Renren Announces Unaudited Second Quarter 2018 Financial Results

Sep 11, 2018

BEIJING, Sept. 11, 2018 /PRNewswire/ -- Renren Inc. (NYSE: RENN) ("Renren" or the "Company"), which operates a social networking service (SNS) business, used auto business and SaaS business, today announced its unaudited financial results for the second quarter ended June 30, 2018.

Second Quarter 2018 Highlights

  • Total net revenues were US$135.0 million, a 582% increase from the corresponding period in 2017.
    - Used auto sales revenue was US$122.7 million. We initiated used auto sales business through one of our subsidiaries in the second quarter of 2017.
    - Internet Value-Added Services (IVAS) and others net revenues were US$12.1 million, an 18.6% increase from the corresponding period in 2017.
    - Financing income was US$0.2 million, a 97.4% decrease from the corresponding period in 2017.
  • Gross profit was US$5.4 million, a 16.0% increase from the corresponding period in 2017.
  • Operating loss was US$32.6 million, compared to an operating loss of US$15.1 million in the corresponding period in 2017.
  • Net income (1) attributable to the Company was US$166.1 million, compared to a net loss of US$17.2 million in the corresponding period in 2017.
  • Adjusted loss from continuing operations (2) (non-GAAP) was US$19.0 million, compared with an adjusted loss from continuing operations of US$9.9 million in the corresponding period in 2017.
  • Adjusted net income (2) (non-GAAP) was US$177.5 million, compared to an adjusted net loss of US$12.0 million in the corresponding period in 2017.

 

(1)       On April 30, 2018, the Company announced a series of transactions that included a cash dividend by the Company and a private placement by its subsidiary Oak Pacific Investment (the "Transaction"). The Transaction was completed in June 2018. The operational results of Oak Pacific Investment for the three months ended June 30, 2017, March 31, 2018, and June 30, 2018, have been excluded from the Company's financial results from continuing operations and have been separately presented under discontinued operations. There was a one-time gain amounting to US$180.8 million that resulted from the Transaction and was not related to Renren's continued operations post Transaction.

(2)       Adjusted loss from operations and 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 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.

"We are pleased that our revenues grew 582% year-over-year, supported by the addition of our used auto retail business one year ago. We have been able to leverage Renren's past experience in integrating more technology into our auto business, including a mobile app for consumers to browse for autos and purchase value-added services, big data analytics to optimize procurement and an auto dealership SaaS platform that improve efficiencies in our dealership operations. Q2 also saw the disposition of almost all of our investments in private companies. We believe this will sharpen our management focus on our auto and SaaS operating businesses as we strive to create sustainable shareholder value for the long term," commented Joseph Chen, Chairman and Chief Executive Officer.

Second Quarter 2018 Results

Total net revenues for the second quarter of 2018 were US$135.0 million, representing a 582% increase from the corresponding period in 2017, due to the launch of the used auto retail business in the second quarter of 2017.

Used auto sales revenue of US$122.7 million was generated through one of our subsidiaries conducting our used auto sales business, which is a new business that we initiated in the second quarter of 2017.

IVAS and others net revenues were US$12.1 million, representing an 18.6% increase from the corresponding period of 2017. The increase was mainly due to the revenue from our Renren mobile live streaming service and SaaS business.

Financing income was US$0.2 million for the second quarter of 2018, compared to US$8.6 million in the corresponding period of 2017. The decrease was in line with the decrease of financing receivable due to the reformation of used auto dealership financing services from US$238.6 million as of June 30, 2017 to US$13.2 million as of June 30 2018.

Cost of revenues was US$129.6 million, compared to US$15.1 million from the corresponding period of 2017. The increase was primarily due to the cost of used auto sales.

Operating expenses were US$38.0 million, a 92.6% increase from the corresponding period of 2017.

Selling and marketing expenses were US$9.9 million, an 81.4% 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$6.8 million, a 48.3% 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$21.3 million, a 120% increase from the corresponding period in 2017. The increase was primarily due to an increase in share-based compensation expenses.

Share-based compensation expenses, which were all included in operating expenses, were US$13.5 million, compared to US$5.2 million in the corresponding period in 2017. The increase was mainly due to a modification which repriced the exercise price with respect to options.

