Fangdd Network (DUO) 24 Nov 202020 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to Fangdd Network Group Limited's Third Quarter 2020 Earnings Call. [Operator Instructions] Please note, this event is being recorded. And I would now like to hand the conference over to your speaker host today, Mr. Warren Wen, Financial Controller of the company. Please go ahead, sir.

Yes. operator. you, Thank thank call. and for us joining Hello, you today's on everyone, all The XXXX IR third earnings its company announced has quarter now on release available results the company's website. is and today, hear from And today, you our Mr. co-CEO, will with quarter. Zeng our review dynamics the progress the development our industry of details current a of Xi, the strategy start who and will call and in this CFO, Mr. our Afterwards, over the will go our call questions. Jiaorong, we up financials Pan open for before

measurements will to I the SEC. with their non-GAAP would our remarks statements, and under measures harbor comparable which applies to our earnings in And please filings today, well, please call which Our we the call Zeng English the statement thoroughly note release accounting to in release, management team go our are will before as forward-looking and translations. reported to and also reconciled as will over co-CEO, deliver like explained Chinese to Xi, principle And our in discuss provide continue, will Mr. and I would we making this that, that the we I and press now most refer turn earnings the ahead. you safe accepted generally more be with

[Foreign Language]

welcome our Hello, everyone, and earnings XXXX to third call. quarter

[Foreign Language]

state Before current real the of China. business an I highlights, reviewing market update I estate our start on would like the share in to

[Foreign Language]

total reach total to agents property transaction grow China a trillion RMB new of to Sullivan, has resale reach transaction service total CAGR in maintained of in expected & value reaching at In service billion the the transaction is value XXXX year the expected XX.X%. The of XXX.X facilitated transactions growing of of property value a market XX.X%, growth steadily XXXX, in through market service particular, resale RMB construction at transactions, XXX.X the XX.X a total reaching of their the in Frost CAGR grow to RMB growing property of is transaction projected XXXX, been the while XXXX. CAGR estate are The to first, by transaction property XX.X According real trillion at XX.X%. to size a billion the CAGR China the value have by transaction as property trajectories. expected and X.X%, is services at

[Foreign Language]

and in for establishment And lines for third the has -- ceilings the real for real ratios red This introduced debt-to-assets policy policy announced of developers. lines developers debt-to-equity second, red estate regulators August estate effectively three the domestic real the XXXX. debt-to-cash, the estate

business space component XX, become of to manage property RMB RMB our own trillion the ability has And the community-centric value of X.X to inventory of an total reduce analysis, XXXX. developer essential of total trillion. flows. Statistics has and inventory parking as and developers' policy, better sales, to the of has strategy As of developers their rely real inventory. a This new in shift result the are the their now collecting Based the start accelerating of greater agents to sales their emphasis estate data greater developers from portion and reducing other their and the Bureau National forced on debt. receivables real reduce has cash The reached quickly March the value utilizing encouraged the accounts their their reached to business estate to place XX.X being on channels

[Foreign Language]

who those facilitating agents providing has provide the thus observation has able estate are outstanding Consequently, transaction are and in to of real continued agents to further attractiveness value services. of capable the the is third boosted transaction grow

quality's resale of for capable agents highly within lion's our agents share agencies, transactions, rate that believe potential. aggregating will rapidly. property growth property the of of be we that observed the Meanwhile, in unlock While agent the maintained key we has services penetration penetration agent grown transaction service stable rate have future construction of the new of has the to the to results. [minority] Therefore, continue capable deliver terms

Language] [Foreign

Shanghai have is closed with between X,XXX are estate RMB for are become higher the to has and leveraging platforms the gain to seen for deals. competition we following up the in capital quickly this for share. offer their Take also real as cities, in market platform trend. market full X,XXX or And as several ranging incentives providing in advances projects fierce each subsidy RMB from of commissions expands, transaction And to fourth additional funding example, other platforms the transaction including subsidies Guangzhou, commissions Chengdu

commission forcing achieve while quantity to their the these pushing advances and subsidies been up real to estate rely agencies of agents results. costs have However, sheer developers' commission on

Language] [Foreign

Despite agents still services the real remains to and provide that technology have demand for the we their market conduct business essential for to competition, in industry found the technology SaaS as services. intensifying become strong their estate continues

online of customer online. listings, and estate transaction services process, online -- online elements transaction payment the and the management solutions fee including online service X agent Our progress key reactions transaction services and real cover property

significantly As and both a has efficiency solution improved transaction result, our user experience.

