BEIJING, March 25, 2020 /PRNewswire/ -- Phoenix Tree
Holdings Limited ("Danke" or the "Company") (NYSE: DNK), one of the
largest co-living platforms in China with the fastest growth, today announced
its unaudited financial results for the fourth quarter and fiscal
year ended December 31, 2019.
FINANCIAL AND OPERATING HIGHLIGHTS
All comparisons
are made on a year-over-year ("yoy") basis.
For the Quarter Ended December 31,
2019:
- Revenues increased 112.5% to RMB2,129.3
million (US$305.9 million)
from RMB1,002.0 million.
- Net loss was RMB921.0 million
(US$132.3 million) compared to
RMB556.8 million. Net margin improved
by 12.3 percentage points.
- Adjusted EBITDA[1] was negative RMB461.0 million (US$66.2
million) compared to negative RMB349.2 million. Adjusted EBITDA margin improved
by 13.2 percentage points.
- The number of apartment units operated increased 85.4% to
438,309 units as of December 31,
2019, from 236,420 units as of December 31, 2018.
[1]
Adjusted EBITDA represents EBITDA before share-based compensation
and incentives for apartment sourcing. EBITDA represents net loss
before depreciation and amortization, interest expenses, interest
income, and income tax benefit (expense). Both adjusted EBITDA and
EBITDA are non-GAAP financial measures. See the sections entitled
"Use of Non-GAAP Financial Measures" and "Reconciliations of
Non-GAAP Measures to the Nearest Comparable GAAP Measures" for more
information about the non-GAAP measures referred to in this results
announcement.
|
For the Fiscal Year Ended December 31,
2019:
- Revenues increased 166.5% to RMB7,129.1
million (US$1,024.0 million)
from RMB2,675.0 million.
- Net loss was RMB3,437.2 million
(US$493.7 million) compared to
RMB1,369.7 million. Net margin
improved by 3.0 percentage points.
- Adjusted EBITDA was negative RMB1,921.9
million (US$276.1 million)
compared to negative RMB816.4
million. Adjusted EBITDA margin improved by 3.5 percentage
points.
"We are very pleased with our progress during this quarter and
throughout the year. We experienced rapid growth in operating
scale, with the number of apartment units increasing 85.4%
year-over-year as of December 31,
2019. We expanded our presence to Suzhou, Wuxi, Xi'an, and Chongqing, for a total footprint of 13 cities,
which further demonstrated our ability to duplicate our success
across cities. These achievements drove revenue growth, which
increased 112.5% year-over-year for the quarter and 166.5%
year-over-year for 2019," said Mr. Jing
Gao, Co-founder and Chief Executive Officer of Danke.
"With the coronavirus outbreak, we have experienced a
challenging start to 2020. Our thoughts are with those affected by
the virus, and we are doing what we can to protect the health and
safety of our residents and employees. While continuing to monitor
the rapidly evolving situation, we remain focused on our growth
strategies of enhancing our technological capabilities, further
expanding our scale, expanding and enhancing our product and
service offerings, promoting our brand awareness and industry
influence, and strengthening and expanding our ecosystem. We are
optimistic about our ability to execute on these strategies and are
confident in our ability to deliver long-term, sustainable value
for our shareholders," concluded Mr. Gao.
FINANCIAL RESULTS
For the Quarter Ended December 31,
2019:
Revenues were RMB2,129.3
million (US$305.9 million) in
the fourth quarter of 2019, representing an increase of 112.5% yoy
from RMB1,002.0 million in the fourth
quarter of 2018. The revenue growth was primarily driven by an
increase in the number of opened apartment units as a result of the
continued organic expansion of the business and, to a lesser
extent, by the acquisition of Aishangzu[2] in
March 2019.
[2]
Hangzhou Aishang Danke Technology Co., Ltd ("Aishangzu"), a
residential rental apartment operator that primarily operated in
Hangzhou.
|
Operating expenses were RMB2,967.0 million (US$426.2 million) in the fourth quarter of 2019,
representing an increase of 96.3% yoy from RMB1,511.1 million in the fourth quarter of
2018.
- Rental costs increased 123.8% yoy to RMB1,949.8 million (US$280.1 million) from RMB871.0 million primarily due to an increase in
the number of opened apartments units as a result of the continued
expansion of the business.
- Depreciation and amortization increased 138.4% yoy to
RMB347.9 million (US$50.0 million) from RMB145.9 million primarily due to an increase in
the number of apartment units renovated and opened.
- Other operating expenses increased 90.8% yoy to
RMB205.5 million (US$29.5 million) from RMB107.7 million primarily due to (i) increased
cost of services as the Company operated more apartment units, (ii)
increased incentives for apartment sourcing as additional
commissions and lead generation fees were incurred for sourcing
more apartments, and (iii) increased payroll cost primarily due to
business expansion. The following table sets forth a breakdown of
other operating expenses, expressed as an absolute amount and as a
percentage of revenues, for the periods indicated:
|
Three Months Ended
December 31,
|
|
2018
|
|
2019
|
|
RMB
|
|
%
|
|
RMB
|
|
US$
|
|
%
|
|
(in thousands,
except for percentages)
|
Other operating
expenses:
|
|
|
|
|
|
|
|
|
|
Cost of
services
|
33,731
|
|
3.3
|
|
114,225
|
|
16,407
|
|
5.4
|
Payroll
cost
|
34,546
|
|
3.4
|
|
46,975
|
|
6,748
|
|
2.2
|
Incentives for
apartment sourcing
|
12,541
|
|
1.3
|
|
27,805
|
|
3,994
|
|
1.3
|
Other
expenses
|
26,887
|
|
2.7
|
|
16,469
|
|
2,365
|
|
0.7
|
Total
|
107,705
|
|
10.7
|
|
205,474
|
|
29,514
|
|
9.6
|
- Pre-opening expense decreased 57.8% yoy to
RMB37.6 million (US$5.4 million) from RMB89.1 million primarily due to a lower number
of pre-opening apartment units during the quarter compared to the
prior year period, as the Company strategically sourced a larger
number of apartment units in the fourth quarter of 2018.
