Fangdd Network Group Ltd. Q2 FY2020 earnings call

1. Post-COVID-19 Recovery: The Chinese economy and real estate market started to recover in Q2, with pent-up market demand driving growth in the real estate transaction services market. 2. Small and Medium-sized Agencies: Over 40% of agencies in first and second-tier cities are small and medium-sized. FangDD attracted more such agencies, with 85% of closed-loop transactions coming from them. 3. SaaS Offerings: Updated the total property sale solution to assist small and medium-sized agencies in online agent management, improving operational efficiency and utilizing social media for marketing. The online shop generated an average of 1.2 million sales leases per month. 4. New Construction Properties: The number of new construction property projects increased by 24.9% year over year and 22.76% quarter over quarter to 2,918. 5. Parking Space Service: Expanded parking space service to 8 cities, with listed parking spaces increasing by 37.8% sequentially to over 13,500, and commission fees from parking space transactions rising by 53% quarter over quarter to RMB54.62 million. 6. Transaction Service Centers: Authorized transaction service center network covered 11 cities with 31 service centers, integrating financial products in property transactions. 7. Old Urban Property Renovation: Launched renovation and transaction services for old urban properties, extended to 8 core commercial areas in Shanghai.

In the second quarter of 2020, revenue decreased to RMB737.7 million. Cost of revenue dropped by 15.1% to RMB616.7 million. Gross profit was RMB121 million with a gross margin of 16.4%. Sales and marketing expense fell by 86.4% to RMB2.9 million. Product development expenses were RMB70.5 million, a decrease from RMB79.1 million in the same period of 2019. General and administrative expenses increased to RMB80.5 million. Net loss was RMB14 million, but non-GAAP net income was RMB11.9 million. Small and medium-sized agencies accounted for 85% of the closed-loop transactions during the quarter.

Forecasts revenue for the third quarter of 2020 to be between RMB1.05 billion and RMB1.15 billion. Anticipates active agency and agent numbers to continue growing in the coming quarter.

1. Small and medium-sized agencies face weaknesses such as inability to digitize operations, lack of brand endorsement, and limited resources, making them vulnerable to market volatility. 2. Intensifying competition from other players in the real estate transaction platform space.

Q: Based on recent business development in July and August, share views on the second half market outlook and competitive landscape.

A: Zeng Xi stated that while competition exists, the market size is vast. FangDD focuses on its independent platform, serving small and medium-sized agencies in the new construction property market. They believe in their strategy of providing financing products and empowering agencies, expecting growth in the second half.