Leju Holdings Ltd

NYSE:LEJU

Earnings Call Transcript 2021-Q4

[Operator]

00:06 Hello, and thank you for standing by for Leju’s Second Half and Full-Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After managements prepared remarks there will be a Q&A session. Please note that today’s conference call is being recorded. If you have any objections you may disconnect at any time. 00:32 I would now I turn the meeting over to your host for today's conference, Ms. Michelle Yuan, Leju's Deputy CFO.

[Michelle Yuan, Deputy Chief Financial Officer]

00:43 Hello, everyone, and welcome to Leju's second half and full-year 2021 earnings conference call. Today, we will update you regarding our financial results for second half and full-year ended December 31, 2021. If you would like a copy of the earnings press release or would like to sign up for our email distribution list, please go to our IR website at ir.leju.com. 01:10 Leading the call today is Mr. Geoffrey He, our CEO, who will review our operational highlights for the second half and full-year 2021. I will then discuss the financial results in more detail. Mr. Li-Lan Cheng, our Acting CFO, along with Geoffrey will then be available to answer your questions. 01:28 Before we continue, please allow me to read you Leju's Safe Harbor statement. Some of the statements during this conference call are forward-looking statements made under Safe Harbor provisions of Section 21E of the Securities Exchange Act of 1934 as amended. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to those outlined in our public filings with the SEC. You are encouraged to review the forward-looking statement section of our annual report filed with the SEC for additional information concerning factors that could cause those differences. Leju does not undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. 02:30 Our earnings press release and this call include discussions of unaudited GAAP financial information, as well as some unaudited non-GAAP financial measures. Our press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. Please note that unless otherwise stated all figures mentioned during this conference call are in U.S. dollars. 02:55 I will now turn the call over to Leju's CEO, Geoffrey He. He, please go ahead.

[Geoffrey He, Chief Executive Officer]

03:01 Thanks, Michelle, and thanks everyone for joining us on today's call. In the second half of 2021, China's real estate industry experienced a steep downturn with many developers facing severe operational challenges. This had a direct and a negative impact on Leju's online advertising and e-commerce businesses. As certain real estate developers faced deterioration in their creditworthiness, our bad debt provision also continued to increase substantially in the second half of the year compared to 2020, resulting in further losses. 03:40 Rather than being discouraged by the current market downturn and uncertainties, the Leju team is rising to the challenges. In the second half of 2021, we held a series of successful marketing campaigns on our dual Tmall and Leju platforms, including our September 16th Promotion, Double 11 Festival, Smile Angel Celebrity Festival, and The 5th China Real Estate New Time Gala, which drove business development and strengthened our influence as an industry media. 04:14 In the second half of 2021, our parent company E-House deepened its strategic cooperation with Alibaba. E-House became the controlling shareholder of Tmall Haofang, and Tmall Haofang became the direct and controlling shareholder of Leju. Capitalizing on this opportunity, in 2022 Leju will accelerate the development and integration of the two platforms, seize the opportunities presented by the digitization of real estate industry, and actively explore new business models and revenue growth areas, while consolidating our online advertising and e-commerce services. Amidst the new market situation, Leju will take a result-oriented approach, reinforce process management and further improve operational efficiency to achieve our goals as set at the beginning of this year. 05:09 Now, I'll turn the call to our Deputy CFO, Mr. Li-Lan Cheng -- Ms. Michelle Yuan, who will review our financial highlights for the second half of the full year 2021. Michelle?

[Michelle Yuan, Deputy Chief Financial Officer]