- Sales and marketing expenses increased 33.5% yoy to
RMB244.5 million (US$35.1 million) from RMB183.1 million due to (i) an increase in
incentives for apartment renting as additional commissions and lead
generation fees were incurred for renting out apartment units, (ii)
an increase in advertising expenses as the Company enhanced its
advertising efforts , and (iii) an increase in payroll cost
primarily due to business expansion. The following table sets forth
a breakdown of sales and marketing expenses, expressed as an
absolute amount and as a percentage of revenues, for the periods
indicated:
|
Three Months Ended
December 31,
|
|
2018
|
|
2019
|
|
RMB
|
|
%
|
|
RMB
|
|
US$
|
|
%
|
|
(in thousands,
except for percentages)
|
Sales and
marketing expenses:
|
|
|
|
|
|
|
|
|
|
Advertising
expenses
|
81,112
|
|
8.1
|
|
102,663
|
|
14,747
|
|
4.8
|
Payroll
cost
|
64,991
|
|
6.5
|
|
68,376
|
|
9,822
|
|
3.2
|
Incentives for
apartment renting
|
29,891
|
|
3.0
|
|
64,206
|
|
9,223
|
|
3.0
|
Other
expenses
|
7,151
|
|
0.7
|
|
9,224
|
|
1,324
|
|
0.5
|
Total
|
183,145
|
|
18.3
|
|
244,469
|
|
35,116
|
|
11.5
|
- General and administrative expenses increased 76.7%
yoy to RMB131.7 million (US$18.9 million) from RMB74.5 million due to the hiring of additional
personnel for general corporate functions at the Company's
headquarters and for regional managerial roles.
- Technology and product development
expenses increased 26.3% yoy to RMB50.1 million (US$7.2
million) from RMB39.7 million,
which was driven by the expansion of the Company's technology team
with additional, experienced research and development personnel to
develop its technology system and to improve its product and
service offerings.
As a result of the above, operating loss was RMB837.7 million (US$120.3
million) in the fourth quarter of 2019 compared to
RMB509.1 million in the fourth
quarter of 2018.
Interest expenses were RMB99.4 million (US$14.3
million) in the fourth quarter of 2019, representing an
increase of 61.8% yoy from RMB61.5
million in the fourth quarter of 2018. The increase was
attributable to additional bank loans and an increase in interest
expenses related to rent financing, which was driven by an increase
in the number of residents who opted for rent financing as more
apartment units were rented. The following table sets forth a
breakdown of interest expenses, expressed as an absolute amount and
as a percentage of revenues, for the periods indicated:
|
Three Months Ended
December 31,
|
|
2018
|
|
2019
|
|
RMB
|
|
%
|
|
RMB
|
|
US$
|
|
%
|
|
(in thousands,
except for percentages)
|
Interest
expenses
|
|
|
|
|
|
|
|
|
|
Interest expenses
related to rent financing
|
53,208
|
|
5.3
|
|
65,269
|
|
9,375
|
|
3.1
|
Other interest
expenses
|
8,243
|
|
0.8
|
|
34,158
|
|
4,907
|
|
1.6
|
Total
|
61,451
|
|
6.1
|
|
99,427
|
|
14,282
|
|
4.7
|
Net loss was RMB921.0
million (US$132.3 million) in
the fourth quarter of 2019 compared to RMB556.8 million in the fourth quarter of 2018.
Net margin improved by 12.3 percentage points to negative
43.3% from negative 55.6%. Adjusted net loss[3],
which represents net loss before share-based compensation and
incentives for apartment sourcing, was RMB892.1 million (US$128.1
million) in the fourth quarter, compared to RMB542.8 million in the prior year period.
Adjusted net margin improved by 12.3 percentage points to
negative 41.9% from negative 54.2%.
Net loss per basic and diluted share was
RMB3.66 (US$0.53) compared to RMB2.88 in the prior year period. Adjusted net
loss per basic and diluted share [4] was
RMB3.56 (US$0.51) compared to RMB2.82 in the prior year period.
[3]
Adjusted net loss is a non-GAAP financial measure. See the sections
entitled "Use of Non-GAAP Financial Measures" and "Reconciliations
of Non-GAAP Measures to the Nearest Comparable GAAP Measures" for
more information about the non-GAAP measures referred to in this
results announcement.
|
|
[4]
Adjusted net loss per basic and diluted share is a non-GAAP
financial measure. See the sections entitled "Use of Non-GAAP
Financial Measures" and "Reconciliations of Non-GAAP Measures to
the Nearest Comparable GAAP Measures" for more information about
the non-GAAP measures referred to in this results
announcement.
|
EBITDA, which represents net loss before depreciation and
amortization, interest expenses, interest income, and income tax
benefit (expense), was negative RMB489.8
million (US$70.4 million) in
the fourth quarter of 2019 compared to negative RMB363.2 million in the prior year period.
EBITDA margin improved by 13.2 percentage points to negative
23.0% from negative 36.2%. Adjusted EBITDA, which represents
EBITDA before share-based compensation and incentives for apartment
sourcing, was negative RMB461.0
million (US$66.2 million) in
the fourth quarter of 2019 compared to negative RMB349.2 million in the prior year period.
Adjusted EBITDA margin improved by
13.3 percentage points to negative 21.6% from negative
34.9%.
Cash and restricted cash were RMB3,455.9 million (US$496.4 million) as of December 31, 2019.
