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spk02: Hello, and thank you for standing by for Leju's first half 2021 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. Please note that today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference, Ms. Michelle Yuan, Leju's Deputy CFO. Please go ahead, ma'am.
spk00: Hello, everyone, and welcome to LeJu's first half 2021 earnings conference call. Today, we'll update you regarding our financial results for the first half year-end June 30, 2021. If you would like a copy of the earnings press release or would like to sign up for our email distribution list, please go to our IR website at ir.leju.com. Leading the call today is Mr. Jeffrey He, our CEO. We will review operational highlights for the first half of 2021. I will then discuss the financial results in more detail. We will then open the call to questions. Before we continue, please allow me to read you Le Ju Safe Harbor Statement. Some of the statements during this conference call are forward-looking statements made under Safe Harbor provisions of Section 21E of the Securities Exchange Act of 1934 as amended. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but are not limited to those outlined in our public findings with the SEC. You are encouraged to review the forward-looking statement section of our annual report filed with the SEC for additional information concerning factors that could cause those differences. The AG does not undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Our earnings press release and this call include discussions of unaudited gap financial information, as well as some unaudited non-gap financial measures. Our press release contains a reconciliation of the unaudited non-gap measures to the unaudited most directly comparable gap measures. Please note that unless otherwise stated, all figures mentioned during this conference call are in U.S. dollars. I will now turn the call over to Leju CEO Jeffrey He. He Zong, please go ahead.
spk01: Thank you, everyone, for joining us on today's call. In the first half of 2021, amid tightening regulations in China's real estate industry, the pressure on real estate developers' operations and sales continued to increase. Against this challenging backdrop, our overall business was able to maintain steady growth. However, due to the deterioration of credit status of one of our real estate developer clients, our bad debt provision for the first half of this year increased by $48.9 million compared to the same period of 2020, resulting in a loss for the first half of this year. With the support of the strategic cooperation between our controlling shareholder e-house China Enterprise Holding Limited and the Alibaba Group Holding Limited, we held a series of online promotional events including the second online real estate fair and the June 18 Topic House Festival on the luxury housing platform and the luxury flagship store on Timor-Halfang. Subsequently, we jointly supported We joined hands with T-Mart Haufang to create a new smart transaction ecosystem for the real estate sector and launched four project series, including our smart coupon, smart verification, smart project opening, and smart subscription services to help real estate enterprises conduct efficient project field service, project opening services, and transactional services. The success of this event and the launch of our luxury flagship store on Timor-Haufang have greatly improved the operational capabilities of luxury advertising business and e-commerce business. At the same time, our top-down approach has pioneered a new model based on developed clients' official flagship stores on Timor-Haufang, helping them kick off their digitalization from zero to one. In the second half of this year, we will firmly seize the opportunities created by the digitalization of the real estate marketing and the deep incorporation with developers as we strive to expand our entire business and develop new e-commerce business models. At the same time, we will continue to focus on platform construction and the content creation and make efforts to improve user growth, optimize user experience, and the stiffness and further consolidate religious influence among industry media. We will also continue to strengthen our team, further optimize our organizational structure, and improve operational efficiency in order to lay a solid foundation for our future development. Now I'll turn the call over to our Deputy CFO, Mr. Michelle Yuan, who will reveal our financial highlights for the first half of 2021.
spk00: Thank you, Jeffrey. For the first half of 2021, we reported total revenues of $301.1 million, an increase of 8% from the same period last year. Our e-commerce revenues increased by 13% to $231.4 million for the first half of 2021 as a result of an increase in the number of discount coupons redeemed, partially offset by a decrease in the average price per discount coupon redeemed. E-commerce services contributed 77% of total revenues for the first half 2021. Our online advertising revenues contributing 23% of total revenues decreased by 6% to 69.3 million for the first half 2021 due to a decrease in property developers' demand for online advertising, while our listing revenues increased by 18%. to $0.4 million as a result of an increase in secondary real estate brokers' demand for the first half of 2021. Loss from operations was $49.9 million for the first half of 2021 compared to income from operations of $1.2 million for the same period last year, primarily due to bed debt provision, which was increased by $48.9 million compared to the same period of 2020. Net loss attributable to LeJu shareholders was $47.8 million for the first half of 2021, compared to net income attributable to LeJu shareholders of $1.5 million for the same period of 2020. Non-GAAP loss from operations was $43.4 million for the first half of 2021, compared to non-GAAP income from operations of $8.3 million for the same period last year. Non-GAAP net loss attributable to Low-G shareholders was $42.6 million for the first half of 2021, compared to non-GAAP net income attributable to Low-G shareholders of $7.2 million for the same period last year. As of June 30, 2021, our cash and cash equivalence balance was $328 million. Our net cash flows generated in operating activities for the first half of 2021 were $38.8 million, mainly attributable to provision for allowance for doctoral accounts of $51.7 million and a decrease in accounts receivable of $46.5 million, partially offset by non-GAAP net loss of $41.7 million and an increase in prepaid expenses and other current assets of $15.2 million. Looking ahead, given the current macroeconomic situation and our prudent operating model, we estimate that our second half of 2021 total revenues will be approximately between $300 million and $310 million, which is relatively flat compared to the first half of 2021. Please note this forecast reflects our current and preliminary view, which is subject to change. This concludes our prepared remarks. We are now ready to take your questions. Operator, please go ahead.
