Renren Announces Unaudited Fourth Quarter and Fiscal Year 2018 Financial Results

BEIJING,May 15,2019 -- Renren Inc. (NYSE: RENN) ("Renren" or the "Company"),which operates a leading premium used auto business in China (NASDAQ: KXIN) and several US-based SaaS businesses,today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31,2018.

Fourth Quarter 2018 Highlights

Total net revenues were US$122.2 million,a 35.8% increase from the corresponding period in 2017.

- Used auto sales revenue wasUS$114.6 million,a 47.3% increase from the corresponding period in 2017.

Operating loss was US$40.5 million,compared to an operating loss of US$25.4 million in the corresponding period in 2017.

Net loss attributable to the Company was US$23.3 million,compared to a net loss of US$54.3 million in the corresponding period in 2017.

Adjusted loss from continuing operations (1) (non-GAAP) was US$37.5 million,compared with an adjusted loss from continuing operations of US$19.8 million in the corresponding period in 2017.

Adjusted net income (1) (non-GAAP) was US$11.7 million,compared to an adjusted net loss of US$46.1 million in the corresponding period in 2017.

Fiscal Year 2018 Highlights

Total net revenues were US$498.2 million,a 185% increase from the corresponding period in 2017.

- Used auto sales revenue wasUS$467.2 million,a 286% increase from 2017.

- Internet Value-Added Services (IVAS) and others revenues were US$28.5 million,a 17.5% increase from 2017.

Operating loss was US$113.4 million,compared to an operating loss of US$77.7 million in 2017.

Net income attributable to the Company was US$72.5 million,compared to net loss attributable to the Company of US$110.4 million in 2017.

Adjusted loss from continuing operations (1) (non-GAAP) was US$81.3 million,compared to an adjusted net loss from continuing operations of US$49.6 million in 2017.

Adjusted net income (1) (non-GAAP) was US$126.2 million,compared to an adjusted net loss of US$79.8 million in 2017.

(1)

Adjusted loss from continuing operations and adjusted net income (loss) are non-GAAP measures,which are defined as loss from operations excluding share-based compensation expenses and amortization of intangible assets and adjusted net income (loss) excluding share-based compensation expenses,fair value change of contingent consideration and amortization of intangible assets,respectively. See "About Non-GAAP Financial Measures" below.

Fourth Quarter 2018 Results

Total net revenues for the fourth quarter of 2018 were US$122.2 million,representing a 35.8% increase from the corresponding period in 2017,due to the rapid growth of our used auto retail business since its launch in the second quarter of 2017.

Used auto sales revenues for the fourth quarter of 2018 were US$114.6 million,representing a 47.3% increase from the corresponding period in 2017. This is a new business that we initiated in the second quarter of 2017.

IVAS and others net revenues were US$7.6 million,compared to US$7.4 million from the corresponding period of 2017.

Financing income was negligible for the fourth quarter of 2018,compared to US$4.7 million in the corresponding period of 2017. Our used auto dealership financing business ceased to extend financing to third parties from January 2018,and instead has focused on internal financing to our own used car dealerships since that time.

Cost of revenues was US$111.6 million,compared to US$91.4 million from the corresponding period of 2017. The increase was primarily due to the growth of our used auto sales business.

Operating expenses were US$51.0 million,a 114% increase from the corresponding period of 2017.

Selling and marketing expenses were US$7.2 million,a 15.8% increase from the corresponding period of 2017. The increase was primarily due to the increase in headcount and personnel-related expenses for the used auto sales business.

Research and development expenses were US$7.2 million,a 22.6% increase from the corresponding period in 2017. The increase was primarily due to an increase in headcount and personnel-related expenses for the SaaS business.

General and administrative expenses were US$7.6 million,a 35.7% decrease from the corresponding period in 2017. The decrease was primarily due to the closing of the disposition of Oak Pacific Investment in June 2018,since the preparations for this transaction contributed significantly to our general and administrative expenses in the corresponding period in 2017.

