BEIJING, February 10, 2015 /PRNewswire/ — SouFun Holdings Limited (NYSE: SFUN) ("SouFun"), the leading real estate Internet portal in China, announced today its unaudited financial results for the fourth quarter of 2014. In addition, SouFun declared a cash dividend of $1.00 per ordinary share to its shareholders (one ordinary share equals five ADSs).

Fourth Quarter 2014 Highlights

  • Total Revenue increased by 2.7% year-on-year to $223.0 million.
    • Revenue from e-commerce services increased by 47.2% year-on-year to $98.7 million.
    • Revenue from marketing services decreased by 5.0% year-on-year to $92.2 million.
  • Operating income decreased by 15.1% year-on-year to $107.6 million. Non-GAAP operating income decreased by 16.1% year-on-year to $107.8 million. A description of the adjustments from GAAP to non-GAAP operating income is described below.
  • Net income attributable to SouFun‘s shareholders decreased by 26.4% year-on-year to $82.5 million.
    Fully diluted earnings per ADS decreased by 24.0% year-on-year to $0.19.
  • Non-GAAP net income attributable to SouFun’s shareholders decreased by 24.5% year-on-year to $95.2 million.
    Non-GAAP fully diluted earnings per ADS decreased by 25.0% year-on-year to $0.21.

Fiscal Year 2014 Highlights

  • Total Revenue increased by 10.3% year-on-year to $702.9 million.
  • Operating income decreased by 11.7% year-on-year to $309.5 million. Non-GAAP operating income decreased by 12.1% year-on-year to $314.2 million.
  • Net income attributable to SouFun‘s shareholders decreased by 15.2% year-on-year to $253.2 million.
    Fully diluted earnings per ADS decreased by 19.7% year-on-year to $0.57.
  • Non-GAAP net income attributable to SouFun‘s shareholders decreased by 10.5% year-on-year to $284.8 million.
    Non-GAAP fully diluted earnings per ADS decreased by 14.7% year-on-year to $0.64.

"We tried very hard to maintain a double digit growth for the whole year 2014 with our revenue but still saw net income decreasing for the first time in the past five years," said Vincent Mo, Chairman and CEO of SouFun. "The transformation and expansion from a media platform to media, transaction and financial platforms is getting material and we hope to see contribution from these new business initiatives in the second half of this year."

Fourth Quarter 2014 Results

Revenues

SouFun reported total revenues of $223.0 million for the fourth quarter of 2014, representing an increase of 2.7% from $217.2 million for the corresponding period in 2013, primarily driven by the growth in e-commerce services.

Revenue from marketing services was $92.2 million for the fourth quarter of 2014, a decrease of 5.0% from $97.1 million for the corresponding period in 2013, primarily due to difficult real estate market conditions.

Revenue from e-commerce services was $98.7 million for the fourth quarter of 2014, a 47.2% increase from $67.1 million for the same period in 2013, primarily due to the fast growth of our new e-commerce business.

Revenue from listing services was $25.2 million for the fourth quarter of 2014, a decrease of 49.7% from $50.0 million for the corresponding period in 2013, primarily due to discounts which the Company has offered to the agency clients since the end of June 2014.

Revenue from other value-added services was $6.8 million for the fourth quarter of 2014, an increase of 126.8% from $3.0 million for the corresponding period in 2013, primarily due to the rapid growth of our financial services and research related products. We began offering financial services on our financial platform since September in 2014, which primarily include loans to developers and home buyers.

Cost of Revenue

Cost of revenue was $42.7 million for the fourth quarter of 2014, an increase of 53.6% from $27.8 million for the corresponding period in 2013. The increase in cost of revenue was mainly driven by our new e-commerce model, increased staff cost, as well as an increase in VAT taxes and surcharges.

Gross margin was 80.8% for the fourth quarter of 2014, compared to 87.2% for the corresponding period in 2013.

