1/12/2024 0 Comments Nasdaq duo![]() Last year operating margins were 3.0%, while this year the margin sunk to -14.9%. Taking out stock-based compensation, that loss would have been ¥123 million in 2020 compared to a profit of ¥209 million in 2019. The decline in spending offset the decline in revenues and the operating loss decreased to ¥226 million from ¥537 million on a GAAP basis. This compares with ¥1.3 billion in expenses in 2019 of which ¥746 million was stock-based compensation. Operating costs for 2020 were ¥640 million of which ¥103 million was from stock-based compensation. The company cut expenses, mostly by reducing stock-based compensation expense. Gross margin dollars decreased 45.3% and margins declined to 16.9% from 21.0%. Revenues improved sequentially from a low in Q1 through to Q3, but dropped again in Q4. Fangdd targets small to medium independent agencies in China, of which 1.5 million are registered on the platform.Īt $5.52 per share Fangdd trades at an enterprise valuation of US$387 million or 0.8 times estimated 2021 sales and is a value play compared with its peers who trade at 7.9 times.įor 2020 revenues declined 31.9% from 2019 to ¥2.5 billion from ¥3.6 billion. It provides discovery and transaction support to the 2019 ¥9.5 trillion market (US$1.4 trillion) of new and existing residential properties that are sold each year (that is expected to grow 9.3% to ¥17.4 trillion by 2024), as Chinese consumers add second homes and continue to invest in real estate as prices continue to appreciate. It is similar to a US company like Zillow where homebuyers can view properties, but in contrast, the platform earns a transaction fee like the Multiple Listing Service, which in the US can only be viewed by brokers. We expect this product should yield the typical 60-80% margins a SaaS product provides and will increase the company’s overall gross margin.įangdd is the second largest real estate transaction platform in China. The company is already had discussions with the top 100 developers in China and is optimistic about its prospects. An agent that closes its deal on Fangdd’s platform then pays Fangdd 5% of whatever commission it has earned from that developer. It allows them to communicate with real estate brokers directly through an app and it can also allow the developer to set the agent’s commission rate. Fangdd’s new product is sold at a flat monthly fee to developers making their costs more predictable. These developers have been experiencing a profit margin squeeze and are looking for solutions that reduce their operating costs and improve their ability to generate sales faster. In Q4 it introduced a new SaaS product targeted at real estate developers. Fangdd has chosen not to compete on price and is instead trying to make its platform more efficient with improved features and functions. Rather than matching subsidies for short-term low margin revenues the company plans to maintain it bases business at current levels and grow through its new SaaS offering.Ĭompetitors are throwing out huge subsidies to attract transactions and taking huge losses to gain market share. Fangdd (NASDAQ:DUO) is working its way back to profitability from a pandemic-ravaged 2020 by cutting costs and introducing new higher margin services.
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