Secoo Reports Unaudited Fourth Quarter and Full Year 2019 Results
BEIJING, April 30, 2020 (GLOBE NEWSWIRE) — Secoo Holding Limited (“Secoo”, the “Company” or “We”) (NASDAQ: SECO), Asia’s largest online integrated upscale products and services platform, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2019.
Highlights for Fourth Quarter 2019:GMV1 reached RMB4,679.0 million (US$672.1 million) for Q4 2019, representing an increase of 51.9% from RMB3,080.7 million for Q4 2018.Total number of orders2 was 1.4 million for Q4 2019, representing an increase of 48.4% from 945.2 thousand for Q4 2018.Number of active customers3 increased by 50.9% to 612.5 thousand for Q4 2019 from 406.0 thousand for Q4 2018.Total revenues increased to RMB2,040.1 million (US$293.0 million) for Q4 2019, increasing by 13.8% from RMB1,792.6 million for Q4 2018.Net income was RMB43.7 million (US$6.3 million) for Q4 2019 compared with RMB48.3 million for Q4 2018.Highlights for Full Year 2019:GMV1 reached RMB13,785.3 million (US$1,980.1 million) for full year 2019, representing an increase of 71.3% from RMB8,048.1 million for 2018.Total number of orders2 was 4.0 million for full year 2019, representing an increase of 75.6% from 2.3 million for 2018.Number of active customers3 increased by 67.5% to 1,223.0 thousand for 2019.Total registered customers reached 36.5 million as of December 31, 2019 from 27.0 million as of December 31, 2018.Total revenues reached RMB6,869.2 million (US$986.7 million) for full year 2019, increasing by 27.5% from RMB5,387.6 million in 2018.Net income increased by 3.9% to RMB161.7 million (US$23.2 million) for full year 2019 from RMB155.5 million for 2018._________________________1 GMV, or Gross Market Value, refers to the total value of all orders of products and services, excluding the value of whole car sales, placed on our online platform and in our offline experience centers, regardless of whether the products are delivered or returned or whether the services are cancelled during the period presented.2 Total orders refer to the total number of orders of products and services, excluding the number of whole car sales, placed on our online platform and in our offline experience centers, regardless of whether the products are delivered or returned or whether the services are cancelled during the period presented.3 Active customer refers to a customer who made at least one account purchase during the period presented.CommentaryMr. Richard Rixue Li, Chairman and Chief Executive Officer of Secoo, said, “We are very pleased to conclude the robust year of 2019 with significant growth represented by our key metrics. Our full year GMV posted an impressive increase of 71.3% year-over-year to RMB13.8 billion and the number of active customers in 2019 grew 67.5% to 1.22 million. These results reveal our strong growth momentum and further validate our leading position in China’s luxury goods and services marketplace.“We remain committed to our diversified growth strategy, expanding supply chain capabilities and deepening brand relationships across the globe as part of our continuous pursuit to meet and exceed the ever-evolving demand for luxury goods. Our strategic effort to cultivate our membership ecosystem continues to deliver promising results. In the fourth quarter, the number of active customers enrolled in our membership programs increased approximately 200.0% year-over-year, which increased transaction volume on Secoo platforms. Looking forward, we will continue to strengthen the core competitive advantages that undergird our position as the destination of choice for discerning shoppers of luxury goods and services and support our convictions to promote sustainable fashion trends and luxury goods consumption. While the current global macro-economic environment is experiencing a slowdown, we are confident in the long-term demand resiliency for luxury goods and services and in our ability to capture the emerging opportunities in the upscale shopping and lifestyle industry and deliver value to our shareholders,” Mr. Li concluded.Mr. Shaojun Chen, Chief Financial Officer of Secoo, said, “We achieved solid topline result in 2019 with total revenues grew 27.5% compared with 2018. The encouraging growth in both revenue streams demonstrates the effective execution of our strategies to broaden product selections through the consistent expansion of brand partnership and the robust customer demand for the premium merchandise offerings on our platform. Entering into 2020, considering the shock on the macroeconomy brought by the COVID-19 epidemic in the first quarter and its enduring impact in the quarters ahead, we currently tend to keep a conservative view on our business performance. Despite the challenging market environment, we will continue to pursue solid organic growth and explore valuable partnerships to enhance our suite of offerings and strengthen our brand leadership in the market. We believe our core capability will support us to achieve long-term corporate goal and maximize shareholder value.”Recent DevelopmentsIn the fourth quarter, Secoo executed a series of high-profile year-end consumer events during shopping holidays such as “Double-11”, “Black Friday”, and “1217 Luxury Festival.” These events featured innovative marketing campaigns centering on the Company’s membership programs. Supported by Secoo’s AI-based operating platform and service system, these marketing activities, strongly boosted the Company’s rapidly growing active customer base.
