Fang Announces Third Quarter 2018 Results

BEIJING,Nov. 30,2018 -- Fang Holdings Limited (NYSE: SFUN) ("Fang" or "we"),the leading real estate Internet portal in China,today announced its unaudited financial results for the fiscal quarter ended September 30,2018.

Third Quarter 2018 Highlights

Total revenues were $83.6 million,a decrease of 25.5% from $112.2 million in the corresponding period in 2017.

Operating income was $15.3 million. Non-GAAP operating income was $ 18.9 million. A description of the adjustments from GAAP to non-GAAP operating income is detailed in the table captioned "Reconciliation of GAAP and Non-GAAP Results" following this press release.

Net income attributable to Fang's shareholders was $2.3 million,GAAP fully diluted earnings per ADS were $0.00.

Non-GAAP net income attributable to Fang's shareholders was $12.3 million,Non-GAAP fully diluted earnings per ADS were $0.03. A description of the adjustments from GAAP to non-GAAP net income attributable to Fang's shareholders and fully diluted loss per ADS is detailed in the table captioned "Reconciliation of GAAP and Non-GAAP Results" following this press release.

Adjusted EBITDA was $25.7 million. A description of the adjustments from GAAP net income to Adjusted EBITDA is detailed in the table captioned "Reconciliation of GAAP and Non-GAAP Results" following this press release.

"We have been solidifying our platforms and products and focusing on the effectiveness of our services," commented Vincent Mo,Chairman and CEO of Fang. "At the same time,we continue to explore creating empowering products that serve real estate professionals in China's new and resale markets."

Third Quarter 2018 Results

Revenues

Fang reported total revenues of $83.6 million in the third quarter of 2018,a decrease of 25.5% from $112.2 million in the corresponding period of 2017,mainly due to the decline in revenues from listing and e-commerce services.

Revenue from marketing services was $35.7 million in the third quarter of 2018,a slight decrease of 4.1% from $37.3 million in the corresponding period of 2017.

Revenue from listing services was $29.2 million in the third quarter of 2018,a decrease of 38% from $47.2 million in the corresponding period of 2017,caused by the decreased number of paying members.

Revenue from value-added services was $10.3 million in the third quarter of 2018,an increase of 33.3% from $7.7 million in the corresponding period of 2017,driven by the increased demand for our database and research services.

Revenue from financial services was $4.7 million in the third quarter of 2018,an increase of 34.6% from $3.5 million in the corresponding period of 2017,driven by increased demand for our financial products.

Revenue from e-commerce services was $3.7 million in the third quarter of 2018,a decrease of 77.7% from $16.6 million in the corresponding period of 2017,primarily due to Fang's transformation back to a technology-driven open platform model.

Cost of Revenue

Cost of revenue was $17.8 million in the third quarter of 2018,a decrease of 49.8% from $35.4 million in the corresponding period of 2017,primarily due to optimization in our cost structure.

Operating Expenses

Operating expenses were $50.6 million in the third quarter of 2018,a decrease of 13.4% from $58.4 million in the corresponding period of 2017.

Selling expenses were $21.0 million in the third quarter of 2018,an increase of 24.3% from $16.9 million for the corresponding period of 2017,primarily driven by an increase in advertising and promotional expenses.

General and administrative expenses were $29.8 million in the third quarter of 2018,a decrease of 28.5% from $41.8 million for the corresponding period of 2017,primarily due to effective cost control and a decrease in bad debt expenses.

Operating Income

Operating income was $15.3 million in the third quarter of 2018,compared to $18.4 million in the corresponding period of 2017,caused by the decline in revenue from listing services.

Change in Fair Value of Securities

Change in fair value of securities for the third quarter of 2018 was a loss of $11.8 million. The amount represents changes in fair value of securities in accordance with FASB ASU 2016-01,which became effective on January 1,2018.

Income Tax Expenses

Income tax expenses were $3.1 million in the third quarter of 2018,compared to income tax expenses of $4.1 million in the corresponding period of 2017.

