Fang Announces Fourth Quarter And Fiscal Year 2018 Results

BEIJING,April 26,2019 -- Fang Holdings Limited (NYSE: SFUN) ("Fang" or "we"),a leading real estate Internet portal in China,today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31,2018.

Fourth Quarter 2018 Highlights

Total revenues were $82.2 million.

Operating income was $11.9 million. Non-GAAP operating income was $ 13.7 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 loss attributable to Fang's shareholders was $48.2 million,which was primarily due to the change in fair value of equity securities of $34.4 million,and the income tax expense of $9.5 million related to the effect of change in fair value of equity securities. Loss per ADS was $0.11.

Non-GAAP net loss attributable to Fang's shareholders was $9.1 million. Non-GAAP fully diluted loss per ADS were $0.02. A description of the adjustments from GAAP net loss to non-GAAP net loss attributable to Fang's shareholders and fully diluted income per ADS is detailed in the table captioned "Reconciliation of GAAP and Non-GAAP Results" following this press release.

Adjusted EBITDA was $19.3 million. A description of the adjustments from GAAP net loss to Adjusted EBITDA is detailed in the table captioned "Reconciliation of GAAP and Non-GAAP Results" following this press release.

Fiscal Year 2018 Highlights

Total revenues were $303.0 million.

Operating income was $39.9 million. Non-GAAP operating income was $ 54.0 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 loss attributable to Fang's shareholders was $117.3 million,which was primarily due to the change in fair value of equity securities of $168.7 million,and the income tax benefits of $22.0 million related to the effect of change in fair value of equity securities and the reversal of previously recorded ASC 740 (FIN 48) income tax and interest liability. Loss per ADS was $0.26.

Non-GAAP net income attributable to Fang's shareholders was $29.2 million. Non-GAAP fully diluted benefits per ADS were $0.07. A description of the adjustments from GAAP net loss to non-GAAP net income attributable to Fang's shareholders and fully diluted income per ADS is detailed in the table captioned "Reconciliation of GAAP and Non-GAAP Results" following this press release.

Adjusted EBITDA was $81.7 million. A description of the adjustments from GAAP net loss to Adjusted EBITDA is detailed in the table captioned "Reconciliation of GAAP and Non-GAAP Results" following this press release.

"Fang is continuing its restructuring by focusing more on its data and analytics business,internet advertising and listing services," commented Vincent Mo,Chairman of Fang. "The spin-off of China Index Holdings is underway and Fang is also exploring a separation of its core internet advertising and listing services for an independent listing."

Fourth Quarter 2018 Results

Revenues

Fang reported total revenues of $82.2 million in the fourth quarter of 2018,a decrease of 26.8% 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 $41.5 millionin the fourth quarter of 2018,a decrease of 16.3% from $49.6 millionin the corresponding period of 2017,primarily due to a slowdown in the real estate market and the continued impacts of tightening policies.

Revenue from listing services was $24.4 million in the fourth quarter of 2018,a decrease of 41.6% from $41.8 million in the corresponding period of 2017,caused by the decreased number of paying members.

Revenue from value-added services was $11.1 millionin the fourth quarter of 2018,an increase of 28.5% from $8.6 million in the corresponding period of 2017,driven by the increased demand for our database and research services.

Revenue from Financial services was $2.4 millionin the fourth quarter of 2018,a decrease of 35.3% from $3.6 million in the corresponding period of 2017.

Revenue from e-commerce services was $2.8 millionin the fourth quarter of 2018,a decrease of 67.1% from $8.5 millionin 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 $12.4 million in the fourth quarter of 2018,a decrease of 58.1% from $29.7 million in the corresponding period of 2017,primarily due to optimization in our cost structure.

Operating Expenses

Operating expenses were $57.9 million in the fourth quarter of 2018,an increase of 24.4% from $46.5 million in the corresponding period of 2017.