Operating Expenses

Operating expenses were $72.8 million for the fourth quarter of 2014, an increase of 15.6 % from $63.0 million for the corresponding period in 2013.

Selling expenses were $47.6 million for the fourth quarter of 2014, an increase of 36.6% from $34.8 million for the corresponding period in 2013, primarily due to the new e-commerce model, and increased advertising and promotional expenses.

General and administrative expenses were $25.2 million for the fourth quarter of 2014, a decrease of 10.4% from $28.2 million for the corresponding period in 2013 primarily due to our cost control efforts.

Operating Income

Operating income was $107.6 million for the fourth quarter of 2014, a decrease of 15.1% from $126.7 million for the corresponding period in 2013.

Income Tax Expenses

Income tax expenses were $23.6 million for the fourth quarter of 2014, a 22.6% increase compared to $19.2 million for the corresponding period in 2013. Our effective tax rate was 22.2% for the fourth quarter of 2014 as compared to 14.6% for the same period in 2013. The increase in the effective tax rate was primarily due to the Fin48 effect of releasing our deferred tax liabilities in the fourth quarter of 2013, which drove down our effective tax rate in that earlier period.

Net Income and EPS

Net income attributable to SouFun’s shareholders was $82.5 million for the fourth quarter of 2014, a 26.4% decrease from $112.1 million for the corresponding period in 2013. Fully diluted earnings per ADS was $0.19 for the fourth quarter of 2014, a 24.0% decrease from $0.25 for the corresponding period in 2013.

Adjusted EBITDA

Adjusted EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was $112.2 million for the fourth quarter of 2014, a decrease of 15.0% as compared to $132.0 million for the corresponding period in 2013.

Cash

As of December 31, 2014, SouFun had cash, cash equivalents, and short-term investments of $809.9 million, compared to $896.9 million as of September 30, 2014. Cash flow used in operating activities was $5.0 million for the fourth quarter of 2014, compared to cash flow generated from operating activities of $142.4 million for the same period in 2013, which was mainly due to micro loans of approximately $45.3 million provided to developers and home buyers under our financial services platform, customer deposits of approximately $47.3 million paid to real estate developers in the fourth quarter of 2014.

Fiscal Year 2014 Results

Revenues

SouFun reported total revenues of $702.9 million for 2014, representing an increase of 10.3% from $637.4 million for 2013, primarily driven by the growth in marketing services and e-commerce services.

Revenue from marketing services was $294.5 million for 2014, an increase of 5.8% from $278.3 million for 2013.

Revenue from e-commerce services was $244.3 million for 2014, a 29.9% increase from $188.1 million for 2013. The growth was primarily driven by the fast growth of our new e-commerce business.

Revenue from listing services was $145.7 million for 2014, a decrease of 9.8% from $161.5 million for 2013. This decrease was primarily due to the slowdown in secondary home sales and our reduction in listing service fees.

Revenue from other value-added services was $18.4 million for 2014, an increase of 95.7% from $9.4 million for 2013, primarily due to the rapid growth of our financial services and research related products.

Cost of Revenue

Cost of revenue was $145.7 million for 2014, an increase of 42.2% from $102.5 million 2013. The increase in cost of revenue was mainly driven by our new e-commerce model, increased staff costs, as well as an increase in VAT taxes and surcharges.

Gross margin was 79.3% for 2014, compared to 83.9% for the corresponding period in 2013.

Operating Expenses

Operating expenses were $248.4 million for 2014, an increase of 34.1% from $185.3 million for 2013.

Selling expenses were $147.9 million for 2014, an increase of 45.1% from $101.9 million for 2013, primarily due to the new e-commerce model, increased advertising and promotional expenses and staff cost.

General and administrative expenses were $100.6 million for 2014, an increase of 20.6% from $83.4 million for 2013, primarily due to increased staff costs.

Operating Income

Operating income was $309.5 million for 2014, a decrease of 11.7% from $350.4 million for 2013.

