RENN [Renren] 6-K: Renren Announces Unaudited Fourth Quarter and Fiscal Year

Ticker: RENN, Company: Renren Inc., Type: 6-K, Date: 2019-05-15
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Webplus: RENN/20190515/6-K_1/2_EX-99.1/000.htm SEC Original: tv521672_ex99-1.htm
Renren Announces Unaudited Fourth Quarter and Fiscal Year 2018 Financial Results BEIJING, China, May 14, 2019 — Renren Inc. (NYSE: RENN) (“Renren” or the “Company”), which operates a leading premium used auto business in China (NASDAQ: KXIN) and several US-based SaaS businesses, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2018. Fourth



s:51148:" EX-99.1 2 tv521672_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

Renren Announces Unaudited Fourth Quarter and Fiscal Year 2018 Financial Results

BEIJING, China, May 14, 2019 — Renren Inc. (NYSE: RENN) ("Renren" or the "Company"), which operates a leading premium used auto business in China(NASDAQ: KXIN)and several US-based SaaS businesses, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2018.

Fourth Quarter 2018 Highlights

Total net revenues were US$122.2 million, a 35.8% increase from the corresponding period in 2017.

Used auto sales revenuewas US$114.6 million, a 47.3% increase from the corresponding period in 2017.

Operating loss was US$40.5 million, compared to an operating loss of US$25.4 million in the corresponding period in 2017.

Net loss attributable to the Company was US$23.3 million, compared to a net loss of US$54.3 million in the corresponding period in 2017.

Adjusted loss from continuing operations(1)(non-GAAP) was US$37.5 million, compared with an adjusted loss from continuing operations of US$19.8 million in the corresponding period in 2017.

Adjusted net income(1)(non-GAAP) was US$11.7 million, compared to an adjusted net loss of US$46.1 million in the corresponding period in 2017.

Fiscal Year 2018 Highlights

Total net revenues were US$498.2 million, a 185% increase from the corresponding period in 2017.

Used auto sales revenuewas US$467.2 million, a 286% increase from 2017.
Internet Value-Added Services (IVAS) and others revenueswere US$28.5 million, a 17.5% increase from 2017.

Operating loss was US$113.4 million, compared to an operating loss of US$77.7 million in 2017.

Net income attributable to the Company was US$72.5 million, compared to net loss attributable to the Company of US$110.4 million in 2017.

Adjusted loss from continuing operations(1)(non-GAAP) was US$81.3 million, compared to an adjusted net loss from continuing operations of US$49.6 million in 2017.

Adjusted net income(1)(non-GAAP) was US$126.2 million, compared to an adjusted net loss of US$79.8 million in 2017.

(1) Adjusted loss from continuing operations and adjusted 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 adjusted 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.

Fourth Quarter 2018 Results

Total net revenues for the fourth quarter of 2018 were US$122.2 million, representing a 35.8% increase from the corresponding period in 2017, due to the rapid growth of our used auto retail business since its launch in the second quarter of 2017.

Used auto sales revenues for the fourth quarter of 2018 were US$114.6 million, representing a 47.3% increase from the corresponding period in 2017. This is a new business that we initiated in the second quarter of 2017.

IVAS and others net revenueswere US$7.6 million, compared to US$7.4 million from the corresponding period of 2017.

Financing income was negligible for the fourth quarter of 2018, compared to US$4.7 million in the corresponding period of 2017. Our used auto dealership financing business ceased to extend financing to third parties from January 2018, and instead has focused on internal financing to our own used car dealerships since that time.

Cost of revenues was US$111.6 million, compared to US$91.4 million from the corresponding period of 2017. The increase was primarily due to the growth of our used auto sales business.

Operating expenses were US$51.0 million, a 114% increase from the corresponding period of 2017.

Selling and marketing expenses were US$7.2 million, a 15.8% 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$7.2 million, a 22.6% 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 expenseswere US$7.6 million, a 35.7% decrease from the corresponding period in 2017. The decrease was primarily due to the closing of the disposition of Oak Pacific Investment in June 2018, since the preparations for this transaction contributed significantly to our general and administrative expenses in the corresponding period in 2017.

Impairment of goodwill was US$29.1 million for the fourth quarter of 2018. We had no impairment of goodwill in the corresponding period of 2017.

Share-based compensation expenses, which were all included in operating expenses, were US$2.9 million, compared to US$5.5 million in the corresponding period in 2017.