Net Income and EPS

Net income attributable to Fang's shareholders was $2.3 million in the third quarter of 2018,compared to net income of $15.2 million in the corresponding period of 2017. Earnings per fully-diluted ordinary share and ADS were $0.02 and $0.00 in the third quarter of 2018,compared to $0.16 and $0.03,respectively,in the corresponding period of 2017.

Adjusted EBITDA

Adjusted EBITDA,defined as GAAP net income before share-based compensation,investment income,change in fair value of securities,income taxes,interest expenses,interest income and depreciation,was $25.7 million in the third quarter of 2018,compared to the $24.8 million in the corresponding period of 2017.

Cash

As of September 30,2018,Fang had cash and cash equivalents,restricted cash (current and non-current) and short-term investments of $439.9 million,compared to $547.1 million as of December 31,2017. Net cash generated from operating activities was $33.5 million in the third quarter of 2018,compared to cash flow generated from operating activities of $57.8 million in the same period of 2017.

Business Outlook

Based on current operations and market conditions,Fang's non-GAAP net income is expected to be profitable for the fiscal year ending December 31,2018. These estimates represent management's current and preliminary view,which are subject to change.

About Non-GAAP Financial Measures

To supplement Fang's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"),Fang 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 (loss)/income,(2) non-GAAP net (loss)/income,(3) non-GAAP basic and diluted (loss)/earnings per ordinary share and per ADS,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.

Fang believes that these non-GAAP measures help identify underlying trends in Fang's business that could otherwise be distorted by the effect of the change in fair value of equity securities,and the expenses and gains that Fang includes in income from operations and net income. Fang believes that these non-GAAP measures provide useful information about its operating results,enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by Fang's management in its financial and operational decision-making. A limitation of using these non-GAAP financial measures is that share-based compensation,change in fair value of equity securities,interest income and expenses,income tax expenses,and depreciation expenses have been and will continue to be a significant recurring item that will continue to exist in Fang'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.

New Accounting Pronouncements

The new revenue recognition standard (ASU No. 2014-09 'Revenue from Contracts with Customers') was released in 2014 and becomes effective for Fang with effect from January 1,2018. Fang has elected to adopt the new standard (ASC 606 - 'Revenue from Contracts with Customers') using cumulative effect method for all contracts that are not completed contracts at the date of initial application. Under this transition method,the new standard is applied from January 1,2018 without restatement of comparative period amounts. The cumulative effect of initially applying the new standard is reflected as an adjustment to opening retained earnings as of January 1,2018 in the amount of $0.3 million.

In January 2016,the FASB issued ASU No. 2016-01,Financial Instruments Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,which is an amendment which addresses certain aspects of recognition,measurement,presentation,and disclosure of financial instruments. This guidance includes the requirement that equity investments that do not result in consolidation and are not accounted for under the equity method be measured at fair value with changes in the fair value recognized in net income. An entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment,if any,plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment. Fang adopted this standard from the quarter beginning January 1,and Fang recognized a cumulative-effect adjustment to retained earnings of $163.8 million as of January 1,2018 for the after-tax unrealized gains of available-for-sale equity securities previously recognized in accumulated other comprehensive income.

Conference Call Information

Fang's management team will host a conference call on the same day at 7:30 AM U.S. ET (8:30 PM Beijing/Hong Kong time). The dial-in details for the live conference call are:

International Toll:

+65 67135090

Toll-Free/Local Toll:

United States

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

Hong Kong

+852 800-906-601 / +852 3018-6771

Mainland China

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

Passcode:

SFUN

A telephone replay of the call will be available after the conclusion of the conference call from 11:00 ET on November 30,2018 through 9:59 ET December 8,2018. The dial-in details for the telephone replay are:

International Toll:

+61 2-8199-0299

Toll-Free/Local Toll:

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 / +86 800-870-0205

Conference ID:

9369764

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

About Fang

Fang operates the leading real estate Internet portal in China in terms of the number of page views and visitors to its websites. Through its websites,Fang provides marketing,listing,financial,e-commerce and other value-added services for China's fast-growing real estate and home furnishing and improvement sectors. Its user-friendly websites support active online communities and networks of users seeking information on,and other value-added services for,the real estate and home furnishing and improvement sectors in China. Fang currently maintains about 100 offices to focus on local market needs and its website and database contains real estate related content covering more than 651 cities in China. For more information about Fang,please visit http://ir.fang.com.