Since the beginning of the fourth quarter to date, Secoo has secured direct cooperation partnerships with 69 new brands, including Zegna, Maserati, Lanvin, and Anna Sui.
During the fourth quarter, Secoo continued to heighten its livestream ecosystem. Our livestream video programs focuses largely on fashion and upscale content, featuring a wide range of unique, engaging experiences such as live broadcast programs in direct collaboration with brands, livestream in-store shopping, live fashion show and live broadcasting fashion style guidance. These programs are designed to effectively drive user traffic and free-to-paid conversion rate.
In late February 2020, Secoo worked with Tod’s, Versace and Lanvin to live stream on Secoo’s platform their runway shows during the Milan and Paris Fashion Weeks. This gave users front-row, real-time viewing for the autumn-winter collections from each fashion house, all from the convenience of their own homes, free of charge.
Ontimeshow, a well-known Chinese indie fashion trade show, launched its inaugural online trade show exclusively on Secoo’s platform when its offline 2020 autumn-winter season show was canceled due to the COVID-19. Since mid-March 2020, Secoo has enabled all indie designers and branded shops on Ontimeshow to sign up for an online shop on Secoo, which offers live streaming functions to promote their sales.
In February 2020, Secoo upgraded its tiered membership program with enhanced membership benefits. This initiative, coupled with promotional campaigns during shopping festivals and holidays, contributed to a robust increase in the number of paying users on its platforms.
Starting from February 2020, the Company launched an express delivery service catering to customers in Beijing, Shanghai, Xiamen and Qingdao. Customers in these four cities who order products applicable to this express delivery service through the Secoo app are now able to receive their merchandise in as quickly as 2 hours from the time of placing their order.
In the fourth quarter, Secoo launched an online luxury authentication service for luxury item to users online. Secoo rolled out this new service by leveraging a strong team of luxury goods authentication experts and a powerful product authentication database that incorporates block chain technology.
In the fourth quarter, Secoo officially launched a unified merchandise management system which applies AI-empowered identification, big-data analytics and cloud computing technologies to standardized merchandise descriptions for SKUs to implement automated pricing of merchandise and product recommendations.Fourth Quarter 2019 Financial ResultsGMV increased by 51.9% to RMB4,679.0 million (US$672.1 million) for the fourth quarter of 2019, from RMB3,080.7 million for the fourth quarter of 2018.Total number of orders increased by 48.4% to 1,403.0 thousand for the fourth quarter of 2019 from 945.2 thousand for the fourth quarter of 2018.Total revenues for the fourth quarter of 2019 increased by 13.8% to RMB2,040.1 million (US$293.0 million) from RMB1,792.6 million in the fourth quarter of 2018, primarily attributable to the continuous expansion of our operation, our lush offerings of merchandise and service SKU combined with our creative and effective marketing activities driving the rapid growth in our total active customers and total number of orders served during the period.Cost of revenues increased by 19.6% to RMB1,744.5 million (US$250.6 million) for the fourth quarter of 2019 from RMB1,458.1 million for the fourth quarter of 2018, primarily due to the increase of total revenues.Gross profit was RMB295.6 million (US$42.5 million) for the fourth quarter of 2019, compared to RMB334.5 million for the fourth quarter of 2018.Operating expenses decreased by 7.5% to RMB245.6 million (US$35.3 million) for the fourth quarter of 2019 from RMB265.4 million for the fourth quarter of 2018.Fulfillment expenses increased by 24.7% to RMB50.1 million (US$7.2 million) for the fourth quarter of 2019 from RMB40.1 million for the fourth quarter of 2018. The increase was primarily attributable to the increase of shipping expenses, and third-party payment commissions, as well as the increased staff cost during the period.Marketing expenses decreased by 30.9% to RMB106.2 million (US$15.3million) for the fourth quarter of 2019 from RMB153.7 million for the fourth quarter of 2018. The decrease was primarily due to reduced online and offline advertising expenses.Technology and content development expenses increased by 27.2% to RMB27.1 million (US$3.9 million) for the fourth quarter of 2019 from RMB21.3 million for the fourth quarter of 2018. The increase was primarily due to the continuous investment in the technology department in order to strengthen the driving force of technology for operation.General and administrative expenses increased by 23.7% to RMB62.2 million (US$8.9 million) for the fourth quarter of 2019 from RMB50.3 million for the fourth quarter of 2018. The increase was primarily attributable to rising rents associated with relocation of office, and provision for doubtful debts.Income from operations was RMB50.0 million (US$7.2 million) for the fourth quarter of 2019, compared to RMB69.1 million for the fourth quarter of 2018.Non-GAAP income from operations for the fourth quarter of 2019 was RMB49.8 million (US$7.2 million), compared to RMB75.5 million for the fourth quarter of 2018.Income tax expenses was RMB4.4 million (US$0.6 million) in the fourth quarter of 2019, compared with an income tax expense of RMB10.7 million for the fourth quarter of 2018.Net income was RMB43.7 million (US$6.3 million) for the fourth quarter of 2019, compared with RMB48.3 million for the fourth quarter of 2018.Non-GAAP net income, which excludes share-based compensation expenses, was RMB43.5 million (US$6.2 million) in the fourth quarter of 2019, compared to RMB54.8 million in the fourth quarter of 2018.Net income