Jupai Reports First Quarter 2020 Results

SHANGHAI,May 28,2020 -- Jupai Holdings Limited ("Jupai" or the "Company") (NYSE: JP),a leading third-party wealth management service provider,focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China,today announced its unaudited financial results for the first quarter ended March 31,2020.

FIRST QUARTER 2020 FINANCIAL HIGHLIGHTS

Net revenues in the first quarter of 2020 were RMB96.6 million (US$[1]13.6 million),a decrease of 65.6% from the corresponding period in 2019.

(RMB '000,except percentages)

Q1 2019

Q1 2019 %

Q1 2020

Q1 2020 %

YoY Change %

One-time commissions

58,630

20.9%

39,496

40.9%

-32.6%

Recurring management fees

192,221

68.4%

25,293

26.2%

-86.8%

Recurring service fees

16,291

5.8%

31,798

32.9%

95.2%

Other service fees

13,904

4.9%

-

-

-100.0%

Total net revenues

281,046

100.0%

96,587

100.0%

-65.6%

Loss from operations in the first quarter of 2020 was RMB12.1 million (US$1.7 million),an increase of 2.5% from the corresponding period in 2019.

Net loss attributable to ordinary shareholders in the first quarter of 2020 was RMB19.9 million (US$2.8 million),a decrease of 22.3% from the corresponding period in 2019.

Adjusted net loss attributable to ordinary shareholders (non-GAAP[2]) in the first quarter of 2020 was RMB17.2 million (US$2.4 million),a decrease of 24.0% from the corresponding period in 2019.

FIRST QUARTER 2020 OPERATIONAL UPDATES

Total number of active clients[3] during the first quarter of 2020 was 559,as compared to 1,279 active clients during the first quarter of 2019.

The aggregate value of wealth management products distributed by the Company during the first quarter of 2020 was RMB1.4 billion (US$0.2 billion),a 48.0% decrease from the corresponding period in 2019.

Wealth management products distributed by the Company - breakdown by product type

Three months ended

March 31,2019

March 31,2020

Product type

(RMB in millions,except percentages)

Fixed income products

1,907

68%

971

67%

Private equity products

586

21%

212

15%

Secondary market equity fund products

52

2%

206

14%

Other products

238

9%

59

4%

All products

2,783

100%

1,448

100%

Jupai's coverage network as of March 31,2020 included 44 client centers covering 39 cities,as compared to 65 client centers covering 47 cities as of March 31,2019.

Total assets under management[4] as of March 31,2020 were RMB39.8 billion (US$5.6 billion),a 24.8% decrease from March 31,2019.

Assets under management – breakdown by product type

As of

March 31,except percentages)

Fixed income products

18,055

34%

13,048

33%

Private equity products

32,239

61%

24,684

62%

Secondary market equity fund products

1,601

3%

994

2%

Other products

1,079

2%

1,090

3%

All products

52,974

100%

39,816

100%

[1]The U.S. dollars (US$) amounts disclosed in this press release,except for those transaction amounts that were actually settled in U.S. dollars,are presented solely for the convenience of the reader. The conversion of Renminbi (RMB) into U.S. dollars (US$) in this press release is based on the noon buying rate on March 31,2020,as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System,which was RMB7.0808 to US$1.00. The percentages stated in this press release are calculated based on the Renminbi amounts.

[2]Jupai's non-GAAP financial measures are derived from adjusting the corresponding GAAP financial measures by excluding the effects of share-based compensation and amortization of intangible assets resulted from business acquisitions.

[3]"Active clients" for a given period refers to clients who purchase wealth management products distributed by Jupai at least once during that given period.

[4]"Assets under management" or "AUM" of Jupai refers to the amount of capital contributions made by investors to the funds managed by the Company,for which the Company is entitled to receive management fees. The amount of AUM of Jupai is recorded and carried based on the historical cost of the contributed assets instead of fair market value of assets for almost all AUM of Jupai. For assets denominated in currencies other than Renminbi,the AUM are translated into Renminbi upon their contribution,without interim value adjustments solely due to changes in foreign exchange rates. As a result,Jupai's management fees for almost all its AUM are calculated based on the historical cost balance of the AUM.