[Foreign Language]

our valuable we past X the accumulation in the have of implemented the optimizations quarter. X strategic years, Based experience third in major on

food not the for cannot guidelines. built standardizing The offerings efficiency or and that between to leverage the one's estate From the improve in estate to We lies than which platform to advances industry was leveraging subsidies, frequency their Instead, relationship rate offer more is and believe we it advances implementing the improve is and agents small- plan of first does subsidy the average also for not operating its ability low long-term as agents any on empower to strategic nor future decision a market be and to of transactions our is transactions. unsustainable. and the to optimization our commissions. market XX%. real subsidies. made competition typically SaaS in closed-loop overall annual technology services efficiency, appropriate relatively short-term perspective, Real and healthy more medium-sized a turnover help sustainable the we have technology industry, A our our performance such solution vicious agencies, improved the facilitate customer

Language] [Foreign

line with In which SaaS of moat. partners, have remained utilizing solution economic believe optimization, agent the strategic we our to committed long-term our is Okay. core first we empower at to our our

stage continued As DUODUO upgrade SaaS to the By official mini attract SaaS videos their better different throughout such, of to property without the -- operations high-quality WeChat, and market agencies through of help on agents' agents stages release solution accounts careers. sales customers help we our we new to of their different listings. features to their solution program Meanwhile, our the for enables to leveraging developed property agencies solution have refine also through quarter private network. introductory in their third a

a marketing incentives, introduced a awards user series property For example, this during activity. and including viewing price [wheels] acquisition agent quarter, of new to we stimulate

in a individual agents' same help operating time, leveraged at and their understanding analyze incentives These agents the help ways level agent relation introduced as ability an faster. careers. online acquisition well and their to complement we agents agencies At to agencies, analysis, has platform customers system, as improve assign agency viewing organize throughout we in-depth and to have as the efficiency and those efforts. initiatives of transaction agency responsibilities to stage areas this quality in other key developed agents' innovative the customer set their the empowering levels throughout Through to features helped To of operations as also such our work to needs transactions to of agents the process. tasks close agents' for workflow particular, of property agent example, gain the we enabling coupons organizations these helped work, different which refine while a reminders procedures, agencies new data development to management management of of at for capabilities effectively both augmenting user helped the agents different have enhance acquire in to to marketing We an more development. the number of their

agencies needs higher our engagement and adjusted the products also most on usage have our platform. and We agent small- training, of increased of the medium-sized for

and a number our third quarter active exceeded result, period of capabilities an the of platform. platform of us In our our technology representing and our to solutions XXXX. As continue attract on agents service XXX,XXX, enabled XXXX, year-over-year the XX.XX% of the increase thus to optimizing same agents offerings has SaaS more from

September, of in the by increased agents number importantly, of agents active reached on a More number platform our platform high the XXX,XXX. active year-over-year, of our while monthly record on XX.X%

Language] [Foreign

number optimization platform. our on second estate strategic maximize complete the deals transaction The is to of agents real the goal that exclusively of

growth network. long services For with [offline] will to transaction achieve this will purpose, service and run. enable utilizing alliance This agents solution over focus our empower our the preferred enabled SaaS us to and on mutual capabilities operation those our agents initiatives our in we agent

Language] [Foreign

partnership, During develop the established this fourth cooperation a strategic first-grade third we Through the we quarter, plan system quarter. Group. the in franchising to a technology-enabled with leading Centaline

And We cooperation our yesterday. of over our to Asian empower long partnership ability will are exclusivity announced to us confident have agent overall enable the Group will our this we secure that -- the with help run. Centaline

Language] [Foreign

result real over In China's agents and the in off-line made management combination one as has Centaline Hong based is Mainland extensive sophisticated platform the technology since the X leadership. has years, experience been best million of real providers The accumulated Group in our Group active has country. this a Centaline estate agent in in last service X market estate Kong of XXXXs. of its our operations system and

creating as and Tianyang, technology Chairman and estate in and of Centaline Property partnership, Centaline currently agent shops real Shanghai our to shops, the agent further innovative this China's Ltd., Liu and invested model which Technology Agency alliance technology-enabled Mr. of Co., agent service-oriented estate manages off-line jointly joint have preferred part of Vice an over agent on Group, agents new those will empower union President Yuancui system. will Limited a franchising we real via estate the joint network China. China our the serve venture, venture XXX As of President service focus Information this in Director real of

[Foreign Language]

our optimization able service offerings focused the property resale the our utilizing fully centers. of off-line to The Duoduo [third] transactions. our CRM, By management digitize service transaction of centers capabilities expanding transaction strategic service service the off-line and process are our on centers, transaction strengthening

XX stores, additional online During XX while to through the centers operations. established stores, expanding -- and service off-line self-owned joint the third while our Shanghai we in XX an cities built coverage area quarter, transaction XX