Loss from operations was US$40.5 million, compared to a loss from operations of US$25.4 million in the corresponding period in 2017.

Loss in equity method investmentswas US$0.3 million, compared to loss of US$0.4 million in the corresponding period in 2017.

Income from discontinued operationswas US$59.4 million, compared to a loss of US$26.6 million in the corresponding period in 2017. The income from discontinued operations in the fourth quarter of 2018 was due to the gain on disposal of Renren social networking service (“SNS”) business. The disposal of SNS Business represents a strategic shift and has a major effect on the Company’s result of operations.

Net loss attributable to the Companywas US$23.3 million, compared to a net loss of US$54.3 million in the corresponding period in 2017.

Adjusted loss from continuing operations (non-GAAP)was US$37.5 million, compared with an adjusted loss from continuing operations of US$19.8 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$11.7 million, compared to an adjusted net loss of US$46.1 million in the corresponding period in 2017. 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.

Fiscal Year 2018 Results

Total net revenues in 2018 were US$498.2 million, representing a 185% increase from 2017, due to the rapid growth of our used auto retail business since its launch in the second quarter of 2017.

Used auto sales revenue for the year of 2018 were US$467.2 million, representing a 286% increase from 2017. This is a new business that we initiated in the second quarter of 2017.

IVAS and others net revenueswere US$28.5 million, representing a 17.5% increase from 2017. The increase was primarily due to the service revenue from the used auto business.

Financing income was US$2.5 million, compared to US$29.3 million in 2017. Our used auto dealership financing business ceased to extend financing to third parties from January 2018, and instead has focused on internal financing to our own used car dealerships since that time.

Cost of revenues in 2018 was US$476.5 million, compared to US$163.3 million in 2017. The increase was primarily due to the cost of used car sales.

Operating expenses in 2018 were US$135.1 million, a 51.8% increase from 2017.

Selling and marketing expenses in 2018 were US$34.6 million, a 72.2% increase from 2017, primarily due to an increase in headcount and personnel-related expenses for the used auto sales business.

Research and development expenses in 2018 were US$26.3 million, a 51.1% increase from 2017, primarily due to personnel related expense increases for the SaaS business.

General and administrative expenses in 2018 were US$71.1 million, a 38.1% increase from 2017. The increase was primarily due to an increase of US$16.1 million write-offs of advance to suppliers and an increase of US$2.2 million in share-based compensation expenses.

Gain on disposal of property and equipmentin 2018 was US$25.9 million in 2018. We had no gain on disposal of property and equipment in 2017.

Impairment of goodwill was US$29.1 million in 2018. We had no impairment of goodwill in 2017.

Share-based compensation expenses in 2018, which were all included in operating expenses, were US$31.6 million, compared to US$28.0 million in 2017. The increase was mainly due to stock options granted during the first quarter of 2018 by our subsidiary conducting our used car business.

Operating loss in 2018 was US$113.4 million, compared to US$77.7 million operating loss in 2017.

Non-operating loss was US$33.1 million in 2018, compared to an income of US$34.9 million in 2017. The non-operating loss in 2018 was mainly due to fair value change of contingent consideration.

Loss in equity method investments were US$2.5 million, compared to an income of US$56.0 million in 2017. The decrease was mainly due to a US$58.3 million gain on disposal of certain shares of Social Finance Inc in 2017.

Income from discontinued operationswas US$223.3 million in 2018, compared to a loss of US$119.3 million in 2017. The income from discontinued operations in 2018 was mainly due to the gain on disposal of Oak Pacific Investment and Renren SNS business.

Net income attributable to the Company in 2018 was US$72.5 million, compared to a net loss of US$110.4 million in 2017.

