Q4 2014 Leju Holdings Ltd Earnings Call

Mar 18, 2015 AM EDT
LEJU - Leju Holdings Ltd
Q4 2014 Leju Holdings Ltd Earnings Call
Mar 18, 2015 / 11:00AM GMT 

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Corporate Participants
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   *  Melody Liu
      Leju - IR - Director
   *  Geoffrey He
      Leju - CEO
   *  Min Chen
      Leju - CFO
   *  Xin Zhou
      Leju - Executive Chairman

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Conference Call Participants
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   *  Jinsong Du
      Credit Suisse - Analyst
   *  Alex Yao
      J.P. Morgan - Analyst
   *  Hillman Chan
      Macquarie - Analyst
   *  Sisi Lu
      China Renaissance - Analyst
   *  Tian Hou
      T.H. Capital - Analyst
   *  Chen Yang
      CICC - Analyst
   *  Gregory Zhao
      Barclays Capital - Analyst

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Presentation
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Operator   [1]
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 Hello and thank you for standing by for Leju's Fourth Quarter and Full Year 2014 Earnings Conference Call.

 At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Please note that today's conference call is being recorded. If you have any objections, you may disconnect at this time.

 I would now like to turn the meeting over to your host for today's conference, Ms. Melody Liu, Leju's Investor Relations Director. Please go ahead.

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 Melody Liu,  Leju - IR - Director   [2]
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 Thank you. Hello, everyone, and welcome to Leju's fourth quarter and full year 2014 earnings conference call.

 Today, we will update you regarding our financial results for the fourth quarter and full year ended December 31, 2014. If you would like a copy of the earnings press release or would like to sign-up for our email distribution list, please go to our IR Web site at ir. Leju.com.

 Leading the call today is Mr. Geoffrey He, our CEO who will review operational highlights for the fourth quarter and full year of 2014. Ms. Min Chen, our CFO will then discuss the financial results in more detail. We will then open the call to questions at which time, our Executive Chairman, Mr. Xin Zhou, will be available.

 Before we continue, please allow me to read you Leju's Safe Harbor statement. Some of the statements during this conference call are forward-looking statements made under the Safe Harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.

 Potential risks and uncertainties include, but are not limited to those outlined in our public filings with the SEC. You are encouraged to review the Forward-Looking Statement section of our IPO Prospectus filed with the SEC for additional information concerning factors that could cause those differences. Leju does not undertake any obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise except as required by applicable law.

 Our earnings press release and this call include discussions of unaudited GAAP financial information, as well as some unaudited non-GAAP financial measures. Our press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. Please note that unless otherwise stated all figures mentioned during this conference call are in U.S. dollars.

 I will now turn the call over to Leju's CEO, Geoffrey He. Please go ahead.

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 Geoffrey He,  Leju - CEO   [3]
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 Good evening and good morning, everyone. Thanks for joining us on the call today.

 We are pleased to report strong fourth quarter and full year results for 2014. As you know, China's real estate market conditions remained volatile throughout the year and went through numerous change but really if you accomplish the number of goals we have set out to achieve for our business.

 As we enter 2014, our goals for the year were clear. First within the primary housing sector, we wanted to increase our e-commerce business market share and to incorporate mobile resources into our marketing routines.

 And second in the secondary listing sector, we wanted to continue building a transparent informational listing platform for our brokerage clients.

 In the primary market, we have stuck with our outflow e-commerce model because it worked and more and more developers are including Leju as their marketing partner. In 2020, we expanded our e-commerce business to over 2,800 projects in 63 cities and help developers build nearly 22,000 units an increase of over 51% from last year.

 Another reason developers choose our Tier mobile marketing solutions we offer. In 2014 we focused on building a fully integrated mobile marketing platform using unique resources available only to us. Our mobile ecosystem has the functionality and swiftness in strategic buyers engaged for more than basic housing transactions.

 Our platform seamlessly connects buyers and sellers for the information sharing activities and other features and offers developers a more accurate and effective marketing solutions than ever before.