To process. the we solutions banks established Communications system interfaced partnerships payments. already our of the and to have with both the we have transaction efficiency of enhance ICBC of online mortgage on Bank the and addition, In commission provided date, with

Language] [Foreign

Okay.

consider We continued our listings to library expand on enabled core us the services we forged platform. their to developer our library construction coverage to cities. projects better further expand property property third top-tier production our By agents. a this end for strategic new key and grow projects third partnerships essential and for agencies developers as real focus supply platform our new These the in have property the as enhanced of have the the in the business, to property China. is estate XX quarter partnerships on with are materials we products listings. number collaborations to As construction of of quarter, projects to listing the on developers expand of those well for with to We our serve conduct agent in our our new

representing our the during platform construction of and on increase projects result, of an number a XX.XX% quarter-over-quarter. this X,XXX, As the period, increased year-over-year to new XX.XX% property

addition X.X Jinan, X,XXX value The and Luzhou, terms reached management of we our cities parking new pass parking RMB business, our XX excess in spaces our quarter. parking of number business for continued such this of XX,XXX related X to in expand in a space Since estate total projects Chongqing, In new on our executing Changsha, Jimo. quarter, real this listed platform asset as spaces of total billion. during

renovation to also expand We resale properties. property continued through our to services our exclusive access

enterprises. health us to our the than with forge our space and our renovation and services during the partnership indoor to process leading customers renovation foothold in safer partnership providers As such, property make health resale renovation before. This we and technology of actively to home better, promote help home enabled environmental leverage smarter

Language] [Foreign

the establishment agency by operations our to becoming always and our and agencies digitizing reliable with a ago, real off-line agents. solution, long-term years for goal our SaaS estate empower ally estate Since has X providing agencies, real quality been

fourth conservative that our on execute diligently share quarter. continue will can strategies the and We And lastly, our current long-term risk approach, growth generate going value our let for manage forward. an those outlook me update

or subsidies, agents to expect We have decision offer new will construction strategic a transaction on properties. not impact closed-loop our our any short-term for

our remain agent listing ability to our expand confident continuously library. and base However, properly in the we

more in establishment alliance network will joint plan agents also Centaline-Yuancui, our with to cooperation Centaline in believe more those with to and the we those exclusive through We partnerships agent invest and preferred empowering which establish enable a us the venture, of same agents. long-term

result, expect our increase costs quarter. the As we a next to in off-line

change. This forecasting views revenue XXX of including quarter SaaS the strengthening real fourth addition, the RMB partnerships our In we those RMB environment, commitment agents, on between million our to on our our currently current to XXXX. our of expanding quarter is XXX remain be offerings, for stickiness estate the fourth in are of and expectations upgrading our are library million to will we assumptions, and XXXX. listing property our market and subject platform developer Based in which forecast based

Language] [Foreign

call Jiaorong, to Mr. With this financial our will that, turn I quarter's Pan the CFO, review results. to over

Language] [Foreign

Thank a will you, financial now look into third Zeng. closer I Mr. provide quarter results. the

which the begin, a of quarter the X.X% all XXX.X a commissions to period XXXX. the from in an XXX.X I and the RMB the and XX.X% attributable quarter of XXX.X million of for XXXX was increase XXX.X represented of third that Before quarter And decrease second of XXX.X of million RMB which from Revenue million, our was transactions. agents RMB an decrease in RMB the in represented period third of in a was from in XXXX in increase XXXX RMB revenue numbers XX.X% rendered, stated. from payable revenue XXXX. the note of unless terms from XX% XXXX the to million, services of decrease in they decrease The of RMB commission otherwise in resulted RMB which quarter please mainly million in year-over-year the fees the from decrease XXX cost of million same second are same

[Foreign Language]

Gross profit same XXX.X the period expanded a margin second XX.X% in XXXX represented million in from RMB XX.X% of Gross XXXX, XXX.X RMB decrease increase the from third in RMB quarter which period quarter the in was further million, the in of to of third of XXXX. X.X% from of XXX XX% quarter the of same of million an XXXX XXXX.

[Foreign Language]

the XXXX. RMB XXX.X of XX.X% from XXXX, in the share-based represented including expenses XXX quarter XX.X RMB in an an million increase X.X% which million RMB same the expenses XXXX, were quarter compensation of of from period Operating third of million, in of of increase million RMB XXX.X second

[Foreign Language]

sellers attract to million our and estate to our X.X our in expanding quarter. real Sales and from RMB and activity primarily decreases in second and due expenses RMB quarter reduction of decrease XX.X% from XX.X% XXXX marketing the million The million, of decrease marketplace same third of RMB a in brand were the X.X were promotion to of a represented period listing XXXX X.X marketing platform. the from in which property

