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Highlights for Second Quarter 2018:
- GMV1 reached
RMB1,653.4 million (US$249.9 million ) for Q2 2018, representing an increase of 44.7% fromRMB1,142.6 million for Q2 2017. - Total number of orders2 was 455.9 thousand for Q2 2018, representing an increase of 49.7% from 304.6 thousand for Q2 2017.
- Number of active customers3 increased by 97.6% to 255.5 thousand for Q2 2018 from 129.3 thousand for Q2 2017.
- Total net revenues reached
RMB1,220.1 million (US$184.4 million ) for Q2 2018, increasing by 55.5 % fromRMB784.7 million in Q2 2017. - Gross margin was 18.3% for Q2 2018, compared to 16.5% in Q2 2017.
- Net income increased by 26.4% to
RMB36.4 million (US$5.5 million ) for Q2 2018 fromRMB28.8 million for Q2 2017. - Non-GAAP net income4 increased by 42.4% to
RMB41.0 million (US$6.2 million ) for Q2 2018 fromRMB28.8 million in Q2 2017. - Basic and diluted net income per share was
RMB1.42 (US$0.21) andRMB1.36 (US$0.21) , respectively, for Q2 2018, compared toRMB18.93 andRMB6.75 , respectively, for Q2 2017. Basic and diluted net income per American Depositary Share ("ADS") wasRMB0.71 (US$0.11) andRMB0.68 (US$0.10) , respectively, for Q2 2018, compared toRMB9.47 andRMB3.38 , respectively, for Q2 2017. Two ADSs represent one ordinary share. - Basic and diluted non-GAAP net income per share5 was
RMB1.62 (US$0.24) andRMB1.56 (US$0.24) , respectively, for Q2 2018, compared toRMB3.84 andRMB1.37 , respectively, for Q2 2017. Basic and diluted non-GAAP net income per ADS wasRMB0.81 (US$0.12) andRMB0.78 (US$0.12) , respectively, for Q2 2018, compared toRMB1.92 andRMB0.68 , respectively, for Q2 2017.
_________________________
1 GMV is 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 are 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 is customer through whose account that made at least one 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
“We remain committed to establishing solid relationships with leading partners to increase our brand awareness and further strengthen Secoo’s leading position in the sector. Notably, we’re thrilled about the recently disclosed investments from L Catterton and JD, along with business collaboration opportunities with these leaders in the world’s consumers, luxury and e-commerce spaces,” continued Mr. Li. “During the second quarter, a significant number of additional well-known fashion and luxury brands joined our integrated online and offline platforms, a further testament to the unique value that
“As we continue to move our expansion strategy forward, we are pleased with our operational and financial performance for the second quarter of 2018, which continued to demonstrate our solid growth trajectory,” said Mr.
Recent Developments
- In August, L Catterton Asia (“L Catterton”) and
JD.com Inc. (“JD”) closed anUS$175 million investment for a three-year convertible note.Secoo also entered into business cooperation agreements with L Catterton and JD respectively, which will allowSecoo to attract more leading fashion and luxury brands that further boost Secoo’s influence and capabilities among Chinese luxury and fashion consumers. L Catterton is the Asian unit of the largest and most global consumer-focused private equity firm in the world, formed through the partnership of Catterton, LVMH and Groupe Arnault. - During the second quarter of 2018,
Secoo expanded direct collaborations with 35 international top-tier designer brands, such asStella McCartney ,Alexander Wang andRichard Ginori , an acclaimed Italian Porcelain Brand. In the Chinese heritage design category,Secoo expanded collaborations with 120 brands with Chinese traditional elements, covering garment, jewelry, art work and tea categories. In addition, Mulberry, a leading British lifestyle brand with internationally acclaimed quality and design, officially entered intoSecoo's platform in early August. For Mulberry’s debut on Secoo’s platform,Secoo was named as the exclusive online partner for Mulberry limited-edition bag, “Amberley”, for the ChineseValentine's Day . - In