Loss from operations was US$32.6 million, compared to a loss from operations of US$15.1 million in the corresponding period in 2017.

Loss in equity method investments was US$0.6 million, compared to earnings of US$57.7 million in the corresponding period in 2017.

Net income attributable to the Company was US$166.1 million, compared to a net loss of US$17.2 million in the corresponding period in 2017. The improvement was primarily due to a US$180.8 million one off gain recognized resulting from the transaction the Company announced on April 30, 2018.

Adjusted loss from continuing operations (non-GAAP) was US$19.0 million, compared with an adjusted loss from operations of US$9.9 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$177.5 million, compared to an adjusted net loss of US$12.0 million in the corresponding period in 2017. The adjusted net income for the second quarter of 2018 was mainly attributable to a one-time gain amounting to US$180.8 million that resulted from the foresaid Transaction. 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$123 million to US$128 million in the third quarter of 2018, representing a 104.3% to 112.6% year-over-year increase. 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 social networking service (SNS) business, used auto business and SaaS business. 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 third quarter of 2018 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; the expected growth of the social networking site market in China; 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, fair value change of contingent consideration and amortization of intangible assets, 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:

Cynthia Liu
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,



June 30,





2017



2018











 ASSETS 




















 Current assets: 










 Cash and cash equivalents 





$

128,595


$

30,508

 Restricted cash 






47,253



6,347

 Accounts receivable, net 






6,260



1,423

 Financing receivable, net 






125,478



13,225

 Prepaid expenses and other current assets 






50,183



59,148

 Amounts due from related parties 






15,224



6,708

 Inventory, net 






95,012



75,215

 Total current assets 






468,005



192,574











 Non-current assets: 










 Long-term financing receivable, net 






8



-

 Property and equipment, net 






29,532



1,891

 Goodwill and intangible assets, net 






104,197



124,168

 Long-term investments 






565,366



35,565

 Non-current amount due from a related party 






-



90,000

 Other non-current assets 






27,056



41,218

 Total non-current assets 






726,159



292,842











 TOTAL ASSETS 





$

1,194,164


$

485,416











 LIABILITIES AND EQUITY 




















 Current liabilities: 










 Accounts payable 





$

20,046


$

6,473

 Short-term debt 






61,479



54,300

 Accrued expenses and other current liabilities 






45,898



30,711

 Payable to investors 






142,689



2,353

 Amounts due to related parties 






17,746



3,545

 Deferred revenue and advance from customers  






11,489



6,895

 Income tax payable 






12,652



12,513

 Contingent consideration  






5,944



7,812

 Long-term debt - current 






52,604



-

 Total current liabilities 






370,547



124,602











 Non-current liabilities: 










 Long-term debt 






47,665



40,000

 Long-term contingent consideration 






60,850



79,181

 Other non-current liabilities 






6,356



-

 Total non-current liabilities 






114,871



119,181











 TOTAL LIABILITIES 





$

485,418


$

243,783











 Shareholders' Equity: 










 Class A ordinary shares 






727



731

 Class B ordinary shares 






305



305

 Additional paid-in capital 






1,303,117



703,619

 Statutory reserves 






6,712



6,712

 Accumulated deficit 






(653,173)



(511,708)

 Accumulated other comprehensive income 






17,116



(2,178)











 Total Renren Inc. shareholders' equity 






674,804



197,481











 Noncontrolling interests 






33,942



44,152











 TOTAL EQUITY 






708,746



241,633











 TOAL LIABILITIES AND EQUITY 





$

1,194,164


$

485,416


 

 

 

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 Six Months Ended





June 30,



March 31,



June 30,



June 30,



June 30,





2017



2018



2018



2017



2018

 Net revenues: 

















 Used auto sales 



$

1,042


$

123,606


$

122,728


$

1,042


$

246,334

 IVAS and others 




10,187



13,970



12,085



21,311



26,055

 Financing income 




8,559



2,203



224



17,906



2,427

 Total net revenues 




19,788



139,779



135,037



40,259



274,816


















 Cost of revenues  




(15,107)



(127,740)



(129,605)



(29,319)



(257,345)


















 Gross profit 




4,681



12,039



5,432



10,940



17,471


















 Operating expenses: 

















 Selling and marketing 




(5,467)



(11,397)



(9,916)



(10,930)



(21,313)

