U.S. Markets close in 4 hrs 34 mins

Secoo Reports Unaudited Third Quarter 2019 Results

  • Oops!
    Something went wrong.
    Please try again later.
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

BEIJING, Dec. 05, 2019 (GLOBE NEWSWIRE) -- Secoo Holding Limited (“Secoo”, the “Company” or “We”) (SECO), Asia's largest online integrated upscale products and services platform, today announced its unaudited financial results for the third quarter ended September 30, 2019.

Highlights for Third Quarter 2019:

  • GMV1 reached RMB3,661.0 million (US$512.2 million) for Q3 2019, representing an increase of 66.8% from RMB2,194.6 million for Q3 2018.

  • Total number of orders2 was 1,035.3 thousand for Q3 2019, representing an increase of 74.2% from 594.4 thousand for Q3 2018.

  • Number of active customers3 increased by 58.7% to 482.5 thousand for Q3 2019 from 304.0 thousand for Q3 2018.

  • Total revenues reached RMB1,941.6 million (US$271.6 million) for Q3 2019, increasing by 23.5% from RMB1,572.4 million for Q3 2018.

  • Net income increased by 38.3% to RMB62.1 million (US$8.7 million) for Q3 2019 from RMB44.9 million for Q3 2018.

  • Non-GAAP net income4 increased by 32.0% to RMB64.7 million (US$9.1 million) for Q3 2019 from RMB49.0 million for Q3 2018.

_______________________

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 period presented.
2 Total number of orders refers 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 period presented.
3 Active customer refers to a customer who made at least one account purchase during the period presented.
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.

Commentary

Mr. Richard Rixue Li, Chairman and Chief Executive Officer of Secoo, commented, “We’re pleased to deliver another quarter of solid operational and financial results, highlighted by 66.8% year-over-year increase in GMV to a record high of RMB3.66 billion, thanks to strong execution of our overall strategy, focused on providing the best possible luxury shopping experience to our customers. As we build upon our growing brand recognition and leading luxury retail capabilities through our integrated online and offline platform, we will continue achieving sustained growth in both the number of active customers and paid memberships. In the third quarter, our number of active customers increased by 58.7% year-over-year, and incremental paid memberships increased by 64.6% compared to the incremental paid membership in the second quarter of 2019."

“As we commit our efforts to expanding and deepening our supply chain capabilities, we have added direct cooperation with 143 domestic and international brands since the third quarter to date. The expanded offerings appeal to the interests of high-end consumers with discerning tastes seeking premium shopping experiences. In addition, we continue advancing our technology including artificial intelligence, big data and cloud computing, especially with the deployment of our AI-powered operating system, which improve operating efficiency and provide superior customer experience. Our healthy growth momentum reaffirms the enormous and growing demand for online luxury shopping in China and our market-leading position,” Mr. Li concluded.

Mr. Shaojun Chen, Chief Financial Officer of Secoo, added, “During the third quarter, we reported record high revenue of RMB1,941.6 million, which is in line with our expectation. The solid third quarter results, coupled with our ability to increase operating leverage, brought about healthy profitability during the quarter with income from operations and net income increasing by 35.0% and 38.3%, respectively, on a year-over-year basis. Our focus going forward is to continue to balance profitability by increasing operating efficiency, while at the same time expanding our suite of boutique offerings. Moreover, we will strengthen our influence across the value chain in the online luxury retail industry to further solidify our position as a leading player in the market, both in China and internationally.”

Recent Developments

  • From the third quarter of 2019 to date, Secoo has established new direct collaborations with 143 brands, including Valentino, Thom Browne and Gènavant. Notably, Secoo partnered with Prada to release Prada Spring/Summer 2020 limited edition exclusively available on Secoo. Moreover, Secoo collaborated with Stella McCartney, a leading British designer brand, to exclusively unveil limited edition shoes – Elyse series.

  • In the third quarter, Secoo established a new collaboration with Stadium Goods, a prestigious premium sneaker and streetwear marketplace in the U.S., providing customers opportunities to spot trends and purchase hard-to-procure product releases.

  • Secoo launched the eleventh “707” anniversary promotion festival in July and Secoo “Outlets” offerings promotion festival in September, further enhancing Secoo brand awareness and improving the boutique shopping experiences on Secoo’s integrated platform.