Adjusted loss from continuing operations (non-GAAP)was US$81.3 million, compared to an adjusted net loss from continuing operations of US$49.6 million 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$126.2 million, compared to an adjusted net loss of US$79.8 million in 2017. 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$110 million to US$115 million in the first quarter of 2019. 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 leading premium used auto business in China (NASDAQ: KXIN) and several US-based SaaS businesses. 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 first quarter of 2019 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; 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:

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, December 31,
2017 2018
ASSETS
Current assets:
Cash and cash equivalents $ 125,199 $ 15,333
Restricted cash 47,253 5,818
Accounts receivable, net 6,098 2,584
Financing receivable, net 125,478 3,486
Prepaid expenses and other current assets 48,226 49,515
Amounts due from related parties 188 20,829
Inventory, net 95,012 59,197
Assets of discontinued operations - current 20,551
Total current assets 468,005 156,762
Non-current assets:
Long-term financing receivable, net 8
Property and equipment, net 29,509 1,555
Goodwill and intangible assets, net 104,197 85,526
Long-term investments 34,742 22,341
Amount due from related parties-non-current 133,880
Restricted cash – non-current 26,075 36,362
Other non-current assets 958 767
Assets of discontinued operations – non-current 530,670
Total non-current assets 726,159 280,431
TOTAL ASSETS $ 1,194,164 $ 437,193
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 19,095 $ 8,255
Short-term debt 61,479 49,887
Accrued expenses and other current liabilities 31,877 33,055
Payable to investors 142,689 15
Amounts due to related parties 7,059 55
Deferred revenue 11,433 3,716
Income tax payable 11,727 20,602
Contingent consideration 5,944 11,929
Liabilities of discontinued operations – current 79,244
Total current liabilities 370,547 127,514
Non-current liabilities:
Long-term debt 47,665 35,000
Long-term contingent consideration 60,850 93,741
Liabilities of discontinued operations– non-current 6,356
Total non-current liabilities 114,871 128,741
TOTAL LIABILITIES $ 485,418 $ 256,255
Shareholders' Equity:
Class A ordinary shares 727 737
Class B ordinary shares 305 305
Additional paid-in capital 1,303,117 709,137
Statutory reserves 6,712 6,712
Accumulated deficit (653,173 ) (563,737 )
Accumulated other comprehensive income (loss) 17,116 (5,689 )
Total Renren Inc. shareholders' equity 674,804 147,465
Noncontrolling interests 33,942 33,473
TOTAL EQUITY 708,746 180,938
TOAL LIABILITIES AND EQUITY $ 1,194,164 $ 437,193