"Our cost control measures helped to drive improved bottom line results compared to the first quarter of 2019,even as our top-line performance remained under pressure due to the COVID-19 outbreak," said Mr. Jianda Ni,Jupai's chairman of the board and chief executive officer. "We remain confident for the future prospects for Jupai and China's wealth management industry,which has been reflected in theUS$10 millionshare repurchase program we announced in late February 2020. We will continue to focus on our core strategies: improving our cost controls and increasing operating efficiency,enhancing our product portfolio,optimizing our risk control system,improving project transparency and seeking potential overseas growth opportunities."

Ms. Min Liu,Jupai's chief financial officer,said,"Reflecting our continuous efforts to streamline costs,Jupai achieved another sequential reduction in operating expenses in the first quarter of 2020. Ourtotal operating cost and expenses declined by 35% and cost of revenues were down by 32%. We expect to continue improving our bottom-line in the quarters ahead as we further enhance operating efficiencies."

FIRST QUARTER 2020 FINANCIAL RESULTS

Net Revenues

Net revenuesfor the first quarter of 2020 were RMB96.6 million (US$13.6 million),a 65.6% decrease from the corresponding period in 2019,primarily due to decreases in one-time commissions,recurring management fees and other service fees.

Net revenues from one-time commissions for the first quarter of 2020 were RMB39.5 million (US$5.6 million),a 32.6% decrease from the corresponding period in 2019,primarily as a result of a decrease in the aggregate value of wealth management products distributed by the Company.

Net revenues from recurring management fees for the first quarter of 2020 were RMB25.3 million (US$3.6 million),an 86.8% decrease from the corresponding period in 2019,primarily due to the decrease in carried interest and the value of assets under management. RMB31.9 thousand (US$4.5 thousand) and RMB127.4 million carried interest was recognized as part of Jupai's recurring management fees in the first quarter of 2020 and 2019,respectively.

Net revenues from recurring service fees for the first quarter of 2020 were RMB31.8 million (US$4.5 million),a 95.2% increase from the corresponding period in 2019,primarily because the Company provided ongoing services to more product suppliers. The Company recognized RMB0.4 million (US$0.06 million) and nil variable performance fees in the first quarter of 2020 and 2019,respectively.

Net revenues from other service fees for the first quarter of 2020 were nil,as compared to RMB13.9 million from the corresponding period in 2019,primarily due to a decrease in sub-advisory fees collected from other companies.

Operating Costs and Expenses

Operating costs and expensesfor the first quarter of 2020 were RMB108.7 million (US$15.4 million),a decrease of 62.9% from the corresponding period in 2019.

Cost of revenues for the first quarter of 2020 was RMB62.0 million (US$8.8 million),a decrease of 64.8% from the corresponding period in 2019,primarily due to decreased compensation to wealth management advisors and client managers,as a result of the decrease in the aggregate value of wealth management products distributed by the Company and the cost control measures the Company adopted.

Selling expenses for the first quarter of 2020 were RMB19.9 million (US$2.8 million),a decrease of 63.3% from the corresponding period in 2019,primarily due to the decrease in marketing and promotion expenses as a result of cost control and the decrease in revenues.

General and administrative expenses for the first quarter of 2020 were RMB35.3 million (US$5.0 million),a decrease of 43.7% from the corresponding period in 2019,mainly due to the cost control measures the Company adopted.

Other operating income (government subsidies) received by the Company for the first quarter of 2020 was RMB8.5 million (US$1.2 million),as compared to nil from the corresponding period in 2019. Government subsidies were recorded when received,with their availability and amount dependent upon government policies.

Operating marginfor the first quarter of 2020 was -12.6%,as compared to -4.2% for the corresponding period in 2019.

Income tax expenses for the first quarter of 2020 were RMB12.7 million (US$1.8 million),a 16.6% decrease from the corresponding period in 2019,primarily due to a decrease in taxable income.