  • In November, Secoo attended 2019 China International Import Expo (“CIIE 2019”). During the CIIE 2019, Secoo and Deloitte jointly released the Secoo – Deloitte CIIE 2019 Blue Paper, which analyzes the luxury purchasing power of consumers from lower-tier cities, providing consumer demographic characteristics and luxury shopping behaviors. This Blue Paper can be utilized as an important reference for high-end brands to design and execute their marketing activities suitable for their target markets.

  • Recently, Secoo began partnering with Vestiaire Collective, Europe's largest pre-owned luxury fashion website, to connect China’s savvy shoppers with world-class pre-owned fashion trends.

  • In the third quarter, Secoo successfully launched its live streaming shopping channel, devoted to online luxury fashion brand shopping through the convenient airing of live streaming shows featuring a wide range of top-tier boutique shops across the globe, including Europe and Hong Kong of China. As consumers experienced live streaming shopping, turning into consistent viewers of shopping for the latest fashions, the Company aired more than 1,000 live streaming events.

  • In the third quarter, Secoo strengthened its AI-powered operating system, along with an intelligent customer service system. Building on proprietary data-as-a-service system, Secoo is able to provide data analytics on merchandise price, sales and user behavior, enabling smarter matches between merchandises and customers and leading more accurate recommendations through the AI-powered system.

  • In this quarter, the advertiser base on Secoo EEC remained robust across diverse sectors with a total of 20 brands, including 15 new brands, such as PT Platinum, Montblanc, Qatar Airline, Metro Group, Maserati, Ping An Insurance, and iRobot.

Third Quarter 2019 Financial Results

GMV increased by 66.8% to RMB3,661.0 million (US$512.2 million) for the third quarter of 2019, from RMB2,194.6 million for the third quarter of 2018.

Total number of orders increased by 74.2% to 1,035.3 thousand for the third quarter of 2019 from 594.4 thousand for the third quarter of 2018.

Total revenues for the third quarter of 2019 increased by 23.5% to RMB1,941.6 million (US$271.6 million) from RMB1,572.4 million in the third quarter of 2018, primarily attributable to the continuous expansion of our operation, our lush offerings of merchandise and SKUs combined with our creative and effective marketing activities driving the growth in our total active customers and total number of orders served during the period.

Cost of revenues increased by 23.8% to RMB1,612.3 million (US$225.6 million) for the third quarter of 2019 from RMB1,302.7 million for the third quarter of 2018, which was in line with the increase of total revenues.

Gross profit increased by 22.1% to RMB329.3 million (US$46.1 million) for the third quarter of 2019 from RMB269.7 million for the third quarter of 2018.

Operating expenses increased by 17.6% to RMB234.5 million (US$32.8 million) for the third quarter of 2019 from RMB199.4 million for the third quarter of 2018.

Fulfillment expenses increased by 18.4% to RMB49.6 million (US$6.9 million) for the third quarter of 2019 from RMB41.9 million for the third quarter of 2018. The increase was primarily attributable to the growth in sales volume, including third-party payment commissions, as well as the increased staff cost during the period.

Marketing expenses increased by 0.3% to RMB110.8 million (US$15.5 million) for the third quarter of 2019 from RMB110.5 million for the third quarter of 2018. The marketing expenses remained flat year over year, which was primarily due to improved marketing efficiency and our efforts to enhance customer retention and repeated purchase.

Technology and content development expenses increased by 23.6% to RMB26.2 million (US$3.7 million) for the third quarter of 2019 from RMB21.2 million for the third quarter of 2018. The increase was primarily due to the continuous investment in the technology department in order to strengthen our technological capabilities.

General and administrative expenses increased by 84.6% to RMB47.8 million (US$6.7 million) for the third quarter of 2019 from RMB25.9 million for the third quarter of 2018. The increase was primarily attributable to the rising staff cost, professional fee, rents and office expenses associated with relocation of office during the period.

Income from operations increased by 35.0% to RMB94.9 million (US$13.3 million) for the third quarter of 2019 from RMB70.3 million for the third quarter of 2018.

Non-GAAP income from operations, which excludes share-based compensation expenses, increased by 31.2% to RMB97.5 million (US$13.6 million) for the third quarter of 2019 from RMB74.3 million for the third quarter of 2018.