Safe Harbor Statements

This press release 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,and include,without limitation,statements regarding Fang's future financial performance,revenue guidance,growth and growth rates,market position and continued business transformation. Such statements are based upon management's current expectations and current market and operating conditions,and relate to events that involve known or unknown risks,uncertainties and other factors,all of which are difficult to predict and many of which are beyond Fang's control,which may cause its actual results,performance or achievements to differ materially from those in the forward-looking statements. Potential risks and uncertainties include,the impact of Fang's transformation back to a technology-driven Internet platform and the impact of current and future government policies affecting China's real estate market. Further information regarding these and other risks,uncertainties or factors is included in Fang's filings with the U.S. Securities and Exchange Commission. Fang does not undertake any obligation to update any forward-looking statement as a result of new information,future events or otherwise,except as required under law.

For investor and media inquiries,please contact:

Dr. Hua Lei

CFO

Phone: +86-10-5631-8661

Email: leihua@fang.com

Ms. Jessie Yang

Investor Relations Director

Phone: +86-10-5631 8805

Email: jessieyang@fang.com

Fang Holdings Limited

Condensed Consolidated Balance Sheets

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

ASSETS

September 30,

December 31,

2018

2017

Current assets:

(Unaudited)

(Audited)

Cash and cash equivalents

151,159

228,276

Restricted cash,current

211,818

223,002

Short-term investments

40,043

55,801

Accounts receivable,net

69,640

66,884

Funds receivable

6,068

6,264

Prepayment and other current assets

33,856

32,704

Commitment deposits

191

5,876

Loan receivable,current

149,796

129,438

Amount due from related parties

134

167

Total current assets

662,705

748,412

Non-current assets:

Property and equipment,net

737,362

622,145

Prepaid land lease payments

32,563

35,728

Loan receivable,non-current

7,010

14,674

Deferred tax assets,non-current

8,164

7,602

Restricted cash,non-current portion

36,897

39,982

Deposit for non-current assets

7,594

58,722

Long-term investments

392,231

470,964

Other non-current assets

870

2,026

Total non-current assets

1,222,691

1,251,843

Total assets

1,885,396

2,000,255

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term loans

274,670

236,985

Deferred revenue

182,111

168,884

Accrued expenses and other liabilities

123,243

158,799

Customers' refundable fees

12,282

7,070

Income tax payable

5,597

4,374

Convertible senior notes

5,700

5,700

Due to related parties

322

-

Total current liabilities

603,925

581,812

Non-current liabilities:

Long-term loans

124,381

114,109

Convertible senior notes

292,731

291,365

Deferred tax liabilities,non-current

91,037

126,641

Other non-current liabilities

131,266

146,053

Total non-current liabilities

639,415

678,168

Total Liabilities

1,243,340

1,259,980

Equity:

Class A ordinary shares,par value Hong Kong Dollar ("HK$") 1

per share,600,000 shares authorized for Class A and Class

B in aggregate,issued shares as of September 30,2018 and

December 31,2017: 72,093,308 and 71,425,120; outstanding

shares as of September 30,2018 and December 31,2017:

65,028,250 and 64,360,062

9,285

9,204

Class B ordinary shares,par value HK$1 per share,000

shares authorized for Class A and Class B in aggregate,and

24,336,650 shares and 24,650 shares issued and

outstanding as at September 30,2017

respectively

3,124

3,124

Treasure stock

(136,615)

(136,615)

Additional paid-in capital

515,870

500,666

Accumulated other comprehensive income

(70,833)

