Fangdd(DUO) - 2021 Q2 - Quarterly Report

Financial & Operating Highlights Q2 2021 revenue increased 37.9% to RMB 401.4 million, but net loss widened to RMB 139.0 million, driven by a significant doubtful accounts provision Q2 2021 Key Financial Highlights (vs Q1 2021) | Financial Metric | Q2 2021 (RMB million) | Q1 2021 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Revenue | 401.4 | 291.0 | +37.9% | | Net Loss | 139.0 | 104.8 | Widened | | Net Loss (ex-provision) | 59.9 | 84.8 | Narrowed | | Non-GAAP Net Loss | 127.9 | 93.0 | Widened | Q2 2021 Key Operating Highlights (vs Q1 2021) | Operating Metric | Q2 2021 | Q1 2021 | Change | | :--- | :--- | :--- | :--- | | Active Agents | 249.9 thousand | 221.1 thousand | +13.0% | | Closed-loop Agents | 19.0 thousand | 18.4 thousand | +3.3% | | Total Closed-loop GMV | RMB 29.6 billion | RMB 29.9 billion | -1.0% | Management Commentary Management sees growth for asset-light platforms amid challenging regulations, committing to core business growth and strengthened financial management - Chairman Yi Duan commented that intensified government regulations, while creating cash flow difficulties for some developers, present growth opportunities for asset-light, efficiency-focused real estate transaction service platforms[6] - Co-CEO Xi Zeng stated the company's commitment to its growth strategy, focusing on improving new construction property sales, refining Property Cloud SaaS solutions, and enhancing the resale property business[6] - CFO Jiaorong Pan noted that the company has strengthened its accounts receivable management and is utilizing multi-channel funding solutions to support business development and maintain healthy cash flows[6] Detailed Financial Results Revenue grew 37.9% to RMB 401.4 million, with strong SaaS growth, but operating expenses increased 46.2% due to higher product development and a significant doubtful accounts provision, resulting in a wider net loss Revenue Total revenue increased significantly quarter-over-quarter, driven by strong growth across all segments, particularly SaaS solutions Revenue Breakdown (Q2 2021 vs Q1 2021) | Revenue Source | Q2 2021 (RMB million) | Q1 2021 (RMB million) | QoQ Growth | | :--- | :--- | :--- | :--- | | Total Revenue | 401.4 | 291.0 | +37.9% | | New Property Transaction | 358.8 | 271.6 | +32.1% | | Resale Property Transaction | 40.3 | 18.8 | +114.4% | | SaaS Solutions | 2.3 | 0.6 | +268.4% | Cost of Revenue and Gross Profit Cost of revenue increased due to higher commission fees and service costs, while gross profit surged, improving the gross margin to 15.6% - Cost of revenue increased by 31.5% to RMB 338.9 million from RMB 257.7 million in Q1 2021, primarily due to higher commission fees to agents and increased costs related to value-added services and SaaS solutions[9] Gross Profit and Margin (Q2 2021 vs Q1 2021) | Metric | Q2 2021 (RMB million) | Q1 2021 (RMB million) | | :--- | :--- | :--- | | Gross Profit | 62.5 | 33.3 | | Gross Margin | 15.6% | 11.4% | Operating Expenses Total operating expenses increased significantly, driven by higher general and administrative costs due to a doubtful accounts provision, despite reduced sales and marketing expenses Operating Expenses Breakdown (Q2 2021 vs Q1 2021) | Expense Category | Q2 2021 (RMB million) | Q1 2021 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Total Operating Expenses | 205.1 | 140.3 | +46.2% | | Sales and Marketing | 13.1 | 37.9 | -65.4% | | Product Development | 64.5 | 37.3 | +72.9% | | General and Administrative | 127.5 | 65.2 | +95.5% | - The decrease in Sales and marketing expenses was due to optimizing staff and reducing marketing activities for new property services to focus on SaaS solutions[11] - The increase in General and administrative expenses was mainly due to a higher provision for doubtful accounts, which rose to RMB 79.1 million in Q2 from RMB 20.0 million in Q1[12] Net Loss