Selling expenses were $13.8 millionin the fourth quarter of 2018,a decreaseof 50.2% from $27.8 millionfor the corresponding period of 2017,primarily driven by a decrease in advertising and promotional expenses and deduction of staff cost.

General and administrative expenses were $43.8 million in the fourth quarter of 2018,an increase of 131.5% from $18.9 millionfor the corresponding period of 2017,primarily due to an increase in bad debts.

Operating Income

Operating income was $11.9 million in the fourth quarter of 2018,compared to $36.0millionin the corresponding period of 2017,caused by the decline in revenue from listing and e-commerce services and increase in bad debts.

Investment Income

Change in fair value of securities included in investment income for the fourth quarter of 2018 was a loss of $34.4 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 $27.5 millionin the fourth quarter of 2018,compared to income tax expenses of $13.1 million in the corresponding period of 2017.

Net Income/Loss and EPS

Net loss attributable to Fang's shareholders was $48.2 millionin the fourth quarter of 2018,compared to net income of $20.6 millionin the corresponding period of 2017. Loss per ordinary share and ADS were $0.54 and $0.11in the fourth quarter of 2018,compared to net income per fully-diluted ordinary share and ADS of $0.23 and $0.04,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 $19.3 millionin the fourth quarter of 2018,compared to the $41.0 millionin the corresponding period of 2017.

Cash

As of December 31,2018,Fang had cash and cash equivalents,restricted cash (current and non-current) and short-term investments of $463.6 million,compared to $547.1 million as of December 31,2017.

Fiscal Year 2018 Results

Revenues

Fang reported total revenues of $303.0 million for 2018,representing a decrease of 31.8% from $444.3 million for 2017,mainly due to the decline in revenues from e-commerce and listing services.

Revenue from marketing services was $119.7 million for 2018,a decrease of 19.8% from $149.3 million for 2017,primarily due to slowdown in the real estate market and the continued impacts of tightening policies.

Revenue from listing services was $113.5 million for 2018,a decrease of 31.3% from $165.4 million for 2017,caused by a decreased number of paying members.

Revenue from other value-added services was $36.4 million for 2018,an increase of 22.0% from $29.8 million for 2017,primarily driven by the increase demand for our database and research services.

Revenue from financial services was $18.1 million for 2018,an increase of 49.8% from $12.1 million for 2017,driven by increased average balance of loans receivable.

Revenue from e-commerce services was $15.4 million for 2018,a decrease of 82.5% from $87.8 million for 2017,primarily due to Fang's transformation back to a technology-driven open platform model.

Cost of Revenue

Cost of revenue was $58.6 million for 2018,a decrease of 66.5% from $174.6 million for 2017,primarily driven by the closing of the self-owned brokerage stores,deduction of e-commerce staff and cost optimization under the technology-driven open platform model.

Operating Expenses

Operating expenses were $204.5 million for 2018,a decrease of 10.1% from $227.5 million for 2017.

Selling expenses were $69.5 million for 2018,a decrease of 23.8% from $91.3 million for 2017,primarily due to the decrease of advertising and promotion fee and deduction of staff cost.

General and administrative expenses were $138.2 million for 2018,an increase of 1.9% from $135.7 million for 2017.

Operating Income

Operating income was $39.9 million for 2018,compared with operating income of $42.2 million for 2017.

Investment Income

Change in fair value of securities included in investment income for the fiscal year was a loss of $168.7 million. The amount represents changes in fair value of securities in accordance with FASB ASU 2016-01,2018.

Income Tax Expenses

Income tax benefits were $11.9 million for 2018,compared to Income tax expenses of $21.4 million for the corresponding period in 2017,primarily due to the reversal of previously recorded ASC 740 (FIN 48) tax and interest liability.

Net Loss/Income and EPS

Net loss attributable to Fang's shareholders was $117.3 million for 2018,compared to net income of $21.7 million for 2017. Loss per fully-diluted ordinary share and ADS were $1.31 and $0.26 in 2018,compared to net income per fully-diluted ordinary share and ADS of $0.24 and $0.05 in 2017,respectively.

