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Highlights for Third Quarter 2018:
- GMV1 reached
RMB2,194.6 million (US$319.5 million ) for Q3 2018, representing an increase of 57.4% fromRMB1,394.4 million for Q3 2017. - Total number of orders2 was 594.4 thousand for Q3 2018, representing an increase of 59.7% from 372.3 thousand for Q3 2017.
- Number of active customers3 increased by 92.4% to 304 thousand for Q3 2018 from 158 thousand for Q3 2017.
- Total net revenues reached
RMB1,572.4 million (US$228.9 million ) for Q3 2018, increasing by 60.1% fromRMB982.2 million in Q3 2017. - Gross margin was 17.2% for Q3 2018, compared to 17.0% in Q3 2017.
- Net income increased by 31.7% to
RMB44.9 million (US$6.5 million ) for Q3 2018 fromRMB34.1 million for Q3 2017. - Non-GAAP net income4 increased by 23.4% to
RMB49.0 million (US$7.1 million ) for Q3 2018 fromRMB39.7 million in Q3 2017. - Basic and diluted net income per share were
RMB1.74 (US$0.25) andRMB1.67 (US$0.24) , respectively, for Q3 2018, compared with basic and diluted net losses per share ofRMB0.61 andRMB0.61 , respectively, for Q3 2017. Basic and diluted net income per American Depositary Share ("ADS") wereRMB0.87 (US$0.13) andRMB0.84 (US$0.12) , respectively, for Q3 2018, compared to basic and diluted net losses per ADS ofRMB0.30 andRMB0.30 , respectively, for Q3 2017. Two ADSs represent one ordinary share. - Basic and diluted non-GAAP net income per share5 were
RMB1.94 (US$0.28) andRMB1.87 (US$0.27) , respectively, for Q3 2018, compared toRMB4.28 andRMB3.96 , respectively, for Q3 2017. Basic and diluted non-GAAP net income per ADS wereRMB0.97 (US$0.14) andRMB0.94 (US$0.14) , respectively, for Q3 2018, compared toRMB2.14 andRMB1.98 , respectively, for Q3 2017.
_________________________
1 GMV, or Gross Market Value, refers to the total value of all orders of products and services, excluding the value of whole car sales, placed on our online platform and in our offline experience centers, regardless of whether the products are delivered or returned or whether the services are cancelled during the quarter.
2 Total orders refer to the total number of orders of products and services, excluding the number of whole car sales, placed on our online platform and in our offline experience centers, regardless of whether the products are delivered or returned or whether the services are cancelled during the quarter.
3 Active customer refers to a customer who made at least one account purchase during the period.
4 Non-GAAP net income is a non-GAAP financial measure, which is defined as net income, excluding share-based compensation expenses. See “Reconciliation of GAAP and Non-GAAP Results” at the end of this press release.
5 Basic and diluted non-GAAP net income per share is a non-GAAP financial measure, which is defined as non-GAAP net income, divided by weighted average number of basic and diluted outstanding, including the dilutive effect of share-based awards as determined under the treasury stock method. Basic and diluted Non-GAAP net income per ADS is equal to basic and diluted non-GAAP net income per share divided by two, as two ADSs represent one ordinary share.
Commentary
Mr. Richard Rixue Li, Chairman and Chief Executive Officer of
“During the third quarter, our efforts to strengthen our operational capabilities covered multiple fronts,” continued Mr. Li. “We continued to broaden and deepen our alliances with premiere designers to further enhance our product offerings and expand our influence. In doing so, we remained strategically active, entering into partnerships with 97 new brands throughout the quarter and recent months. These important partnerships serve not only as a means to increase our brand recognition among Chinese luxury and fashion consumers but also as a way for us to continue to offer superior luxury shopping experiences. As always, we continue our ardent focus on providing the best shopping experience for our customers.”
“Secoo’s impressive financial results for the third quarter of 2018 are reflective of the solid demand that we have been experiencing and underscore our robust growth trajectory,” said Mr.