For the Fiscal Year Ended December 31,
2019:
Revenues were RMB7,129.1
million (US$1,024.0 million)
in 2019, representing an increase of 166.5% yoy from RMB2,675.0 million in 2018. The revenue growth
was primarily driven by an increase in the number of opened
apartment units as a result of the continued organic expansion of
the business, and to a lesser extent, by the acquisition of
Aishangzu in March 2019.
Operating expenses were RMB10,279.9 million (US$1,476.6 million) in 2019, representing an
increase of 163.8% from RMB3,896.4
million in 2018.
- Rental costs increased 194.7% yoy to RMB6,400.0 million (US$919.3 million) from RMB2,171.8 million primarily due to an increase
in the number of opened apartment units as a result of the
continued expansion of the business.
- Depreciation and amortization increased 205.0% yoy to
RMB1,138.2 million (US$163.5 million) from RMB373.2 million primarily due to an increase in
the number of apartment units renovated and opened.
- Other operating expenses increased 156.9% yoy to
RMB758.3 million (US$108.9 million) from RMB295.1 million primarily due to (i) increased
cost of services as the Company operated more apartment units, (ii)
increased payroll cost primarily due to business expansion, and
(iii) increased incentives for apartment sourcing as additional
commissions and lead generation fees were incurred for sourcing
more apartments. The following table sets forth a breakdown of
other operating expenses, expressed as an absolute amount and as a
percentage of revenues, for the years indicated:
|
Year Ended
December 31,
|
|
2018
|
|
2019
|
|
RMB
|
|
%
|
|
RMB
|
|
US$
|
|
%
|
|
(in thousands,
except for percentages)
|
Other operating
expenses:
|
|
|
|
|
|
|
|
|
|
Cost of
services
|
96,834
|
|
3.6
|
|
366,475
|
|
52,641
|
|
5.1
|
Payroll
cost
|
105,387
|
|
3.9
|
|
171,064
|
|
24,572
|
|
2.4
|
Incentives for
apartment sourcing
|
31,077
|
|
1.2
|
|
85,108
|
|
12,225
|
|
1.2
|
Other
expenses
|
61,843
|
|
2.3
|
|
135,686
|
|
19,490
|
|
1.9
|
Total
|
295,141
|
|
11.0
|
|
758,333
|
|
108,928
|
|
10.6
|
- Pre-opening expense decreased 17.2% yoy to RMB224.0 million (US$32.2
million) from RMB270.4 million
primarily due to a lower number of pre-opening apartment units in
2019 compared to the prior year.
- Sales and marketing expenses increased 120.4% yoy
to RMB1,038.2 million (US$149.1 million) from RMB471.0 million due to (i) an increase in
advertising expenses as the Company enhanced its advertising
efforts, (ii) an increase in incentives for apartment renting as
additional commissions and lead generation fees were incurred for
renting out apartment units, and (iii) an increase in payroll cost
primarily due to business expansion. The following table sets forth
a breakdown of sales and marketing expenses, expressed as an
absolute amount and as a percentage of revenues, for the years
indicated:
|
Year Ended
December 31,
|
|
2018
|
|
2019
|
|
RMB
|
|
%
|
|
RMB
|
|
US$
|
|
%
|
|
(in thousands,
except for percentages)
|
Sales and
marketing expenses:
|
|
|
|
|
|
|
|
|
|
Advertising
expenses
|
200,733
|
|
7.5
|
|
506,401
|
|
72,740
|
|
7.1
|
Payroll
cost
|
175,612
|
|
6.6
|
|
256,277
|
|
36,812
|
|
3.6
|
Incentives for
apartment renting
|
75,301
|
|
2.8
|
|
209,338
|
|
30,070
|
|
2.9
|
Other
expenses
|
19,380
|
|
0.7
|
|
66,175
|
|
9,505
|
|
1.0
|
Total
|
471,026
|
|
17.6
|
|
1,038,191
|
|
149,127
|
|
14.6
|
- General and administrative expenses increased
158.8% yoy to RMB527.5 million
(US$75.8 million) from RMB203.8 million due to the hiring of additional
personnel for general corporate functions at the Company's
headquarters and for regional managerial roles.
- Technology and product development
expenses increased 74.6% yoy to RMB193.7 million (US$27.8
million) from RMB111.0
million, which was driven by the expansion of the Company's
technology team with additional, experienced research and
development personnel to develop its technology system and to
improve its product and service offerings.
As a result of the above, operating loss was RMB3,150.8 million (US$452.6 million) in 2019 compared to
RMB1,221.3 million in 2018.
Interest expenses were RMB352.4 million (US$50.6
million) in 2019, representing an increase of 115.7% yoy
from RMB163.4 million in 2018. The
increase was attributable to additional bank loans and an increase
in interest expenses related to rent financing, which was driven by
an increase in the number of residents who opted for rent financing
as more apartment units were rented. The following table sets forth
a breakdown of interest expenses, expressed as an absolute amount
and as a percentage of revenues, for the years indicated:
|
Year Ended
December 31,
|
|
2018
|
|
2019
|
|
RMB
|
|
%
|
|
RMB
|
|
US$
|
|
%
|
|
(in thousands,
except for percentages)
|
Interest
expenses
|
|
|
|
|
|
|
|
|
|
Interest expenses
related to rent financing
|
152,996
|
|
5.7
|
|
241,033
|
|
34,622
|
|
3.4
|
Other interest
expenses
|
10,361
|
|
0.4
|
|
111,375
|
|
15,998
|
|
1.5
|
Total
|
163,357
|
|
6.1
|
|
352,408
|
|
50,620
|
|
4.9
|
Net loss was RMB3,437.2
million (US$493.7 million) in
2019 compared to RMB1,369.7 million
in 2018. Net margin improved by 3.0 percentage points to
negative 48.2% from negative 51.2%. Adjusted net loss, which
represents net loss before share-based compensation and incentives
for apartment sourcing, was RMB3,346.6
million (US$480.7 million) in
2019 compared to RMB1,332.9 million
in 2018. Adjusted net margin improved by 2.9 percentage
points to negative 46.9% from negative 49.8%.