attributable to ordinary shareholders of Secoo Holding Limited for the fourth quarter of 2019 was RMB41.0 million (US$5.9 million), compared to RMB46.5 million for the fourth quarter of 2018.Basic and diluted net income per share were RMB1.63 (US$0.23) and RMB1.57 (US$0.23), respectively, for the fourth quarter of 2019, compared with basic and diluted net income per share of RMB1.85 and RMB1.78, respectively, for the fourth quarter of 2018. Basic and diluted net income per American depositary share (“ADS”) were RMB0.82 (US$0.12) and RMB0.79 (US$0.11), respectively, for the fourth quarter of 2019, compared to basic and diluted net income per ADS of RMB0.92 and RMB0.89, respectively, for the fourth quarter of 2018.Non-GAAP basic and diluted net income per share were RMB1.62 (US$0.23) and RMB1.56 (US$0.22), respectively, for the fourth quarter of 2019, compared to RMB2.11 and RMB2.03, respectively, for the fourth quarter of 2018. Non-GAAP basic and diluted net income per ADS were RMB0.81 (US$0.12) and RMB0.78 (US$0.11), respectively, for the fourth quarter of 2019, compared to RMB1.05 and RMB1.01, respectively, for the fourth quarter of 2018.Cash and Restricted CashAs of December 31, 2019, the Company had cash and restricted cash of RMB954.1 million (US$137.1 million).Full Year 2019 Financial ResultsGMV increased by 71.3% to RMB13,785.3 million (US$1,980.1 million) for full year 2019, from RMB8,048.1 million for 2018.Total number of orders increased by 75.6% to 4.0 million for full year 2019 from 2.3 million for 2018.Total revenues for full year 2019 increased by 27.5% to RMB6,869.2 million (US$986.7 million) from RMB5,387.6 million in 2018, primarily driven by the growth in our total active customers and total number of orders served during the period.Cost of revenues increased by 28.1% to RMB5,672.3 million (US$814.8 million) for full year 2019 from RMB4,427.8 million for 2018, which was in line with the increase of total revenues.Gross profit increased by 24.7% to RMB1,196.9 million (US$171.9 million) for full year 2019 from RMB959.7 million for 2018.Operating expenses increased by 32.4% to RMB980.5 million (US$140.8 million) for full year 2019 from RMB740.5 million for 2018.Fulfillment expenses increased by 37.3% to RMB190.5 million (US$27.4 million) for full year 2019 from RMB138.7 million for 2018. The increase was primarily attributable to the increase of shipping expenses, and third-party payment commissions, as well as the increased staff cost during the period.Marketing expenses increased by 17.0% to RMB480.4 million (US$69.0 million) for full year 2019 from RMB410.5 million for 2018. The increase was primarily attributable to the increase in staff compensation and benefits expenses, as well as the increase in marketing promotions both online and offline.Technology and content development expenses increased by 26.2% to RMB101.5 million (US$14.6 million) for full year 2019 from RMB80.4 million for 2018. The increase was primarily due to the increase in our technology staff headcount to support the growth of the business and third-party service fees.General and administrative expenses increased by 87.8% to RMB208.1 million (US$29.9 million) for full year 2019 from RMB110.8 million for 2018. The increase was primarily attributable to the increase in staff compensation and benefits, rising professional fee and rents, and provision for doubtful debts.Income from operations was RMB216.5 million (US$31.1 million) for full year 2019, compared with RMB219.3 million for 2018.Non-GAAP income from operations for full year 2019 was RMB225.3 million (US$32.4 million), compared with RMB243.0 million for 2018.Income tax expenses was RMB31.4 million (US$4.5 million) for full year 2019, compared with an income tax expenses of RMB40.7 million for 2018.Net income was RMB161.7 million (US$23.2 million) for full year 2019, representing an increase of 3.9% from RMB155.5 million for 2018.Non-GAAP net income, which excludes share-based compensation expenses, was RMB170.5 million (US$24.5 million) in full year 2019, compared to RMB179.2 million in 2018.Net income attributable to ordinary shareholders of Secoo Holding Limited increased by 1.7% to RMB154.4 million (US$22.2 million) for full year 2019 from RMB151.8 million for 2018.Basic and diluted net income per share were RMB6.15 (US$0.88) and RMB5.89 (US$0.85), respectively, for full year 2019, compared with basic and diluted net income per share of RMB6.02 and RMB5.80 respectively, for 2018. Basic and diluted net income per ADS were RMB3.08 (US$0.44) and RMB2.95 (US$0.42), respectively, for full year 2019, compared to basic and diluted net income per ADS of RMB3.01 and RMB2.90 respectively, for 2018.Non-GAAP basic and diluted net income per share were RMB6.50 (US$0.93) and RMB6.22 (US$0.89), respectively, for full year 2019, compared with basic and diluted net income per share of RMB6.95 and RMB6.70 for 2018. Non-GAAP basic and diluted net income per ADS were RMB3.25 (US$0.47) and RMB3.11 (US$0.45), respectively, for full year 2019, compared with basic and diluted net income per ADS of RMB3.48 and RMB3.35, respectively, for 2018.Business OutlookCOVID-19 has brought unprecedented levels of macro-economic disruption and uncertainty across the globe. Since late January, most regions in China have been subject to lockdown and restricted public movement. At present, many aspects of daily life in China are starting to return to more normal routines. However, the situation in Europe and certain countries is still evolving and the operations of many of Secoo’s European and overseas suppliers and merchants have been either interrupted or operating in reduced capacities. As a result, the Company expects soft performance in the first quarter of 2020. Secoo has been adjusting its business strategies to minimize COVID-19’s impact on its operations. However, due to uncertainty of the pandemic’s impact, particularly in Europe, the full extent