Leju Holdings Limited
Q3 2015 Earnings Call Transcript

Published: 18 Nov 2015

[Operator:]

Hello and thank you for standing by for Leju’s Third Quarter 2015 Earnings Conference Call. At this time, all participants are in a 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.

[Melody Liu:]

Thank you. Hello, everyone, and welcome to Leju’s third quarter 2015 earnings conference call. Today, we will update you regarding our financial results for the third quarter ended September 30, 2015. If you’d like a copy of the earnings press release or would like to sign-up for our email distribution list, please go to our IR website at ir.leju.com. Leading the call today is Mr. Geoffrey He, our CEO, who will review operational highlights for the third quarter of 2015. 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 Annual Report 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. Hedong [ph], please go ahead.

[Geoffrey He:]

Thanks, everyone, for joining us on the call today. As you know, our strategy focused on building an integrated online and offline platform to provide overall marketing solutions to connect and serve our customers efficiently. We are pleased to see that, as well roll out the platform during the third quarter this year, our customers continue to recognize the value in our services, as evidenced by another quarter of revenue growth, as well as the number of operation achievements. For the first nine months of 2015, our O2O marketing platform serving the primary and secondary listing business has generated more than US$400 million of revenue, which solidly positioned us as the leading operator in this space. Our commitment to marketing on behalf of and connecting our developer, brokerage agency and home-buy customers is bearing fruit. We achieved a record high number of e-commerce products during the operation this quarter in the primary housing market and attracted a record number of paying agents on to our secondary listing platform. We combine a powerful media platform, diversified distribution channels, membership services and e-commerce discount services to effectively serve our customers through the innovative products. When each product, for example, is the private car site-visit product that we developed with Didi, which offers a premium hassle-free offline house-hunting experience that can help significantly increase the sales conversion rate for developers. Since the launch of Masunsangsu [ph] in July, it has been gaining traction with very positive feedback from both developers and potential home-buyers. By mid-November, more than 3,000 real estate projects in 56 cities have used Masunsangsu as part of their marketing campaign. More than 50,000 private car site-visit orders have been placed, and more than 110,000 potential home-buyers have enjoyed our one-on-one car service. We also strengthened our distribution capabilities this year by working more closely with secondary brokerage partners, supporting primary e-commerce projects. During the third quarter, more than 10,000 transactions under our e-commerce platform were introduced by secondary brokerage agents. In the secondary listing services, we witnessed exciting revenue growth of 134% this quarter, as we continued to expand our pros-wing, [ph] which validates our direction in this market to provide an independent information platform with verified listings. While pricing remained stable year-on-year, the growth is primarily driven by an increased number of paying agents and increased verified listing subscriptions. In home furnishing sector, we continue to roll out our Qianggongzhang platform and have expanded into 60 cities with more than 15,000 qualified contractors. We also launched a contract program among more than 7,000 contractors and home furnishing promotion for customers, which we converted into 2,500 orders during the quarter. We are confident about the market opportunities in the home furnishing business and we will continue to invest in this area throughout the rest of the area. Now, I will turn the call to our CFO, Ms. Min Chen, who will review our financial highlights for the second quarter.

[Min Chen:]