Income tax expenses were RMB17.0 million (US$2.4 million) in the third quarter of 2019, compared to RMB9.2 million for the third quarter of 2018.

Net income increased by 38.3% to RMB62.1 million (US$8.7 million) for the third quarter of 2019 from RMB44.9 million for the third quarter of 2018.

Non-GAAP net income, which excludes share-based compensation expenses, was RMB64.7 million (US$9.1 million) in the third quarter of 2019, representing an increase of 32.0% from RMB49.0 million in the third quarter of 2018.

Net income attributable to ordinary shareholders of Secoo Holding Limited for the third quarter of 2019 was RMB60.9 million (US$8.5 million), representing an increase of 38.7% from RMB43.9 million for the third quarter of 2018.

Basic and diluted net income per share were RMB2.43 (US$0.34) and RMB2.33 (US$0.33), respectively, for the third quarter of 2019, compared to basic and diluted net income per share of RMB1.74 and RMB1.67, respectively, for the third quarter of 2018. Basic and diluted net income per American Depositary Share (“ADS”) were RMB1.21 (US$0.17) and RMB1.17 (US$0.16), respectively, for the third quarter of 2019, compared to basic and diluted net income per ADS of RMB0.87 and RMB0.84, respectively, for the third quarter of 2018.

Non-GAAP basic and diluted net income per share were RMB2.53 (US$0.35) and RMB2.43 (US$0.34), respectively, for the third quarter of 2019, compared to RMB1.90 and RMB1.83, respectively, for the third quarter of 2018. Non-GAAP basic and diluted net income per ADS were RMB1.26 (US$0.18) and RMB1.22 (US$0.17), respectively, for the third quarter of 2019, compared to RMB0.95 and RMB0.91 respectively, for the third quarter of 2018.

Cash and Restricted Cash
As of September 30, 2019, the Company had cash and restricted cash of RMB758.7 million (US$106.1 million).

Fourth Quarter 2019 Guidance

The Company currently expects total revenues for the fourth quarter of 2019 to be in the range of RMB2.2 billion and RMB2.3 billion, which would represent an increase of approximately 22.7% to 28.3% on a year-over-year basis.

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 8:00 AM U.S. Eastern Time on December 5, 2019 (9:00 PM Beijing/Hong Kong Time on December 5, 2019).

The dial-in details for the live conference call are as follows:

United States:

+1-845-675-0437

International:

+65-6713-5090

Hong Kong, China:

+852-3018-6771

Mainland China:

400-620-8038

Conference ID:

2969318

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 December 12, 2019, by dialing the following telephone numbers:

United States:

+1-646-254-3697

International:

+61-2-8199-0299

Hong Kong, China:

+852-3051-2780

Mainland China:

400-632-2162

Replay Access Code:

2969318

About Secoo Holding Limited

Secoo Holding Limited (“Secoo”) is Asia’s largest online integrated upscale products and services platform as measured by GMV in 2016. Secoo provides customers a wide selection of authentic upscale products and lifestyle services on the Company’s integrated online and offline shopping platform which consists of the Secoo.com website, mobile applications and offline experience centers, offering over 400,000 SKUs, covering over 3,800 global and domestic brands. Supported by the Company’s proprietary database of upscale products, authentication procedures and brand cooperation, Secoo is able to ensure the authenticity and quality of every product offered on its platform.

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 income from operations, non-GAAP net income, non-GAAP net income attributable to ordinary shareholders of Secoo Holding Limited, and non-GAAP basic and dilutive 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 net income per share as non-GAAP net income attributable to ordinary shareholders of Secoo Holding Limited 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 non-GAAP basic and diluted net income per ADS as non-GAAP basic and diluted 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 Secoo does.

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 RMB7.1477 to US$1.0, the noon buying rate in New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York in effect as of September 30, 2019.

