Leju(LEJU) - 2023 Q1 - Quarterly Report

Financial Highlights This section provides an overview of Leju's financial performance for the second half and full year 2022, highlighting revenue declines and improved loss metrics Second Half 2022 Financial Highlights In the second half of 2022, Leju's total revenues decreased by 25% year-on-year to $173.7 million, with declines in both e-commerce and online advertising services. Despite the revenue drop, the company significantly narrowed its losses, with loss from operations improving to $40.9 million from $116.9 million in the same period of 2021 Second Half 2022 vs 2021 Financial Performance (YoY) | Financial Metric | H2 2022 | H2 2021 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $173.7M | $233.0M | -25% | | E-commerce Services Revenue | $145.8M | $179.7M | -19% | | Online Advertising Services Revenue | $27.9M | $53.2M | -48% | | Loss from Operations | ($40.9M) | ($116.9M) | Improved | | Non-GAAP Loss from Operations | ($34.7M) | ($111.2M) | Improved | | Net Loss Attributable to Shareholders | ($36.8M) | ($103.2M) | Improved | | Loss per Diluted ADS | ($2.69) | ($7.54) | Improved | Full Year 2022 Financial Highlights For the full year 2022, total revenues fell 36% year-on-year to $343.2 million. Both e-commerce and online advertising revenues saw significant declines. However, the company's loss from operations was reduced to $105.6 million from $166.7 million in 2021, and net loss attributable to shareholders also improved Full Year 2022 vs 2021 Financial Performance (YoY) | Financial Metric | FY 2022 | FY 2021 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $343.2M | $534.1M | -36% | | E-commerce Services Revenue | $278.5M | $411.1M | -32% | | Online Advertising Services Revenue | $64.7M | $122.5M | -47% | | Loss from Operations | ($105.6M) | ($166.7M) | Improved | | Non-GAAP Loss from Operations | ($93.2M) | ($154.5M) | Improved | | Net Loss Attributable to Shareholders | ($89.7M) | ($150.9M) | Improved | | Loss per Diluted ADS | ($6.54) | ($11.05) | Improved | Management Commentary and Business Outlook This section presents the CEO's insights on market challenges and Leju's strategic adjustments and future outlook for 2023 CEO's Statement Leju's CEO, Mr. Geoffrey He, stated that the company's performance in the second half of 2022 was negatively impacted by the continued downturn in China's real estate industry, developer liquidity pressures, and declining market sales. In response, Leju has optimized its sales network and team structure. Looking ahead to 2023, the company anticipates a depressed market and will focus on brand building and new product development to prepare for a future recovery - The CEO attributed poor performance to the challenging macro environment in China's real estate industry, including developer liquidity issues and declining sales, which negatively impacted Leju's businesses[8] - The company has implemented adaptive optimizations and adjustments to its sales network and team structure in response to market projections[8] - Leju's forward-looking strategy for 2023 involves enhancing its focus on brand building and new product development to capitalize on a future market recovery[8] Detailed Financial Results This section provides a detailed breakdown of Leju's financial results for H2 and full year 2022, including revenue, expenses, and cash flow Second Half 2022 Results In H2 2022, total revenues decreased 25% YoY to $173.7 million. E-commerce revenue fell 19% due to fewer discount coupons redeemed, while online advertising revenue dropped 48% from lower developer demand. A significant 39% reduction in SG&A expenses, primarily from a $63.7 million decrease in bad debt provision, was the main driver for the improved operating loss of $40.9 million H2 2022 Revenue Breakdown (YoY) | Revenue Source | H2 2022 | H2 2021 | Change | | :--- | :--- | :--- | :--- | | E-commerce Services | $145.8M | $179.7M | -19% | | Online Advertising Services | $27.9M | $53.2M | -48% | | Total Revenues | $173.7M | $233.0M | -25% | - Selling, general and administrative (SG&A) expenses decreased by 39% YoY to $198.7 million, mainly due to a $63.7 million decrease in bad debt provision[10] - Net loss attributable to shareholders improved significantly to $36.8 million, compared to $103.2 million in the same period of 2021[11] Full year 2022 Results