Thank you, Hedong. Good morning and good evening, everyone. For the third quarter 2015, we recorded total revenues of $151.2 million, representing an increase of 18% over the same quarter last year. Our e-commerce revenues - e-commerce services revenues were $106 million this year accounting for about 70% of our total revenues, and a 26% year-over-year growth. The growth was mainly driven by the increases in average price per discount coupon redeemed. Our online advertising revenues for this quarter were $39.4 million, a decrease of 6% from the same quarter of 2014. Our revenues from listing services this quarter more than doubled to $5.4 million, posting a 134% growth, driven by increases in both the number of paying agents and verified listings sold. As expected, intense market competition continue to drive up marketing expenditures this quarter as we compete for and allocate resources to market real estate projects. Our overall SG&A expenses rose 39% to $117.5 million this quarter from $85 million a year ago. In the third quarter of 2015, non-GAAP income from operations was $26.7 million, representing a 29% year-over-year decrease from the same period last year. Non-GAAP net income attributable to Leju shareholders were $21.1 million representing a 32% year-over-year decrease from the same period last year. For the first nine months of 2015, we recorded $402 million in total revenues, representing a 24% increase from the same period last year. E-commerce revenue among this grew 44% from the same period of last year to $291 million, contributing roughly 32% of total revenues. Our online advertising revenue decreased 13% from the same period of last year to $97.2 million, contributing about 24% of total revenues, while our listing revenues increased 34% to $14.4 million. Non-GAAP income from operations was $47.3 million, representing a 33% year-over-year decrease from the same period last year. Non-GAAP net income attributable to Leju shareholders was $39.3 million, representing a 34% year-over-year decrease from the same period last year. As of September 30, 2015, our cash and cash equivalents balance was $291.2 million. Our net cash flows from operations for the third quarter of 2015 were $49.3 million, including a decrease in customer deposits of $14.2 million. We are maintaining our previous guidance of total revenues of $600 million to $620 million for the full year of 2015, which represents an increase from full year 2014 of 21% to 25%. That concludes our prepared remarks. We’re now ready to take your questions. Operator, please go ahead.

[Operator:]

The question-and-answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions we will take one question at a time from each caller. If you have more than one question, please request to join the question queue again after your first question has been addressed. We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Jinsong Du from Credit Suisse. Your line is open. Please go ahead.

[Jinsong Du:]

Thank you. Your margins improved sequentially. Could you explain the reasons for the margin improvement? And also, do you expect the margins to improve further of the rest of the year and next year? And also, what will be your reasons for maintaining the guidance for the whole year, please? Thank you.

[Geoffrey He:]

I think first is the scalability of our business because, as you know, in the third quarter we achieved a record high number of our projects. So the - but the growth of the costs actually is much lower than the growth of our project numbers. So it’s the scalability of our business.

[Min Chen:]

And, Jinsong, in terms of our view to maintain the guidance, obviously, we gave full year guidance at the beginning of this year. And at that point we had a view of the overall general real estate market, which so far more or less have turned out and the market has been performing somewhat on track as what we expected. So while, the sort of exchange rate between RMB and U.S. dollar have affected our - has affected our third quarter and will continue to affect our fourth quarter U.S. dollar reporting performance somewhat. At this moment, based on what we’re seeing in the operations of the business we’re confident of maintaining the guidance currently.

[Jinsong Du:]

Got it. Thank you.

[Operator:]

Your next question comes from Hillman Chan from Macquarie. Your line is open. Please go ahead.

[Hillman Chan:]

Thank you, management, for taking my question. I have a question regarding the coupon business. I want to have a sense on - during your compensation discussion with the property developers do you have a sense that they are shifting the advertising from - for example, from coupon back to brand display, brand advertising. And other than that, do we see the decline of our - a decline of our coupon sales more due to that shift in the formatting or more a market share loss to competitors. That’s my first question. Thank you.

[Geoffrey He:]

I think, first I should say that, coupon model has been running for three years, and more and more developers actually accept this model during their wholesale season. But it doesn’t mean that it will replace that advertising business. Actually, it’s a quite a different role at different stage of their seasons, sales season. Usually the developers will need advertising at the initial stage for the mass campaigning. And during the - when we especially first launched our products as they need the e-commerce actually to bring more effective leads and to secure the intention of the buyers. And after that and this you still need advertising to maintain the brand awareness of their product. So I think these two products, two services actually played a different roles at different stages. Our strategy is that that we try to get as more - more projects as possible when they are doing their sales seasons. And after that, we will still get more advertising opportunities to get the advertising dollars. So that’s two different ways.

[Hillman Chan:]

So just regarding the year-on-year decline in terms of the coupon sales volume, do you see any sort of market share loss or any preference change in terms of our property developers?