137,630

Retained earnings

320,532

225,574

Total Fang Holdings Limited shareholders' equity

641,363

739,583

Non-controlling interests

693

692

Total equity

642,056

740,275

TOTAL LIABILITIES AND EQUITY

1,255

Condensed Consolidated Statements of Comprehensive Income

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

Three months ended

September 30,

September 30,

2018

2017

(Unaudited)

(Unaudited)

Revenues:

Marketing services

35,725

37,265

Listing services

29,237

47,175

Value-added services

10,278

7,708

Financial services

4,658

3,461

E-commerce services

3,702

16,574

Total revenues

83,600

112,183

Cost of Revenues:

Cost of services

(17,780)

(35,443)

Total Cost of Revenues

(17,780)

(35,443)

Gross Profit

65,820

76,740

Operating expenses and income:

Selling expenses

(21,035)

(16,921)

General and administrative expenses

(29,845)

(41,758)

Other income

318

302

Operating Income

15,258

18,363

Foreign exchange gain (loss)

7

(1)

Interest income

4,877

3,196

Interest expense

(5,810)

(4,538)

Investment income

2,034

1,857

Government grants

323

480

Other non-operating income

442

-

Change in fair value of securities

(11,752)

-

Income before income taxes and noncontrolling interests

5,379

19,357

Income tax expenses

Income tax expenses

(3,101)

(4,124)

Net income

2,278

15,233

Net loss attributable to noncontrolling interests

(1)

-

Net income attributable to Fang Holdings Limited shareholders

2,279

15,233

Other comprehensive (loss) income,net of tax

Foreign currency translation

(33,577)

17,739

Amounts reclassified from accumulated other comprehensive

income

-

(801)

Unrealized gain on available-for-sale security

-

102,032

(Loss) income on intra-entity foreign transactions of

long-term-investment nature

(2,019)

1,544

Total other comprehensive (loss) income,net of tax

(35,596)

120,514

Comprehensive (loss) income

(33,318)

135,747

Earnings per share for Class A and Class B ordinary shares:

Basic

0.03

0.17

Diluted

0.02

0.16

Earnings per ADS:

Basic

0.01

0.03

Diluted

0.00

0.03

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

Basic

88,979,317

88,486,099

Diluted

91,242,914

94,312

Weighted average number of ADSs outstanding:

Basic

444,896,584

442,430,494

Diluted

456,214,572

470,466,562

Fang Holdings Limited

Reconciliation of GAAP and Non-GAAP Results

(in thousands of U.S. dollars,

2018

2017

GAAP income from operations

15,258

18,363

Share-based compensation expense

3,671

1,390

Non-GAAP income from operations

18,929

19,753

GAAP net income

2,279

15,233

Reconciliation items:

Share-based compensation

3,390

Realized gain on available-for-sale securities

-

(801)

Investment income

(2,034)

(1,857)

Change in fair value of securities

11,752

-

Subtotal

13,389

(1,268)

Tax impact of reconciliation items

(3,378)

(155)

Non-GAAP net income

12,290

13,810

GAAP earnings per share for Class A and Class B ordinary

shares:

Basic

0.03

0.17

Diluted

0.02

0.16

GAAP earnings per ADS:

Basic

0.01

0.03

Diluted

0.00

0.03

Non-GAAP earnings per share for Class A and Class B

ordinary shares:

Basic

0.14

0.16

Diluted

0.13

0.15

Non-GAAP earnings per ADS

Basic

0.03

0.03

Diluted

0.03

0.03

Weighted average number of Class A and Class B ordinary

shares outstanding:

Basic

88,562

GAAP net income

2,233

Add back:

Share-based compensation expense

3,390

Change in fair value of securities

11,752

-

Interest expense

5,810

4,538

Income tax expenses

3,101

4,124

Depreciation expenses

5,957

5,398

Subtract:

Investment income

(2,857)

Interest income

(4,877)

(3,196)

Realized gain on available-for-sale securities

(801)

Adjusted EBITDA

25,659

24,829

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