to which COVID-19 will impact our financial results and business operations will depend on future developments, which cannot be predicted.Conference Call InformationThe Company’s management will host an earnings conference call at 8:00 AM U.S. Eastern Time on April 30, 2020 (8:00 PM Beijing/Hong Kong time on April 30, 2020).To speed up the entry process for participants, this earnings conference call requires all participants to finish an online registration in advance.For participants who wish to join the call, please complete the Direct Event online registration at http://apac.directeventreg.com/registration/event/2837748 at least 15 minutes prior to the scheduled call start time. Upon registration, participants will receive the conference call access information, including dial-in numbers, Direct Event Passcode, unique Registrant ID, and an e-mail with detailed instructions to join the conference call.Once complete the registration, please dial-in at least 10 minutes before the scheduled start time of the earnings call and enter the Direct Event Passcode and Registrant ID as instructed to connect to the call.Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at http://ir.secoo.com.A replay of the conference call will be accessible by phone two hours after the conclusion of the live call at the following numbers, until May 7, 2020:
About Secoo Holding LimitedSecoo Holding Limited (“Secoo”) is Asia’s largest online integrated upscale products and services platform as measured by GMV in 2016. Secoo provides customers a wide selection of authentic upscale products and lifestyle services on the Company’s integrated online and offline shopping platform which consists of the Secoo.com website, mobile applications and offline experience centers, offering over 400,000 SKUs, covering over 3,800 global and domestic brands. Supported by the Company’s proprietary database of upscale products, authentication procedures and brand cooperation, Secoo is able to ensure the authenticity and quality of every product offered on its platform.For more information, please visit http://ir.secoo.com.Use of Non-GAAP Financial MeasuresTo supplement our consolidated financial statements which are presented in accordance with U.S. GAAP, we also use non-GAAP income from operations, non-GAAP net income, non-GAAP net income attributable to ordinary shareholders of Secoo Holding Limited, and non-GAAP basic and diluted net income per share and ADS as additional non-GAAP financial measures. We present these non-GAAP financial measures because they are used by our management to evaluate our operating performance. We define non-GAAP income from operations as income from operations excluding share-based compensation expenses. We define non-GAAP net income as net income excluding share-based compensation expenses. We define non-GAAP net income per share as non-GAAP net income attributable to ordinary shareholders of Secoo Holding Limited dividing by weighted average number of basic and diluted share outstanding, including the dilutive effect of share-based awards as determined under the treasury stock method. We define non-GAAP basic and diluted net income per ADS as non-GAAP basic and diluted net income per share divided by two as two ADSs represent one ordinary share. We also believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies.The use of non-GAAP financial measures has certain limitations. These non-GAAP measures exclude certain items that have been and will continue to be incurred in the future and are not reflected in the presentation of the non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to results prepared in accordance with U.S. GAAP, and should not be considered a substitute for or superior to U.S. GAAP results. In addition, these non-GAAP financial measures may not be comparable to similarly titled measures utilized by other companies since such other companies may not calculate such measures in the same manner as Secoo does.Reconciliation of these non-GAAP financial measures to the most directly comparable U.S. GAAP financial measure is set forth at the end of this release.Exchange Rate InformationThis press release contains translation of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars were made at the exchange rate of RMB6.9618 to US$1.0, the noon buying rate in New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York in effect as of December 31, 2019.Safe Harbor StatementThis press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include but are not limited to Secoo management quotes and the Company’s financial outlook. These forward-looking statements can be identified by terminology such as “will,” “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “intend,” “potential,” “plan,” “goal” and similar statements. Secoo Holding Limited may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These forward-looking statements include, but are not limited to, statements about: the Company’s goals and strategies; its future business development, financial condition and results of operations; its ability to attract and retain new customers and to increase revenues generated from repeat customers; its expectations regarding demand for and market acceptance of its products and services; trends and competition in China’s e-commerce market; changes in its revenues and certain cost or expense items; the expected growth of the Chinese e-commerce market; Chinese governmental policies relating to the Company’s industry and general economic conditions in China. For additional information on these and other important factors that could adversely affect the Company’s business, financial condition, results of operations and prospects, please see its filings with the U.S. Securities and Exchange Commission.For investor and media inquiries, please contact:In China:
Secoo Holding Limited
Jingbo Ma
Tel: +86 (10) 6588-0135
E-mail: ir@secoo.comThe Piacente Group, Inc.