and Net Loss Per ADS Net loss widened to RMB 139.0 million in Q2 2021, with basic and diluted net loss per ADS increasing to RMB 1.64 Net Loss Summary (Q2 2021 vs Q1 2021) | Metric | Q2 2021 (RMB million) | Q1 2021 (RMB million) | | :--- | :--- | :--- | | Net Loss | (139.0) | (104.8) | | Net Loss (ex-provision) | (59.9) | (84.8) | | Non-GAAP Net Loss | (127.9) | (93.0) | - Basic and diluted net loss per ADS were both RMB 1.64 (US$0.25) in Q2 2021, compared to RMB 1.27 in Q1 2021[14] Liquidity As of June 30, 2021, the company maintained RMB 749.4 million in cash and equivalents, with net cash used in operating activities totaling RMB 53.0 million for the quarter - As of June 30, 2021, the Company had cash, cash equivalents, restricted cash, and short-term investments totaling RMB 749.4 million (US$116.1 million)[15] - Net cash used in operating activities for the second quarter of 2021 was RMB 53.0 million (US$8.2 million)[15] Business Outlook The company forecasts Q3 2021 revenue between RMB 250 million and RMB 300 million, reflecting uncertainties from Covid-19 impacts in core markets - For the third quarter of 2021, the Company expects its revenue to be between RMB 250 million and RMB 300 million[16] - This forecast is subject to change and reflects the company's preliminary views on market and operational conditions, which are affected by the impact of Covid-19[16] Financial Statements Unaudited financial statements detail the company's financial position and performance, showing a net loss of RMB 139.0 million in Q2 2021 and reconciling GAAP to Non-GAAP results Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2021, shows total assets of RMB 3.38 billion, a decrease from year-end 2020, with corresponding changes in liabilities and equity Selected Balance Sheet Data (in thousands RMB) | Account | As of June 30, 2021 (RMB thousands) | As of Dec 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | 674,920 | 843,448 | | Accounts receivable, net | 1,783,583 | 2,252,103 | | Total assets | 3,384,662 | 4,047,952 | | Total liabilities | 2,141,974 | 2,581,954 | | Total equity | 1,242,688 | 1,465,998 | Consolidated Statements of Comprehensive Income (Loss) The income statement for Q2 2021 reports a net loss of RMB 139.0 million, significantly wider than Q2 2020, with a basic net loss per ADS of RMB 1.64 Selected Income Statement Data for Three Months Ended June 30 (in thousands RMB) | Account | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 401,424 | 737,690 | | Gross profit | 62,486 | 120,953 | | Loss from operations | (142,607) | (32,954) | | Net loss | (139,023) | (13,987) | | Net loss per ADS (Basic) | (1.64) | (0.18) | Reconciliation of GAAP and Non-GAAP Results A reconciliation table clarifies adjustments from GAAP to Non-GAAP figures, primarily by excluding share-based compensation for a clearer view of core operating performance GAAP to Non-GAAP Reconciliation for Three Months Ended June 30 (in thousands RMB) | Metric | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | GAAP loss from operations | (142,607) | (32,954) | | Share-based compensation | 11,092 | 25,916 | | Non-GAAP loss from operations | (131,515) | (7,038) | | GAAP net loss | (139,023) | (13,987) | | Share-based compensation | 11,092 | 25,916 | | Non-GAAP net (loss)/income | (127,931) | 11,929 | Supplementary Information This section provides earnings call logistics, currency exchange rates, non-GAAP measure definitions, a corporate overview, and a standard safe harbor statement - The earnings conference call was scheduled for August 13, 2021, at 8:00 A.M. Eastern Time[17] - The press release uses an exchange rate of RMB 6.4566 per US$1.00 for currency conversions, based on the Federal Reserve Board rate on June 30, 2021[21] - Non-GAAP financial measures presented exclude share-based compensation expenses to help investors better understand the company's core operating performance[22]