Income Tax Expenses

Income tax expenses were $81.6 million for 2014, a 17.0% increase compared to $69.8 million for the corresponding period in 2013. The effective tax rate was 24.4% for 2014, compared to 18.9% for the corresponding period in 2013. The increase in the effective tax rate was primarily due to the release of deferred tax assets under Fin48 in 2013, which was not repeated in 2014.

Net Income and EPS

Net income attributable to SouFun’s shareholders was $253.2 million for 2014, a decrease of 15.2% from $298.6 million for the corresponding period in 2013. Fully diluted earnings per ADS was $0.57 for 2014, a 19.7% decrease from $0.71 for 2013.

Adjusted EBITDA

Adjusted EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was $333.0 million for 2014, a decrease of 10.3% as compared to $371.1 million for 2013.

Cash

Cash flow from operating activities was $214.4 million for 2014, a 47.5% decrease from $408.1 million for 2013, which was mainly due to entrust loans and micro loans of approximately $81.8 million provided to developers and home buyers under our financial services platform, customer deposits of approximately $47.3 million paid to real estate developers in 2014.

Business Outlook

SouFun estimates its total revenue for 2015 will be between $773 million and $780 million, representing a year-on-year increase of 10.0% to 11.0%. This forecast reflects SouFun’s current and preliminary view, which is subject to change.

Cash Dividend to Shareholders

In addition, SouFun declared a cash dividend of US$1.00 per share on SouFun’s ordinary shares. Five SouFun’s American depositary shares ("ADS") represent one ordinary share.

The cash dividend will be paid by March 31, 2015 to shareholders of record as of the close of business on March 13, 2015. Dividends will be paid to SouFun’s ADS holders through the depositary bank, JPMorgan Chase Bank, N.A., subject to the terms of the deposit agreement, including the fees and expenses payable there under.

Conference Call Information

SouFun’s management team will host a conference call on the same day at 8:00 AM U.S. EST (9:00 PM Beijing / Hong Kong time).

The dial-in details for the live conference call are:

International Toll:

+65 6723-9381

Local Toll:

United States

+1 866-519-4004/+1 845-675-0437

Hong Kong

+852 800-906-601/ 3018-6771

Mainland China

+86 400-620-8038 / +86 800-819-0121

Passcode:

SFUN

A telephone replay of the call will be available after the conclusion of the conference call from 11:00 AM U.S. EST on February 10 through 11:59 PM February 18, 2015. The dial-in details for the telephone replay are:

International Toll:

+61 2-8199-0299

Toll-Free:

United States

+1 855-452-5696 / +1 646-254-3697

Hong Kong

+852 800-963-117 / +852 3051-2780

Mainland China

+86 400-602-2065 / +86 800-870-0206

Conference ID number:

75472858

A live and archived webcast of the conference call will be available on SouFun’s website at http://ir.fang.com.

About SouFun

SouFun operates the leading real estate Internet and mobile portal in China in terms of the number of page views and visitors to our websites and Apps in 2014. Through SouFun’s websites and Apps, we provide marketing, e-commerce, listing and other value-added services for China’s real estate and home furnishing and improvement sectors. Our user-friendly websites and Apps support active online communities and networks of users seeking information on, and other value-added services for, the real estate and home-related sectors in China. SouFun currently maintains about 100 offices to focus on local market needs and its website, Apps and database contains real estate related content covering more than 330 cities in China. For more information about SouFun, please visit http://ir.fang.com.