For the full year 2022, total revenues declined 36% YoY to $343.2 million. E-commerce revenue was down 32% and online advertising revenue fell 47%. SG&A expenses decreased by 35%, largely due to a $97.5 million reduction in bad debt provision compared to 2021. This cost management led to a smaller operating loss of $105.6 million for the year Full Year 2022 Revenue Breakdown (YoY) | Revenue Source | FY 2022 | FY 2021 | Change | | :--- | :--- | :--- | :--- | | E-commerce Services | $278.5M | $411.1M | -32% | | Online Advertising Services | $64.7M | $122.5M | -47% | | Total Revenues | $343.2M | $534.1M | -36% | - SG&A expenses decreased by 35% YoY to $418.5 million, primarily driven by a $97.5 million decrease in bad debt provision[13] - Net loss attributable to shareholders for the full year was $89.7 million, an improvement from the $150.9 million loss in 2021[14] Cash Flow As of December 31, 2022, Leju's cash, cash equivalents, and restricted cash stood at $127.6 million. The company experienced a net cash outflow from operating activities of $47.4 million during the second half of 2022 - The company's cash, cash equivalents, and restricted cash totaled $127.6 million as of December 31, 2022[15] - Net cash used in operating activities for the second half of 2022 was $47.4 million[15] Financial Statements and Other Information This section provides an overview of Leju, its unaudited financial statements, GAAP reconciliation, and selected operating data About Leju Leju Holdings Limited is a prominent e-commerce and online media platform focused on the real estate and home furnishing sectors in China. Its integrated platform includes mobile apps and local websites covering over 380 cities. The company also operates the real estate and home furnishing websites for SINA Corporation and has a strategic partnership with Tencent - Leju is a leading e-commerce and online media platform for China's real estate and home furnishing industries[16] - The company's services cover more than 380 cities and it maintains strategic partnerships with SINA and Tencent[16] Unaudited Condensed Consolidated Financial Statements The unaudited financial statements show a significant contraction in the company's balance sheet, with total assets decreasing from $437.2 million in 2021 to $216.1 million in 2022. Total liabilities also decreased substantially. The statement of operations details the revenue decline and narrowed losses for H2 and the full year 2022 Consolidated Balance Sheet Highlights (Year-End) | Balance Sheet Item | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $123.4M | $250.3M | | Total Assets | $216.1M | $437.2M | | Total Liabilities | $163.2M | $286.2M | | Total Equity | $53.0M | $151.1M | Consolidated Statement of Operations Highlights (Full Year) | Income Statement Item | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Total Net Revenues | $343.2M | $534.1M | | Loss from Operations | ($105.6M) | ($166.7M) | | Net Loss | ($89.7M) | ($149.9M) | Unaudited Reconciliation of GAAP and Non-GAAP Results This section reconciles GAAP results to non-GAAP measures by excluding non-cash items like share-based compensation and amortization of intangible assets. For the full year 2022, the Non-GAAP loss from operations was $93.2 million (vs. GAAP loss of $105.6 million), and the Non-GAAP net loss attributable to shareholders was $79.9 million (vs. GAAP loss of $89.7 million) Full Year 2022 GAAP vs. Non-GAAP Reconciliation | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Loss from Operations | ($105.6M) | $12.4M | ($93.2M) | | Net Loss Attributable to Shareholders | ($89.7M) | $9.8M | ($79.9M) | - The primary adjustments between GAAP and Non-GAAP figures are share-based compensation expense ($1.8M for FY2022) and amortization of intangible assets from acquisitions ($10.6M for FY2022)[28] Selected Operating Data The company's key operating metrics for its e-commerce services reflect the challenging market conditions. The number of discount coupons redeemed, a measure of transaction volume, decreased by approximately 49% from 138,230 in 2021 to 70,476 in 2022 E-commerce Services Operating Data (Full Year) | Operating Metric | FY 2022 | FY 2021 | Change | | :--- | :--- | :--- | :--- | | Number of discount coupons issued | 67,250 | 162,196 | -58.5% | | Number of discount coupons redeemed | 70,476 | 138,230 | -49.0% |