[Geoffrey He:]

I think when you look at the market actually the most important is the number of the projects that we operate. In terms of the coupons we sell, actually it’s affected by the market situation, especially you can see when you compare this year and last year you will see that seasonality is very different. Last year’s, the first quarter is the best. And the first three quarters actually is picking up quarter by quarter. And this year actually you can see that the second quarter is - rise to a certain level, and third quarter, actually the market performance. And also the market actually maintains its level, but still slight down compared to the second quarter. And it’s slightly picking up in October. So the seasonality actually affects the number of the coupons we sell. That’s the first question - the first issue. The second issue is that actually when we cooperate with projects, the key issue, decide whether we can sell - we can confirm the sales of the coupon is when the projects actually confirm the sales. So if the projects actually confirm the sales across the quarter, so we cannot book in this quarter. So when you look at the business, actually there are several factors to influence our sales of the coupons. A key factor is that how many projects actually we cooperate in the quarter. That would decide the - when you look at our business you can have a more careful or more precise watch of that.

[Hillman Chan:]

Okay. Thank you. And I have more a high-level question, looking at your revenue compensation for now, e-commerce the largest, followed by online advertising and then listings smaller; looking ahead two to three years later, how should we expect the change in our business model and also the revenue composition? And what new business may potentially emerge, for example, transformation in our e-commerce business, any color on your decision in coming two or three years will be very helpful? Thank you.

[Geoffrey He:]

I think at current level that e-commerce, especially the primary sector e-commerce remain - would be the largest portion of our revenue composition. We actually are developing our secondary listing sector and especially the home furnishing sector. The e-commerce side, at the home furnishing side, we are - it’s an area that we are trying to drive more revenue growth, because the market pie for each sector is different. When you look at the primary sector, the marketing, we said several times actually is that the e-commerce pie for the primary sector were - RMB200 billion. But for the listing the market pie is about RMB2 billion, so it’s different pie. But each sector will drive different margin and different profits.

[Hillman Chan:]

Thank you very much. That’s very helpful. I’ll get back into queue.

[Geoffrey He:]

Thank you.

[Operator:]

Your next question comes from Cheng Yang from CICC. Your line is open, please go ahead.

[Cheng Yang:]

Thanks - sorry. Thanks for taking my question. I have two. First, one of your competitors, SOHU Focus, started to offer new home e-commerce through in-house agents, similar to Jisofong’s [ph] direct-sale model. So for an online media platform, it is sure that using new home agents does not substantially change the way it generates the sales leads, meaning, majority of its sales leads still come from online traffic. But it seems everyone is doing it in order to better transactions. So my question is do you think direct sale is a better business model for online media platforms, if not, what could we do differently to improve the performance tracking of our e-commerce business? The second question is regarding our one-on-one car services co-developed with Didi. Intuitively, this channel should - the higher conversion rate given people who books at specific time for show-floor [ph] visit should have high buying intentions. So my question is, are there any data points you could share with us? And also, could you update us on the progress in the roll-out of this new marketing add-on for developers? Thanks.

[Geoffrey He:]

Okay. Thank you for that two very good questions. First one is that direct sales model, I think they call it direct sales, but actually it’s not direct sales. Why? Because for the primary sector, the developers own the products, owns the price decision right, and owns the site to sell that product, so actually for all our media, we actually a service provider. Either way, e-commerce, service e-commerce or the channel e-commerce or whatever they call, we are actually helping the developers for sale. What we can do is bring as many as - as many potential new buyers to the site and help them to buy the products, buy the houses. So I think our e-commerce, current e-commerce model - what we define it as service e-commerce program, that we can provide a total solution to developers from the media awareness, to the brand awareness, to the online exposure, to the home buyer recruitment and also connect them to directly to the site, so it’s total solution that developers they want. For the direct sales, actually the only effectiveness for the direct sale is that means that buyer is brought by the media. So what - so it doesn’t have any service idea off of that. And running this model, we can see clearly that, first, it’s - isn’t generate any profits, because we have to pay a quite high certain amount of commission to the in-house agent, in-house - what I know is that about 20%, 25% to 30%. So it’s plus your operation costs and the office costs. You cannot get any money back. It’s just the burn of cash. The second one is that, it’s very hard to define what kind of people are you bought - you are bringing to the house, are your clients but not the developers’ clients. So as I said in the last quarter there’s a lot of grey-practice [ph] among that. So we don’t think it’s a very good model, especially recently I also heard a lot of negative comments from developers saying that, they’re stealing clients from them. So we don’t think - currently, we don’t think it’s a sustainable model in long-term, especially for making profits. Leju’s strategy I think is still - maintains our current strategy. We can provide total solution to developers, which can create value to them. As to the Didi cooperation, our Masunsangsu, I think first of this products can strongly demonstrate how many clients we brought to the new house sales sites to the developers. Of course, it bring a lot of convenience to the home buyers and also bring a lot of convenience for developers to do their marketing campaigns. Currently, we actually combined this service as a star service into our total solution. Going forward, I think we can - we wish to have a lot of trends to upgrade this product. And I think we can generate more business obtained from the Masunsangsu. It’s already been a very effective way to demonstrate the sales mix and to increase the business of the home buyers to the new house sites.