Jenny Cai
Tel: +86 (10) 6508-0677
E-mail: Secoo@tpg-ir.comIn the United States:
The Piacente Group, Inc.
Brandi Piacente
Tel: +1-212-481-2050
E-mail: Secoo@tpg-ir.com
Highlights for Fourth Quarter 2019:GMV1 reached RMB4,679.0 million (US$672.1 million) for Q4 2019, representing an increase of 51.9% from RMB3,080.7 million for Q4 2018.Total number of orders2 was 1.4 million for Q4 2019, representing an increase of 48.4% from 945.2 thousand for Q4 2018.Number of active customers3 increased by 50.9% to 612.5 thousand for Q4 2019 from 406.0 thousand for Q4 2018.Total revenues increased to RMB2,040.1 million (US$293.0 million) for Q4 2019, increasing by 13.8% from RMB1,792.6 million for Q4 2018.Net income was RMB43.7 million (US$6.3 million) for Q4 2019 compared with RMB48.3 million for Q4 2018.Highlights for Full Year 2019:GMV1 reached RMB13,785.3 million (US$1,980.1 million) for full year 2019, representing an increase of 71.3% from RMB8,048.1 million for 2018.Total number of orders2 was 4.0 million for full year 2019, representing an increase of 75.6% from 2.3 million for 2018.Number of active customers3 increased by 67.5% to 1,223.0 thousand for 2019.Total registered customers reached 36.5 million as of December 31, 2019 from 27.0 million as of December 31, 2018.Total revenues reached RMB6,869.2 million (US$986.7 million) for full year 2019, increasing by 27.5% from RMB5,387.6 million in 2018.Net income increased by 3.9% to RMB161.7 million (US$23.2 million) for full year 2019 from RMB155.5 million for 2018._________________________1 GMV, or Gross Market Value, refers to the total value of all orders of products and services, excluding the value of whole car sales, placed on our online platform and in our offline experience centers, regardless of whether the products are delivered or returned or whether the services are cancelled during the period presented.2 Total orders refer to the total number of orders of products and services, excluding the number of whole car sales, placed on our online platform and in our offline experience centers, regardless of whether the products are delivered or returned or whether the services are cancelled during the period presented.3 Active customer refers to a customer who made at least one account purchase during the period presented.CommentaryMr. Richard Rixue Li, Chairman and Chief Executive Officer of Secoo, said, “We are very pleased to conclude the robust year of 2019 with significant growth represented by our key metrics. Our full year GMV posted an impressive increase of 71.3% year-over-year to RMB13.8 billion and the number of active customers in 2019 grew 67.5% to 1.22 million. These results reveal our strong growth momentum and further validate our leading position in China’s luxury goods and services marketplace.“We remain committed to our diversified growth strategy, expanding supply chain capabilities and deepening brand relationships across the globe as part of our continuous pursuit to meet and exceed the ever-evolving demand for luxury goods. Our strategic effort to cultivate our membership ecosystem continues to deliver promising results. In the fourth quarter, the number of active customers enrolled in our membership programs increased approximately 200.0% year-over-year, which increased transaction volume on Secoo platforms. Looking forward, we will continue to strengthen the core competitive advantages that undergird our position as the destination of choice for discerning shoppers of luxury goods and services and support our convictions to promote sustainable fashion trends and luxury goods consumption. While the current global macro-economic environment is experiencing a slowdown, we are confident in the long-term demand resiliency for luxury goods and services and in our ability to capture the emerging opportunities in the upscale shopping and lifestyle industry and deliver value to our shareholders,” Mr. Li concluded.Mr. Shaojun Chen, Chief Financial Officer of Secoo, said, “We achieved solid topline result in 2019 with total revenues grew 27.5% compared with 2018. The encouraging growth in both revenue streams demonstrates the effective execution of our strategies to broaden product selections through the consistent expansion of brand partnership and the robust customer demand for the premium merchandise offerings on our platform. Entering into 2020, considering the shock on the macroeconomy brought by the COVID-19 epidemic in the first quarter and its enduring impact in the quarters ahead, we currently tend to keep a conservative view on our business performance. Despite the challenging market environment, we will continue to pursue solid organic growth and explore valuable partnerships to enhance our suite of offerings and strengthen our brand leadership in the market. We believe our core capability will support us to achieve long-term corporate goal and maximize shareholder value.”Recent DevelopmentsIn the fourth quarter, Secoo executed a series of high-profile year-end consumer events during shopping holidays such as “Double-11”, “Black Friday”, and “1217 Luxury Festival.” These events featured innovative marketing campaigns centering on the Company’s membership programs. Supported by Secoo’s AI-based operating platform and service system, these marketing activities, strongly boosted the Company’s rapidly growing active customer base.