Net loss per basic and diluted share was
RMB15.05 (US$2.16) compared to RMB7.95 in 2018. Adjusted net loss per basic
and diluted share was RMB14.69
(US$2.11) compared to RMB7.75 in 2018.
EBITDA, which represents net loss before depreciation and
amortization, interest expenses, interest income, and income tax
benefit (expense), was negative RMB2,012.6
million (US$289.1 million) in
2019 compared to negative RMB853.3
million in 2018. EBITDA margin improved by 3.7
percentage points to negative 28.2% from negative 31.9%.
Adjusted EBITDA, which represents EBITDA before share-based
compensation and incentives for apartment sourcing, was negative
RMB1,921.9 million (US$276.1 million) in 2019 compared to negative
RMB816.4 million in 2018. Adjusted
EBITDA margin improved by 3.5 percentage points to negative
27.0% from negative 30.5%.
KEY OPERATING METRICS
|
|
As
of
|
|
|
December 31,
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
2018
|
|
2019
|
|
2019
|
|
2019
|
|
2019
|
Number of cities
in which the
Company operated
|
|
9
|
|
9
|
|
10
|
|
13
|
|
13
|
Number of
apartment units the
Company operated (by status):
|
|
|
|
|
|
|
|
|
|
|
Pre-opening apartment
units(1)
|
|
27,007
|
|
15,012
|
|
5,160
|
|
14,835
|
|
7,081
|
Opened apartment
units(2)
|
|
209,413
|
|
270,337
|
|
341,213
|
|
391,911
|
|
431,228
|
Total
|
|
236,420
|
|
285,349
|
|
346,373
|
|
406,746
|
|
438,309
|
Number of
apartment units the
Company operated (by city):
|
|
|
|
|
|
|
|
|
|
|
Beijing, Shanghai and
Shenzhen
|
|
152,630
|
|
176,746
|
|
192,268
|
|
213,866
|
|
223,753
|
Other
cities
|
|
83,790
|
|
108,603
|
|
154,105
|
|
192,880
|
|
214,556
|
Total
|
|
236,420
|
|
285,349
|
|
346,373
|
|
406,746
|
|
438,309
|
|
(1)
Represent apartment units that are within the pre-opening period
(i.e., the period between the effective date of the lease with
the property
owners and the date when the relevant
apartment units achieve ready-to-move-in status).
(2)
Represent apartment units that achieve ready-to-move-in status,
including those rented out and to be rented out.
|
|
|
Year
Ended
|
|
Three Months
Ended
|
December
31,
|
December 31,
|
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
|
|
RMB
|
|
RMB
|
US$
|
|
RMB
|
|
RMB
|
US$
|
|
Average revenues per
rented-out unit per
month(1)
|
|
2,352
|
|
2,130
|
306
|
|
2,264
|
|
2,074
|
298
|
|
Average leasing cost
per unit per month(2)
|
|
1,637
|
|
1,546
|
222
|
|
1,609
|
|
1,504
|
216
|
|
|
(1)
Represents the revenues recognized in the period presented divided
by rented-out unit days (i.e., the simple
sum of the number of days the Company
rented out each apartment unit during a particular period) in
such
period multiplied by the average number of
days per month (assuming 30 days per month).
(2)
Represents leasing cost (i.e., the sum of rental cost and
pre-opening expense) recorded in the period presented
divided by total unit days (i.e., the
simple sum of the number of days the Company operated each
apartment
unit during a particular period) in such
period multiplied by the average number of days per month
(assuming
30 days per month).
|
|
|
As
of
|
|
|
December 31,
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
2018
|
|
2019
|
|
2019
|
|
2019
|
|
2019
|
Occupancy
rate(1)
|
|
76.9%
|
|
77.8%
|
|
89.0%
|
|
86.9%
|
|
76.7%
|
|
|
|
|
|
|
|
|
|
|
(1)
Represents the aggregate number of rented-out apartment units as a
percentage of the number of opened apartment units
as of a given date.
|
SHARES OUTSTANDING
As of the date of this press release, the Company had
approximately 1,828.8 million ordinary shares outstanding. The
total number of shares outstanding excludes shares reserved for
future issuances upon exercise or vesting of awards granted under
the Company's share incentive plans. Each American Depositary Share
(ADS) represents ten Class A ordinary shares.
RECENT DEVELOPMENTS
Series D Financing
As previously disclosed in its filings with the U.S. Securities
and Exchange Commission, the Company completed a Series D
fundraising round in October 2019,
receiving gross proceeds of US$190.0
million. CMC Capital Group and Primavera Capital Group
participated in the round.
Initial Public Offering (IPO)
On January 22, 2020, the Company
completed its IPO on the New York Stock Exchange. In its IPO, the
Company sold a total of 9,600,000 ADSs, each representing ten Class
A ordinary shares. In addition, the underwriters of the IPO
exercised their option to purchase 304,933 additional ADSs. As a
result, the Company received total net proceeds of approximately
US$128.4 million after deducting
underwriter commissions and relevant offering expenses.