Language] [Foreign

XX in of XXXX development in year-over-year as the the decrease decrease RMB our the of basis in XX.X XX.X lead period efficiency. personnel-related primarily to of RMB commitment to third was in The continued optimization development teams' attributable And product period. the the to same in RMB compared Okay. XXXX. expenses on of XXXX therefore, million quarter our to a were million the million second the operating Product quarter expenses and

[Foreign Language]

our increase to and primarily of the remaining U.S.-listed our both attributable the compliance a provision in the in increase million second, And million third the various of XXXX. the expenditures of doubtful to was and administrative second headcount compensation the quarter an as for The an million. XX.X XX.X of expenses, governance first, million RMB period the XXX.X year-over-year and compared to debtors. and administrative increased share-based XX And as in to ensure and RMB increase RMB General same general expenses included in improve corporate status were expenses period, company. XXXX quarter RMB RMB were in XXXX in million relation XX.X in

[Foreign Language]

the of RMB of to in period the loss of XXXX. and third million XX compared quarter quarter RMB of RMB same a in the in XXXX million XX net period million RMB XXXX and income non-GAAP Net the the in income XX.X second quarter was XXXX second in as XX.X to million quarter of million -- RMB was XXXX in RMB as XXXX. Net XX.X same million net the of compared third XX.X of

[Foreign Language]

quarter income [shareholders] and were respectively. RMB comparison, XXXX of and XXXX RMB in X.XX diluted respectively. net basic ordinary Basic second Okay. $X to X.XX, the the and diluted quarter RMB third quarter $X, both ADS the income for per in X.XX were net basic our and per In net in loss diluted while ADS attributable of XXXX our and of ADS third were

[Foreign Language]

short-term cash bank XX, million September X,XXX.X million. facilities and XXXX, of equivalents, cash restricted borrowing and of investment cash $XXX.X RMB short-term we had XXX As RMB of and million, unutilized banking of

the quarter operating activities XX.X provided was million. net by For of RMB third XXXX, cash

Language] [Foreign

prepared to remarks for this our ready questions. And operator, are today. And now concludes we take

[Operator question Xiong Wei UBS. of Instructions] first We from the line the have from

Language] impacted as off-line term, size management more and business mentioned will business So the the just be distribution well. we invest fourth in in of quarter that to the plan now [Foreign we as that short the primary in the would expect

the expect that And off-line also, So my to distribution question impact fourth to what And margins? quarter? our will is, we expecting primary how are we see in on of the kind the investments how long would impact business? see

Language] [Foreign

We solution continue our believe improve our we agents. strengthening of size Okay. to offerings, our the -- active will active on through our SaaS continued

the our we in have record new also of users For number By example, the And listing, property a of upgrading we of record -- listings. on reached property listings. new our high property a quarter, high new September. have our third active reached we're

And our working we so to endeavor -- of both that our also property new the agencies activeness and improve we listings. are and agents on

on the of close and of competition subsidy, will their the transaction. deals consider be vicious the agencies a agent That is there the because the who However, closed-loop rate we negative impact still on platform. and on

observed the have property agencies platform. on We obtained the new that the listings the of information on have some

on However, their other they deals close platform.

the on last this is we to the because the And believe of level X landscape after Technology become in and not all will the quarters. subsidy going particular, Company. And we that And the reasonable our will competition is with this, property profit. and therefore, the the Information with competitors Yuancui be gross of or competition and based a off-line on cooperation more respect competition on presence long Group, we However, believe the like X in the forecasted Centaline stable that. our investment

against And focused them we we build the have with for we against on key with can cooperation we and these exclusive from strategy without subsidizing our our outstanding agency agents like limits, a kept And quarters forward traffic. on up a our an we -- competition come market. and forming the on empowering continue focused in few vicious going capital online this our is competition protection believe to to -- working platform. respond empower operation We therefore, that management. off-line that wall the buildup to so We

[Foreign Language]

Right.

to our not -- there in terms we in a the be presence And an the and off-line in this have And seen forecast increase the is gross insisted off-line have we on result investment agency a shops, competition. We margin too that revenue. offer our the much presence of there related of in our decrease increase quarter in gross competitors. in is will whilst our terms and expect our seen significant margin not off-line we by have we its subsidy of

in will the So not be the short improved gross term. we expect positively profit

We the to presenters don't on back have closing hand any line. questions now I'll remarks. for conference further the the

Do we have any further questions, operator?

closing to questions at Thank now presenters hand you. I'll the no conference are further remarks. for There this time. today's back

the everybody, you, joining call for earnings you Okay. thank conclude thank this you again. and now. call. And this does Thank earnings And

for all gentlemen, and Ladies today. our you conference for conclude Thank participating. that does

may disconnect. You now