Safe Harbor Statements

This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking 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 "will," "expects," "is expected to," "anticipates," "aim," "future," "intends," "plans," "believes," "are likely to," "estimates," "may," "should" and similar expressions. Such forward-looking statements include, without limitation, statements regarding the revenue outlook for 2015, SouFun’s strategic and operational plans to transform its business, expand transaction related products and financial services and invest in technology, products and people. Statements that are not historical facts, including statements about SouFun’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, the impact of the slowdown in the PRC real estate market on SouFun and the impact on revenues of our existing and new service fees reductions, the ability of SouFun to retain real estate listing agencies as customers during challenging economic periods, the success of SouFun’s new business initiatives, the ability of SouFun to manage its operating expenses, the impact of, measures taken or to be taken by the Chinese government to control real estate growth and prices and other events which could occur in the future, economic challenges in China’s real estate market, the impact of competitive market conditions for our services, our ability to maintain and increase our leadership in China’s home related internet sector, the uncertain regulatory landscape in China, fluctuations in our quarterly operating results, our continued ability to execute business strategies including our transaction and financial platforms, our ability to continue to expand in local markets, our reliance on online advertising sales and listing services for our revenues, any failure to successfully develop and expand our content, service offerings and features, including the success of new features to meet evolving market needs, and the technologies that support them, the impact on our results of any micro or other loans or other new products we launch, and, should we in the future make acquisitions, any failure to successfully integrate acquired businesses. In addition, our actual results are subject to completion of our audit for 2014 by our independent auditors and could differ, and such differences could be material, from the unaudited 2014 results reported herein.

Further information regarding these and other risks and uncertainties is included in our annual report on Form 20-F and other documents we have filed with the U.S. Securities and Exchange Commission. SouFun does not assume any obligation to update any forward-looking statements in this release and elsewhere, which apply only as of the date of this press release.

About Non-GAAP Financial Measures

To supplement SouFun’s consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), SouFun uses in this press release the following measures defined as non-GAAP financial measures by the United States Securities and Exchange Commission: (1) non-GAAP operating income, (2) non-GAAP net income and (3) non-GAAP basic and diluted earnings per ordinary share and (4) adjusted EBITDA. The presentation of the non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliation of GAAP and non-GAAP Results" set forth at the end of this press release.

SouFun believes that these non-GAAP financial measures provide meaningful supplemental information to investors regarding its operating performance by excluding share-based compensation expenses and the related tax effects, realized gain on available-for-sale security, interest income and expenses, income tax expenses, and depreciation expense for the three months ended Dec 31, 2014 and the year of 2014, which (1) may not be indicative of SouFun’s recurring core business operating results or (2) are not expected to result in future cash payments. These non-GAAP financial measures also facilitate management’s internal comparisons to SouFun’s historical performance and assist its financial and operational decision making. A limitation of using these non-GAAP financial measures is that share-based compensation, interest income and expenses, income tax expenses, and depreciation expenses have been and will continue to be a significant recurring expense that will continue to exist in SouFun’s business for the foreseeable future. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliation between non-GAAP financial measures and their most directly comparable GAAP financial measures.

For investor and media inquiries, please contact:

Dr. Hua Lei
Deputy CFO
Phone: +86-10-5631-8661
Email: leihua@soufun.com

SouFun Holdings Limited

Condensed Consolidated Balance Sheets

(in thousands of U.S. dollars, except as noted)

ASSETS

December 31,

December 31,

2014

2013

Current assets:

(Unaudited)

(Audited)

Cash and cash equivalents

354,760

581,010

Restricted cash, current

97,988

255,917

Short-term investments

455,184

10,138

Accounts receivable, net

49,691

44,541

Funds receivable

62,163

37,124

Prepayment and other current assets

30,161

31,758

Customer deposits

47,312

Loan receivable, current

79,641

Deferred tax assets, current

2,991

3,165

Total current assets

1,179,891

963,653

Non-current assets:

Property and equipment, net

217,105

221,442

Loan receivable, non-current

2,009

Restricted cash, non-current

109,495

257,499

Deferred tax assets, non-current

1,570

1,728

Deposit for non-current assets

86,515

38,140

Long-term investments

121,292

Prepayment for business acquisition

9,806

Other non-current assets

16,556

22,627

Total non-current assets

564,348

541,436

Total assets

1,744,239

1,505,089

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Short-term loans

80,750

90,000

Deferred revenue

119,042

115,043

Accrued expenses and other liabilities

221,901

143,292

Income tax payable

35,394

43,688

Customers’ refundable fees

42,392

53,066

Amounts due to a related party

660

537

Total current liabilities

500,139

445,626

Non-current liabilities:

Long-term loans

100,000

180,750

Convertible senior notes

400,000

350,000

Deferred tax liabilities, non-current

111,026

84,767

Other non-current liabilities

385

479

Total non-current liabilities

611,411

615,996

Total Liabilities

1,111,550

1,061,622

Equity:

Class A ordinary shares, par value Hong Kong Dollar ("HK$") 1 per share, 600,000,000 shares authorized for Class A and Class B in aggregate, and 58,364,924 shares and 57,440,895 shares issued and outstanding as at December 31, 2014 and December 31, 2013, respectively

7,495

7,376

Class B ordinary shares, par value HK$1 per share, 600,000,000 shares authorized for Class A and Class B in aggregate, and 24,336,650 shares and 24,336,650 shares issued and outstanding as at December 31, 2014 and December 31, 2013 , respectively

3,124

3,124

Additional paid-in capital

101,072

89,071

Accumulated other comprehensive income

49,566

43,381

Retained earnings

471,352

300,515

Total SouFun Holdings Limited shareholders’ equity

632,609

443,467

Noncontrolling interests

80

Total equity

632,689

443,467

TOTAL LIABILITIES AND EQUITY

1,744,239

1,505,089

SouFun Holdings Limited

Condensed Consolidated Statements of Comprehensive Income

(in thousands of U.S. dollars, except share data and per share data)

Three months ended

Year ended

December 31,

December 31,

December 31,

December 31,

2014

2013

2014

2013

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

Revenues:

Marketing services

92,227

97,077

294,484

278,322

E-commerce services

98,744

67,078

244,344

188,107

Listing services

25,157

49,979

145,654

161,547

Other value-added services

6,846

3,019

18,400

9,403

Total revenues

222,974

217,153

702,882

637,379

Cost of Revenues:

Cost of services

(42,712)

(27,802)

(145,739)

(102,488)

Total Cost of Revenues

(42,712)

(27,802)

(145,739)

(102,488)

Gross Profit

180,262

189,351

557,143

534,891

Operating expenses and income:

Selling expenses

(47,571)

(34,823)

(147,874)

(101,935)

General and administrative expenses

(25,228)

(28,161)

(100,571)

(83,384)

Other income

130

345

835

786

Operating Income

107,593

126,712

309,533

350,358

Foreign exchange gain (loss)

(34)

1

(44)

3

Interest income

9,606

8,278

43,857

27,803

Interest expense

(4,069)

(4,488)

(17,308)

(14,675)

Government grants

1,389

786

7,205

4,031

Other-than-temporary impairment on available -for-sale securities

(8,417)

(8,417)

Realized gain on available-for-sale security (includes $821 accumulated other comprehensive income reclassifications for unrealized net gains on available-for-sale security)

821

Gain on bargain purchase

102

Income before income taxes and noncontrolling interests

106,068

131,289

334,826

368,443

Income tax expenses

Income tax expenses

(23,566)

(19,215)

(81,609)

(69,781)

Net income

82,502

112,074

253,217

298,662

Net income attributable to noncontrolling

interests

(18)

53

Net income attributable to SouFun Holdings Limited shareholders

82,502

112,092

253,217

298,609

Other comprehensive income, net of tax

Foreign currency

Translation

5,908

6,941

(4,323)

20,150

Realized gain on available-for-sale security

(821)

Unrealized gain on available-for-sale security

(4,145)

10,508

78

Total other comprehensive income, net of tax

1,763

6,941

6,185

19,407

Comprehensive income

84,265

119,015

259,402

318,069

Earnings per share for Class A and Class B ordinary shares

Basic

1.01

1.43

3.08

3.82

Diluted

0.94

1.27

2.87

3.54

Earnings per ADS

Basic

0.20

0.29

0.62

0.76

Diluted

0.19

0.25

0.57

0.71

Weighted average number of Class A and Class B ordinary shares outstanding:

Basic

81,965,501

78,346,884

82,163,135

78,101,205

Diluted

91,186,744

88,469,234

92,208,620

84,602,678

Weighted average number of ADSs outstanding:

Basic

409,827,505

391,734,420

410,815,675

390,506,025

Diluted

455,933,720

442,346,170

461,043,100

423,013,390

SouFun Holdings Limited

Reconciliation of GAAP and Non-GAAP Results

(in thousands of U.S. dollars, except share data and per share data)

Three months ended

Year ended

December 31,

December 31,

December 31,

December 31,

2014

2013

2014

2013

GAAP income from operations

107,593

126,712

309,533

350,358

Share-based compensation expense

184

1,793

4,682

7,028

Non-GAAP income from operations

107,777

128,505

314,215

357,386

GAAP net income

82,502

112,074

253,217

298,662

One-off tax benefit

(4,657)

(15,101)

Withholding tax related to dividends

4,075

12,103

23,164

28,632

Realized gain on available-for-sale security (includes $821 accumulated other comprehensive

Income reclassifications for unrealized net gains on available-for-sale security)

(821)

Other-than-temporary impairment on available-for-sale securities

8,417

8,417

Share-based compensation expense

184

1,793

4,682

7,028

Gain on bargain purchase

(102)

Non-GAAP net income

95,178

125,970

284,823

318,298

Net Income attributable to
SouFun shareholders

82,502

112,092

253,217

298,609

One-off tax benefit

(4,657)

(15,101)

Withholding tax related to dividends

4,075

12,103

23,164

28,632

Realized gain on available-for-sale security(includes $821 accumulated other comprehensive income reclassifications for unrealized net gains on available-for-salesecurity)

(821)

Other-than-temporary impairment on available-for-sale securities

8,417

8,417

Share-based compensation expense

184

1,793

4,682

7,028

Gain on bargain purchase

(102)

Non-GAAP net Income attributable to SouFun Holdings Limited shareholders

95,178

125,988

284,823

318,245

GAAP earnings per share for Class A and Class B ordinary shares:

Basic

1.01

1.43

3.08

3.82

Diluted

0.94

1.27

2.87

3.54

GAAP earnings per ADS:

Basic

0.20

0.29

0.62

0.76

Diluted

0.19

0.25

0.57

0.71

Non-GAAP earnings per share for Class A and Class B ordinary shares:

Basic

1.16

1.61

3.47

4.07

Diluted

1.07

1.42

3.21

3.76

Non-GAAP earnings per ADS:

Basic

0.23

0.32

0.69

0.81

Diluted

0.21

0.28

0.64

0.75

Weighted average number of Class A and Class B ordinary shares outstanding:

Basic

81,965,501

78,346,884

82,163,135

78,101,205

Diluted

91,186,744

88,469,234

92,208,620

84,602,678

Weighted average number of ADSs outstanding:

Basic

409,827,505

391,734,420

410,815,675

390,506,025

Diluted

455,933,720

442,346,170

461,043,100

423,013,390

SouFun Holdings Limited

Reconciliation of Non-GAAP and Adjusted EBITDA

(in thousands of U.S. dollars)

Three months ended

Six months ended

December 31,

December 31,

December 31,

December 31,

2014

2013

2014

2013

Non-GAAP

Net income

95,178

125,970

284,823

318,298

Add back:

Interest expense

4,069

4,488

17,308

14,675

Income tax expenses

19,491

7,112

63,102

56,250

Depreciation expenses

3,065

2,722

11,624

9,701

Subtract:

Interest income

(9,606)

(8,278)

(43,857)

(27,803)

Adjusted EBITDA

112,197

132,014

333,000

371,121

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