from RMB2.97million for the same period 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 REVENUECost of revenue
for the six months ended June 30, 2022 decreased by 76.5% to
RMB140.1 million (US$20.9 million) from RMB596.7 million for the
same period 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.
GROSS PROFIT AND GROSS
MARGINGross profit for the six months ended June 30, 2022
decreased by 95.1% to RMB4.7 million (US$0.7 million) from RMB95.8
million for the same period of 2021. Gross margin for the six
months ended June 30, 2022 decreased to 3.2% from 13.8% for the
same period of 2021. The decrease was mainly because: i) we
strategically adjusted our new property business scale and resale
property to avoid further losses due to continuous downturn of real
estate transactions market, and ii) the development of other value
added services offered to various platform participants with higher
gross profit margins has not yet reached a scale, so its
contribution to our gross profit is currently limited.
OPERATING EXPENSESOperating
expenses for the six months ended June 30, 2022, which included
share-based compensation expenses of RMB9.2 million (US$1.4
million), decreased by 47.0% to RMB182.90 million (US$27.3 million)
from RMB345.4 million of the same period of 2021, which included
share-based compensation expenses of RMB23.0 million.
- Sales and marketing
expenses for the six months ended June 30, 2022 decreased to RMB8.8
million (US$1.3 million) from RMB51.0 million for the same period
of 2021. The decrease was primarily due to the optimization of the
sales department composition, the reduced spending on marketing
activities related to new property transaction services, and
reduced scale of the resale property transactions.
- Product development
expenses for the six months ended June 30, 2022 were RMB39.8
million (US$5.9 million) compared to RMB101.7 million for the same
period of 2021. The decrease was attributable to the decreases in
personnel-related expenses following the Company’s decision to
significantly cut investments in research and development for
resale property business.
- General and
administrative expenses for the six months ended June 30, 2022 were
RMB134.3 million (US$20.1 million) compared to RMB192.7 million for
the same period of 2021. The decrease was mainly due to: i) the
decrease in provision of impairment of certain assets, such as
accounts receivable due from developers, other accounts receivable
of project deposits and short-term investments, and ii) the actions
that the Company has 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 for the
six months ended June 30, 2022 was RMB192.1 million (US$28.7
million), compared to a net loss of RMB243.9 million for the same
period of 2021.
Non-GAAP net loss for the six months ended June 30, 2022 was
RMB182.9 million (US$27.3 million), compared to non-GAAP net loss
of RMB220.9 million for the same period of 2021.
NET LOSS PER
ADSBasic and diluted net loss per American Depositary
Share (“ADS”) for the six months ended June 30, 2022 were both
RMB36.08 (US$5.39). In comparison, the Company’s basic and diluted
net loss attributable to ordinary shareholders per ADS for the same
period of 2021 were both RMB43.80. Each ADS represents 375 of our
Class A ordinary shares.
Liquidity As of June 30, 2022,
the Company had cash and cash equivalents, restricted cash, and
short-term investments of RMB278.1 million (US$41.5 million),
short-term bank borrowings of RMB84.8 million (US$12.7 million),
and un-utilized bank facilities of RMB30.0 million (US$4.5
million). For the six months ended June 30, 2022, net cash used in
operating activities was RMB45.7 million (US$6.8 million).
Exchange RateThis 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. dollar, in
this press release, were made at a rate of RMB6.6981 to US$1.00,
the exchange rate set forth in the H.10 statistical release of the
Federal Reserve Board on June 30, 2022. 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 MeasuresTo
supplement the financial measures prepared in accordance with
generally accepted accounting principles in the United States, or
GAAP, this press release presents non-GAAP loss from operations,
non-GAAP operating margin, non-GAAP net loss and non-GAAP net
margin by excluding share-based compensation expenses from loss
from operations and net 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 FangDDFangdd Network
Group Ltd. (Nasdaq: DUO) 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, big data, artificial intelligence, among others,
FangDD has fundamentally revolutionized the way real estate
transaction participants conduct their business through a suite of
modular products and solutions powered by SaaS tools, products and
technology. For more information, please visit
http://ir.fangdd.com.