Novel Coronavirus Outbreak
Since the outbreak of the coronavirus, the Company has
proactively initiated measures to protect its residents and support
the government's efforts to combat the epidemic. For example, the
Company provided safety notifications and preventative guidelines
to residents through multiple channels, immediately launched online
travel detail registration, and assisted residents with applying
for neighborhood entry permits. In addition, leveraging its online
platform, the Company publicized various online facilitation
services including launching an online, zero-contact apartment
viewing and selection function. Furthermore, the Company offered
partial rental waivers to certain affected residents and held
discussions with property owners to offer rental waivers during
this difficult time. The Company has encouraged employees to work
from home as necessary, and implemented temperature checks and
frequent disinfection of workplaces. To support the relief effort
in Wuhan, the Company provided 800
apartment units in the Wuhan area
for medical workers, free of charge, to provide them with places to
rest.
The Company expects adverse impacts on its business and
financial performance from the novel coronavirus outbreak for the
first quarter of 2020. The Company expects a decrease in the
occupancy rate as residents delay their return to work, which will
result in an adverse impact on the Company's revenues. Since the
outbreak of the novel coronavirus, the Company also adjusted the
number of apartment units it operated to counteract some of the
adverse impacts on its occupancy rate. As a result, the number of
apartment units the Company will operate as of March 31, 2020, is expected to decrease as
compared to that as of the end of 2019. In addition, the Company
has been taking proactive actions to control its costs and
expenses, including significantly slowing down the rate of sourcing
and renovating additional apartment units. Furthermore, the
Company's management team has volunteered for a pay cut during this
difficult time. The Company currently expects the impacts of the
outbreak to be short-term given some early signs of recovery in
China, and remains confident in
the long-term outlook of its industry and growth prospects.
The extent to which the novel coronavirus outbreak impacts the
Company's operating results for the remainder of the fiscal year is
highly uncertain and difficult to predict and will depend on future
developments, including the duration, severity, and reach of the
outbreak, and actions taken to contain the situation. The Company
continues to monitor the rapidly evolving situation in order to
evaluate the impact on its business and financial performance and
to protect the health and safety of its residents and
employees.
BUSINESS OUTLOOK
Based on current market and operating conditions, the Company
expects revenues for the first quarter of 2020 to be between
RMB1,900 million and RMB2,000 million. This forecast reflects the
Company's current and preliminary views, which is subject to change
and substantial uncertainties, particularly in view of the
potential impact of the novel coronavirus outbreak, the effects of
which are difficult to analyze and predict.
CONFERENCE CALL
A conference call and webcast to discuss Danke's financial
results and guidance will be held at 8:00
a.m. U.S. Eastern Time (8:00
p.m. Beijing Time) on March 25,
2020. Interested parties may listen to the conference call
by the dialing numbers below:
United States:
1-888-317-6003
China Domestic: 4001-206115
Hong Kong: 800-963976
International:
1-412-317-6061
Conference ID: 6995877
The replay will be accessible through April 1, 2020, by dialing the following
numbers:
United States:
1-877-344-7529
International: 1-412-317-0088
Conference ID: 10139891
The webcast will be available at ir.danke.com and will be
archived on the site shortly after the call has concluded.
ABOUT DANKE
Danke, one of the largest co-living platforms in China with the fastest growth, is redefining
the residential rental market through technology and aims to help
people live better. Empowered by data, technology, and a
large-scale apartment network, Danke's vibrant and expanding
ecosystem connects and benefits property owners, residents, and
third-party service providers, and delivers quality and
best-in-class services through an innovative "new rental" business
model featuring centralization, standardization, and a seamless
online experience. Danke was founded in 2015 and is headquartered
in Beijing, China. For more
information, please visit ir.danke.com.
CONTACTS
Investor Relations Contact
Danke IR
Email: ir@danke.com
Bill Zima
ICR, Inc.
Phone: +1 203-682-8200
Media Relations Contact
Danke PR
Email: pr@danke.com
Edmond Lococo
ICR, Inc.
Phone: +86 (10) 6583-7510
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 and quotations from management in this
announcement, the impact of the coronavirus outbreak on Danke's
business and financial performance, as well as Danke's strategic
and operational plans, contain forward-looking statements. Danke
may also make written or oral forward-looking statements in its
filings with the U.S. Securities and Exchange Commission (the
"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 Danke'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: Danke's
goals and strategies; Danke's future business development, results
of operations and financial condition; Danke's ability to maintain
and enhance its ecosystem; Danke's ability to expand its apartment
network and resident base, meet evolving market trends, adapt to
changing demands of property owners and residents and improve the
effectiveness of its technology system; the future developments of
the coronavirus outbreak; and fluctuations in general economic and
business conditions in China and
assumptions underlying or related to any of the foregoing. Further
information regarding these and other risks is included in Danke's
filings with the SEC. All information provided in this press
release and in the attachments is as of the date of this press
release, and Danke does not undertake any obligation to update any
forward-looking statement, except as required under applicable
law.
USE OF NON-GAAP FINANCIAL MEASURES
We use EBITDA, adjusted EBITDA and adjusted net loss, each a
non-GAAP financial measure, in evaluating our operating results and
for financial and operational decision-making purposes. We believe
that these measures help us identify underlying trends in our
business that could otherwise be distorted by the effect of certain
expenses and income that we include in net loss. We believe that
these measures provide useful information about our operating
results, enhance the overall understanding of our past performance
and future prospects, and allow for greater visibility with respect
to key metrics used by our management in its financial and
operational decision-making.
EBITDA represents net loss before depreciation and amortization,
interest expenses, interest income, and income tax benefit
(expense). Adjusted EBITDA represents EBITDA before share-based
compensation and incentives for apartment sourcing. Adjusted net
loss represents net loss before share-based compensation and
incentives for apartment sourcing. Incentives for apartment
sourcing consist of commissions and lead generation fees related to
apartment sourcing. We pay commissions and lead generation fees
upfront when the relevant apartment is sourced and amortize such
cost on a straight-line basis over the term of the lease with the
property owner, which is generally four to six years. Share-based
compensation represents compensation expenses in connection with
the restricted shares granted to our co-founders. Share-based
compensation used in the calculation of the adjusted EBITDA and
adjusted net loss represents compensation expenses in connection
with the issuance of restricted shares to our co-founders. It does
not, however, include the share-based compensation in connection
with the repurchase in cash in January
2019 of the share options previously granted to certain
employees.