Impairment of goodwill was US$29.1 million for the fourth quarter of 2018. We had no impairment of goodwill in the corresponding period of 2017.

Share-based compensation expenses,which were all included in operating expenses,were US$2.9 million,compared to US$5.5 million in the corresponding period in 2017.

Loss from operations was US$40.5 million,compared to a loss from operations of US$25.4 million in the corresponding period in 2017.

Loss in equity method investments was US$0.3 million,compared to loss of US$0.4 million in the corresponding period in 2017.

Income from discontinued operations was US$59.4 million,compared to a loss of US$26.6 million in the corresponding period in 2017. The income from discontinued operations in the fourth quarter of 2018 was due to the gain on disposal of Renren social networking service ("SNS") business. The disposal of SNS Business represents a strategic shift and has a major effect on the Company's result of operations.

Net loss attributable to the Company was US$23.3 million,compared to a net loss of US$54.3 million in the corresponding period in 2017.

Adjusted loss from continuing operations (non-GAAP) was US$37.5 million,compared with an adjusted loss from continuing operations of US$19.8 million in the corresponding period in 2017. Adjusted loss from operations is defined as loss from operations excluding share-based compensation expenses and amortization of intangible assets.

Adjusted net income (non-GAAP) was US$11.7 million,compared to an adjusted net loss of US$46.1 million in the corresponding period in 2017. Adjusted net income (loss) is defined as net income (loss) excluding share-based compensation expenses,fair value change of contingent consideration and amortization of intangible assets.

Fiscal Year 2018 Results

Total net revenues in 2018 were US$498.2 million,representing a 185% increase from 2017,due to the rapid growth of our used auto retail business since its launch in the second quarter of 2017.

Used auto sales revenue for the year of 2018 were US$467.2 million,representing a 286% increase from 2017. This is a new business that we initiated in the second quarter of 2017.

IVAS and others net revenues were US$28.5 million,representing a 17.5% increase from 2017. The increase was primarily due to the service revenue from the used auto business.

Financing income was US$2.5 million,compared to US$29.3 million in 2017. Our used auto dealership financing business ceased to extend financing to third parties from January 2018,and instead has focused on internal financing to our own used car dealerships since that time.

Cost of revenues in 2018 was US$476.5 million,compared to US$163.3 million in 2017. The increase was primarily due to the cost of used car sales.

Operating expenses in 2018 were US$135.1 million,a 51.8% increase from 2017.

Selling and marketing expenses in 2018 were US$34.6 million,a 72.2% increase from 2017,primarily due to an increase in headcount and personnel-related expenses for the used auto sales business.

Research and development expenses in 2018 were US$26.3 million,a 51.1% increase from 2017,primarily due to personnel related expense increases for the SaaS business.

General and administrative expenses in 2018 were US$71.1 million,a 38.1% increase from 2017. The increase was primarily due to an increase of US$16.1 million write-offs of advance to suppliers and an increase of US$2.2 million in share-based compensation expenses.

Gain on disposal of property and equipment in 2018 was US$25.9 million in 2018. We had no gain on disposal of property and equipment in 2017.

Impairment of goodwill was US$29.1 million in 2018. We had no impairment of goodwill in 2017.

Share-based compensation expenses in 2018,were US$31.6 million,compared to US$28.0 million in 2017. The increase was mainly due to stock options granted during the first quarter of 2018 by our subsidiary conducting our used car business.

Operating loss in 2018 was US$113.4 million,compared to US$77.7 million operating loss in 2017.

Non-operating loss was US$33.1 million in 2018,compared to an income of US$34.9 million in 2017. The non-operating loss in 2018 was mainly due to fair value change of contingent consideration.

Loss in equity method investments were US$2.5 million,compared to an income of US$56.0 million in 2017. The decrease was mainly due to a US$58.3 million gain on disposal of certain shares of Social Finance Inc in 2017.