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 Secoo management quotes and the Company’s financial outlook. These forward-looking statements can be identified by terminology such as “will,” “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “intend,” “potential,” “plan,” “goal” and similar statements. Secoo Holding Limited may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, 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. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These forward-looking statements include, but are not limited to, statements about: the Company’s goals and strategies; its future business development, financial condition and results of operations; its ability to attract and retain new customers and to increase revenues generated from repeat customers; its expectations regarding demand for and market acceptance of its products and services; trends and competition in China’s e-commerce market; changes in its revenues and certain cost or expense items; the expected growth of the Chinese e-commerce market; Chinese governmental policies relating to the Company’s industry and general economic conditions in China. For additional information on these and other important factors that could adversely affect the Company's business, financial condition, results of operations and prospects, please see its filings with the U.S. Securities and Exchange Commission.

For investor and media inquiries, please contact:

In China:
Secoo Holding Limited
Jingbo Ma
Tel: +86 (10) 6588-0135
E-mail: ir@secoo.com

The Piacente Group, Inc.
Jenny Cai
Tel: +86 (10) 6508-0677
E-mail: Secoo@tpg-ir.com

In the United States:
The Piacente Group, Inc.
Brandi Piacente
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,

2018

2019

2018

2019

RMB

RMB

US$

RMB

RMB

US$

Revenues:

Merchandise sales

1,548,403

1,895,212

265,149

3,517,423

4,680,686

654,852

Marketplace and other services

23,954

46,401

6,492

77,558

148,426

20,766

Total revenues

1,572,357

1,941,613

271,641

3,594,981

4,829,112

675,618

Cost of revenues

(1,302,657

)

(1,612,282

)

(225,567

)

(2,969,740

)

(3,927,774

)

(549,516

)

Gross profit

269,700

329,331

46,074

625,241

901,338

126,102

Operating expenses:

Fulfillment expenses

(41,886

)

(49,630

)

(6,943

)

(98,570

)

(140,451

)

(19,650

)

Marketing expenses

(110,532

)

(110,844

)

(15,508

)

(256,845

)

(374,208

)

(52,354

)

Technology and content development expenses

(21,166

)

(26,187

)

(3,664

)

(59,100

)

(74,366

)

(10,404

)

General and administrative expenses

(25,850

)

(47,794

)

(6,686

)

(60,529

)

(145,886

)

(20,410

)

Total operating expenses

(199,434

)

(234,455

)

(32,801

)

(475,044

)

(734,911

)

(102,818

)

Income from operations

70,266

94,876

13,273

150,197

166,427

23,284

Other income/(expenses):

Interest expense, net

(15,220

)

(29,093

)

(4,070

)

(19,164

)

(80,442

)

(11,254

)

Foreign currency exchange loss

(7,583

)

(87

)

(12

)

(11,904

)

(623

)

(87

)

Others

6,709

13,419

1,877

18,110

59,575

8,335

Income before income tax

54,172

79,115

11,068

137,239

144,937

20,278

Income tax expenses

(9,228

)

(17,041

)

(2,384

)

(30,014

)

(26,998

)

(3,777

)

Net income

44,944

62,074

8,684

107,225

117,939

16,501

Income/(loss) attributable to redeemable non-controlling interest

96

(128

)

(17

)

705

834

117

Income attributable to non-redeemable non-controlling interest

969

1,147

160

1,161

3,177

444

Net income attributable to Secoo Holding Limited

43,879

61,055

8,541

105,359

113,928

15,940

Accretion to redeemable non-controlling interest redemption value

-

(123

)

(17

)

-

(499

)

(70

)

Net income attributable to ordinary shareholders of Secoo Holding Limited

43,879

60,932

8,524

105,359

113,429

15,870

Net income per share

— Basic

1.74

2.43

0.34

4.17

4.52

0.63

— Diluted

1.67

2.33

0.33

4.04

4.34

0.61

Net income per ADS

— Basic

0.87

1.21

0.17

2.08

2.26

0.32

— Diluted

0.84

1.17

0.16

2.02

2.17

0.30

Weighted average number of shares outstanding used in computing net income per share

— Basic

25,260,757

25,122,199

25,122,199

25,273,554

25,122,199

25,122,199

— Diluted

26,236,702

26,115,445

26,115,445

26,096,457

26,111,835

26,111,835

SECOO HOLDING LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except for share data)