Since the beginning of the fourth quarter to date, Secoo has secured direct cooperation partnerships with 69 new brands, including Zegna, Maserati, Lanvin, and Anna Sui.
During the fourth quarter, Secoo continued to heighten its livestream ecosystem. Our livestream video programs focuses largely on fashion and upscale content, featuring a wide range of unique, engaging experiences such as live broadcast programs in direct collaboration with brands, livestream in-store shopping, live fashion show and live broadcasting fashion style guidance. These programs are designed to effectively drive user traffic and free-to-paid conversion rate.
In late February 2020, Secoo worked with Tod’s, Versace and Lanvin to live stream on Secoo’s platform their runway shows during the Milan and Paris Fashion Weeks. This gave users front-row, real-time viewing for the autumn-winter collections from each fashion house, all from the convenience of their own homes, free of charge.
Ontimeshow, a well-known Chinese indie fashion trade show, launched its inaugural online trade show exclusively on Secoo’s platform when its offline 2020 autumn-winter season show was canceled due to the COVID-19. Since mid-March 2020, Secoo has enabled all indie designers and branded shops on Ontimeshow to sign up for an online shop on Secoo, which offers live streaming functions to promote their sales.
In February 2020, Secoo upgraded its tiered membership program with enhanced membership benefits. This initiative, coupled with promotional campaigns during shopping festivals and holidays, contributed to a robust increase in the number of paying users on its platforms.
Starting from February 2020, the Company launched an express delivery service catering to customers in Beijing, Shanghai, Xiamen and Qingdao. Customers in these four cities who order products applicable to this express delivery service through the Secoo app are now able to receive their merchandise in as quickly as 2 hours from the time of placing their order.
In the fourth quarter, Secoo launched an online luxury authentication service for luxury item to users online. Secoo rolled out this new service by leveraging a strong team of luxury goods authentication experts and a powerful product authentication database that incorporates block chain technology.
In the fourth quarter, Secoo officially launched a unified merchandise management system which applies AI-empowered identification, big-data analytics and cloud computing technologies to standardized merchandise descriptions for SKUs to implement automated pricing of merchandise and product recommendations.Fourth Quarter 2019 Financial ResultsGMV increased by 51.9% to RMB4,679.0 million (US$672.1 million) for the fourth quarter of 2019, from RMB3,080.7 million for the fourth quarter of 2018.Total number of orders increased by 48.4% to 1,403.0 thousand for the fourth quarter of 2019 from 945.2 thousand for the fourth quarter of 2018.Total revenues for the fourth quarter of 2019 increased by 13.8% to RMB2,040.1 million (US$293.0 million) from RMB1,792.6 million in the fourth quarter of 2018, primarily attributable to the continuous expansion of our operation, our lush offerings of merchandise and service SKU combined with our creative and effective marketing activities driving the rapid growth in our total active customers and total number of orders served during the period.Cost of revenues increased by 19.6% to RMB1,744.5 million (US$250.6 million) for the fourth quarter of 2019 from RMB1,458.1 million for the fourth quarter of 2018, primarily due to the increase of total revenues.Gross profit was RMB295.6 million (US$42.5 million) for the fourth quarter of 2019, compared to RMB334.5 million for the fourth quarter of 2018.Operating expenses decreased by 7.5% to RMB245.6 million (US$35.3 million) for the fourth quarter of 2019 from RMB265.4 million for the fourth quarter of 2018.Fulfillment expenses increased by 24.7% to RMB50.1 million (US$7.2 million) for the fourth quarter of 2019 from RMB40.1 million for the fourth quarter of 2018. The increase was primarily attributable to the increase of shipping expenses, and third-party payment commissions, as well as the increased staff cost during the period.Marketing expenses decreased by 30.9% to RMB106.2 million (US$15.3million) for the fourth quarter of 2019 from RMB153.7 million for the fourth quarter of 2018. The decrease was primarily due to reduced online and offline advertising expenses.Technology and content development expenses increased by 27.2% to RMB27.1 million (US$3.9 million) for the fourth quarter of 2019 from RMB21.3 million for the fourth quarter of 2018. The increase was primarily due to the continuous investment in the technology department in order to strengthen the driving force of technology for operation.General and administrative expenses increased by 23.7% to RMB62.2 million (US$8.9 million) for the fourth quarter of 2019 from RMB50.3 million for the fourth quarter of 2018. The increase was primarily attributable to rising rents associated with relocation of office, and provision for doubtful debts.Income