 As of March this year, we are operating over 50,000 official accounts on Weibo and over 70,000 official accounts on Weixin. Together these accounts have now over three million followers. We continue to believe in the new home e-commerce market and eMobile market. This year e-commerce and mobile will remain two major focus areas for our new home business and will help to drive our growth.

 The secondary housing market in 2014 also experienced a sharp decrease in both transaction volume and our real online listing business was impacted both in terms of volume and pricing. Now the market more than ever is calling for a transparent and effective online marketing platform for agents.

 Amid the market turn down, we stayed committed to our listing platform which promotes accurate clarified listings. We have expanded this platform from one city in 2013 to 17 markets in 2014. When the market regains some of its footing in the fourth quarter of last year we also began to see increase in the number of our paying agents on our platform.

 We believe the market values having an unbiased information platform that caters to the specific needs of secondary brokers in the Chinese market. For our Visa foundation totaling our transparency and our credibility, we remain committed to building a two listing platform to serve our clients and our partners.

 A third area of focus for us in 2014 was expanding our home furnishing business. We have built this business over past two years and have worked primary list of top brands from furnishing suppliers for value and e-commerce revenues.

 In 2014, we launched a new online platform hometown.com to directly connect customers with professional contractors. The new platform allow customers to compare and shop online for home categories and service easily and save intermediary cost.

 This platform loosely translated as [contractor depart], now aggregates over 1,100 contractors from 43 cities and its gaining momentum.

 We anticipate very exciting growth in 2015 from this platform which turns in a lot one type of proposed purchase real estate market. This will complement our existing service in the primary and secondary markets, which focus more on the transaction space.

 Now I will turn the call over to our CFO, Ms. Min Chen, who will review our financial highlights for the quarter.

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 Min Chen,  Leju - CFO   [4]
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 Thank you. Good morning and good evening to everyone.

 We're pleased to report fourth quarter and full year 2014 results with strong topline growth and profitability. Overall revenues for the fourth quarter of 2014 grew by 36% year-over-year to $171.8 million. Among this our e-commerce services revenue was $124 million, contributing 72% of our total revenues.

 The 61% year-over-year growth was primarily driven by increases in discount coupons redeemed and we substantially grew our project coverage with the help of our mobile platform.

 During the fourth quarter, we generated e-commerce revenues from 54 cities. Our online advertising services revenues of $43.8 million was slightly higher than that of the same period last year and contributed 26% of our total revenues.

 Our listing services revenue continue to be impacted during the quarter primarily as a result of lower pricing. Listing services revenues for the fourth quarter declined by 38% to $3.5 million and contributed about 2% of our total revenue.

 The fourth quarter non-GAAP income from operations was approximately $36.8 million representing an 8% increase from the same period last year. Non-GAAP net income attributable to Leju shareholders was approximately $31.3 million, representing a 12.5% growth compared to the same period last year.

 For the full year 2014, we reported $496 million in total revenues representing a 48% increase from full year of 2013. Our e-commerce services revenue grew 92% from 2013 to $326.7 million contributing 66% of our full year total revenues.

 Our online advertising services revenues grew 7% from 2013 to $155 million contributing 51% of our total revenues, while our listing services revenue declined 28% to $14.3 million.

 Non-GAAP income from operations was $107 million representing a 44% increase compared to 2013. Non-GAAP net income attributable to Leju shareholders was $90.7 million, representing a 44% increase from 2013.

 As of December 31, 2014, our cash and cash equivalents balance was approximately $318 million. Our net cash flow from operations from the fourth quarter of 2014 was $59.7 million.

 Our Board of Directors has approved a dividend of $0.20 per ordinary share or $0.20 per ADS for the year 2014 to our shareholders. The record date is at the close of business on April 10, 2015, and the dividend will be payable on or about May 15, 2015.

 Turning to our guidance, we estimate that our fiscal 2015 total revenues will be between $600 million to $620 million, which will be an increase of approximately 21% to 25% over 2014. Please note obviously this forecast reflects our current and preliminary view which is subject to change.