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 Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2017 2018 2018 2017 2018
Net revenues:
Used auto sales $ 77,797 $ 106,338 $ 114,560 $ 121,084 $ 467,232
IVAS and others 7,440 5,962 7,609 24,271 28,510
Financing income 4,733 28 1 29,269 2,456
Total net revenues 89,970 112,328 122,170 174,624 498,198
Cost of revenues (91,420 ) (115,805 ) (111,641 ) (163,314 ) (476,468 )
Gross (loss) profit (1,450 ) (3,477 ) 10,529 11,310 21,730
Operating expenses(income):
Selling and marketing (6,234 ) (8,531 ) (7,218 ) (20,070 ) (34,562 )
Research and development (5,840 ) (6,664 ) (7,160 ) (17,435 ) (26,349 )
General and administrative (11,831 ) (24,519 ) (7,609 ) (51,494 ) (71,094 )
Gain on disposal of property and equipment - - - - 25,928
Impairment of goodwill - - (29,055 ) - (29,055 )
Total operating expenses (23,905 ) (39,714 ) (51,042 ) (88,999 ) (135,132 )
Loss from operations (25,355 ) (43,191 ) (40,513 ) (77,689 ) (113,402 )
Other (loss) income (1,236 ) (1,157 ) (3,135 ) 2,656 (2,014 )
Fair value change of contingent consideration (2,601 ) 18,301 (39,837 ) (2,601 ) (29,604 )
Interest income 616 2,387 2,158 1,988 5,760
Interest expenses (1,218 ) (1,861 ) (1,078 ) (4,322 ) (5,103 )
Realized loss on short-term investments - - - (100 ) -
Realized gain (loss) on disposal of long-term investments 4,585 (2,209 ) 68 37,311 (2,141 )
Total non-operating income (loss) 146 15,461 (41,824 ) 34,932 (33,102 )
Loss before provision of income tax and loss in equity method investments, net of tax (25,209 ) (27,730 ) (82,337 ) (42,757 ) (146,504 )
Income tax expenses (1,936 ) (1,096 ) (7,807 ) (4,479 ) (9,850 )
Loss before loss in equity method investments, net of tax (27,145 ) (28,826 ) (90,144 ) (47,236 ) (156,354 )
Loss in equity method investments, net of tax (439 ) (692 ) (342 ) 55,985 (2,463 )
(Loss) income from continuing operations (27,584 ) (29,518 ) (90,486 ) 8,749 (158,817 )
Discontinued operation:
Loss from operations of discontinued operations, net of income tax (26,606 ) (956 ) (277 ) (119,252 ) (18,799 )
Gain on deconsolidation of the subsidiaries, net of income tax - 1,612 59,656 - 242,097
(Loss) income from discontinued operations, net of tax (26,606 ) 656 59,379 (119,252 ) 223,298
Net (loss) income (54,190 ) (28,862 ) (31,107 ) (110,503 ) 64,481
Net income (loss) attributable to noncontrolling interests (99 ) 102 7,837 76 8,059
Net (loss) income attributable to Renren Inc. $ (54,289 ) $ (28,760 ) $ (23,270 ) $ (110,427 ) $ 72,540
Net (loss) income per share from continuing operations attributable to Renren Inc.shareholders:
Basic $ (0.03 ) $ (0.03 ) $ (0.08 ) $ 0.01 $ (0.15 )
Diluted $ (0.03 ) $ (0.03 ) $ (0.08 ) $ 0.01 $ (0.15 )
Net (loss) income per share from discontinued operations attributable to Renren Inc. shareholders:
Basic $ (0.03 ) $ 0.00 $ 0.06 $ (0.12 ) $ 0.22
Diluted $ (0.03 ) $ 0.00 $ 0.06 $ (0.12 ) $ 0.20
Net (loss) income per share attributable to Renren Inc. shareholders:
Basic $ (0.05 ) $ (0.03 ) $ (0.02 ) $ (0.11 ) $ 0.07
Diluted $ (0.05 ) $ (0.03 ) $ (0.02 ) $ (0.11 ) $ 0.07
Net (loss) income  attributable to Renren Inc. shareholders per ADS*:
Basic $ (0.79 ) $ (0.42 ) $ (0.34 ) $ (1.61 ) $ 1.05
Diluted $ (0.79 ) $ (0.42 ) $ (0.34 ) $ (1.61 ) $ 0.99
Weighted average number of shares used in calculating net (loss) income per ordinary share attributable to Renren Inc. shareholders:
Basic 1,030,786,885 1,036,609,262 1,040,385,805 1,028,537,406 1,036,421,063
Diluted 1,030,786,885 1,036,609,262 1,040,385,805 1,028,537,406 1,095,805,917
Weighted average number of shares used in calculating net (loss) income per ordinary share from discontinued operations attributable to Renren Inc. shareholders:
Basic 1,030,786,885 1,036,609,262 1,040,385,805 1,028,537,406 1,036,421,063
Diluted 1,030,786,885 1,116,051,687 1,079,618,090 1,028,537,406 1,095,805,917

* 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 Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
2017 2018 2018 2017 2018
Loss from operations $ (25,355 ) $ (43,191 ) $ (40,513 ) $ (77,689 ) $ (113,402 )
Add back: Shared-based compensation expenses 5,494 2,915 2,898 28,016 31,605
Add back: Amortization of intangible assets 35 131 101 55 494
Adjusted loss from continuing operations $ (19,826 ) $ (40,145 ) $ (37,514 ) $ (49,618 ) $ (81,303 )
Net (loss) income $ (54,190 ) $ (28,862 ) $ (31,107 ) $ (110,503 ) $ 64,481
Add back: Shared-based compensation expenses 5,494 2,915 2,898 28,016 31,605
Add back: Fair value change of contingent consideration 2,601 (18,301 ) 39,837 2,601 29,604
Add back: Amortization of intangible assets 35 131 101 55 494
Adjusted net (loss) income $ (46,060 ) $ (44,117 ) $ 11,729 $ (79,831 ) $ 126,184

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Webplus: RENN/20190515/6-K_1/1/000.htm SEC Original: tv521672_6k.htm



s:898:" 6-K 1 tv521672_6k.htm FORM 6-K

Exhibit Index

Exhibit 99.1—Press Release

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Company Info:

Ticker: RENN, Company: Renren Inc., Type: 6-K, Date: 2019-05-15CIK: 0001509223, Location: F4, SIC: 7374, SIC Desc: SERVICES-COMPUTER PROCESSING & DATA PREPARATION
Business Phone & Address:
5/F, NORTH WING, 18 JIUXIANQIAO MIDDLE ROAD
CHAOYANG DISTRICT, BEIJING 100016

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