July 2018 ,Secoo signed a strategic partnership withShandong Ruyi Group , a Chinese textile conglomerate with an extensive portfolio of fashion, luxury clothing and accessories brands. Through the partnership, both companies will leverage respective resources and expertise in branding, technology, network and channel management to jointly establish a global omni-channel fashion supply chain characterized by deep cooperation in brand operations, big data, smart manufacturing and smart retail. Secoo launched the “618” and “707” promotion events celebrating its tenth anniversary. Benefitting from these promotion events, the Company’s total number of active users had a significant increase which jumped 97.6% year-over-year in the second quarter of 2018. Additionally, NEXT7, a young Chinese idol group, endorsed Secoo’s “618” and “707” events as celebrity spokesmen during the second quarter of 2018. Through the endorsement,Secoo gained valuable brand awareness and further expanded its brand’s influence among China’s younger generation.- In the second quarter of 2018,
Secoo entered into collaboration with 88 European buying agent shops, mostly covering apparel and footwear categories, to improve Secoo’s global supply chain capacity and the depth of inventory. - In the second quarter of 2018,
Secoo expanded cooperation with eight high-end properties and real estate developers across China, includingBeijing Vanke and Gemdale Property Management Group , to expand its offline presence and broaden brand coverage. - In the second quarter of 2018,
Secoo entered business partnership with Starbucks China, through whichSecoo members are able to redeem theirSecoo membership rewards on the Secoo APP for electronicStarbucks coupons, which can be exchanged forStarbucks products in more than 3,400Starbucks stores in China nationwide. This partnership helps to optimize membership benefits and further enhance customer loyalty, while also increasing Secoo’s brand exposure and awareness. - In
June 2018 ,Secoo announced applying the block chain technology for the authentication of certain items sold on theSecoo platform. With this new technology,Secoo becomes the first e-commerce company to utilize block chain technology for product application in the luxury industry. - Up to today,
Secoo added a variety of top brands to our advertising clients, including Martell,Porsche , Volkswagen CC,Kerry Properties andChina Red Star . Furthermore, Secoo’s big-data-driven marketing and advertising solutions have already served 14 Internet Content Providers, including NetEase Cloud Music, WeBank, and VIPKID.
Second Quarter 2018 Financial Results
GMV increased by 44.7% to
Total number of orders increased by 49.7% to 455.9 thousand for the second quarter of 2018 from 304.6 thousand for the second quarter of 2017.
Total net revenues for the second quarter of 2018 increased by 55.5% to
Cost of revenues increased by 52.1% to
Operating expenses increased by 63.8% to
Fulfillment expenses increased by 48.0% to
Marketing expenses increased by 79.4% to
Technology and content development expenses increased by 40.0% to
General and administrative expenses increased by 58.6% to
Operating income increased by 104.3% to
Income tax expenses were
Net income was
Non-GAAP net income, which excludes share-based compensation expenses, increased by 42.4% to
Net income attributable to ordinary shareholders of
Basic and diluted net income per share was
Basic and diluted non-GAAP net income per share was
Cash, Time deposits, and Restricted Cash
As of
Third Quarter 2018 Guidance
The Company currently expects total net revenues for the third 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.
Resignation of Chief Operating Officer
The Company today also announced that Mr.
“I would like to thank Mr.
Conference Call Information
The Company's management will host an earnings conference call at
Dial-in details for the earnings 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: | 3058626 |