 With that, we conclude our prepared remarks and we're now ready to take your questions. Operator, please go ahead.

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Questions and Answers
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Operator   [1]
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 (Operator Instructions) Our first question comes from the line of Jinsong Du from Credit Suisse. Your line is open. Please go ahead.

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 Jinsong Du,  Credit Suisse - Analyst   [2]
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 Hi good morning and evening. My question is about the profitability in the fourth quarter as well as the outlook for the profitability in 2015 because it seems that your margins, especially the non-GAAP net margins has come down sharply over year-over-year in the fourth quarter.

 So could you explain the reasons, is it because of the intensified competition in the e-commerce services industry because some new entrants coming to the segment? If that's the case, could you elaborate what would be the competitive landscape in 2015 and how would that affect the margin trend in 2015 and beyond, thank you?

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 Min Chen,  Leju - CFO   [3]
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 Thank you, Jinsong. You're correct in the sense that the fourth quarter operating income and net margin has come down primarily due to the competition that we faced continuously in 2014.

 As we've been discussing with everyone throughout the year, I think 2014 we saw a lot of new emerging players into the market and put in better words, it caused a lot of noises or disruptions into the market.

 So two, we've always said that our e-commerce product would complete on results and cost rather than pricing. So from a revenue perspective, that was less impacted, but on a cost side from both the offline marketing expenses as well as our own marketing expenses for our branding to gain more attention from our developer clients, I think that those costs have increased relatively in the fourth quarter of this year.

 So that's why you see a decline in the margins in the fourth quarter.

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 Geoffrey He,  Leju - CEO   [4]
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 And just to include Min's comments, I think our major problem is that while you can see in the first quarter of last year that loading picked up, that the market competition of real estate market officially for developers who sell houses to the buyers, the competition is getting fierce.

 So we have to pay more marketing efforts to attract the new users and our potential buyers. That's also something that's build up.

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 Jinsong Du,  Credit Suisse - Analyst   [5]
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 Right. So how about the margins going forward and what define your assumptions for revenue guidance in '15?

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 Geoffrey He,  Leju - CEO   [6]
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 Well on the competing level, I think that as we continue to see that the competition in the market is getting fierce, and for us I think the top priority is to how to grab the market share to further increase that. So I think that we still have pricing pressure for each products that we maybe we have to spend more marketing efforts to finalize the transactions.

 But I think for the corporate strategies, we're trying to use a lot of innovative products to raise efficiency of each product and use the mobile strategies to help our developers to put more potential buyers. That on the other side that will save our marketing expense because that will be a significant dynamic situation and we are trying to maintain or either to improve the efficiency of our each project.

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 Jinsong Du,  Credit Suisse - Analyst   [7]
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 Yes could you give us some quantitative or at least directional guidance on the margins?

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 Min Chen,  Leju - CFO   [8]
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 Jinsong, I think there are two factors that first one I mentioned that we faced in 2014 affecting margins both the overall real estate market conditions where we have to spend, in general do more marketing activities to sell houses for our developer clients as well as competition that we face among the real estate services industry.

 Those two factors both will be present in 2015. So from our perspective, we want to increase our market share to really focus on solidifying the e-commerce leadership that we have and from a margin perspective, we think that the dynamic situation will be how much we have to spend versus how much efficiency we can get from the product.

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 Jinsong Du,  Credit Suisse - Analyst   [9]
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 All right. So the revenue guidance is an assumption of the market conditions based on market share solutions for 2015.

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 Min Chen,  Leju - CFO   [10]
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 Yes.

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 Jinsong Du,  Credit Suisse - Analyst   [11]
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 Yeah, could you quantify that for your 21% to 25% revenue growth that is -- what are the assumptions behind that in terms of your different lines of business growth and also your -- the overall market underlying conditions.