from operations was RMB50.0 million (US$7.2 million) for the fourth quarter of 2019, compared to RMB69.1 million for the fourth quarter of 2018.Non-GAAP income from operations for the fourth quarter of 2019 was RMB49.8 million (US$7.2 million), compared to RMB75.5 million for the fourth quarter of 2018.Income tax expenses was RMB4.4 million (US$0.6 million) in the fourth quarter of 2019, compared with an income tax expense of RMB10.7 million for the fourth quarter of 2018.Net income was RMB43.7 million (US$6.3 million) for the fourth quarter of 2019, compared with RMB48.3 million for the fourth quarter of 2018.Non-GAAP net income, which excludes share-based compensation expenses, was RMB43.5 million (US$6.2 million) in the fourth quarter of 2019, compared to RMB54.8 million in the fourth quarter of 2018.Net income attributable to ordinary shareholders of Secoo Holding Limited for the fourth quarter of 2019 was RMB41.0 million (US$5.9 million), compared to RMB46.5 million for the fourth quarter of 2018.Basic and diluted net income per share were RMB1.63 (US$0.23) and RMB1.57 (US$0.23), respectively, for the fourth quarter of 2019, compared with basic and diluted net income per share of RMB1.85 and RMB1.78, respectively, for the fourth quarter of 2018. Basic and diluted net income per American depositary share (“ADS”) were RMB0.82 (US$0.12) and RMB0.79 (US$0.11), respectively, for the fourth quarter of 2019, compared to basic and diluted net income per ADS of RMB0.92 and RMB0.89, respectively, for the fourth quarter of 2018.Non-GAAP basic and diluted net income per share were RMB1.62 (US$0.23) and RMB1.56 (US$0.22), respectively, for the fourth quarter of 2019, compared to RMB2.11 and RMB2.03, respectively, for the fourth quarter of 2018. Non-GAAP basic and diluted net income per ADS were RMB0.81 (US$0.12) and RMB0.78 (US$0.11), respectively, for the fourth quarter of 2019, compared to RMB1.05 and RMB1.01, respectively, for the fourth quarter of 2018.Cash and Restricted CashAs of December 31, 2019, the Company had cash and restricted cash of RMB954.1 million (US$137.1 million).Full Year 2019 Financial ResultsGMV increased by 71.3% to RMB13,785.3 million (US$1,980.1 million) for full year 2019, from RMB8,048.1 million for 2018.Total number of orders increased by 75.6% to 4.0 million for full year 2019 from 2.3 million for 2018.Total revenues for full year 2019 increased by 27.5% to RMB6,869.2 million (US$986.7 million) from RMB5,387.6 million in 2018, primarily driven by the growth in our total active customers and total number of orders served during the period.Cost of revenues increased by 28.1% to RMB5,672.3 million (US$814.8 million) for full year 2019 from RMB4,427.8 million for 2018, which was in line with the increase of total revenues.Gross profit increased by 24.7% to RMB1,196.9 million (US$171.9 million) for full year 2019 from RMB959.7 million for 2018.Operating expenses increased by 32.4% to RMB980.5 million (US$140.8 million) for full year 2019 from RMB740.5 million for 2018.Fulfillment expenses increased by 37.3% to RMB190.5 million (US$27.4 million) for full year 2019 from RMB138.7 million for 2018. The increase was primarily attributable to the increase of shipping expenses, and third-party payment commissions, as well as the increased staff cost during the period.Marketing expenses increased by 17.0% to RMB480.4 million (US$69.0 million) for full year 2019 from RMB410.5 million for 2018. The increase was primarily attributable to the increase in staff compensation and benefits expenses, as well as the increase in marketing promotions both online and offline.Technology and content development expenses increased by 26.2% to RMB101.5 million (US$14.6 million) for full year 2019 from RMB80.4 million for 2018. The increase was primarily due to the increase in our technology staff headcount to support the growth of the business and third-party service fees.General and administrative expenses increased by 87.8% to RMB208.1 million (US$29.9 million) for full year 2019 from RMB110.8 million for 2018. The increase was primarily attributable to the increase in staff compensation and benefits, rising professional fee and rents, and provision for doubtful debts.Income from operations was RMB216.5 million (US$31.1 million) for full year 2019, compared with RMB219.3 million for 2018.Non-GAAP income from operations for full year 2019 was RMB225.3 million (US$32.4 million), compared with RMB243.0 million for 2018.Income tax expenses was RMB31.4 million (US$4.5 million) for full year 2019, compared with an income tax expenses of RMB40.7 million for 2018.Net income was RMB161.7 million (US$23.2 million) for full year 2019, representing an increase of 3.9% from RMB155.5 million for 2018.Non-GAAP net income, which excludes share-based compensation expenses, was RMB170.5 million (US$24.5 million) in full year 2019, compared to RMB179.2 million in 2018.Net income attributable to ordinary shareholders of Secoo Holding Limited increased by 1.7% to RMB154.4 million (US$22.2 million) for full year 2019 from RMB151.8 million for 2018.Basic and diluted net