SouFun (SFUN) Q2 Loss Narrower Than Expected, View Intact

SouFun Holdings Ltd. (NYSE:SFUN) reported operating net loss of 9 cents per share in the second quarter of 2016, narrower than the Zacks Consensus Estimate of a loss of 10 cents. The company had earned 4 cents per share in the year-ago quarter.

A higher level of expense offset revenue improvement, resulting in a loss in the quarter.

Behind the Headlines

Total revenue of SouFun was $287 million in the quarter, up 34.2% year over year on an increase in e-commerce services.

On a year-over-year basis, revenues from e-Commerce services (contributing nearly 66% to total revenue) surged 77.4% to $189.5 million on higher real estate brokerage services for secondary homes. Internet financial services revenues skyrocketed 176.4% on increased financial services to the real estate brokerage services. Other value-added services revenues improved 2.6%. Listing services revenues decreased 23% to $26.9 million and marketing services revenues declined 15.2% to $51.4 million.

Operating expenses increased 4.8% while selling expenses decreased 4.7%. General and administrative expenses also increased 22.4% due to higher staff cost and operating lease.

The company incurred an operating loss of $32.8 million in the reported quarter. The year-ago quarter on the other hand had seen an operating income of $22.3 million.

Before income tax, interest expenses, interest income, depreciation and amortization, the company suffered an adjusted loss of $24.6 million. In the year-ago quarter, the company’s adjusted earnings before income tax, interest expenses, interest income, depreciation and amortization (EBITDA) was $28.4 million.

Financial Update

SouFun exited the second quarter with cash and cash equivalents of $759.5 million, down 31% year over year. Convertible senior notes totaled $288.7 million, up 0.3% from the Dec 31, 2015 level.

Cash from operating activities of $36.5 million compared favorably with $4.1 million in the year-ago quarter.

Guidance

SouFun affirmed its revenue guidance of $1.15 billion for 2016 that translates into a 30% year-over-year increase.

Zacks Rank

SouFun presently carries a Zacks Rank #3 (Hold).

Performance of Other Business Service Providers

The bottom line at Core-Mark Holding Company, Inc. (NASDAQ:CORE) came in line with the Zacks Consensus Estimate. Performant Financial Corporation (NASDAQ:PFMT) outperformed the same in its last reported quarter, while Avis Budget Group, Inc (NASDAQ:CAR) missed the expectation.