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 Geoffrey He,  Leju - CEO   [12]
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 I think assumption for that is that first that we expect market will not be even worse than last year. So the market will keep stable and the second one is we will -- we're going to -- we're still going to expand the number of all our projects, e-commerce projects. So the assumption I think these two things.

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 Min Chen,  Leju - CFO   [13]
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 And Jinsong also that I think to remarks you also mentioned that e-commerce will still be our focus that will help driving our revenue growth in 2015.

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 Jinsong Du,  Credit Suisse - Analyst   [14]
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 All right. Thank you.

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Operator   [15]
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 Your next question comes from the line of Alex Yao from JP Morgan. Your line is open. Please go ahead.

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 Alex Yao,  J.P. Morgan - Analyst   [16]
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 Hi, good morning and good evening, everyone. Thank you for taking my question. I have a question regarding the overall trend of the e-commerce, the e-commerce business in China, but you're aware your major competitor is shifting from pure online e-commerce model towards a combination of online lead generation platform offline service and procurement business model.

 I would like to hear you thought on of this trend. Are you thinking may be at some point being '15 or '16 you guys might also be joining this transition towards transaction based model and I have a follow-up question. Thank you.

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 Geoffrey He,  Leju - CEO   [17]
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 And first, I think we will continue to drive -- our model is that online and offline we combine online to our offline services and our business model will have a very effective ways to post developers that also our end users.

 Actually you can see there are quite some new change on the market that some people they try to want to get the markets to only offline services, but we think as the market develops, I think especially internet develops, I think the efficiency was based on for online services.

 So I think we will continue our strategy to provide more innovative online service to increase every project's efficiency and our very strong expertise in the offline recruiting. I think that will create most value for developer.

 As you know, you can see that there are a lot of new models that titled for e-commerce, but we don't think of course because we think that we owe to e-commerce is how to perfectly combine your expertise both online and offline.

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 Min Chen,  Leju - CFO   [18]
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 And Alex to supplement those comments, I think if you think about the real estate vertical as a whole because of how long the process takes and how long the position process is for each buyer, there is definitely value in the early stage marketing of the real estate projects, particularly considering sort of the ongoing real estate market in China where we're moving from the golden decade to the silver decade as many of you know.

 So we firmly believe that there is a need for professional and specialized marketing and promotions for real estate projects because the value chain, the process chain is very long.

 If we extend ourselves to every step along the chain, we may just not doing anything very well, but we're focused on the marketing and promotion of real estate project for our client and disseminating the information to our customer clients and that we hope to do that with all of our resources on hand both online and offline that's what we've been doing, that's what we foresee continue doing in the future.

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 Alex Yao,  J.P. Morgan - Analyst   [19]
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 Got it. Very helpful and the second question is regarding the cooperation with a larger profit platform in China, can you update us regarding your cooperation with the Tencent Weixin and also you guys just renewed a compare with the Baidu '15 plan in cooperation with the Baidu platform. Thank you.

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 Geoffrey He,  Leju - CEO   [20]
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 Okay, I think for the Tencent Weixin platform and we said, we have opened 70,000 accounts on that and actually we base on these accounts platform we have created our own platform from mobile event, Weixin mobile event and also for mobile act through our this platform.

 So thoughts for us going forward is that how to evaluate -- just evaluate more innovative event and create more awareness concerned product, so that we can attract more potential home buyers. So this is how we actually our statistically known strategy and as to the Baidu and we just announced that we just assigned a contract with Baidu for 2015.

 I think we will continue our cooperating -- previous cooperation with Baidu on the PC side. On the other hand, we will further expand our cooperation on the mobile side. So actually it's quite well actually.

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 Alex Yao,  J.P. Morgan - Analyst   [21]
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 Thank you very much.

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 Geoffrey He,  Leju - CEO   [22]
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 Thank you.

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Operator   [23]
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 Your next question comes from the line of Hillman Chan from Macquarie. Your line is open. Please go ahead.

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 Hillman Chan,  Macquarie - Analyst   [24]
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 Hi, good evening. Thank you for taking my question. My first question is about the number of cities that you're going to cover regarding your e-commerce business this year, that's my first question.