[Cheng Yang:]

Thank you very much. I’ll jump back to the queue.

[Geoffrey He:]

Thank you.

[Operator:]

Your next question comes from Gregory Zhao from Barclays. Your line is open, please go ahead.

[Gregory Zhao:]

Hi, management, thanks for taking my question. And my first question is still about our margin. So I think during this quarter we launched some promotion with Didi taxi for the hailing services and - but at same time we see the margins very strong compared to previous quarters. So just want to have a breakdown of the expense or cost contributed from that cooperation with taxi-hailing services, and as well as the margin outlook for Q4 and next year. This is my first question. My second question is about, earlier you mentioned there were some contribution from the offline - secondary home agency to our e-commerce services. So just want to understand in that part of business, so the corporation - so what’s the revenue sharing terms between us and the agents. I have these two questions. Thank you.

[Geoffrey He:]

Okay. For your first question, actually that Didi cooperation, the Masunsangsu, is not a cash burning project for us. It’s a cash making project for us. Yes, we paid the car fee to Didi, but actually when we cooperate a project they have to pay a much higher cooperation fee for us to get this right to use these cars. So actually we are making money out of it. And on the other hand, actually we saved a lot of costs, offline costs. Previously, we used a lot of cars to bring people to the home buying sites using the buses and also pay them certain gifts or the lunch. By using Didi we actually do not use that. So actually we make money out of it, and save a lot of cost from this product. That’s for your first question. For the second question, as I said, that cooperation or our channel platform, the channel platform cooperation with the agents is also a part of our service solutions to the new home developers. This model, if you’re looking at this model you can see, if you use this as a service, it’s very valuable to the developers. If you use this model as a business model, you are not making any money out of it. Currently, we actually cooperate with the agencies and project by project. And also of our each project, we will negotiate our commission rate to the agencies with the developers. And we pay this. We use this as a cost of the channel from our income from the e-commerce. We don’t have actually - so it’s varied, the commission rate actually is very different from project to project. We don’t have an average rate for that, so it’s quite different. So - but we think it’s a very useful tool. It’s a very useful service for the developers.

[Gregory Zhao:]

Okay. Thank you. And I have a follow-up question for listing services. Actually our competitors SouFun also announced their Q3 result with listing services year-over-year decline around 25%, but at the same time, we see our listing services is growing very fast. So just want to understand that business - is that market industry are dynamic, like if we are taking market share from SouFun and maybe while attracting more agents to our platform to do the listing services and maybe we can monetize that services in a more aggressive way. So, yes, that’s my third question. Thank you.

[Geoffrey He:]

Yes, you are right. We are taking market share from SouFun. As we said, our strategy is to invest in independent information platform. And we think the market needs an independent information market platform. So verified listing model, that’s our business model on the information platform, I said, think is - we are - we see quite achievement quarter by quarter. So strongly demonstrates that our strategy is right. Secondly, is that I think on the secondary market we - SouFun and us, we are not competitor anymore. We are doing online. They became an agent. So it’s a very - two different business, so directions, so it’s not comparable.

[Gregory Zhao:]

Okay. Understood. Thank you very much.

[Geoffrey He:]

Thank you.

[Operator:]

Your next question comes from Jack Yang from T.H. Capital. Your line is open. Please go ahead.