05:22 Thank you, He. For the second half of 2021, we recorded total revenues of $233 million, a decrease of 47% from $439.8 million for the same period of 2020. Revenues from e-commerce services were $179.7 million, a decrease of 48% from $342.4 million for the same period of 2020, primarily due to a decrease in number of discount coupons redeemed, partially offset by an increase in the average price per discount coupon redeemed. 05:59 Revenues from online advertising services were $53.2 million, a decrease of 45% from $96.9 million for the same period of 2020, primarily due to a decrease in property developers' demand for online advertising. 06:15 Revenues from listing services were $0.1 million, a decrease of 81% from $0.5 million for the same period of 2020, primarily due to a decrease in secondary real estate brokers' demand. 06:29 Cost of revenues was $24.1 million, a decrease of 26% from $32.6 million for the same period of 2020, primarily due to a decreased cost of advertising resources purchased from media platforms. 06:45 SG&A expenses were $326.2 million, a decrease of 15% from $384.4 million for the same period of 2020, primarily due to a decreased marketing expenses related to the company's e-commerce business, partially offset by increased bad debt provision. 07:05 The bad debt provision recorded in the second half of 2021 was mainly attributable to the recognition of additional loss allowance on expected credit loss of the company's outstanding online advertising related receivables from some customers, whose credit quality has worsened. 07:26 Loss from operations was $116.9 million, compared to income from operations of $23 million for the same period of 2020. Non-GAAP loss from operations was $111.2 million, compared to non-GAAP income from operations of $30 million for the same period of 2020. 07:46 Net loss was $103.0 million, compared to net income of $19.1 million for the same period of 2020. Non-GAAP net loss was $98.6 million, compared to non-GAAP net income of $24.8 million for the same period of 2020. 08:04 Net loss attributable to Leju's shareholders was $103.2 million, or $0.75 loss per diluted ADS, compared to net income attributable to Leju's shareholders of $17.8 million, or $0.13 per diluted ADS, for the same period of 2020. 08:24 Non-GAAP net loss attributable to Leju's shareholders was $98.7 million, or $0.72 loss per diluted ADS, compared to non-GAAP net income attributable to Leju's shareholders of $23.5 million, or $0.17 per diluted ADS, for the same period of 2020. 08:47 For the full-year 2021 we recorded $534.1 million in total revenues, a decrease of 26% from $719.5 million for 2020. Revenues from e-commerce services were $411.1 million, a decrease of 25% from $547.9 million for 2020, primarily due to a decrease in the number of discount coupons redeemed. 09:17Revenues from online advertising services were $122.5 million, a decrease of 28% from $170.8 million for 2020, primarily due to a decrease in property developers' demand for online advertising. Revenues from listing services were $0.5 million, a decrease of 41% from $0.8 million for 2020, primarily due to a decrease in secondary real estate brokers' demand. 09:46 Cost of revenues were $55.8 million, a decrease of 24% from $73.8 million for 2020, primarily due to decreased cost of advertising resources purchased from media platforms. SG&A expenses were $645.6 million, an increase of 4% from $622.0 million for 2020, primarily due to bad debt provision, which increased by $106.4 million compared to 2020, partially offset by decreased marketing expenses related to the company's e-commerce business. 10:23 The bad debt provision recorded in 2021 was mainly attributable to the recognition of additional loss allowance on expected credit loss of the company's outstanding online advertising related receivables from some customers, whose credit quality has worsened. 10:43 Loss from operations was $166.7 million, compared to income from operations of $24.1 million for 2020. Non-GAAP loss from operations was $154.5 million, compared to non-GAAP net income of $38.3 million for 2020. Net loss was $149.9 million, compared to net income of $21.0 million for 2020. Non-GAAP net loss was $140.3 million, compared to non-GAAP net income of $32.4 million for 2020. 11:19 Net loss attributable to Leju's shareholders was $150.9 million, or $1.10 loss per diluted ADS, compared to net income attributable to Leju's shareholders of $19.3 million, or $0.14 per diluted ADS, for 2020. Non-GAAP net loss attributable to Leju's shareholders was $141.4 million, or $1.03 loss per diluted ADS, compared to non-GAAP net income attributable to Leju's shareholders of $30.7 million, or $0.22 per diluted ADS, for 2020. 12:01 As of December 31, 2021, the company's cash and cash equivalents and restricted cash were $252.4 million. Second half of 2021 net cash used in operating activities was $78.7 million, primarily comprised of non-GAAP net loss of $98.6 million, a decrease in other current liabilities and accrued expenses of $42 million, and an increase in deferred tax assets of $9.6 million, partially offset by provision for allowance for doubtful accounts of $59.6 million, and a decrease in accounts receivable of $15.4 million. 12:48 This concludes our prepared remarks. We are now ready to take your questions. Operator, please go ahead.

[Operator]

12:56 Thank you. [Operator Instructions] There seems to be no questions at this time. I would like to hand the conference back to the speakers.

[Michelle Yuan, Deputy Chief Financial Officer]

13:55 This concludes today's call. If you have any follow-up questions, please contact us at the numbers or emails provided on our earnings release and on our website. Thank you.