Net Loss

- Net Loss

Net loss attributable to ordinary shareholders for the first quarter of 2020 was RMB19.9 million (US$2.8 million),a 22.3% decrease from the corresponding period in 2019.

Net margin attributable to ordinary shareholders for the first quarter of 2020 was -20.6%,as compared to -9.1% from the corresponding period in 2019.

Net loss attributable to ordinary shareholders per basic and diluted American depositary share ("ADS") for the first quarter of 2020 was RMB0.59 (US$0.08) and RMB0.59 (US$0.08),respectively,as compared to RMB0.76 and RMB0.76,from the corresponding period in 2019.

- Adjusted Net Loss(non-GAAP)

Adjusted net loss attributable to ordinary shareholders (non-GAAP) for the first quarter of 2020 was RMB17.2 million (US$2.4 million),a 24.0% decrease from the corresponding period in 2019.

Adjusted net margin attributable to ordinary shareholders (non-GAAP) for the first quarter of 2020 was -17.8%,as compared to -8.1% from the corresponding period in 2019.

Adjusted net loss attributable to ordinary shareholders per diluted ADS (non-GAAP) for the first quarter of 2020 was RMB0.51 (US$0.07),as compared to RMB0.67 from the corresponding period in 2019.

Repurchase of Shares

As of May 22,we had repurchased 292,112 ADSs as part of the share repurchase program of up to US$10 million announced in February 2020,at a total cost of US$316,453,inclusive of transaction charges.

Balance Sheet and Cash Flow

As of March 31,the Company had RMB682.0 million (US$96.3 million) in cash,cash equivalents and restricted cash,as compared to RMB712.3 million as of December 31,2019.

Net cash used in operating activitiesduring the first quarter of 2020 was RMB21.2 million (US$3.0 million).

Net cash used in investing activitiesduring the first quarter of 2020 was RMB2.0 million (US$0.3 million).

Net cash used in financing activitiesduring the first quarter of 2020 was RMB7.1 million (US$1.0 million).

CONFERENCE CALL

Jupai's management will host an earnings conference call on May 28,2020 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing/Hong Kong time).

Please register in advance for the conference call using the link provided below. Upon registering,you will be provided with a calendar invite with participant dial-in numbers,passcode,and a unique access pin by email. To join the conference,simply dial the number you receive after preregistering,enter the passcode followed by your pin,and you will join the conference instantly.

PRE-REGISTER LINK: https://s1.c-conf.com/diamondpass/10007204-invite.html

A replay of the conference call may be accessed by phone at the following number until June 4,2020:

U.S./Canada:

+1-855-833-1031

Hong Kong:

800-930-639

Singapore:

800-101-3223

Passcode:

10007204

Additionally,a live and archived webcast will be available at http://jupai.investorroom.com.

DISCUSSION OF NON-GAAP FINANCIAL MEASURES

In addition to disclosing financial results prepared in accordance with U.S. GAAP,the Company's earnings release contains non-GAAP financial measures that exclude the effects of all forms of share-based compensation and amortization of intangible assets related to acquisition. The reconciliation of these non-GAAP financial measures to the nearest GAAP measures as set forth in the table captioned "Reconciliation of GAAP to Non-GAAP Results" below.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for financial measures prepared in accordance with U.S. GAAP. The financial results reported in accordance with U.S. GAAP and reconciliation of GAAP to non-GAAP results should be carefully evaluated. The non-GAAP financial measure used by the Company may be prepared differently from,and therefore may not be comparable to,similarly titled measures used by other companies.

When evaluating the Company's operating performance in the periods presented,management reviewed non-GAAP net income results reflecting adjustments to exclude the impacts of share-based compensation and amortization of intangible assets related to acquisition,to supplement U.S. GAAP financial data. As such,the Company believes that the presentation of the non-GAAP net income attributable to ordinary shareholders,non-GAAP net income attributable to ordinary shares per diluted ADS and non-GAAP net margin attributable to ordinary shareholders provides important supplemental information to investors regarding financial and business trends relating to the Company's financial condition and results of operations in a manner consistent with that used by management. Pursuant to U.S. GAAP,the Company recognized significant amounts of expenses for the restricted shares,share options and amortization of intangible assets related to acquisition. The Company utilized the non-GAAP financial results to make financial results comparable period to period and to better understand its historical business operations.