[Jack Yang:]

Hello, management. I have a question about the overlap rate of the e-commerce project of the competitors. Or what you will say the budget allocation by advertisers, especially for next year? Or are they willing to put their multiple platforms or just exclusively on a single platform? That’s my question.

[Geoffrey He:]

I think the overlap, maybe last year I think the overlap between us and our competitors is more. But this year, I think, because we already take I think more than half of the market in terms of our projects. So the overlap actually is going down. For the developers, of course, they are willing to cooperate with more channels to squeeze the client source, but actually currently that competitor e-commerce provider, they are few, and we are the biggest. So in terms of the budget, I think the e-commerce is not involved in any budget from the developers. So it’s decided actually project by project, especially when the developer setup their sales plan for each project. So it’s quite hard to predict, next year the budget of the e-commerce, it’s quite hard to.

[Jack Yang:]

Thank you. That’s all for my question.

[Geoffrey He:]

Thank you.

[Operator:]

Your next question comes from Ming Xu from UBS. Your line is open. Please go ahead.

[Ming Xu:]

Hello, management. I have two questions. First is regarding the competition of the online media business, so in order that SouFun they recently announced the spinoff of their online media business, and relisted that on the - in the E-share [ph] market. So I think that with a stronger financing capability in the E-share market, do you see more competition ahead, if they raise more money - if they are able to raise more money and become more aggressive in terms of their business? That’s my first question. And I have a follow-up. Thanks.

[Geoffrey He:]

I think for the media business, who will be more influential is not decided by how many cash they have. It’s decided by what kind of service they can provide for the users, and what kind of media influence they make to the audience. So that’s the key issue. I think, the E-share re-management have SouFun’s capital arrangement, it’s not involved - or any connection with the business.

[Min Chen:]

Ming, if you look at our business, actually operating cash flow positive, it’s an asset-light model. And the financing into this business or the financing channels into this business, because we’re generating cash flow already, it’s more or less important, it’s not critical. Whereas, if you look at some of the other asset- or labor-heavy businesses, where they are spending a lot of cash but not very profitable, that’s probably where the financing is actually more critical to them.

[Ming Xu:]

Sure, thanks. My second question is a housekeeping question about the redemption rate of coupons. So we noticed that for the past few quarters that redemption rate has been around 75% to 80%, but it’s declined quite substantially to around 55% in Q2, but recovered to around 80% in Q3. So how do we see this redemption rate going forward? How should we model it?

[Geoffrey He:]

I think usually that quarter-by-quarter that average rate should be around 70% to 80%. But this year’s second quarter, I think the 55% is a bit low. Simply, because a lot of projects actually they presumed the sales confirmed to the third quarter. So that’s the way. Actually a lot of projects actually they’re collecting the users, collecting the buyers, but confirmed the sales actually over the quarter. That’s the special reason I think for that.

[Ming Xu:]

Thanks.

[Geoffrey He:]

Thank you.

[Operator:]

Your next question comes from Hillman Chan from Macquarie. Your line is open. Please go ahead.

[Hillman Chan:]

Thank you, management, for taking my question again. I have a question regarding your strategy on Internet finance. I think on Fang Jin Suo you have some product, P2P product on Fang Jin Suo as well. I just want to see your role in it; can you elaborate a little bit more? Or is it just mainly E-House was doing more active, I think, in the P2P financing? Thank you.

[Geoffrey He:]

Okay. Thank you for your question. Fang Jin Suo actually is the business of our group, E-House group. It’s not within Leju. But we have very close cooperation with Fang Jin Suo, because we also help them to design some projects that we can jointly market to the developers. For us, I think we - the Internet finance from the Fang Jin Suo is also a very important part of our service solution to the developers.

[Hillman Chan:]

Okay. Of course, when I look at Fang Jin Suo, I saw some product called Leju-Wang-Tai [ph] that I think you - in what that say you participate in the design of the product. So what’s the economics for those products. I mean, do you take a cut of it, or just mainly E-House, who’s doing it, and that is more like directing - re-directing the traffic from our website to Fang Jin Suo?