 And my second question is regarding the residential training fashion value is down 17% year-on-year in Jan and Feb this year and the seasonality is I think is over and the same period last year given that first quarter is almost -- could you share more on the e-commerce business in the first quarter?

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 Min Chen,  Leju - CFO   [25]
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 In terms of the numbers of cities that we cover, we have e-commerce operations, direct operations in 70-plus cities and in 2015, I think that number is going to stay largely the same as we expand it's going to be very strategic and in a single digit number it's not going to be large scale expansion as we think our network coverage currently is very well positioned.

 What we will look to do is to deepen our operations or penetration in each of the existing market that we're already in.

 In terms of the first quarter real estate transaction value I think you mentioned that there is definitely a seasonality and I think this year, the Chinese New Year falls sort of towards the second half of the quarter, which makes very tricky for many developers to plan their launches of new projects, that certainly contributed to the decline of transactions for this quarter.

 First quarter usually our network representative of the full year operations anyway and then we actually think in 2015 this first quarter is especially so because of where -- how developer plan their January and then how they plan their March and then kind of Chinese New Year with most developers taking off for about two to three weeks it's very tricky.

 So we hope that for the rest of the year like Feb, we assume the market conditions remain stable and obvious -- certainly the cover somewhat from the first quarter this year on a year-over-year comparison basis.

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 Hillman Chan,  Macquarie - Analyst   [26]
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 Okay, just one more follow-up question and that's regarding the mobile side. I think mobile in the past was used as part of that the e-commerce package like as part of the marketing resources that you also said you also could develop.

 So it's more of a cost line in the OPEB and could you talk about monetization of the mobile asset going forward by how you're going to that market of healthy product, mobile product continue to invest in the future.

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 Geoffrey He,  Leju - CEO   [27]
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 Definitely most of the developers are interested in our mobile solutions and they also think that the mobile will be the future for their house marketing. Then for our strategies, I think that firstly that we use mobile solutions to attract more developers to give products to us.

 And especially the e-commerce project we think that mobile solutions will be a very good way to improve the project efficiency. And as to our private business it think that more and more developers actually they're going to us for the mobile advertising and we already see that to mobile advertising that takes some percentage of our total advertising revenue. We except that the percentage will further going up.

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 Hillman Chan,  Macquarie - Analyst   [28]
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 Okay, that's very helpful. Thank you, management.

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Operator   [29]
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 Your next question comes from the line of Sisi Lu from China Renaissance. Your line is open. Please go ahead.

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 Sisi Lu,  China Renaissance - Analyst   [30]
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 Hi. Good evening, Geoffrey and Xin Zhou and thank you for taking my questions. So my question is about all our listing business. So I'm trying to -- and given the current market condition do we see any strategy change in the short-term for example like city coverage plan and pricing strategy?

 And what do you think is the main issue that the management will focus right now for the listing business. Thank you.

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 Xin Zhou,  Leju - Executive Chairman   [31]
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 Thank you for the question. I think we will be very consistent to our strategies on the mobile -- for the secondary market. We will continue to provide transparent information platform to the brokerages clients. We will not be involved in any offline transactions because there will be competitor to our client.

 As to the price and the volume you mentioned, I think that key issue currently is not the pricing because after last year's event, I think the pricing problems already stopped.

 So I think for the brokerage industries they're even more eager than ever before to have transparent information platform. That is why will be consistent to our strategy and we will -- our strategy I think as we already expand to 70 cities, the top priority for us is how to deepen our penetration on these markets and provide best service to them. I think these cities already represent quite a big market share for us.

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 Sisi Lu,  China Renaissance - Analyst   [32]
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 Okay. Thank you, Xin Zhou.

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 Xin Zhou,  Leju - Executive Chairman   [33]
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 Thank you.

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Operator   [34]
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 Your next question comes from the line of Tian Hou from T.H. Capital. Your line is open. Please go ahead.