Recent Developments
- From the third quarter to date,
Secoo expanded its direct collaborations efforts, adding 97 brands, including renowned international fashion and lifestyle designers such asCalvin Klein ,R. M. Williams , DIESEL,Nicole Miller ,Alberta Ferretti , Philosophy , Mikael D, Villeroy & Boch, Marshall and LVMH’s new beauty brand Cha Ling. Further, Secoo’s advertising sales grew substantially, driven by a further increasing advertiser base, includingHuawei Glory , Land Rover, Smart, Dunhill, COFCO,Haier , andDBS Bank . - In
September 2018 ,Secoo entered into a strategic partnership agreement withSASSEUR Group , a leading operator of outlet malls inAsia , allowing both parties to leverage each other’s resources and expertise to (i) drive the growth of omni-channel retail networks, (ii) boost both companies’ growing and leading market presence and (iii) jointly explore new business initiatives to offer superior luxury shopping experience for consumers inChina . - In
November 2018 ,Secoo established a strategic partnership with Will's Group,China's leading premium fitness lifestyle brand.SASSEUR Group and Will’s Group are both invested by L Catterton which also has a strategic stake inSecoo . The partnership with Will’s Group allows each company’s customers to benefit from reciprocal membership privileges and aim to combined both parties’ strengths to deliver high-end fitness services. Overall, the partnerships withSASSEUR Group and Will’s Group demonstrate Secoo’s strategic initiative to diversify its lifestyle portfolio offerings to meet the increasing demand in luxury products and services inChina . - In
July 2018 ,Secoo formed strategic partnerships with two iconic museums inChina ,Shanxi History Museum and Xi’an Museum. By leveraging these partnerships and its extensive resources,Secoo believes it will be well positioned to play an important role in protecting Chinese cultural relics and in developing Chinese culture heritage-focused artisanal designs and creative products and services. - During the quarter,
Secoo upgraded its global supply chain system to optimize the user experience via establishing fully integrated SaaS, PaaS and IaaS systems to further expand our global supply chain and suppliers network. - In
September 2018 ,Secoo co-hosted the inaugural “Chinese Heritage Design Festival” inBeijing . The event featured a fusion of traditions and fashion among many Chinese master artisans, traditional craftsmen and the most cutting-edge Chinese designer brands. - In
September 2018 ,Secoo entered into a partnership with Feelunique, Europe’s largest online beauty retailer, to launch a dedicated cosmetics store on Secoo’s platform. Through the partnership, Feelunique will provide Secoo’s customers with access to approximately 50 highly sought-after international brands, which helps bolster Secoo’s beauty and cosmetics product portfolio. - Also, after quarter-end, in
October 2018 , British brand Liberty London joined the Company’s platform to launch an online shop inChina enablingLiberty London to offer luxury bags, leather products, gifts and stationaries to Secoo’s premium customers. The partnership reflects the mutual strategy of both companies to permeate China’s luxury space by offering unique and distinct products and services to Chinese consumers who increasingly use fashion and luxury to express their lifestyle and identity. Leveraging the partnership,Secoo will be better positioned to increase the customer base and purchase activities. - Further, in
November 2018 ,Secoo entered into strategic partnership agreements with the Philippine Trade and Investment Center and the Mongolian delegation during the inaugural China International Import Expo (CIIE). At the CIIE,Secoo also signed cooperation agreements with numerous high-end brands from, among others, the U.S., theU.K. ,France ,Italy ,Australia andKorea . - In
November 2018 ,Secoo formed an alliance with Tokyo MX, a television station inTokyo , to host a tradeshow inTokyo for traditional Japanese craftworks. In addition, Tokyo MX will launch a flagship store on Secoo’s platform, with the goal of providing Chinese consumers with a high-quality collection of eminent traditional Japanese craftworks.
Third Quarter 2018 Financial Results
GMV increased by 57.4% to
Total number of orders increased by 59.7% to 594.4 thousand for the third quarter of 2018 from 372.3 thousand for the third quarter of 2017.
Total net revenues for the third quarter of 2018 increased by 60.1% to
Cost of revenues increased by 59.7% to
Operating expenses increased by 47.2% to
Fulfillment expenses increased by 62.4% to
Marketing expenses increased by 71.9% to
Technology and content development expenses increased by 21.1% to
General and administrative expenses decreased by 7.2% to
Operating income increased by 125.3% to
Income tax expenses were
Net income was
Non-GAAP net income, which excludes share-based compensation expenses, increased by 23.4% to
Net income/loss attributable to ordinary shareholders of
Basic and diluted net income per share were
Basic and diluted non-GAAP net income per share were
Cash, Time deposits, and Restricted Cash
As of
Fourth Quarter 2018 Guidance
The Company currently expects total net revenues for the fourth quarter of 2018 to be in the range of
The above outlook is based on the current market conditions and reflects the Company’s current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change. The Company’s ability to achieve these projections is subject to risks and uncertainties. See “Safe Harbor Statement” at the end of this press release.
Conference Call Information
The Company's management will host an earnings conference call at
The dial-in details for the live conference call are as follows:
United States: | +1-845-675-0437 |
International: | +65-6713-5090 |
Hong Kong: | +852-3018-6771 |
China: | 400-620-8038 |
Conference ID: | 3991427 |
Additionally, a live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.secoo.com.
