Secoo Holding (SECO) Reports Q3 EPS of $0.10 on Revenues of $202.3M

Secoo Holding (NASDAQ: SECO) reported Q3 EPS of $0.10. Revenue for the quarter came in at $202.3 million.

Third Quarter 2020 Financial Results

GMV increased by 12.5% to RMB4,120.4 million (US$606.9 million) for the third quarter of 2020, from RMB3,661.0 million for the third quarter of 2019.

Total number of orders increased by 7.1% to 1,109.0 thousand for the third quarter of 2020 from 1,035.3 thousand for the third quarter of 2019.

Total revenues for the third quarter of 2020 was RMB1,373.5 million (US$202.3 million) compared with RMB1,941.6 million in the third quarter of 2019, primarily attributable to the increase in the proportion of business contribution from its marketplace platform business that recognizes revenues on a net basis, and short supply of some luxury goods and delayed logistics services due to the impact of COVID-19 pandemic.

Cost of revenues decreased by 29.1% to RMB1,142.9 million (US$168.3 million) for the third quarter of 2020 from RMB1,612.3 million for the third quarter of 2019, primarily due to the decrease in total revenues.

Gross profit was RMB230.5 million (US$34.0 million) for the third quarter of 2020, compared with RMB329.3 million for the third quarter of 2019. This decrease was mainly due to the decrease in total revenues and the increase in discount on sales to boost customers’ willingness to purchase during the pandemic.

Operating expenses decreased by 22.3% to RMB182.2 million (US$26.8 million) for the third quarter of 2020 from RMB234.5 million for the third quarter of 2019.

Fulfillment expenses decreased by 16.3% to RMB41.5 million (US$6.1 million) for the third quarter of 2020 from RMB49.6 million for the third quarter of 2019. The decrease was primarily attributable to the decreased freight and staff costs during the period.

Marketing expenses decreased by 47.6% to RMB58.1 million (US$8.6 million) for the third quarter of 2020 from RMB110.8 million for the third quarter of 2019. The decrease was primarily due to the reduced online and offline advertising expenses, as well as the decreased staff costs.

Technology and content development expenses increased by 8.8% to RMB28.5 million (US$4.2 million) for the third quarter of 2020 from RMB26.2 million for the third quarter of 2019. The increase was primarily due to the continuous investment in the technology department in order to strengthen our technological capabilities to improve operating efficiency.

General and administrative expenses increased by 13.2% to RMB54.1 million (US$8.0 million) for the third quarter of 2020 from RMB47.8 million for the third quarter of 2019. The increase was primarily attributable to the additional provisions for bad debts, over which the Company considered many factors in assessing the collectability, such as the financial conditions of the debtors given the impact of the COVID-19 pandemic, among others.

Income from operations was RMB48.3 million (US$7.1 million) for the third quarter of 2020, compared with RMB94.9 million for the third quarter of 2019.

Non-GAAP income from operations, which excludes share-based compensation expenses, for the third quarter of 2020 was RMB50.8 million (US$7.5 million), compared with RMB97.5 million for the third quarter of 2019.

Income tax benefit was RMB570 thousand (US$84 thousand) in the third quarter of 2020, compared with income tax expense of RMB17.0 million for the third quarter of 2019.

Net income was RMB20.8 million (US$3.1 million) for the third quarter of 2020, compared with a net income of RMB62.1 million for the third quarter of 2019.

Non-GAAP net income, which excludes share-based compensation expenses, was RMB23.2 million (US$3.4 million) in the third quarter of 2020, compared with RMB64.7 million in the third quarter of 2019.

Net income attributable to ordinary shareholders of Secoo Holding Limited for the third quarter of 2020 was RMB21.8 million (US$3.2 million), compared with RMB60.9 million for the third quarter of 2019.

Basic and diluted net income per share were RMB0.62 (US$0.09) and RMB0.60 (US$0.09) for the third quarter of 2020, compared with RMB2.43 and RMB2.33, respectively, for the third quarter of 2019. Basic and diluted net income per American depositary share (“ADS”) were RMB0.31 (US$0.05) and RMB0.30 (US$0.04) for the third quarter of 2020, compared with RMB1.21 and RMB1.17, respectively, for the third quarter of 2019.

Non-GAAP basic and diluted net income per share were RMB0.69 (US$0.10) and RMB0.67 (US$0. 10) for the third quarter of 2020, compared with RMB2.53 and RMB2.43, respectively, for the third quarter of 2019. Non-GAAP basic and diluted net income per ADS were RMB0.35 (US$0.05) and RMB0.34 (US$0.05) for the third quarter of 2020, compared with RMB1.26 and RMB1.22, respectively, for the third quarter of 2019.

Cash and Restricted Cash

As of September 30, 2020, the Company had cash, cash equivalents and restricted cash of RMB793.8 million (US$116.9 million).

Commentary

Mr. Richard Rixue Li, Chairman and Chief Executive Officer of Secoo, said, “We are pleased to report our robust operational performance for the third quarter of 2020, highlighted by year-over-year GMV growth of 12.5%. This sustained healthy growth reflects the effective execution of our multi-pronged business strategy, especially our ability to widen our offering of high-end brands as we move toward cementing our leading position in the luxury e-commerce space. We also have been enhancing collaborations with top brands and strategic partners worldwide, as well as using intelligent marketing approaches to enrich product and service offerings for a growing number of Chinese consumers pursuing affluent lifestyles.

“We leveraged our well-established high-end global supply chain systems, cutting-edge technology and integrated online and offline channels to cultivate our luxury-focused livestreaming ecosystem as streaming e-commerce becomes an increasingly popular format for a timely and reliable shopping experience. In this spirit, we remain focused on deepening cooperation with the most trafficked short-video platforms while boosting our streaming content creation and improving streaming shopping experience and quality. We believe we are uniquely positioned to take advantage of the booming opportunities in luxury e-commerce as online shopping picks up pace in the aftermath of pandemic. We will further optimize our core operating strengths to deliver sustainable value to both our customers and shareholders,” Mr. Li concluded.

Mr. Shaojun Chen, Chief Financial Officer of Secoo, said, “In the third quarter, amid a recovering COVID-19 environment in Mainland China, we delivered net income of RMB20.8 million representing an increase of 252.5% quarter-over-quarter. Our sequential improvement in profitability demonstrates the resilience of our business model to navigate through market dynamics. Going forward, we remain confident to capture immense potential in China’s online high-end consumer market in the long run.”

For earnings history and earnings-related data on Secoo Holding (SECO) click here.

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