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 Tian Hou,  T.H. Capital - Analyst   [35]
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 Hi Xin Zhou and Min. A question related to the secondary home markets. So if we look at the e-commerce and it's about two thirds of your business and I wonder what's the plan -- what's your plan in the secondary home markets in 2015?

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 Xin Zhou,  Leju - Executive Chairman   [36]
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 I think as I said just know I think we will be very consistent to provide a transparent information platform to brokerage clients. We will not change our strategy. So our products are same. Our strategies are same and our position is same. We will not be involved in any offline transactions.

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 Tian Hou,  T.H. Capital - Analyst   [37]
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 So, in terms of your e-commerce project and I wonder what's the portion of the core from Tier 1 cities and so now what's the portion of a second Tier and a lower Tier cities and how do you end 2015?

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 Min Chen,  Leju - CFO   [38]
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 For in terms of number of units sold first Tier cities for the full year of 2014 was approximately a quarter. Second Tier cities was about two third 53% and the rest are some lower Tier cities.

 What we have seen this year is that the contributions in terms of number of units coming from third and other -- third and lower Tier cities have increased, which is an indication of our penetration in these cities as well increasing.

 In terms of e-commerce revenue, obviously as you can understand first Tier cities the coupon value is higher. So revenue contribution from first Tier cities was about 44%. Second Tier cities was about 47% and the rest come from third and lower Tier cities of about 8% or 9%.

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 Tian Hou,  T.H. Capital - Analyst   [39]
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 The other question is right now you have what's your plan in 2015? How many cities are you going to enter?

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 Min Chen,  Leju - CFO   [40]
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 For e-commerce, we plan to deepen the penetration that we have already in our current market. In terms of new cities, we would only do that on a very selected basis. There is no plan to kind of large expansion in terms of e-commerce direct operations in two new cities as of yet.

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 Xin Zhou,  Leju - Executive Chairman   [41]
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 In addition to Min's comments that our strategy is because you can see our e-commerce already that the business already in 70-plus cities that represents most of first and second or even some sort of big cities first Tier cities.

 So we'll not expand the number of the directly operated cities in terms of the e-commerce business. But we're thinking that maybe we will do some e-commerce projects in some even smaller cities through another way even through partnership with our partners like that.

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 Tian Hou,  T.H. Capital - Analyst   [42]
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 Got it. Last question is regarding for a new guidance. So amount of guidance is that possible to have a little bit of detail regarding how fast your e-commerce will you plan to grow and how fast online advertising business could grow in 2015?

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 Min Chen,  Leju - CFO   [43]
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 The online advertising business, the way that we look at it, we actually break it into two segments. One is the traditional PC act which I think we've said throughout last year has seen high-single digit type of growth as more and more advertisers as well as users, the advertising audience is moving towards mobile.

 So what we started doing, which is part of our advertising revenue component is also we're starting to see some mobile marketing solution revenue coming from our mobile platform, that's also part of our advertising revenue.

 So overall I think the advertising segment on the financial statements will be we're looking for high-single digit that's our low double-digit type of growth. Our overall revenue guidance is around 20%, 25%.

 So if you factor in sort of the advertising growth, then I guess by mathematical calculation our e-commerce segment growth will be higher than the overall guidance growth rate.

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 Tian Hou,  T.H. Capital - Analyst   [44]
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 Okay, that's very helpful. Thank you for taking my questions.

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 Min Chen,  Leju - CFO   [45]
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 Thank you, Tian.

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Operator   [46]
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 Your next question comes from the line of Chen Yang form CICC. Your line is open. Please go ahead.

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 Chen Yang,  CICC - Analyst   [47]
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 Good evening and good morning, everyone. Thanks for taking my question Geoffrey and Xin Zhou. Well the first question is, while despite an increase in number of new business models, the core question really comes down to how accurately we can track the performance, which in this case are the number of people bring to sales center and the number of people who actually make the purchase in the end.

 While I understand that Leju is doing some internal modification to our business model, can you share with us any updates and I have a follow-up? Thank you.