Adjusted EBITDA

Adjusted EBITDA,was $81.7 millionfor 2018,compared to $68.9 million for 2017.

Cash

As of December 31,2017.

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 31,2019. 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,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 $2.9 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 at7:30 AMU.S. EST (7:30 PMBeijing/Hong Kongtime). 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 10:30 ET on April 26,2019 through 9:59 ET May 3,2019. 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:

8999638

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

About Fang

Fang operates a 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 primarily marketing,listing,financial 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 65 offices to focus on local market needs and its website and database contains real estate related content covering 657 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:

Mr. Zijin Li

Acting CFO

Phone: +86-10-5631 8805

Email:lizijin.bj@fang.com

Ms.Jessie Yang

Investor RelationsDirector

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

December 31,

December 31,

2018

2017

Current assets:

(Unaudited)

(Audited)

Cash and cash equivalents

195,108

228,276

Restricted cash,current

245,474

223,002

Short-term investments

16,043

55,801

Accounts receivable,net

60,950

66,884

Funds receivable

5,474

6,264

Prepayment and other current assets

25,378

32,704

Commitment deposits

191

5,876

Loan receivable,current

117,602

129,438

Amount due from related parties

138

167

Total current assets

666,358

748,412

Non-current assets:

Property and equipment,net

730,774

622,145

Prepaid land lease payments

33,153

35,728

Loan receivable,non-current

6,249

14,674

Deferred tax assets,non-current

2,339

7,602

Deposit for non-current assets

902

58,722

Restricted cash,non-current portion

6,990

39,982

Long-term investments

373,233

470,964

Other non-current assets

4,558

2,026

Total non-current assets

1,158,198

1,251,843

Total assets

1,824,556

2,000,255

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term loans

297,811

236,985

Deferred revenue and other current liabilities

294,359

327,683

Customers' refundable fees

3,976

7,070

Income tax payable

4,493

4,374

Due to a related party

19

-

Convertible senior notes

-

5,700

Total current liabilities

600,658

581,812

Non-current liabilities:

Long-term loans

123,215

114,109

Convertible senior notes

254,435

291,365

Deferred tax liabilities,non-current

100,214

126,641

Other non-current liabilities

152,800

146,053

Total non-current liabilities

630,664

678,168

Total Liabilities

1,231,322

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 December 31,2018 and 2017: 72,069,645 and 71,425,120;

outstanding shares as of December 31,2018 and 2017: 65,004,587 and

64,360,062

9,286

9,204

Class B ordinary shares,par value HK$1 per share,600,000 shares

authorized for Class A and Class B in aggregate,and24,336,650 shares

and 24,650 shares issued and outstanding as at December 31,2018 and

December 31,2017,respectively

3,124

3,124

Treasure stock

(136,615)

(136,615)

Additional paid-in capital

517,802

500,666

Accumulated other comprehensive income

(73,426)

137,630

Retained earnings

272,370

225,574

Total Fang Holdings Limited shareholders' equity

592,541

739,583

Non-controlling interests

693

692

Total equity

593,234

740,275

TOTAL LIABILITIES AND EQUITY

1,255

Fang 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,

2018

2017

2018

2017

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

Revenues:

Marketing services

41,524

49,632

119,680

149,267

Listing services

24,400

41,813

113,534

165,374

Value-added services

11,110

8,647

36,358

29,791

Financial services

2,357

3,645

18,060

12,055

E-commerce services

2,787

8,480

15,384

87,809

Total revenues

82,178

112,217

303,016

444,296

Cost of Revenues:

Cost of services

(12,436)

(29,702)

(58,570)

(174,599)

Total Cost of Revenues

(12,436)

(29,702)

(58,570)

(174,599)

Gross Profit

69,742

82,515

244,446

269,697

Operating expenses and income:

Selling expenses

(13,845)