As of December 31,

As of September 30,

2018

2019

RMB

RMB

US$

Assets

Current assets

Cash

1,034,385

663,750

92,862

Time deposits

68,632

-

-

Restricted cash

89,222

91,998

12,871

Investment in equity security

26,032

2,611

365

Accounts receivable

119,580

137,566

19,246

Inventories

1,712,740

2,406,580

336,693

Advances to suppliers

429,219

459,213

64,246

Prepayments and other current assets

133,551

314,015

43,933

Amount due from related parties

13,284

9,272

1,297

Total current assets

3,626,645

4,085,005

571,513

Non-current assets

Property and equipment, net

56,698

78,245

10,947

Intangible Assets and goodwill

32,680

53,110

7,430

Restricted cash

2,800

3,000

420

Investment in equity investees

2,859

53,571

7,495

Deferred tax assets

51,214

69,859

9,774

Operating lease right-of-use assets

-

150,138

21,005

Other non-current assets

19,030

14,368

2,010

Total non-current assets

165,281

422,291

59,081

Total assets

3,791,926

4,507,296

630,594

Liabilities

Current liabilities

Short-term borrowings and current portion of long-term borrowings

134,324

251,036

35,121

Accounts payable

498,579

366,059

51,214

Amount due to related parties

1,564

29,815

4,171

Advances from customers

66,954

91,056

12,739

Accrued expenses and other current liabilities

352,714

679,014

94,997

Deferred revenue

62,478

74,157

10,375

Total current liabilities

1,116,613

1,491,137

208,617

Non-current liabilities

Long-term borrowings, excluding current portion

1,151,560

1,227,030

171,668

Long-term liabilities

14,240

55,270

7,733

Non-current operating lease liabilities

-

116,487

16,297

Total non-current liabilities

1,165,800

1,398,787

195,698

Total liabilities

2,282,413

2,889,924

404,315

Mezzanine Equity

Redeemable non-controlling interest

7,587

8,920

1,248

Total mezzanine equity

7,587

8,920

1,248

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, 2018 and September 30, 2019, 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, 2018 and September 30, 2019, respectively)

41

41

6

Treasury Stock (517,454 Class A ordinary shares as of December 31, 2018 and September 30, 2019, respectively, at cost)

(71,018

)

(71,018

)

(9,936

)

Accumulated losses

(1,280,753

)

(1,167,324

)

(163,315

)

Additional paid-in capital

2,839,342

2,848,385

398,504

Accumulated other comprehensive loss

(6,373

)

(35,227

)

(4,928

)

Total equity attributable to ordinary shareholders

1,481,365

1,574,983

220,349

Non-redeemable non-controlling interest

20,561

33,469

4,682

Total equity

1,501,926

1,608,452

225,031

Total liabilities, mezzanine equity and equity

3,791,926

4,507,296

630,594

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,

2018

2019

2018

2019

RMB

RMB

US$

RMB

RMB

US$

Income from operations

70,266

94,876

13,273

150,197

166,427

23,284

Add:

Share-based compensation expenses

4,010

2,585

362

17,240

9,043

1,265

Non-GAAP income from operations

74,276

97,461

13,635

167,437

175,470

24,549

Net Income

44,944

62,074

8,683

107,225

117,939

16,501

Add:

Share-based compensation expenses

4,010

2,585

362

17,240

9,043

1,265

Non-GAAP net income

48,954

64,659

9,045

124,465

126,982

17,766

Net income attributable to ordinary shareholders of Secoo Holding Limited

43,879

60,932

8,524

105,359

113,429

15,870

Add:

Share-based compensation expenses

4,010

2,585

362

17,240

9,043

1,265

Non-GAAP net income attributable to ordinary shareholders of Secoo Holding Limited

47,889

63,517

8,886

122,599

122,472

17,135

Non-GAAP net income per shares:

Basic

1.90

2.53

0.35

4.85

4.88

0.68

Diluted

1.83

2.43

0.34

4.70

4.69

0.66

Non-GAAP net income per ADS:

Basic

0.95

1.26

0.18

2.43

2.44

0.34

Diluted

0.91

1.22

0.17

2.35

2.35

0.33

Weighted average number of shares outstanding used in computing the adjusted net income per share

— Basic

25,260,757

25,122,199

25,122,199

25,273,554

25,122,199

25,122,199

— Diluted

26,236,702

26,115,445

26,115,445

26,096,457

26,111,835

26,111,835