The presentation of the non-GAAP financial measures is not
intended to be considered in isolation or as a substitute for the
financial information prepared and presented in accordance with
U.S. GAAP. We present the non-GAAP financial measures because they
are used by our management to evaluate operating performance and
formulate business plans. We believe that the non-GAAP financial
measures help identify underlying trends in our business, provide
further information about our results of operations, and enhance
the overall understanding of our past performance and future
prospects.
The non-GAAP financial measures are not defined under U.S. GAAP
and are not presented in accordance with U.S. GAAP. The non-GAAP
financial measures have limitations as analytical tools. Our
non-GAAP financial measures do not reflect all items of income and
expense that affect our operations and do not represent the
residual cash flow available for discretionary expenditures.
Further, the non-GAAP measures may differ from the non-GAAP
information used by other companies, including peer companies, and
therefore their comparability may be limited. We compensate for
these limitations by reconciling the non-GAAP financial measures to
the nearest U.S. GAAP performance measure, both of which should be
considered when evaluating performance. For more information on
these non-GAAP financial measures, please see the table captioned
"RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE
GAAP MEASURES" set forth at the end of this press release. We
encourage investors and others to review our financial information
in its entirety and not rely on a single financial measure.
EXCHANGE RATE INFORMATION
This announcement contains translations between Renminbi and
U.S. dollars solely for the convenience of the reader. The
translations from Renminbi to U.S. dollars and from U.S. dollars to
Renminbi in this announcement were made at a rate of RMB6.9618 to US$1.00, the exchange rate set forth in the H.10
statistical release of the Federal Reserve Board on December 31, 2019. We make no representation that
the Renminbi or U.S. dollar amounts referred to in this
announcement could have been or could be converted into U.S.
dollars or Renminbi, as the case may be, at any particular rate or
at all.
PHOENIX TREE
HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS
(All amounts in
thousands, except for share and per share data)
|
|
|
For the Year Ended
December 31,
|
Three Months Ended
December 31,
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
Revenues
|
2,675,031
|
|
7,129,088
|
|
1,024,029
|
|
1,002,029
|
|
2,129,348
|
|
305,862
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Rental
cost
|
(2,171,755)
|
|
(6,399,982)
|
|
(919,300)
|
|
(871,046)
|
|
(1,949,783)
|
|
(280,069)
|
Depreciation and
amortization
|
(373,231)
|
|
(1,138,225)
|
|
(163,496)
|
|
(145,892)
|
|
(347,868)
|
|
(49,968)
|
Other operating
expenses
|
(295,141)
|
|
(758,333)
|
|
(108,928)
|
|
(107,705)
|
|
(205,474)
|
|
(29,514)
|
Pre-opening
expense
|
(270,399)
|
|
(223,955)
|
|
(32,169)
|
|
(89,107)
|
|
(37,611)
|
|
(5,402)
|
Sales and marketing
expenses
|
(471,026)
|
|
(1,038,191)
|
|
(149,127)
|
|
(183,145)
|
|
(244,469)
|
|
(35,116)
|
General and
administrative expenses
|
(203,847)
|
|
(527,479)
|
|
(75,767)
|
|
(74,540)
|
|
(131,713)
|
|
(18,920)
|
Technology and
product development expenses
|
(110,954)
|
|
(193,725)
|
|
(27,827)
|
|
(39,673)
|
|
(50,124)
|
|
(7,200)
|
Operating
loss
|
(1,221,322)
|
|
(3,150,802)
|
|
(452,585)
|
|
(509,079)
|
|
(837,694)
|
|
(120,327)
|
Change in fair value
of convertible loan
|
(6,962)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Interest
expenses
|
(163,357)
|
|
(352,408)
|
|
(50,620)
|
|
(61,451)
|
|
(99,427)
|
|
(14,282)
|
Interest
income
|
20,226
|
|
63,831
|
|
9,169
|
|
13,777
|
|
16,129
|
|
2,317
|
Investment
income
|
1,778
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Loss before income
taxes
|
(1,369,637)
|
|
(3,439,379)
|
|
(494,036)
|
|
(556,753)
|
|
(920,992)
|
|
(132,292)
|
Income tax (expense)
benefit
|
(112)
|
|
2,167
|
|
311
|
|
—
|
|
—
|
|
—
|
Net
loss
|
(1,369,749)
|
|
(3,437,212)
|
|
(493,725)
|
|
(556,753)
|
|
(920,992)
|
|
(132,292)
|
Loss attributable to
non-controlling interest
|
(4,134)
|
|
(2,380)
|
|
(342)
|
|
(4,134)
|
|
(1,186)
|
|
(170)
|
Net loss
attributable to Phoenix Tree Holdings Limited
|
(1,365,615)
|
|
(3,434,832)
|
|
(493,383)
|
|
(552,619)
|
|
(919,806)
|
|
(132,122)
|
Accretion and
modification of redeemable convertible