Income from discontinued operations was US$223.3 million in 2018,compared to a loss of US$119.3 million in 2017. The income from discontinued operations in 2018 was mainly due to the gain on disposal of Oak Pacific Investment and Renren SNS business.

Net income attributable to the Company in 2018 was US$72.5 million,compared to a net loss of US$110.4 million in 2017.

Adjusted loss from continuing operations (non-GAAP) was US$81.3 million,compared to an adjusted net loss from continuing operations of US$49.6 million in 2017. Adjusted loss from operations is defined as loss from operations excluding share-based compensation expenses and amortization of intangible assets.

Adjusted net income (non-GAAP) was US$126.2 million,compared to an adjusted net loss of US$79.8 million in 2017. Adjusted net income (loss) is defined as net income (loss) excluding share-based compensation expenses,fair value change of contingent consideration and amortization of intangible assets.

Business Outlook

The Company expects to generate revenues in an amount ranging from US$110 million to US$115 million in the first quarter of 2019. This forecast reflects the Company's current and preliminary view,which is subject to change.

Conference Call Information

The Company will not host a conference call. Please contact our Investor Relations Department if you have any questions.

About Renren Inc.

Renren Inc. (NYSE: RENN) operates a leading premium used auto business in China (NASDAQ: KXIN) and several US-based SaaS businesses. Renren's American depositary shares,each of which represents fifteen Class A ordinary shares,trade on NYSE under the symbol "RENN".

Safe Harbor Statement

This announcement contains forward-looking statements. These 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," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things,the business outlook for the first quarter of 2019 and quotations from management in this announcement,as well as Renren's strategic and operational plans,contain forward-looking statements. Renren may also make written or oral forward-looking statements in its filings with the U.S. Securities and Exchange Commission ("SEC"),in its annual report to shareholders,in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Statements that are not historical facts,including statements about Renren's beliefs and expectations,are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement,including but not limited to the following: our goals and strategies; our future business development,financial condition and results of operations; our expectations regarding demand for and market acceptance of our services; our expectations regarding the retention and strengthening of our relationships with used auto dealerships; our plans to enhance user experience,infrastructure and service offerings; competition in our industry in China; and relevant government policies and regulations relating to our industry. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the SEC. All information provided in this press release and in the attachments is as of the date of this press release,and Renren does not undertake any obligation to update any forward-looking statement,except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Renren's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"),Renren uses "adjusted income (loss) from operations" and "net income (loss)" which are defined as non-GAAP financial measures by the SEC,in evaluating its business. We define adjusted income (loss) from operations as income (loss) from operations excluding share-based compensation expenses and amortization of intangible assets and adjusted net income (loss) as net income (loss) excluding share-based compensation expenses,respectively. Renren continuously and periodically reviews the operating results and business performance from operational perspectives. Starting from the first quarter of 2018,there was a significant impact on net income (loss) due to the material and significant noncash amount of fair value change of contingent consideration relating to the used auto dealerships of the emerging used auto business. Due to the nature of the business,Renren believes that including adjusted income (loss) from operations and excluding the impact of such fair value changes more appropriately reflects Renren's results of operations,and provides investors with a better understanding of Renren's business performance. To facilitate investors and analysts,we present the foresaid impact in "Reconciliation of non-GAAP results of operations measures to the comparable GAAP financial measures" retrospectively. We present adjusted income (loss) from operations and net income (loss) because they are used by our management to evaluate our operating performance. We also believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies.

These non-GAAP financial measures are not intended to be considered in isolation from,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 non-GAAP results of operations measures to the comparable GAAP financial measures" at the end of this release.

For more information,please contact:

Investor Relations Department

Renren Inc.