[Geoffrey He:]

Yes, because we help them design this product, so they give some credit line to Leju’s brand. And also, of course, we market this product to our developers. So that’s why the product is called Leju-Wang-Tai. So it’s just a - it’s a brand credit line.

[Min Chen:]

Credit [indiscernible].

[Hillman Chan:]

Okay. Okay. And then, my another question would be that, could you talk about, for example, the headcount or your geographical expansion in the coming few quarters for your e-commerce model?

[Geoffrey He:]

I think, because our e-commerce model for the primary house sector running for three years. So we don’t have a very significant expansion plan, especially geographical expansion for the primary house e-commerce product. But we do have a plan to expand our Qianggongzhang platform geographically, because it will - in the future it will also involve being sold about the e-commerce, material e-commerce. So currently, we don’t have such a very big plan to expand our payroll.

[Hillman Chan:]

Okay, got it. So it’s all about penetrating more into the 15 cities. Okay…

[Geoffrey He:]

Yes, because we already in almost 73…

[Min Chen:]

70-plus cities.

[Hillman Chan:]

Any plan for the lower-tier cities?

[Geoffrey He:]

I don’t think, because if we are going to lower cities, we actually prefer to use franchise above.

[Hillman Chan:]

Okay. Okay. Okay. That’s all my questions. Thank you very much. That’s very helpful.

[Geoffrey He:]

Thank you.

[Operator:]

Your next question comes from Nora Zhang from Merrill Lynch. Your line is open. Please go ahead.

[Nora Zhang:]

Hey, good evening, management. Thank you for taking my question. I have a question regarding the average revenue per coupon. It seems that this quarter’s average revenue per coupon have declined about 17% quarter-over-quarter. Can you give us more color on the reason behind? And also I want to ask about the city tier breakdown of the e-commerce revenue?

[Geoffrey He:]

Yes, the reason is very simple, because we sell more coupons in the second and third tier cities, and the average price of the coupons in these tier cities are much lower than the first tier. So that’s actually breakdown the average price of the coupon.

[Nora Zhang:]

Appreciate…

[Min Chen:]

So the, Nora, the breakdown - so the breakdown of between tiers of cities is - first tier city, because of the coupon price is still roughly 50% of the overall revenue. And then, second tier city this quarter have contributed around 45% of our overall revenues, and the remaining are lower tier cities.

[Nora Zhang:]

Thank you. Just a quick follow-up, so is this the trend that we should also think about 4Q average selling price?

[Geoffrey He:]

I think we’ll be stable compared to the third quarter.

[Nora Zhang:]

Okay. Thank you.

[Geoffrey He:]

Thank you.

[Operator:]

Your next question comes from Cheng Yang from CICC. Your line is open. Please go ahead.

[Cheng Yang:]

Thanks for taking my question again. I just have a follow-up question on your margins. Well, the non-GAAP net profit margin held up nicely for another quarter, which came at 14.30% [ph] in the third quarter versus 11% in the second quarter. So I understand that a smaller contribution by e-commerce revenue might partially distort the margins. But could you give us more colors on how margins for our e-commerce projects fared in the third quarter versus the previous one, and how do we see the trend in the fourth quarter? Thank you.

[Min Chen:]

It is - Cheng actually the e-commerce revenue contribution went from 72% to 70%. So the lowering of the revenue actually, I think, in effect played very little into the margins. It’s really what Hedong was talking about earlier. With more activities we’re able to save some of our, probably, previously spent marketing cost to increase the margins. And going into the - and the general margin on a project standalone basis between e-commerce project and an advertising assignment where we book into the advertising line items, the overall project-level operating margin is actually quite similar and it’s probably going to maintain at the similar level into this fourth quarter.

[Cheng Yang:]

Okay. Understood. Thank you very much.

[Operator:]

We are now approaching the end of the conference call. I will now turn the call back over to Leju’s Investor Relations Director, Ms. Melody Liu, for her closing remarks.

[Melody Liu:]

Thank you. This concludes today’s call. If you have any follow-up questions, please contact us at the numbers or e-mail provided on our earnings release and on our website. Thank you.

[Operator:]

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Good day.