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 Xin Zhou,  Leju - Executive Chairman   [48]
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 Okay. I think we have several ways to check our potential buyers. First they will call the hotline on our Web site. That's what each hotline there will present a number. So we can track everybody when they call our hotline and this is showing room of how it is, so that's the first way.

 The second way is that we have a lot of application method for our audience -- online audience when they want to register for the -- for some offline and store room services and also they want -- they can also order our coupons online. So that's those two major ways that we get the information from our potential buyers.

 Of course we have a lot of offline marketing at event and of course these events everybody has to be the first one that we can get the information from them.

 So basically we have a quite a lot ways to get to show how to track our potential buyers.

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 Chen Yang,  CICC - Analyst   [49]
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 Okay, that's helpful. I think the real question I want to ask is what are the drawbacks about our existing e-commerce business model is, a lot of offline clients or homebuyers can actually purchase the out coupons on site, so it's really hard for developers to see how many of homebuyers are actually brought by Leju to really accurately track their performance.

 Regarding that front, can you share with us and possible measures we can do to improve the accuracy?

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 Xin Zhou,  Leju - Executive Chairman   [50]
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 I think there's two ways to say that. First way is that how to improve the accuracy and how to check the buyers is from Leju. I think it is important for us because if we can check them then we can even much higher coupon price from the developer, that's the first one.

 The second one is that for most developers, what they want is how many people going to their showroom and the second is how many people will finalize the transaction. So how many people with their showrooms they're also very important. So this ultimately represents the service from Leju. So I think that's a question for two ways to answer your question.

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 Chen Yang,  CICC - Analyst   [51]
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 Understood and the second question is can you talk about what are the pay mobile products we're currently offering and also how much of our revenue was contributed by mobile in 2014 and what are we looking for the 2015 and may be two or three years down the road, thanks?

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 Xin Zhou,  Leju - Executive Chairman   [52]
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 Okay. We have two ways to sell the mobile solution to developers. First way if the developers corporate with us on the e-commerce product that the mobile solution will be part of our e-commerce package. It will not be paid dividend.

 And the second way is that we sell the mobile solutions to the developers as a pricing package. That will be priced separately. So currently about 10% of our present revenue contributed by the mobile solution.

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 Chen Yang,  CICC - Analyst   [53]
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 All right and what are we looking at 2015 maybe any --

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 Xin Zhou,  Leju - Executive Chairman   [54]
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 Yes, I think that potentially we're still will not.

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 Chen Yang,  CICC - Analyst   [55]
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 All right. Well thanks very much. I'll jump back.

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Operator   [56]
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 Your next question comes from the line of Gregory Zhao from Barclays. Your line is open. Please go ahead.

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 Gregory Zhao,  Barclays Capital - Analyst   [57]
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 Hi Geoffrey and Xin Zhou. Thanks for taking my question. I have two follow-up questions. The first one is still about industry competitive landscape and we think some new player like 58.com and [Xododo] is coming to the industry. We're seeing 58.com, they're expending to the new apartment market and Xododo, actually they're giving opposite as advertising revenues and directly getting into the e-commerce business.

 So what the impacts are to our e-commerce business and do we expect some changes of our e-commerce business model in the future, this is my first question.

 And my second question is still about the guidance, the outlook. We see our key competitors actually gave relative comparative guidance for 2015 while our guidance looks more optimistic, so generally so what's management's view about overall performance of the China property market in 2015? Yes, that's my question, thank you.

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 Xin Zhou,  Leju - Executive Chairman   [58]
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 I think for your first question, that either 58 or Xododo they're not new players. They're already in the market for years. So firstly we don't think that it's a new competition. It's already exist in the market.

 The second one is that I think for the antique and 58, we're still watching what they will do next. As we know so far that the audience of the 58 they are younger people. We're not sure if they have their signature on that.

 As to the Xododo as I've said we firmly believe that e-commerce market is based on the outflow model. That means you have both online to offline expertise and when you're looking at Xododo model you can see its expertise offline. We don't see very strong expertise online.