A replay of the conference call will be accessible approximately two hours after the conclusion of the live call until
United States: | +1-646-254-3697 |
International: | +61-2-8199-0299 |
Hong Kong: | +852-3051-2780 |
China: | 400-632-2162 |
Replay Access Code: | 3991427 |
About
For more information, please visit http://ir.secoo.com
Use of Non-GAAP Financial Measures
To supplement our consolidated financial statements which are presented in accordance with U.S. GAAP, we also use non-GAAP net income, non-GAAP income from operation and basic and dilutive non-GAAP net income per share and ADS as additional non-GAAP financial measures. We present these non-GAAP financial measures because they are used by our management to evaluate our operating performance. We define non-GAAP net income as net income excluding share-based compensation. We define non-GAAP income from operation as income from operation excluding share-based compensation. We define non-GAAP net income per share as non-GAAP net income dividing by weighted average number of basic and diluted share outstanding, including the dilutive effect of share-based awards as determined under the treasury stock method. We define basic and diluted non-GAAP net income per ADS as basic and diluted non-GAAP net income per share divided by two as two ADSs represent one ordinary share. 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.
The use of non-GAAP financial measures has certain limitations. These non-GAAP measures exclude certain items that have been and will continue to be incurred in the future and are not reflected in the presentation of the non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to results prepared in accordance with U.S. GAAP, and should not be considered a substitute for or superior to U.S. GAAP results. In addition, these non-GAAP financial measures may not be comparable to similarly titled measures utilized by other companies since such other companies may not calculate such measures in the same manner as
Reconciliation of these non-GAAP financial measures to the most directly comparable U.S. GAAP financial measure is set forth at the end of this release.
Exchange Rate Information
This press release contains translation of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars were made at the exchange rate of
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include but are not limited to
For investor and media inquiries, please contact:
In
Tel: +86 (10) 6588-0135
E-mail: ir@secoo.com
Tel: +86 (10) 5730-6202
E-mail: Secoo@tpg-ir.com
In
The Piacente Group, Inc.
Tel: +1-212-481-2050
E-mail: Secoo@tpg-ir.com
SECOO HOLDING LIMITED | ||||||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
(All amounts in thousands, except for share data) | ||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||
2017 | 2018 | 2017 | 2018 | |||||||||||||||||
RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||||
Net revenues: | ||||||||||||||||||||
Merchandise sales | 966,189 | 1,548,403 | 225,452 | 2,292,574 | 3,517,423 | 512,147 | ||||||||||||||
Marketplace and other services | 15,994 | 23,954 | 3,487 | 36,287 | 77,558 | 11,293 | ||||||||||||||
Total net revenues | 982,183 | 1,572,357 | 228,939 | 2,328,861 | 3,594,981 | 523,439 | ||||||||||||||
Cost of revenues | (815,453 | ) | (1,302,657 | ) | (189,671 | ) | (1,935,633 | ) | (2,969,740 | ) | (432,402 | ) | ||||||||
Gross profit | 166,730 | 269,700 | 39,268 | 393,228 | 625,241 | 91,037 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||
Fulfillment expenses | (25,810 | ) | (41,886 | ) | (6,099 | ) | (61,560 | ) | (98,570 | ) | (14,352 | ) | ||||||||
Marketing expenses | (64,282 | ) | (110,532 | ) | (16,094 | ) | (147,733 | ) | (256,845 | ) | (37,397 | ) | ||||||||
Technology and content development expenses | (17,522 | ) | (21,166 | ) | (3,082 | ) | (43,290 | ) | (59,100 | ) | (8,605 | ) | ||||||||