 Research and development 




(4,606)



(7,339)



(6,830)



(10,385)



(14,169)

 General and administrative 




(9,681)



(17,932)



(21,292)



(21,609)



(39,224)


















 Total operating expenses 




(19,754)



(36,668)



(38,038)



(42,924)



(74,706)


















 Loss from operations 




(15,073)



(24,629)



(32,606)



(31,984)



(57,235)


















 Other income (expenses) 




208



(10,676)



30,815



(39)



20,139

 Interest income 




346



803



411



654



1,214

 Interest expenses 




(931)



(1,264)



(900)



(1,822)



(2,164)

 Realized loss on short-term investments 




(201)



-



-



(101)



-

 Total non-operating (loss) income 




(578)



(11,137)



30,326



(1,308)



19,189


















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




(15,651)



(35,766)



(2,280)



(33,292)



(38,046)

 Income tax expenses 




(688)



(831)



(116)



(1,468)



(947)


















 Loss before earnings (loss) in equity method
investments, net of tax 




(16,339)



(36,597)



(2,396)



(34,760)



(38,993)

  Earnings (loss) in equity method investments, net of
tax 




57,668



(808)



(621)



57,741



(1,429)

 Income (loss) from continuing operations 




41,329



(37,405)



(3,017)



22,981



(40,422)


















 Discontinued operation: 

















 Loss from operations of discontinued operations, net of
income tax 




(58,524)



(4,165)



(11,793)



(56,354)



(15,958)

 Gain on deconsolidation of the subsidiaries, net of
income tax 




-



-



180,829



-



180,829

 (Loss) income from discontinued operations, net of
tax 




(58,524)



(4,165)



169,036



(56,354)



164,871


















 Net (loss) income  




(17,195)



(41,570)



166,019



(33,373)



124,449

 Net loss attributable to noncontrolling interests 




-



20



100



-



120


















 Net (loss) income attributable to Renren Inc. 



$

(17,195)


$

(41,550)


$

166,119


$

(33,373)


$

124,569


















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

















 Basic 



$

(0.06)


$

(0.00)


$

0.16


$

(0.05)


$

0.16

 Diluted 



$

(0.06)


$

(0.00)


$

0.15


$

(0.05)


$

0.15


















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

















 Basic 



$

(0.02)


$

(0.04)


$

0.16


$

(0.03)


$

0.12

 Diluted 



$

(0.02)


$

(0.04)


$

0.15


$

(0.03)


$

0.11

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

















 Basic 



$

(0.25)


$

(0.60)


$

2.41


$

(0.49)


$

1.81

 Diluted 



$

(0.25)


$

(0.60)


$

2.21


$

(0.49)


$

1.71


















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

















 Basic 




1,027,812,327



1,033,468,103



1,035,143,003



1,027,097,660



1,034,310,179

 Diluted 




1,027,812,327



1,033,468,103



1,130,285,008



1,027,097,660



1,093,742,531

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

















 Basic 




1,027,812,327



1,033,468,103



1,035,143,003



1,027,097,660



1,034,310,179

 Diluted 




1,027,812,327



1,033,468,103



1,130,285,008



1,027,097,660



1,093,742,531


















 * 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 Six Months Ended





June 30,



March 31,



June 30,



June 30,



June 30,




2017



2018



2018



2017



2018


















 Loss from opeartions 



$

(15,073)


$

(24,629)


$

(32,606)


$

(31,984)


$

(57,235)

 Add back: Shared-based compensation expenses 




5,169



12,327



13,465



10,312



25,792

     Add back: Amortization of intangible assets 




-



131



131



-



262

 Adjusted loss from operations 



$

(9,904)


$

(12,171)


$

(19,010)


$

(21,672)


$

(31,181)


















 Net (loss) income 



$

(17,195)


$

(41,550)


$

166,119


$

(33,373)


$

124,569

 Add back: Shared-based compensation expenses 




5,169



12,327



13,465



10,312



25,792

  Add back: Fair value change of contingent
consideration  




-



10,265



(2,197)



-



8,068

     Add back: Amortization of intangible assets 




-



131



131



-



262

 Adjusted net (loss) income 



$

(12,026)


$

(18,827)


$

177,518


$

(23,061)


$

158,691


 

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SOURCE Renren Inc.