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: | 3058626 |
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 China:
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 June 30, | For the Six Months Ended June 30, | |||||||||||
2017 | 2018 | 2017 | 2018 | |||||||||
RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Net revenues: | ||||||||||||
Merchandise sales | 773,667 | 1,192,653 | 180,238 | 1,326,384 | 1,969,020 | 297,565 | ||||||
Marketplace and other services | 11,058 | 27,478 | 4,153 | 20,294 | 53,604 | 8,101 | ||||||
Total net revenues | 784,725 | 1,220,131 | 184,391 | 1,346,678 | 2,022,624 | 305,666 | ||||||
Cost of revenues | (655,040) | (996,410) | (150,581) | (1,120,180) | (1,667,083) | (251,936) | ||||||
Gross profit | 129,685 | 223,721 | 33,810 | 226,498 | 355,541 | 53,730 | ||||||
Operating expenses: | ||||||||||||
Fulfillment expenses | (20,448) | (30,154) | (4,557) | (35,750) | (56,684) | (8,566) | ||||||
Marketing expenses | (49,622) | (89,012) | (13,452) | (83,451) | (146,313) | (22,111) | ||||||
Technology and content development expenses | (14,546) | (20,277) | (3,064) | (25,768) | (37,934) | (5,733) | ||||||
General and administrative expenses | (17,401) | (27,645) | (4,178) | (29,943) | (34,679) | (5,241) | ||||||
Total operating expenses | (102,017) | (167,088) | (25,251) | (174,912) | (275,610) | (41,651) | ||||||
Income from operations | 27,668 | 56,633 | 8,559 | 51,586 | 79,931 | 12,079 | ||||||
Other income/(expenses): | ||||||||||||
Interest expense, net | (1,829) | (2,564) | (387) | (3,017) | (3,944) | (596) | ||||||
Foreign currency exchange gains | 2,961 | (9,700) | (1,466) | 3,775 | (4,321) | (653) | ||||||
Others | - | 2,289 | 346 | - | 11,401 | 1,723 | ||||||
Income before tax | 28,800 | 46,658 | 7,052 | 52,344 | 83,067 | 12,553 | ||||||
Income tax expenses | - | (10,286) | (1,554) | - | (20,786) | (3,141) | ||||||
Net income | 28,800 | 36,372 | 5,498 | 52,344 | 62,281 | 9,412 | ||||||
(Loss)/income attributable to redeemable non-controlling interest | 67 | 312 | 47 | (114) | 609 | 92 | ||||||
Loss attributable to non-redeemable non-controlling interest | (69) | 250 | 38 | (135) | 192 | 29 | ||||||
Net income attributable to Secoo Holding Limited | 28,802 | 35,810 | 5,413 | 52,593 | 61,480 | 9,291 | ||||||
Accretion to redeemable non-controlling interest redemption value | (58) | - | - | (362) | - | - | ||||||
Accretion to preferred share redemption value | 113,267 | - | - | (162,982) | - | - | ||||||
Net income/(loss) attributable to ordinary shareholders of Secoo Holding Limited | 142,011 | 35,810 | 5,413 | (110,751) | 61,480 | 9,291 | ||||||
Net income/(loss) per share | ||||||||||||
— Basic | 18.93 | 1.42 | 0.21 | (14.77) | 2.43 | 0.37 | ||||||
— Diluted | 6.75 | 1.36 | 0.21 | (14.77) | 2.33 | 0.35 | ||||||
Net income/(loss) per ADS | ||||||||||||
— Basic | 9.47 | 0.71 | 0.11 | (7.39) | 1.22 | 0.18 | ||||||
— Diluted | 3.38 | 0.68 | 0.10 | (7.39) | 1.16 | 0.18 | ||||||
Non-GAAP net income per ADS | ||||||||||||
— Basic | 1.92 | 0.81 | 0.12 | 3.49 | 1.49 | 0.23 | ||||||
— Diluted | 0.68 | 0.78 | 0.12 | 1.25 | 1.43 | 0.22 | ||||||
Weighted average number of shares outstanding used in computing net income/(loss) per share | ||||||||||||
— Basic | 7,500,000 | 25,280,058 | 25,280,058 | 7,500,000 | 25,280,058 | 25,280,058 | ||||||
— Diluted | 21,039,411 | 26,387,317 | 26,387,317 | 21,014,838 | 26,387,321 | 26,387,321 | ||||||
SECOO HOLDING LIMITED | ||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(All amounts in thousands, except for share data) | ||||||
As of December 31, | As of June 30, | |||||
2017 | 2018 | |||||
RMB | RMB | US$ | ||||
Assets | ||||||
Current assets | ||||||
Cash | 453,425 | 230,702 | 34,865 | |||
Time deposits | 292,318 | - | - | |||
Restricted cash | 55,214 | 55,910 | 8,449 | |||
Investment in equity security | - | 27,965 | 4,226 | |||
Amount due from related parties | 38 | 11,495 | 1,737 | |||
Accounts receivable | 54,210 | 93,180 | 14,082 | |||
