Fang Holdings Limited SFUN reported second-quarter 2018 earnings per share of 13 cents against a loss of a penny in the year-ago quarter. Change in fair value of equity securities of $80.3 million (in relation to the new accounting pronouncement) and income tax benefits of $38.3 million boosted the company’s earnings.
Total revenues of $74.4 million declined 32.4% year over year due to decrease in e-commerce services revenues. So far this year, shares of Fang Holdings have declined 46% against the industry’s 11% rally.
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On the call, management sounded optimistic about Fang Holdings’ technology-driven open platform, which offers upgraded products and services to real estate companies, professionals, home buyers and sellers. The company is focused on serving its clients to recover its market share sustainably.
Concurrent with the earnings release, the company made announcements related to the change in its board members. Shaohua Zhang, founder and managing director of Beijing Beyondal Electric Co., Ltd., has been appointed as an independent director and member of the audit committee. Minqiang Bi recently resigned from the board due to some personal reasons.
Let’s check out the numbers in detail.
Revenues by Segment
Listing services segment revenues declined 21.7% year over year to $33.2 million. Decreasing number of paying members resulted in the downfall. The segment accounted for 44.5% of total revenues.
Marketing services segment revenues decreased 28.3% year over year to $25.1 million. Slowdown in the real estate market and continuous impact of tightening government policies weighed on segment revenues. The segment contributed 33.7% to total revenues.
E-commerce services segment revenues declined 92.4% year over year to $1.7 million. Segment revenues were hurt by the company’s transition to a technology-driven open platform model. The segment accounted for 2.3% of total revenues.
Financial services segment revenues increased 121.8% year over year to $6 million. Rising demand for the company’s diversified loan platform products drove segment revenues. The segment contributed 8.1% to total revenues.
Revenues from other value-added services increased 17.9% year over year to $8.4 million, owing to growing demand for the company’s database and research services. The segment accounted for 11.3% of total revenues.
Fang Holdings Limited Revenue (TTM)
Fang Holdings Limited Revenue (TTM) | Fang Holdings Limited Quote
Operating Results
Gross profit increased 8% from the year-ago quarter to $66.3 million. Adjusted EBITDA came in at $27.4 million compared with $1.3 million in the prior-year quarter.
Operating income was $16.7 million against operating loss of $6.1 million in the year-ago quarter due to downsized e-commerce services and effective cost control.
Operating expenses declined 26.4% year over year to $49.6 million. Selling expenses of $19 million were down 17.7% from the year-ago quarter due to reduction in expenses associated with the company’s advertising and promotional activities. General and administrative expenses were $33.8 million, down 22.5% on a year over year basis due to effective cost control methods.
Balance Sheet and Cash Flow
Fang Holdings had cash and cash equivalents, restricted cash (current and non-current) and short-term investments of $481.8 million compared with $492.4 million at the end of the prior quarter. Net cash generated from operating activities was $41.3 million in the reported quarter.
2018 Outlook
For 2018, Fang Holdings expects non-GAAP net income to be profitable.
Zacks Rank & Upcoming Releases
Fang Holdings currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Business Services sector are keenly awaiting earnings reports from key players like ABM Industries ABM, FactSet FDS and Paychex PAYX. While ABM Industries and FactSet will report third-quarter fiscal 2018 on Sep 6 and fourth quarter fiscal 2018 results on Sep 25, respectively, Paychex is expected to release first-quarter fiscal 2019 on Oct 2.
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