ABOUT JUPAI HOLDINGS LIMITED

Jupai Holdings Limited ("Jupai") (NYSE: JP) is a leading third-party wealth management service provider focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China. Jupai's comprehensive and personalized client service and broad range of carefully selected third-party and self-developed products have made it a trusted brand among its clients. Jupai maintains extensive and targeted coverage of China's high-net-worth population.

For more information,please visit http://jupai.investorroom.com.

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," "confident" and similar statements. Among other things,the business outlook and quotations from management in this announcement,as well as Jupai's strategic and operational plans,contain forward-looking statements. Jupai may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission,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 Jupai'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: the goals and strategies of the Company and the Company's ability to manage its growth and implement its business strategies; future business development,financial condition and results of operations of the Company; condition of the wealth management market in China and internationally; the demand for and market acceptance of the products the Company distributes; the Company's ability to maintain and further grow its active high-net-worth client base and maintain or increase the amount of investment by clients; developments in relevant government policies and regulations relating to the Company's industry and the Company's ability to comply with those policies and regulations; the Company's ability to attract and retain quality employees; the Company's ability to adapt to potential uncertainties in China's real estate industry and stay abreast of market trends and technological advances; the results of the Company's investments in research and development to enhance its product choices and service offerings; general economic and business conditions in China; and the Company's ability to protect its reputation and enhance its brand recognition. Further information regarding these and other risks is included in Jupai's filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release,and Jupai does not undertake any obligation to update any such information,including forward-looking statements,as a result of new information,future events or otherwise,except as required under applicable law.

--FINANCIAL AND OPERATIONAL TABLES FOLLOW --

Jupai Holdings Limited

Unaudited Condensed Consolidated Balance Sheets

(In RMB,except for USD data)

As of

December31,

March31,

2019

2020

2020

RMB

RMB

USD

Assets

Current assets:

Cash and cash equivalents

711,205,698

680,910,281

96,162,903

Restricted cash

1,100,000

1,000

155,350

Accounts receivable

-

382,252

53,984

Other receivables

14,125,535

16,388,386

2,314,482

Amounts due from related parties

95,193,003

91,338,050

12,899,397

Other current assets

4,984,541

17,361,551

2,451,919

Total current assets

826,608,777

807,480,520

114,038,035

Long-term investments

228,950,000

228,000

32,333,917

Investment in affiliates

107,541,000

105,228,475

14,861,100

Amounts due from related parties-- non-current

229,117,743

229,246,112

32,375,736

Property and equipment,net

27,834,760

25,575,682

3,611,976

Intangible assets,net

38,250,479

37,311,751

5,269,426

Other non-current assets

17,886,020

17,812,892

2,515,662

Right-of-use assets

68,101

55,520,638

7,841,012

Deferred tax assets

4,063

4,369,259

617,057

Total Assets

1,549,746,943

1,511,495,329

213,463,921

Liabilities and Equity

Current liabilities:

Accrued payroll and welfare expenses

58,318,063

50,833,167

7,179,015

Income tax payable

82,800,208

93,128,174

13,152,211

Other tax payable

695,081

9,109,045

1,286,443

Amounts due to related parties-- current

19,439,664

19,217,717

2,714,060

Deferred revenue from related parties

42,053,959

32,331

4,554,052

Deferred revenue

35,674,503

40,621,030

5,736,785

Other current liabilities

78,201,072

62,307

8,356

Total current liabilities

317,182,550

307,709,771

43,456,922

Deferred revenue-- non-current from related parties

4,917,845

2,497,036

352,649

Deferred revenue-- non-current

311,651

259,151

36,599

Operating Lease Liabilities-- non-current

28,518,789

20,982,766

2,963,333

Total Liabilities

350,930,835

331,448,724

46,809,503

Equity

1,198,816,108

1,180,046,605

166,654,418

Total Liabilities and Total Shareholders' Equity

1,921

Jupai Holdings Limited

Unaudited Condensed Consolidated Income Statements

(In RMB,except for USD data and ADS data)

