$DUO: Q3-2020 Financials released
FangDD Reports Third Quarter 2020 Unaudited Financial Results
4:30 PM ET 11/19/20 | Dow Jones
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FangDD Reports Third Quarter 2020 Unaudited Financial Results
SHENZHEN, China, Nov. 20, 2020 (GLOBE NEWSWIRE) -- 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 2020.
Third Quarter 2020 Financial Highlights
-- Revenue decreased by 13.6% year over year to RMB819.1 million (US$120.6
million) from RMB948.0 million in the same period of 2019.
-- Net income in the third quarter of 2020 was RMB21.9 million (US$3.2
million) compared to RMB80.3 million in the same period of 2019.
-- Non-GAAP net income1 in the third quarter of 2020 was RMB48.0 million
(US$7.1 million) compared to RMB80.3 million in the same period of 2019.
Third Quarter 2020 Operating Highlights
-- The number of active agents2 in the Company's marketplace was 276.6
thousand, representing an increase of 22.0% from 226.8 thousand in the
same period of 2019.
-- The number of closed-loop agents3 was 26.5 thousand, representing an
increase of 28.0% from 20.7 thousand in the same period of 2019.
-- Total closed-loop GMV4 facilitated on the Company's platform increased by
9.4% to RMB55.9 billion (US$8.2 billion) from RMB51.1 billion in the same
period of 2019. New property and resale listings contributed RMB33.0
billion (US$4.9 billion) and RMB22.9 billion (US$3.4 billion),
respectively, to the total closed-loop GMV in the third quarter of 2020.
Mr. Yi Duan, Chairman and Co-Chief Executive Officer of FangDD, commented, "The agency service sector in China has continued to evolve with the introduction of new policies and intensifying subsidy competition between real estate transaction platforms. In line with these trends, we have implemented three key strategies to maintain our growth trajectory over the long run. Firstly, we upheld our strategic decision to forgo any subsidies or advances for full commissions. Instead, we are committed to utilizing our SaaS solutions, which continue to be one of our key competitive advantages, to empower our partnered agencies. Secondly, we established a strategic cooperation with Shanghai Yuancui Information Technology Co., Ltd. ("Shanghai Yuancui"), a subsidiary of Centaline Group, to further improve our ability to facilitate closed-loop transactions on our platform. Our joint venture with Shanghai Yuancui will focus on creating a new technology- and service-oriented real estate agent service model to further empower those highly capable agents in our Preferred Agent Alliance Network via an innovative and technology-enabled franchising system. Thirdly, we also continued to strengthen our offline resale property service capabilities and expand the service offerings of our transaction service centers. During the third quarter of 2020, we built an additional 10 self-owned transaction service centers and interfaced our systems with both the Industrial and Commercial Bank of China and the Bank of Communications to fully digitize the transaction of commission payments. Going forward, we remain committed to further cultivating our agent base and developing more best-in-class SaaS and service solutions to fortify our industry leadership."
Mr. Xi Zeng, Co-Chief Executive Officer of FangDD, stated, "We continued to fuel the growth of our active agent and property listing dual growth engines in the third quarter of 2020. As a result, the number of active agents on our platform exceeded 276 thousand during this quarter, representing an increase of 22.0% year over year. By refining our service offerings for new construction property sales, for example, we not only empowered more agencies, but also increased our partnerships with real estate developers. As a result, the number of new construction property projects on our platform reached 3,479 as of September 30, 2020, representing an increase of 11.3% year over year and 19.2% quarter over quarter. We also remained committed to expanding our parking space pass business, entering into 7 new cities in the period to bring the total number of listed parking spaces on our platform to 23 thousand for a total value of more than RMB1.8 billion. At the same time, we also accelerated the growth of our resale property business, providing our platform agencies with more online management tools to further digitize their operations and thus augment their operating efficiency. Looking ahead, we believe that the competitive advantages we have established on these fronts will continue to compound, widening our economic moats and driving our growth trajectory over the long term."