General and administrative expenses | (27,868 | ) | (25,850 | ) | (3,764 | ) | (57,811 | ) | (60,529 | ) | (8,813 | ) | ||||||||
Total operating expenses | (135,482 | ) | (199,434 | ) | (29,039 | ) | (310,394 | ) | (475,044 | ) | (69,167 | ) | ||||||||
Income from operations | 31,248 | 70,266 | 10,231 | 82,834 | 150,197 | 21,869 | ||||||||||||||
Other income/(expenses): | ||||||||||||||||||||
Interest expense, net | (1,839 | ) | (15,220 | ) | (2,216 | ) | (4,856 | ) | (19,164 | ) | (2,790 | ) | ||||||||
Foreign currency exchange gains/(loss) | 5,471 | (7,583 | ) | (1,104 | ) | 9,246 | (11,904 | ) | (1,733 | ) | ||||||||||
Others | - | 6,709 | 977 | - | 18,110 | 2,637 | ||||||||||||||
Income before tax | 34,880 | 54,172 | 7,888 | 87,224 | 137,239 | 19,983 | ||||||||||||||
Income tax expenses | (777 | ) | (9,228 | ) | (1,344 | ) | (777 | ) | (30,014 | ) | (4,370 | ) | ||||||||
Net income | 34,103 | 44,944 | 6,544 | 86,447 | 107,225 | 15,613 | ||||||||||||||
(Loss)/income attributable to redeemable non-controlling interest | (71 | ) | 96 | 14 | (206 | ) | 705 | 103 | ||||||||||||
Loss attributable to non-redeemable non-controlling interest | (58 | ) | 969 | 141 | (173 | ) | 1,161 | 169 | ||||||||||||
Net income attributable to Secoo Holding Limited | 34,232 | 43,879 | 6,389 | 86,826 | 105,359 | 15,341 | ||||||||||||||
Accretion to redeemable non-controlling interest redemption value | (184 | ) | - | - | (546 | ) | - | - | ||||||||||||
Accretion to preferred share redemption value | (39,695 | ) | - | - | (202,680 | ) | - | - | ||||||||||||
Net income/(loss) attributable to ordinary shareholders of Secoo Holding Limited | (5,647 | ) | 43,879 | 6,389 | (116,400 | ) | 105,359 | 15,341 | ||||||||||||
Net income/(loss) per share | ||||||||||||||||||||
— Basic | (0.61 | ) | 1.74 | 0.25 | (14.37 | ) | 4.17 | 0.61 | ||||||||||||
— Diluted | (0.61 | ) | 1.67 | 0.24 | (14.37 | ) | 4.04 | 0.59 | ||||||||||||
Net income/(loss) per ADS | . | |||||||||||||||||||
— Basic | (0.30 | ) | 0.87 | 0.13 | (7.19 | ) | 2.08 | 0.30 | ||||||||||||
— Diluted | (0.30 | ) | 0.84 | 0.12 | (7.19 | ) | 2.02 | 0.29 | ||||||||||||
Non-GAAP net income per ADS | ||||||||||||||||||||
— Basic | 2.14 | 0.97 | 0.14 | 5.68 | 2.46 | 0.36 | ||||||||||||||
— Diluted | 1.98 | 0.94 | 0.14 | 5.21 | 2.39 | 0.35 | ||||||||||||||
Weighted average number of shares outstanding used in computing net income/(loss) per share | ||||||||||||||||||||
— Basic | 9,274,531 | 25,260,757 | 25,280,058 | 8,098,011 | 25,273,554 | 25,273,554 | ||||||||||||||
— Diluted | 9,274,531 | 26,236,702 | 26,236,702 | 8,098,011 | 26,096,457 | 26,096,457 | ||||||||||||||
SECOO HOLDING LIMITED | ||||||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
(All amounts in thousands, except for share data) | ||||||||||||
As of December 31, | As of September 30, | |||||||||||
2017 | 2018 | |||||||||||
RMB | RMB | US$ | ||||||||||
Assets | ||||||||||||
Current assets | ||||||||||||
Cash | 453,425 | 1,141,983 | 166,276 | |||||||||
Time deposits | 292,318 | 68,792 | 10,016 | |||||||||
Restricted cash | 55,214 | 58,129 | 8,464 | |||||||||
Investment in equity security | - | 29,183 | 4,249 | |||||||||
Amount due from related parties | 38 | 8,430 | 1,227 | |||||||||
Accounts receivable | 54,210 | 109,633 | 15,963 | |||||||||
Inventories, net | 1,189,885 | 1,483,488 | 216,000 | |||||||||
Advances to suppliers | 53,016 | 97,147 | 14,145 | |||||||||
Prepayments and other current assets | 22,943 | 64,164 | 9,342 | |||||||||
Total current assets | 2,121,049 | 3,060,949 | 445,682 | |||||||||
Non-current assets | ||||||||||||
Restricted cash | 123,800 | 2,800 | 408 | |||||||||
Investment in equity security | - | 3,031 | 441 | |||||||||
Property and equipment, net | 40,793 | 50,220 | 7,312 | |||||||||
Deferred tax assets | 43,981 | 59,363 | 8,643 | |||||||||
Other non-current assets | 8,085 | 16,758 | 2,440 | |||||||||
Total non-current assets | 216,659 | 132,172 | 19,244 | |||||||||