Tel: (86 10) 8448 1818 ext. 1300

Email: ir@renren-inc.com

RENREN INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands of US dollars)

December 31,

December 31,

2017

2018

ASSETS

Current assets:

Cash and cash equivalents

$

125,199

$

15,333

Restricted cash

47,253

5,818

Accounts receivable,net

6,098

2,584

Financing receivable,net

125,478

3,486

Prepaid expenses and other current assets

48,226

49,515

Amounts due from related parties

188

20,829

Inventory,net

95,012

59,197

Assets of discontinued operations - current

20,551

—

Total current assets

468,005

156,762

Non-current assets:

Long-term financing receivable,net

8

—

Property and equipment,net

29,509

1,555

Goodwill and intangible assets,net

104,197

85,526

Long-term investments

34,742

22,341

Amount due from related parties-non-current

—

133,880

Restricted cash – non-current

26,075

36,362

Other non-current assets

958

767

Assets of discontinued operations – non-current

530,670

—

Total non-current assets

726,159

280,431

TOTAL ASSETS

$

1,194,164

$

437,193

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

19,095

$

8,255

Short-term debt

61,479

49,887

Accrued expenses and other current liabilities

31,877

33,055

Payable to investors

142,689

15

Amounts due to related parties

7,059

55

Deferred revenue

11,433

3,716

Income tax payable

11,727

20,602

Contingent consideration

5,944

11,929

Liabilities of discontinued operations – current

79,244

—

Total current liabilities

370,547

127,514

Non-current liabilities:

Long-term debt

47,665

35,000

Long-term contingent consideration

60,850

93,741

Liabilities of discontinued operations– non-current

6,356

—

Total non-current liabilities

114,871

128,741

TOTAL LIABILITIES

$

485,418

$

256,255

Shareholders' Equity:

Class A ordinary shares

727

737

Class B ordinary shares

305

305

Additional paid-in capital

1,303,117

709,137

Statutory reserves

6,712

6,712

Accumulated deficit

(653,173)

(563,737)

Accumulated other comprehensive income (loss)

17,116

(5,689)

Total Renren Inc. shareholders' equity

674,804

147,465

Noncontrolling interests

33,942

33,473

TOTAL EQUITY

708,746

180,938

TOAL LIABILITIES AND EQUITY

$

1,193

RENREN INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands of US dollars,except share data and per share data,ADS data,and per ADS data)

For the Three Months Ended

For the Twelve Months Ended

December 31,

September 30,

2017

2018

2018

2017

2018

Net revenues:

Used auto sales

$

77,797

$

106,338

$

114,560

$

121,084

$

467,232

IVAS and others

7,440

5,962

7,609

24,271

28,510

Financing income

4,733

28

1

29,269

2,456

Total net revenues

89,970

112,328

122,170

174,624

498,198

Cost of revenues

(91,420)

(115,805)

(111,641)

(163,314)

(476,468)

Gross (loss) profit

(1,450)

(3,477)

10,529

11,310

21,730

Operating expenses(income):

Selling and marketing

(6,234)

(8,531)

(7,218)

(20,070)

(34,562)

Research and development

(5,840)

(6,664)

(7,160)

(17,435)

(26,349)

General and administrative

(11,831)

(24,519)

(7,609)

(51,494)

(71,094)

Gain on disposal of property and equipment

-

-

-

-

25,928

Impairment of goodwill

-

-

(29,055)

-

(29,055)

Total operating expenses

(23,905)

(39,714)

(51,042)

(88,999)

(135,132)

Loss from operations

(25,355)

(43,191)

(40,513)

(77,689)

(113,402)

Other (loss) income

(1,236)

(1,157)

(3,135)

2,656

(2,014)

Fair value change of contingent consideration

(2,601)

18,301

(39,837)

(2,601)

(29,604)

Interest income

616

2,387

2,158

1,988

5,760

Interest expenses

(1,218)

(1,861)

(1,078)

(4,322)

(5,103)

Realized loss on short-term investments

-

-

-

(100)

-

Realized gain (loss) on disposal of long-term investments

4,585

(2,209)

68

37,311

(2,141)

Total non-operating income (loss)

146

15,461

(41,824)

34,932

(33,102)