preferred shares
|
(111,132)
|
|
(348,756)
|
|
(50,096)
|
|
(60,102)
|
|
(95,857)
|
|
(13,769)
|
Net loss
attributable to ordinary shareholders of
Phoenix Tree Holdings Limited
|
(1,476,747)
|
|
(3,783,588)
|
|
(543,479)
|
|
(612,721)
|
|
(1,015,663)
|
|
(145,891)
|
Net
loss
|
(1,369,749)
|
|
(3,437,212)
|
|
(493,725)
|
|
(556,753)
|
|
(920,992)
|
|
(132,292)
|
Other
comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment, net of nil
income taxes
|
(4,478)
|
|
(54,791)
|
|
(7,870)
|
|
1,217
|
|
33,750
|
|
4,848
|
Less:
reclassification adjustment for gain on available-for-sale
securities realized in net income, net of income
taxes
of RMB112
|
(337)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Comprehensive
loss
|
(1,374,564)
|
|
(3,492,003)
|
|
(501,595)
|
|
(555,536)
|
|
(887,242)
|
|
(127,444)
|
Comprehensive loss
attributable to non-controlling interest
|
(4,134)
|
|
(2,380)
|
|
(342)
|
|
(4,134)
|
|
(1,186)
|
|
(170)
|
Comprehensive loss
attributable to ordinary
shareholders of Phoenix Tree Holdings
Limited
|
(1,370,430)
|
|
(3,489,623)
|
|
(501,253)
|
|
(551,402)
|
|
(886,056)
|
|
(127,274)
|
Net loss per
share
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and
diluted
|
(7.95)
|
|
(15.05)
|
|
(2.16)
|
|
(2.88)
|
|
(3.66)
|
|
(0.53)
|
Weighted average
number of shares outstanding
used in computing net loss per
share
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and
diluted
|
185,677,083
|
|
251,347,723
|
|
251,347,723
|
|
212,630,208
|
|
277,296,944
|
|
277,296,944
|
|
|
|
|
|
|
|
|
|
|
|
|
PHOENIX TREE
HOLDINGS LIMITED
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in
thousands, except for share and per share data)
|
|
|
|
As of
December 31,
|
|
|
2018
|
|
2019
|
|
|
RMB
|
|
RMB
|
|
US$
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
1,087,258
|
|
685,277
|
|
98,434
|
Term
deposits
|
|
137,264
|
|
—
|
|
—
|
Restricted
cash
|
|
1,362,266
|
|
1,417,245
|
|
203,575
|
Accounts receivable,
net
|
|
1,456
|
|
2,837
|
|
408
|
Advance to
landlords
|
|
301,190
|
|
223,146
|
|
32,053
|
Prepayments and other
current assets
|
|
265,794
|
|
636,618
|
|
91,444
|
Total current
assets
|
|
3,155,228
|
|
2,965,123
|
|
425,914
|
Non-current
assets:
|
|
|
|
|
|
|
Restricted
cash
|
|
16,010
|
|
1,353,376
|
|
194,400
|
Property and
equipment, net
|
|
1,989,630
|
|
3,167,537
|
|
454,988
|
Intangible asset,
net
|
|
2,053
|
|
152,846
|
|
21,955
|
Goodwill
|
|
—
|
|
347,455
|
|
49,909
|
Deposits to
landlords
|
|
414,754
|
|
608,475
|
|
87,402
|
Other non-current
assets
|
|
251,936
|
|
410,703
|
|
58,994
|
Total non-current
assets
|
|
2,674,383
|
|
6,040,392
|
|
867,648
|
Total
assets
|
|
5,829,611
|
|
9,005,515
|
|
1,293,562
|
LIABILITIES
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Short-term borrowings
and current portion of long-term borrowings
|
|
2,890,842
|
|
4,554,362
|
|
654,193
|
Accounts
payable
|
|
718,890
|
|
726,455
|
|
104,349
|
Rental
payable
|
|
180,994
|
|
553,410
|
|
79,492
|
Advance from
residents
|
|
279,534
|
|
976,348
|
|
140,244
|
Amount due to a
related party
|
|
10,343
|
|
11,343
|
|
1,629
|
Deposits from
residents
|
|
287,304
|
|
605,356
|
|
86,954
|
Accrued expenses and
other current liabilities
|
|
214,170
|
|
495,484
|
|
71,172
|
Total current
liabilities
|
|
4,582,077
|
|
7,922,758
|
|
1,138,033
|
Non-current
liabilities:
|
|
|
|
|
|
|
Long-term borrowings,
excluding current portion
|
|
182,646
|
|
669,250
|
|
96,132
|
Deferred income tax
liabilities
|
|
—
|
|
7,042
|
|
1,012
|
Other non-current
liabilities
|
|
51,539
|
|
27,419
|
|
3,938
|
Total non-current
liabilities
|
|
234,185
|
|
703,711
|
|
101,082
|
Total
liabilities
|
|
4,816,262
|
|
8,626,469
|
|
1,239,115
|
MEZZANINE
EQUITY
|
|
|
|
|
|
|
Total mezzanine
equity
|
|
2,859,632
|
|
6,106,203
|
|
877,101
|
SHAREHOLDERS'
DEFICIT
|
|
|
|
|
|
|
Ordinary
Shares
|
|
35
|
|
35
|
|
5
|
Accumulated other
comprehensive loss
|
|
(3,061)
|
|
(57,852)
|
|
(8,310)
|
Accumulated
deficit
|
|
(1,839,123)
|
|
(5,663,670)
|
|
(813,535)
|
Total shareholders'
deficit attributable to ordinary shareholders
|
|
(1,842,149)
|
|
(5,721,487)
|
|
(821,840)
|
Non-controlling
interest
|
|
(4,134)
|
|
(5,670)
|
|
(814)
|
Total shareholders'
deficit
|
|
(1,846,283)
|
|
(5,727,157)
|
|
(822,654)
|
Total liabilities,
mezzanine equity and shareholders' deficit
|
|
5,829,611
|
|
9,005,515
|
|
1,293,562
|
|
|
|
|
|
|
|
PHOENIX TREE
HOLDINGS LIMITED
UNAUDITED SUMMARY
OF CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
DATA
(All amounts in
thousands, except for share and per share data)