Three months ended

March 31,

March 31,

2019

2020

2020

RMB

RMB

USD

Revenues

Third party revenues

76,387,330

62,182

8,803,127

Related party revenues

205,826,865

34,406,566

4,859,135

Total revenues

282,214,195

96,739,748

13,662,262

Taxes and surcharges

(1,167,813)

(152,482)

(21,534)

Net revenues

281,382

96,587,266

13,640,728

Operating costs and expenses:

Cost of revenues

(175,877,670)

(61,996,617)

(8,755,595)

Selling expenses

(54,239,469)

(19,923,722)

(2,813,767)

General and administrative expenses

(62,759,846)

(35,348,081)

(4,992,103)

Other operating income-- government subsidies

-

8,159

1,207,372

Total operating cost and expenses

(292,876,985)

(108,719,261)

(15,354,093)

Loss from operations

(11,830,603)

(12,131,995)

(1,713,365)

Interest income

1,469,415

1,005

166,649

Investment income

1,844,495

974,705

137,655

Other income

2,070,292

384,112

54,246

Total other income

5,384,202

2,538,822

358,550

Loss before taxes and loss from equity in affiliates

(6,446,401)

(9,593,173)

(1,815)

Income tax expense

(15,194,152)

(12,670,219)

(1,789,377)

Loss from equity in affiliates

(1,995,730)

(2,312,525)

(326,591)

Net loss

(23,636,283)

(24,917)

(3,470,783)

Net (income) loss attributable to non-controlling interests

(1,956,073)

4,682,921

661,355

Net loss attributable to ordinary shareholders

(25,592,356)

(19,892,996)

(2,428)

Net loss per ADS:

Basic

(0.76)

(0.59)

(0.08)

Diluted

(0.76)

(0.59)

(0.08)

Weighted average number of ADSs used in computation:

Basic

33,594,914

33,030

33,030

Diluted

33,030

Jupai Holdings Limited

Unaudited Condensed Comprehensive Income Statements

(In RMB,except for USD data)

Three months ended

March 31,

2019

2020

2020

RMB

RMB

USD

Net loss

(23,783)

Other comprehensive loss,net of tax:

Change in cumulative foreign currency translation adjustment

(4,498,736)

3,750,763

529,709

Other comprehensive (loss) income

(4,709

Comprehensive loss

(28,135,019)

(20,825,154)

(2,941,074)

Less: Comprehensive income (loss) attributable to non-controlling

interests

1,530,331

(4,720,144)

(666,612)

Comprehensive loss attributable to ordinary shareholders

(29,665,350)

(16,105,010)

(2,274,462)

Jupai Holdings Limited

Reconciliation of GAAP to Non-GAAP Results

(In RMB,except for ADS data and percentages)

Three months ended

March 31,

2019

2020

RMB

RMB

Net margin attributable to ordinary shareholders

-9.1%

-20.6%

Adjusted net margin attributable to ordinary shareholders(non-GAAP)

-8.1%

-17.8%

Net loss attributable to ordinary shareholders

(25,996)

Adjustment for share-based compensation (net of tax effect of nil for both three months

ended March 31,2019 and 2020)

2,368,040

2,700,813

Adjustment for amortization of intangible assets related to acquisition (net of tax effect of

RMB196,316 and nil for three months ended March 31,2019 and 2020,respectively)

588,954

-

Adjusted net loss attributable to ordinary shareholders (non-GAAP)

(22,635,362)

(17,192,183)

Net lossattributable to ordinary shareholders per ADS,diluted

(0.76)

(0.59)

Adjusted net loss attributable to ordinary shareholders per ADS,diluted (non-GAAP)

(0.67)

(0.51)

Weighted average number of ADSs used in computation:

Diluted

33,030

View original content:/news-releases/jupai-reports-first-quarter-2020-results-301066743.html