Ms. Jiaorong Pan, Chief Financial Officer of FangDD, added, "The recurrence of the epidemic in certain areas of China during the third quarter of 2020 has led to a reduction in the overall volume of property transactions in the period, which adversely impacted our financial performance during the quarter. As a result, our revenue in the in the third quarter of 2020 decreased by 13.6% year over year. Despite these challenges, we remained focused on refining our cost structures as we improved our gross margin to 23.5% in the third quarter of 2020 from 21.0% in the same period of 2019. Going forward, we plan to focus on allocating our resources towards those areas of the business which we believe to have significant long-term potential, including our SaaS solutions, service offerings for small- and mid-sized agencies, and more. Despite the current headwinds, we are confident in the strength of our future growth prospects and ability to capture those opportunities which will emerge as the economy gradually bounces back."
Third Quarter 2020 Financial Results
REVENUE
Revenue in the third quarter of 2020 decreased by 13.6% to RMB819.1 million (US$120.6 million) from RMB948.0 million in the same period of 2019.
COST OF REVENUE
Cost of revenue in the third quarter of 2020 decreased by 16.3% to RMB626.8 million (US$92.3 million) from RMB749.1 million in the same period of 2019. This decrease was mainly attributable to a decrease in commission fees payable to agents for the services they rendered as a result of the decreased commissions from transactions.
GROSS PROFIT
Gross profit in the third quarter of 2020 decreased by 3.3% to RMB192.3 million (US$28.3 million) from RMB198.8 million in the same period of 2019. Gross margin in the third quarter of 2020 increased to 23.5% from 21.0% in the same period of 2019.
OPERATING EXPENSES
Operating expenses in the third quarter of 2020, including share-based compensation expenses of RMB26.1 million (US$3.8 million), increased by 38.4% to RMB168.8 million (US$24.9 million) from RMB122.0 million in the same period of 2019.
-- Sales and marketing expenses in the third quarter of 2020 decreased by
60.5% to RMB1.5 million (US$0.2 million) from RMB3.8 million in the same
period of 2019. The decrease in sales and marketing expenses was
primarily due to the reduction in the Company's spending on brand
promotion and marketing activities to attract property listings from real
estate sellers to the Company's marketplace.
-- Product development expenses in the third quarter of 2020 were RMB65.0
million (US$9.6 million) compared to RMB73.4 million in the same period
of 2019. The decrease in product development expenses was mainly
attributable to the Company's shift from the expansion of its product
development team size to the optimization of its product development
team's operating efficiency in response to the outbreak of COVID-19,
which led to a decrease in personnel-related expenses in the period. This
decrease was partially offset by share-based compensation expenses of
RMB17.1 million (US$2.5 million) in the third quarter of 2020.
-- General and administrative expenses in the third quarter of 2020 were
RMB102.3 million (US$15.1 million), compared to RMB44.8 million in the
same period of 2019. The increase in general and administrative expenses
in the period included share-based compensation expenses of RMB9.0
million (US$1.3 million). The remaining increase of RMB48.5 million
(US$7.1 million) in general and administrative expenses in the third
quarter of 2020 was primarily attributable to (i) an increased headcount
and various expenditures to improve the Company's corporate governance
and ensure compliance in relation to the Company's status as a
U.S.-listed company; and (ii) an increase in provisions for doubtful
debtors.
NET INCOME
Net income in the third quarter of 2020 was RMB21.9 million (US$3.2 million) compared to RMB80.3 million in the same period of 2019.
Non-GAAP net income in the third quarter of 2020 was RMB48.0 million (US$7.1 million) compared to RMB80.3 million in the same period of 2019.
NET INCOME PER ADS
Basic and diluted net income per American Depositary Share ("ADS") in the third quarter of 2020 were RMB0.28 (US$0.04) and RMB0.26 (US$0.04), respectively. In comparison, the Company's basic and diluted net income attributable to ordinary shareholders per ADS in the same period of 2019 were RMB2.00 and RMB1.00, respectively. Each ADS represents 25 Class A ordinary shares of the Company.
Liquidity
As of September 30, 2020, the Company had cash and cash equivalents, restricted cash, and short-term investments of RMB1,073.7 million (US$158.1 million), short-term bank borrowings of RMB447.9 million (US$66.0 million), as well as un-utilized bank facilities of RMB386.0 million (US$56.9 million). For the third quarter of 2020, net cash provided by operating activities was RMB11.6 million (US$1.7 million).
Business Outlook
For the fourth quarter of 2020, the Company expects its revenue to be between RMB600 million and RMB700 million. This forecast only reflects the Company's current and preliminary views on the market and operational conditions, which are subject to change.
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