Safe Harbor StatementThis
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
ContactFangDDMs. Linda LiDirector, Capital Markets
DepartmentPhone: +86-0755-2699-8968E-mail:ir@fangdd.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 June 30, |
|
|
2,021 |
|
|
2,022 |
|
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
492,107 |
|
|
239,231 |
|
Restricted cash |
24,131 |
|
|
34,709 |
|
Short-term investments |
6,150 |
|
|
4,150 |
|
Accounts receivable, net |
884,740 |
|
|
677,902 |
|
Prepayments and other current assets |
220,171 |
|
|
178,680 |
|
Inventory |
- |
|
|
10,969 |
|
Total current assets |
1,627,299 |
|
|
1,145,641 |
|
|
|
|
|
Total assets |
1,912,983 |
|
|
1,372,366 |
|
|
|
|
|
LIABILITIES |
|
|
|
Current liabilities |
|
|
|
Short-term bank borrowings |
134,780 |
|
|
84,780 |
|
Accounts payable |
1,175,943 |
|
|
913,109 |
|
Customers’ refundable
fees |
30,997 |
|
|
40,430 |
|
Accrued expenses and other payables |
238,198 |
|
|
170,094 |
|
Income taxes payable |
813 |
|
|
4,721 |
|
Total current liabilities |
1,580,731 |
|
|
1,213,134 |
|
|
|
|
|
Total liabilities |
1,609,306 |
|
|
1,242,047 |
|
|
|
|
|
Total Fangdd Network
Group Ltd. shareholders' equity |
313,259 |
|
|
134,780 |
|
Non-controlling interests |
(9,582 |
) |
|
(4,461 |
) |
Total
equity |
303,677 |
|
|
130,319 |
|
|
|
|
|
Total liabilities and
equity |
1,912,983 |
|
|
1,372,366 |
|
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 Six Months Ended June 30, |
|
2021 |
|
|
2022 |
|
Revenue |
692,460 |
|
|
144,834 |
|
Cost of revenues |
(596,655 |
) |
|
(140,128 |
) |
Gross profit |
95,805 |
|
|
4,706 |
|
|
|
|
|
Operating
expenses: |
|
|
|
Sales and marketing expenses |
(50,995 |
) |
|
(8,802 |
) |
Product development expenses |
(101,743 |
) |
|
(39,797 |
) |
General and administrative expenses |
(192,677 |
) |
|
(134,300 |
) |
Total operating expenses |
(345,415 |
) |
|
(182,899 |
) |
|
|
|
|
Loss from operations |
(249,610 |
) |
|
(178,193 |
) |
|
|
|
|
Net loss |
(243,867 |
) |
|
(192,100 |
) |
Net loss attributable to
minority shareholders |
9,650 |
|
|
(4,745 |
) |
Net loss attributable
to ordinary shareholders |
(234,217 |
) |
|
(196,845 |
) |
|
|
|
|
Net loss |
(243,867 |
) |
|
(192,100 |
) |
Other comprehensive
(loss) income |
|
|
|
Foreign currency translation
adjustment, net of nil income taxes |
(3,915 |
) |
|
9,159 |
|
Total comprehensive
loss, net of income taxes |
(247,782 |
) |
|
(182,941 |
) |
Total comprehensive loss
attributable to minority shareholders |
9,650 |
|
|
(4,745 |
) |
Total comprehensive
loss attributable to ordinary shareholders |
(238,132 |
) |
|
(187,686 |
) |
|
|
|
|
Net loss per share |
|
|
|
- Basic |
(0.12 |
) |
|
(0.10 |
) |
- Diluted |
(0.12 |
) |
|
(0.10 |
) |
Net loss per ADS |
|
|
|
- Basic |
(43.80 |
) |
|
(36.08 |
) |
- Diluted |
(43.80 |
) |
|
(36.08 |
) |
Weighted average number of ordinary shares used in computing net
loss per share, basic and diluted |
|
|
|
- Basic |
2,005,851,928 |
|
|
2,046,388,131 |
|
- Diluted |
2,005,851,928 |
|
|
2,046,388,131 |
|
Reconciliation of GAAP and Non-GAAP
Results
(All amounts in thousands, except for
share and per share data)
|
For the Six Months |
Ended June 30, |
|
2,021 |
|
|
2,022 |
|
GAAP loss from
operations |
(249,610) |
|
|
(178,193) |
|
Share-based compensation
expenses |
22,956 |
|
|
9,207 |
|
Non-GAAP loss from
operations |
(226,654) |
|
|
(168,986) |
|
|
|
|
|
GAAP net
loss |
(243,867) |
|
|
(192,100) |
|
Share-based compensation
expenses |
22,956 |
|
|
9,207 |
|
Non-GAAP net
loss |
(220,911) |
|
|
(182,893) |
|
|
|
|
|
GAAP operating
margin |
(36.05%) |
|
|
(123.03%) |
|
Share-based compensation
expenses |
3.32% |
|
|
6.36% |
|
Non-GAAP operating
margin |
(32.73%) |
|
|
(116.68%) |
|
|
|
|
|
GAAP net
margin |
(35.22%) |
|
|
(132.63%) |
|
Share-based compensation
expenses |
3.32% |
|
|
6.36% |
|
Non-GAAP net
margin |
(31.90%) |
|
|
(126.28%) |
|
________________________
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 agents refer to real estate agents
who have completed closed-loop transactions in the Company’s
marketplace under the Company’s monitoring and control. 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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