spk02: As a reminder, ladies and gentlemen, it is star followed by 1 on your telephone keypad if you wish to ask a question. And it is the pound key to cancel your request. Once again, it is star followed by 1 on your telephone keypad if you wish to ask a question. If you wish to cancel your request, please press the pound or hash key. We have a first question coming from the line of Mark Rodriguez from Stonegate Capital. Please go ahead.
spk03: Good morning, everybody. Thank you, or good evening. Thank you for taking my questions. I was wondering if maybe you can talk a little bit more about... Yes, hi. I was wondering if you could talk a little bit more about the bad debt provision that you took in this quarter. If you can just kind of walk us through when that sort of happened or when it became apparent that this was going to be something that you needed to do.
spk01: Okay. As you know, the overall industry actually were not so good since last year, and some certain clients, one of our major clients actually encountered some deterioration of their credit, so we actually have to take this provision. I can give you some notice that as of June 13, And this client, the total account receivables and the note receivables were actually 672 million RMB, comprised of 220 RMB million in note receivables and 152 million RMB in account receivables. The credit rating of note receivables was higher than account receivables. So this quarter, we take back bad debt provision was RMB $324 million. Is that okay?
spk03: Yes, that's very helpful. In terms of just the overall real estate landscape and these impacts that you saw for this particular client, are there any other customers or clients that you're monitoring closely in terms of their credit quality?
spk01: So far, we actually, you know, our clients, excluding this client, our other client base are very diversified, and none of them take a significant portion of our revenue source. So from the base side, I think, our client base is quite safe. That's the first one. The second one is that we already noticed that some developers may have even, or some of their projects may have some security problem. So prior to them, we will stop cooperation with them. So currently, we checked all the projects. We cooperated with all the clients. And currently, I think we All the projects we are currently cooperating with are very safe.
spk03: Got it. Very helpful. And in your prepared remarks, you mentioned tightening regulations as it relates to the real estate industry. I was wondering if you could just kind of put some broad strokes on how you see that evolving, and then if you could, There's obviously been a lot of news about the regulatory environment in general in China and changing regulations as it relates to Internet-related operations. I was wondering if you could also please talk a little bit about how you see those trends impacting Leju.
spk01: Okay, first of all, I think that the regulation of the real estate industry will be if not further tightening, will be consistent in the coming future. So the government, I think the policy, the core of their policy is maintaining the house price. In the past maybe half a year, I think you can see in major cities and in their downtown areas, most projects, the pre-developed sales, the government limits price. which caused thousands of buyers, they will want to buy the project. So this kind of situation actually is getting changed because the government imposed strict policies over the pricing, even on the primary sector and the secondary sector. So I think in the coming future, the market... the market price will encounter some pressure, which we think is not good for developers. But maybe we'll create some new opportunities for rich because we are doing digital marketing for them. If the developers, they don't feel pressure on selling houses, so the opportunity for rich is small. So I think when the market goes down, they will leave some new opportunities for Leji to promote the digital marketing. That's the second one. The third one is that we think in the coming future, as you said, the Internet, actually the government imposed a series of policies over the entertainment side. But for the e-commerce side, I think... Most, actually now most homebuyers, they are getting online to get house information. And the stricter industry policy situations also will push the developers to invest more online to find new homebuyers, which I think will be a new opportunity for us because we are still focusing on how to create digital marketing capabilities for these developers, which I think is a new market for us.
spk03: Excellent. Very helpful. And in terms of the online promotional events you had this last quarter, the second online real estate fair in the June Toppik House Festival, can you just talk a little bit about how those performed versus your expectations? And then if you could also talk a little bit about the LeJu flagship store, how that is also performing.
spk01: Okay, previously, actually, last year, we actually did the first online house fair, mainly on the LeJu platform. This year, actually, we put this fair on both LeJu platform and Tmall platform. You know, Tmall is one of the leading e-commerce platform in China. Their traffic is much larger than Leju. This will help developers when they join our online fair, they will get more traffic. That's the first one. The second one is that actually when we asked developers when they join our online fairs, they need to give some additional discount to the online buyers, which actually will encourage the sales online. So the results actually is quite satisfactory, and the joining of the Tmall House will increase our traffic value and also will increase the influence of our online fair.
spk03: Excellent. And then if you could just maybe discuss what other sort of promotional activities do you have planned for the second half of 2021?
spk01: Actually, we, you know, that traditional promotion event of T-Mall is November 11th that we call the Song Shi Yi. But I think we will catch up with this opportunity. And also, for the real estate industry, December is usually the hot season for the homebuyers to buy the houses. So we will also do December 12, that we call the . So we will catch up with these two points as our online promotion time slot. During that period, I think we both, it's kind of we will encourage more developers to put their projects online, and we also will set up a new online platform to host these projects, and also we will encourage more developers. Now they are more willing to give special discounts when doing these promotion events. I think we'll be very, we also will, create some innovational tools or online games like that to encourage more buyers to get this online house information and even get more discounts from online to encourage them to buy house online. We are currently, we are still designing the marketing plan. Yeah.
spk03: Excellent. Thank you for your time. I appreciate it.
spk02: Once again, ladies and gentlemen, it is star followed by the number one on your telephone keypads if you wish to ask a question. Once again, it is star one to ask a question. Once again, ladies and gentlemen, hit the star followed by 1 on your telephone keypad to ask a question. Once again, hit the star 1 to ask a question. We do not have any further questions at this moment. I would like to hand the conference back to our host. Please take over, ma'am.
spk00: This concludes today's call. If you have any follow-up questions, please contact us at the numbers or emails provided on our earnings release and on our website. Thank you.
spk02: Thank you. That does conclude our conference for today. Thank you all for your participation. You may disconnect.
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