 Especially they don't have very big online audience. So we're also watching that model and so far we don't think that Xododo will give us very significant impact on our business. That's was your first question.

 The second question I think for as I said the guidance is based on the assumption that the market keep stable and we will further grab the market shares throughout our innovative mobile product on the e-commerce and also we expect that our mobile solutions will still make our online advertising revenue keep stable. So that's basically two assumptions on that.

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 Min Chen,  Leju - CFO   [59]
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 I think one more comment on the guidance is that obviously our main competitor is pursuing a somewhat different model. Our model strategy has not changed and our operating teams on the ground have a very deep understanding of each of their local market.

 So the guidance is aggregated from the bottom up so that we have a distance of the three different lines what each region, each city, what the local market landscape looks like and what we are able to take in that market. What kind of shares we're able to take in that market, that how we aggregate our guidance.

 So I don't think we're comparing our guidance versus anybody else's. We need to just focus on doing our own business.

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 Gregory Zhao,  Barclays Capital - Analyst   [60]
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 Thank you. And if I may have one more question is about our cooperation with our parent company actually with our parent company is launching some O2O products and also some financing products but so far have we seen any synergies there with our parent company. Thank you.

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 Xin Zhou,  Leju - Executive Chairman   [61]
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 Yes. We do have a lot of some corporations with our parent company on the new product. Our interactive community products and financial platforms. Currently I think we have corporations in some big cities and we expect because of these new products also welcomed by the market we're thinking to expand to more cities.

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 Gregory Zhao,  Barclays Capital - Analyst   [62]
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 Okay. Thank you very much.

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Operator   [63]
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 (Operator Instructions) We have a follow-up question from Jinsong Du of Credit Suisse. Your line is open. Please go ahead.

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 Jinsong Du,  Credit Suisse - Analyst   [64]
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 Yes. I notice that you have announced the cash dividends. So could you tell us your dividend guidance -- your dividend policy going forward?

 Is going to be around 40% of reported net income going forward and also given your growth patterns, you're still paying dividend. What is the thinking behind managing the line, or are you paying the dividend?

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 Min Chen,  Leju - CFO   [65]
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 So I think the dividend -- our overall thinking -- our overall approach to dividend is obviously we want to give our shareholders some cash return through the form of dividend. There isn't a fact -- a fixed percentage of our earnings per share that we find ourselves to give out every year.

 I think the dividend policy is on an annual basis. We will review the operating cash flow that we've been able to generate from the past year's operations as well as forward looking what we are seeing.

 What kind of opportunities we will see in the market where it might require investment or cash for us to seize those opportunities. I think it's a balance of what we've made in the past year and what we look to spend in the future year and if there is a sufficient room for us to give back to our shareholders then certainly that proposal we would bring up to our Board for them to approve.

------------------------------
 Jinsong Du,  Credit Suisse - Analyst   [66]
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 Right. In your -- you also mentioned that you spent $2.2 million to acquire non-controlling interest. Could you elaborate on that?

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 Min Chen,  Leju - CFO   [67]
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 Yes, those are -- one is -- those are two subsidiaries we did not wholly own in the -- in early part of 2014 that we acquired the remaining interest that we did not own. So now they've become fully -- wholly owned subsidiaries of virtue. These are e-commerce subsidiaries and into local cities -- two cities that have minority shareholders.

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 Jinsong Du,  Credit Suisse - Analyst   [68]
------------------------------
 Okay. Thank you.

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Operator   [69]
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 We're now approaching the end of the conference call. I will now turn the call over to Leju's Investor Relations Director, Ms. Melody Liu for her closing remarks.

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 Melody Liu,  Leju - IR - Director   [70]
------------------------------
 Thank you. This concludes today's call. If you have any follow-up questions, please contact us at the numbers or emails provided on our earnings release and on our IR Web site. Thank you.

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Operator   [71]
------------------------------
 Thank you for your participation in today's conference. This concludes the presentation.




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