|
|
|
|
Year Ended
December 31,
|
|
Three Months Ended
December 31,
|
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
Net cash used in
operating activities
|
|
(1,164,248)
|
|
(1,911,216)
|
|
(274,529)
|
|
(466,435)
|
|
(281,927)
|
|
(40,496)
|
Net cash used in
investing activities
|
|
(1,324,021)
|
|
(2,038,089)
|
|
(292,753)
|
|
(821,868)
|
|
(369,263)
|
|
(53,041)
|
Net cash provided by
financing
activities
|
|
4,692,659
|
|
4,945,078
|
|
710,316
|
|
2,540,840
|
|
1,863,220
|
|
267,635
|
Effect of foreign
currency exchange
rate changes on cash and restricted
cash
|
|
47,142
|
|
(5,409)
|
|
(777)
|
|
(24,890)
|
|
(53,920)
|
|
(7,746)
|
Net increase in cash
and restricted cash
|
|
2,251,532
|
|
990,364
|
|
142,257
|
|
1,227,647
|
|
1,158,110
|
|
166,352
|
Cash and restricted
cash at the
beginning of the period
|
|
214,002
|
|
2,465,534
|
|
354,152
|
|
1,237,887
|
|
2,297,788
|
|
330,057
|
Cash and restricted
cash at the end of
the period
|
|
2,465,534
|
|
3,455,898
|
|
496,409
|
|
2,465,534
|
|
3,455,898
|
|
496,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PHOENIX TREE
HOLDINGS LIMITED
RECONCILIATIONS OF
NON-GAAP MEASURES TO THE NEAREST COMPARABLE GAAP
MEASURES
(All amounts in
thousands, except for share and per share data)
|
|
The table below sets
forth a reconciliation of the Company's net loss to EBITDA and
adjusted EBITDA for the periods indicated:
|
|
|
|
Year Ended
December 31,
|
|
Three Months Ended
December 31,
|
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
Net
Loss
|
|
(1,369,749)
|
|
(3,437,212)
|
|
(493,725)
|
|
(556,753)
|
|
(920,992)
|
|
(132,292)
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
373,231
|
|
1,138,225
|
|
163,496
|
|
145,892
|
|
347,868
|
|
49,968
|
Interest
expenses
|
|
163,357
|
|
352,408
|
|
50,620
|
|
61,451
|
|
99,427
|
|
14,282
|
Income tax expense
(benefit)
|
|
112
|
|
(2,167)
|
|
(311)
|
|
—
|
|
—
|
|
—
|
Subtract:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
20,226
|
|
63,831
|
|
9,169
|
|
13,777
|
|
16,129
|
|
2,317
|
EBITDA
|
|
(853,275)
|
|
(2,012,577)
|
|
(289,089)
|
|
(363,187)
|
|
(489,826)
|
|
(70,359)
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentives for
apartment sourcing
|
|
31,077
|
|
85,108
|
|
12,225
|
|
12,541
|
|
27,805
|
|
3,994
|
Share-based
compensation
|
|
5,808
|
|
5,551
|
|
797
|
|
1,415
|
|
1,040
|
|
149
|
Adjusted
EBITDA
|
|
(816,390)
|
|
(1,921,918)
|
|
(276,067)
|
|
(349,231)
|
|
(460,981)
|
|
(66,216)
|
The table below sets
forth a reconciliation of the Company's net loss to adjusted net
loss for the periods indicated:
|
|
|
|
Year Ended
December 31,
|
|
Three Months Ended
December 31,
|
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
Net
Loss
|
|
(1,369,749)
|
|
(3,437,212)
|
|
(493,725)
|
|
(556,753)
|
|
(920,992)
|
|
(132,292)
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentives for
apartment sourcing
|
|
31,077
|
|
85,108
|
|
12,225
|
|
12,541
|
|
27,805
|
|
3,994
|
Share-based
compensation
|
|
5,808
|
|
5,551
|
|
797
|
|
1,415
|
|
1,040
|
|
149
|
Adjusted Net
Loss
|
|
(1,332,864)
|
|
(3,346,553)
|
|
(480,703)
|
|
(542,797)
|
|
(892,147)
|
|
(128,149)
|
The table below sets
forth a reconciliation of the Company's net loss per basic and
diluted share to adjusted net loss per basic and diluted share
for the periods indicated:
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
Three Months Ended
December 31,
|
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
Net loss
attributable to
ordinary shareholders of
Phoenix Tree Holdings
Limited
|
|
(1,476,747)
|
|
(3,783,588)
|
|
(543,479)
|
|
(612,721)
|
|
(1,015,663)
|
|
(145,891)
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentives for
apartment
sourcing
|
|
31,077
|
|
85,108
|
|
12,225
|
|
12,541
|
|
27,805
|
|
3,994
|
Share-based
compensation
|
|
5,808
|
|
5,551
|
|
797
|
|
1,415
|
|
1,040
|
|
149
|
Adjusted net loss
attributable
to ordinary shareholders of
Phoenix Tree Holdings
Limited
|
|
(1,439,862)
|
|
(3,692,929)
|
|
(530,457)
|
|
(598,765)
|
|
(986,818)
|
|
(141,748)
|
Adjusted net
loss per share
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and
diluted
|
|
(7.75)
|
|
(14.69)
|
|
(2.11)
|
|
(2.82)
|
|
(3.56)
|
|
(0.51)
|
Weighted average
number of
shares outstanding used in
computing adjusted net loss
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and
diluted
|
|
185,677,083
|
|
251,347,723
|
|
251,347,723
|
|
212,630,208
|
|
277,296,944
|
|
277,296,944
|
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SOURCE Phoenix Tree Holdings Limited