Inventories, net | 1,189,885 | 1,379,073 | 208,410 | |||
Advances to suppliers | 53,016 | 61,651 | 9,317 | |||
Prepayments and other current assets | 22,943 | 50,665 | 7,657 | |||
Total current assets | 2,121,049 | 1,910,641 | 288,743 | |||
Non-current assets | ||||||
Restricted cash | 123,800 | 157,550 | 23,810 | |||
Property and equipment, net | 40,793 | 50,852 | 7,685 | |||
Deferred tax assets | 43,981 | 43,031 | 6,503 | |||
Other non-current assets | 8,085 | 17,690 | 2,673 | |||
Total non-current assets | 216,659 | 269,123 | 40,671 | |||
Total assets | 2,337,708 | 2,179,764 | 329,414 | |||
LIABILITIES | ||||||
Current liabilities | ||||||
Short-term borrowings and current portion of long-term borrowings | 177,274 | 124,857 | 18,869 | |||
Accounts payable | 318,414 | 205,425 | 31,044 | |||
Amount due to related parties | 2,467 | 6,233 | 942 | |||
Advances from customers | 68,848 | 67,843 | 10,253 | |||
Accrued expenses and other current liabilities | 343,936 | 241,915 | 36,559 | |||
Deferred revenue | 12,051 | 24,419 | 3,690 | |||
Total current liabilities | 922,990 | 670,692 | 101,357 | |||
Non-current liabilities | ||||||
Long-term borrowings, excluding current portion | 124,324 | 150,000 | 22,669 | |||
Total non-current liabilities | 124,324 | 150,000 | 22,669 | |||
Total liabilities | 1,047,314 | 820,692 | 124,026 | |||
Mezzanine Equity | ||||||
Redeemable non-controlling interest | 5,582 | 6,191 | 936 | |||
Total mezzanine equity | 5,582 | 6,191 | 936 | |||
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 18,708,629 shares outstanding as of December 31, 2017 and June 30, 2018, respectively) |
126 | 126 | 19 | |||
Class B Ordinary shares (US$0.001 par value, 150,000,000 shares authorized including class A shares and class B shares, 6,571,429 shares issued and 6,571,429 shares outstanding as of December 31, 2017 and June 30, 2018, respectively) |
41 | 41 | 6 | |||
Treasury Stock (359,595 Class A ordinary shares as of December 31, 2017 and June 30, 2018, respectively, at cost) |
(42,606) | (42,606) | (6,439) | |||
Accumulated losses | (1,432,586) | (1,371,106) | (207,206) | |||
Additional paid-in capital | 2,763,387 | 2,776,617 | 419,612 | |||
Accumulated other comprehensive loss | (5,304) | (14,620) | (2,209) | |||
Total equity attributable to ordinary shareholders | 1,283,058 | 1,348,452 | 203,783 | |||
Non-redeemable non-controlling interest | 1,754 | 4,429 | 669 | |||
Total equity | 1,284,812 | 1,352,881 | 204,452 | |||
Total liabilities, mezzanine equity and equity | 2,337,708 | 2,179,764 | 329,414 | |||
SECOO HOLDING LIMITED | ||||||||||||
Reconciliations of GAAP and Non-GAAP Results | ||||||||||||
(All amounts in thousands, except for share and per share data) | ||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2017 | 2018 | 2017 | 2018 | |||||||||
RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Income from operations | 27,668 | 56,633 | 8,559 | 51,586 | 79,931 | 12,079 | ||||||
Add: | ||||||||||||
Share-based compensation expenses | - | 4,676 | 707 | - | 13,229 | 1,999 | ||||||
Adjusted Income from operations | 27,668 | 61,309 | 9,266 | 51,586 | 93,160 | 14,078 | ||||||
Net income | 28,800 | 36,372 | 5,497 | 52,344 | 62,281 | 9,412 | ||||||
Add: | ||||||||||||
Share-based compensation expenses | - | 4,676 | 707 | - | 13,229 | 1,999 | ||||||
Adjusted net income | 28,800 | 41,048 | 6,204 | 52,344 | 75,510 | 11,411 | ||||||
Adjusted net income per weighted average shares: | ||||||||||||
Basic | 3.84 | 1.62 | 0.24 | 6.98 | 2.99 | 0.45 | ||||||
Diluted | 1.37 | 1.56 | 0.24 | 2.49 | 2.86 | 0.43 | ||||||
Adjusted net income per ADS: | ||||||||||||
Basic | 1.92 | 0.81 | 0.12 | 3.49 | 1.49 | 0.23 | ||||||
Diluted | 0.68 | 0.78 | 0.12 | 1.25 | 1.43 | 0.22 | ||||||
Weighted average number of shares outstanding used in computing the adjusted net income per share | ||||||||||||
— Basic | 7,500,000 | 25,280,058 | 25,280,058 | 7,500,000 | 25,280,058 | 25,280,058 | ||||||
— Diluted | 21,039,411 | 26,387,317 | 26,387,317 | 21,014,838 | 26,387,321 | 26,387,321 |