(27,819)

(69,532)

(91,250)

General and administrative expenses

(43,815)

(18,923)

(138,249)

(135,688)

Other income (loss)

(202)

238

3,275

(567)

Operating Income

11,880

36,011

39,940

42,192

Foreign exchange gain (loss)

(606)

(198)

(598)

15

Interest income

554

2,688

10,302

11,322

Interest expense

(4,264)

(3,374)

(21,174)

(16,153)

Investment income

(28,858)

2,104

(159,093)

9,946

Government grants

614

975

1,435

3,154

Other non-operating loss

(7)

(4,562)

(30)

(4,562)

Other-than-temporary impairment on

available-for-sale securities

-

-

-

(2,768)

(Loss) income before income taxes and noncontrolling interests

(20,687)

33,644

(129,218)

43,146

Income tax expenses

Income tax (expenses) benefits

(27,475)

(13,062)

11,892

(21,442)

Net (loss) income

(48,162)

20,582

(117,326)

21,704

Net loss attributable to noncontrolling interests

-

(2)

(2)

(3)

Net (loss) income attributable to Fang Holdings Limited shareholders

(48,160)

20,584

(117,324)

21,707

Total other comprehensive (loss) income,net of tax

(2,593)

(4,392)

(47,271)

218,979

Comprehensive (loss) income

(50,755)

16,190

(164,597)

240,683

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

Basic

(0.54)

0.23

(1.31)

0.25

Diluted

(0.54)

0.23

(1.31)

0.24

Earnings per ADS:

Basic

(0.11)

0.05

(0.26)

0.05

Diluted

(0.11)

0.04

(0.26)

0.05

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

Basic

89,512,488

89,060,615

89,384,955

88,475,665

Diluted

89,488

95,347,781

89,955

91,585,677

Weighted average number of ADSs outstanding:

Basic

447,562,440

445,303,077

446,924,775

442,378,324

Diluted

447,440

476,738,907

446,775

464,319,935

Fang Holdings Limited

Reconciliation of GAAP and Non-GAAP Results

(in thousands of U.S. dollars,

December

31,

2018

2017

2018

2017

GAAP income from operations

11,880

36,011

39,940

42,192

Share-based compensation expense

1,844

2,056

14,082

7,218

Non-GAAP income from operations

13,724

38,067

54,022

49,410

GAAP net income

(48,162)

20,582

(117,326)

21,704

Reconciliation items:

Share-based compensation

1,218

Investment income

(28,946

Impairment on investments

-

-

-

2,768

Subtotal

(17,460)

20,534

55,849

21,744

Tax impact of reconciliation items

8,383

(388)

(26,688)

(1,062)

Non-GAAP net income

(9,077)

20,146

29,161

20,682

GAAP earnings per share for Class A and Class B

ordinary shares:

Basic

(0.54)

0.23

(1.31)

0.25

Diluted

(0.54)

0.23

(1.31)

0.24

GAAP earnings per ADS:

Basic

(0.11)

0.05

(0.26)

0.05

Diluted

(0.11)

0.04

(0.26)

0.05

Non-GAAP earnings per share for Class A and Class

B ordinary shares:

Basic

(0.10)

0.28

0.33

0.30

Diluted

(0.10)

0.26

0.33

0.29

Non-GAAP earnings per ADS

Basic

(0.02)

0.06

0.07

0.06

Diluted

(0.02)

0.05

0.07

0.06

Weighted average number of Class A and Class B

ordinary shares outstanding:

Basic

89,935

GAAP net income

(48,704

Add back:

Share-based compensation expense

1,946

Interest expense

4,264

3,374

21,174

16,153

Income tax expenses (benefits)

27,475

13,062

(11,892)

21,442

Depreciation expenses

5,619

6,763

26,856

23,737

Subtract:

Interest income

(554)

(2,688)

(10,302)

(11,322)

Adjusted EBITDA

19,344

41,045

81,685

68,986

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