Loss before provision of income tax and loss in equity method investments,net of tax

(25,209)

(27,730)

(82,337)

(42,757)

(146,504)

Income tax expenses

(1,936)

(1,096)

(7,807)

(4,479)

(9,850)

Loss before loss in equity method investments,net of tax

(27,145)

(28,826)

(90,144)

(47,236)

(156,354)

Loss in equity method investments,net of tax

(439)

(692)

(342)

55,985

(2,463)

(Loss) income from continuing operations

(27,584)

(29,518)

(90,486)

8,749

(158,817)

Discontinued operation:

Loss from operations of discontinued operations,net of income tax

(26,606)

(956)

(277)

(119,252)

(18,799)

Gain on deconsolidation of the subsidiaries,net of income tax

-

1,612

59,656

-

242,097

(Loss) income from discontinued operations,net of tax

(26,606)

656

59,379

(119,252)

223,298

Net (loss) income

(54,190)

(28,862)

(31,107)

(110,503)

64,481

Net income (loss) attributable to noncontrolling interests

(99)

102

7,837

76

8,059

Net (loss) income attributable to Renren Inc.

$

(54,289)

$

(28,760)

$

(23,270)

$

(110,427)

$

72,540

Net (loss) income per share from continuing operations attributable to Renren Inc.shareholders:

Basic

$

(0.03)

$

(0.03)

$

(0.08)

$

0.01

$

(0.15)

Diluted

$

(0.03)

$

(0.03)

$

(0.08)

$

0.01

$

(0.15)

Net (loss) income per share from discontinued operations attributable to Renren Inc.shareholders:

Basic

$

(0.03)

$

0.00

$

0.06

$

(0.12)

$

0.22

Diluted

$

(0.03)

$

0.00

$

0.06

$

(0.12)

$

0.20

Net (loss) income per share attributable to Renren Inc. shareholders:

Basic

$

(0.05)

$

(0.03)

$

(0.02)

$

(0.11)

$

0.07

Diluted

$

(0.05)

$

(0.03)

$

(0.02)

$

(0.11)

$

0.07

Net (loss) income attributable to Renren Inc. shareholders per ADS*:

Basic

$

(0.79)

$

(0.42)

$

(0.34)

$

(1.61)

$

1.05

Diluted

$

(0.79)

$

(0.42)

$

(0.34)

$

(1.61)

$

0.99

Weighted average number of shares used in calculating net (loss) income per ordinary share attributable to Renren Inc. shareholders:

Basic

1,030,786,885

1,036,609,262

1,040,385,805

1,028,537,406

1,421,063

Diluted

1,095,805,917

Weighted average number of shares used in calculating net (loss) income per ordinary share from discontinued operations attributable to Renren Inc. shareholders:

Basic

1,116,051,687

1,079,618,090

1,917

* Each ADS represents 15 Class A ordinary shares.

Reconciliation of Non-GAAP results of operations measures to the comparable GAAP financial measures

(In thousands of US dollars)

For the Three Months Ended

For the Twelve Months Ended

December 31,

2017

2018

2018

2017

2018

Loss from operations

$

(25,355)

$

(43,191)

$

(40,513)

$

(77,689)

$

(113,402)

Add back: Shared-based compensation expenses

5,494

2,915

2,898

28,016

31,605

Add back: Amortization of intangible assets

35

131

101

55

494

Adjusted loss from continuing operations

$

(19,826)

$

(40,145)

$

(37,514)

$

(49,618)

$

(81,303)

Net (loss) income

$

(54,190)

$

(28,862)

$

(31,107)

$

(110,503)

$

64,481

Add back: Shared-based compensation expenses

5,605

Add back: Fair value change of contingent consideration

2,601

(18,301)

39,837

2,601

29,604

Add back: Amortization of intangible assets

35

131

101

55

494

Adjusted net (loss) income

$

(46,060)

$

(44,117)

$

11,729

$

(79,831)

$

126,184

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