Total assets | 2,337,708 | 3,193,121 | 464,926 | |||||||||
LIABILITIES | ||||||||||||
Current liabilities | ||||||||||||
Short-term borrowings and current portion of long-term borrowings | 177,274 | 127,500 | 18,564 | |||||||||
Accounts payable | 318,414 | 9,940 | 1,446 | |||||||||
Amount due to related parties | 2,467 | 10,200 | 1,485 | |||||||||
Advances from customers | 68,848 | 66,023 | 9,613 | |||||||||
Accrued expenses and other current liabilities | 343,936 | 363,123 | 52,872 | |||||||||
Deferred revenue | 12,051 | 22,689 | 3,304 | |||||||||
Total current liabilities | 922,990 | 599,475 | 87,284 | |||||||||
Non-current liabilities | ||||||||||||
Long-term borrowings, excluding current portion | 124,324 | 1,151,151 | 167,611 | |||||||||
Total non-current liabilities | 124,324 | 1,151,151 | 167,611 | |||||||||
Total liabilities | 1,047,314 | 1,750,626 | 254,895 | |||||||||
Mezzanine Equity | ||||||||||||
Redeemable non-controlling interest | 5,582 | 6,287 | 915 | |||||||||
Total mezzanine equity | 5,582 | 6,287 | 915 | |||||||||
Equity: | ||||||||||||
Class A Ordinary shares (US$0.001 par value, 150,000,000 shares authorized including class A shares and class B shares, 19,068,224 shares issued and 18,550,770 shares outstanding as of December 31, 2017 and September 30, 2018, respectively) | 126 | 126 | 18 | |||||||||
Class B Ordinary shares (US$0.001 par value, 150,000,000 shares authorized including class A shares and class B shares, 6,571,429 shares issued and 6,571,429 shares outstanding as of December 31, 2017 and September 30, 2018, respectively) | 41 | 41 | 6 | |||||||||
Treasury Stock (359,595 and 517,454 Class A ordinary shares as of December 31, 2017 and September 30, 2018, respectively, at cost) | (42,606 | ) | (71,018 | ) | (10,340 | ) | ||||||
Accumulated losses | (1,432,586 | ) | (1,327,227 | ) | (193,248 | ) | ||||||
Additional paid-in capital | 2,763,387 | 2,832,907 | 412,479 | |||||||||
Accumulated other comprehensive loss | (5,304 | ) | (4,046 | ) | (589 | ) | ||||||
Total equity attributable to ordinary shareholders | 1,283,058 | 1,430,783 | 208,326 | |||||||||
Non-redeemable non-controlling interest | 1,754 | 5,425 | 790 | |||||||||
Total equity | 1,284,812 | 1,436,208 | 209,116 | |||||||||
Total liabilities, mezzanine equity and equity | 2,337,708 | 3,193,121 | 464,926 | |||||||||
SECOO HOLDING LIMITED | |||||||||||||||
Reconciliations of GAAP and Non-GAAP Results | |||||||||||||||
(All amounts in thousands, except for share and per share data) | |||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2018 | 2017 | 2018 | ||||||||||||
RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||
Income from operations | 31,248 | 70,266 | 10,231 | 82,834 | 150,197 | 21,869 | |||||||||
Add: | |||||||||||||||
Share-based compensation expenses | 5,549 | 4,010 | 584 | 5,549 | 17,240 | 2,510 | |||||||||
Adjusted Income from operations | 36,797 | 74,276 | 10,815 | 88,383 | 167,437 | 24,379 | |||||||||
Net income | 34,103 | 44,944 | 6,544 | 86,447 | 107,225 | 15,612 | |||||||||
Add: | |||||||||||||||
Share-based compensation expenses | 5,549 | 4,010 | 584 | 5,549 | 17,240 | 2,510 | |||||||||
Adjusted net income | 39,652 | 48,954 | 7,128 | 91,996 | 124,465 | 18,122 | |||||||||
Adjusted net income per weighted average shares: | |||||||||||||||
Basic | 4.28 | 1.94 | 0.28 | 11.36 | 4.92 | 0.72 | |||||||||
Diluted | 3.96 | 1.87 | 0.27 | 10.42 | 4.77 | 0.69 | |||||||||
Adjusted net income per ADS: | |||||||||||||||
Basic | 2.14 | 0.97 | 0.14 | 5.68 | 2.46 | 0.36 | |||||||||
Diluted | 1.98 | 0.94 | 0.14 | 5.21 | 2.39 | 0.35 | |||||||||
Weighted average number of shares outstanding used in computing the adjusted net income per share | |||||||||||||||
— Basic | 9,274,531 | 25,260,757 | 25,260,757 | 8,098,011 | 25,273,554 | 25,273,554 | |||||||||
— Diluted | 10,007,076 | 26,236,702 | 26,236,702 | 8,830,556 | 26,096,457 | 26,096,457 | |||||||||