income per share were RMB6.15 (US$0.88) and RMB5.89 (US$0.85), respectively, for full year 2019, compared with basic and diluted net income per share of RMB6.02 and RMB5.80 respectively, for 2018. Basic and diluted net income per ADS were RMB3.08 (US$0.44) and RMB2.95 (US$0.42), respectively, for full year 2019, compared to basic and diluted net income per ADS of RMB3.01 and RMB2.90 respectively, for 2018.Non-GAAP basic and diluted net income per share were RMB6.50 (US$0.93) and RMB6.22 (US$0.89), respectively, for full year 2019, compared with basic and diluted net income per share of RMB6.95 and RMB6.70 for 2018. Non-GAAP basic and diluted net income per ADS were RMB3.25 (US$0.47) and RMB3.11 (US$0.45), respectively, for full year 2019, compared with basic and diluted net income per ADS of RMB3.48 and RMB3.35, respectively, for 2018.Business OutlookCOVID-19 has brought unprecedented levels of macro-economic disruption and uncertainty across the globe. Since late January, most regions in China have been subject to lockdown and restricted public movement. At present, many aspects of daily life in China are starting to return to more normal routines. However, the situation in Europe and certain countries is still evolving and the operations of many of Secoo’s European and overseas suppliers and merchants have been either interrupted or operating in reduced capacities. As a result, the Company expects soft performance in the first quarter of 2020. Secoo has been adjusting its business strategies to minimize COVID-19’s impact on its operations. However, due to uncertainty of the pandemic’s impact, particularly in Europe, the full extent to which COVID-19 will impact our financial results and business operations will depend on future developments, which cannot be predicted.Conference Call InformationThe Company’s management will host an earnings conference call at 8:00 AM U.S. Eastern Time on April 30, 2020 (8:00 PM Beijing/Hong Kong time on April 30, 2020).To speed up the entry process for participants, this earnings conference call requires all participants to finish an online registration in advance.For participants who wish to join the call, please complete the Direct Event online registration at http://apac.directeventreg.com/registration/event/2837748 at least 15 minutes prior to the scheduled call start time. Upon registration, participants will receive the conference call access information, including dial-in numbers, Direct Event Passcode, unique Registrant ID, and an e-mail with detailed instructions to join the conference call.Once complete the registration, please dial-in at least 10 minutes before the scheduled start time of the earnings call and enter the Direct Event Passcode and Registrant ID as instructed to connect to the call.Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at http://ir.secoo.com.A replay of the conference call will be accessible by phone two hours after the conclusion of the live call at the following numbers, until May 7, 2020:
About Secoo Holding LimitedSecoo Holding Limited (“Secoo”) is Asia’s largest online integrated upscale products and services platform as measured by GMV in 2016. Secoo provides customers a wide selection of authentic upscale products and lifestyle services on the Company’s integrated online and offline shopping platform which consists of the Secoo.com website, mobile applications and offline experience centers, offering over 400,000 SKUs, covering over 3,800 global and domestic brands. Supported by the Company’s proprietary database of upscale products, authentication procedures and brand cooperation, Secoo is able to ensure the authenticity and quality of every product offered on its platform.For more information, please visit http://ir.secoo.com.Use of Non-GAAP Financial MeasuresTo supplement our consolidated financial statements which are presented in accordance with U.S. GAAP, we also use non-GAAP income from operations, non-GAAP net income, non-GAAP net income attributable to ordinary shareholders of Secoo Holding Limited, and non-GAAP basic and diluted net income per share and ADS as additional non-GAAP financial measures. We present these non-GAAP financial measures because they are used by our management to evaluate our operating performance. We define non-GAAP income from operations as income from operations excluding share-based compensation expenses. We define non-GAAP net income as net income excluding share-based compensation expenses. We define non-GAAP net income per share as non-GAAP net income attributable to ordinary shareholders of Secoo Holding Limited dividing by weighted average number of basic and diluted share outstanding, including the dilutive effect of share-based awards as determined under the treasury stock method. We define non-GAAP basic and diluted net income per ADS as non-GAAP basic and diluted net income per share divided by two as two ADSs represent one ordinary share. We also believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies.The use of non-GAAP financial measures has certain limitations. These non-GAAP measures exclude certain items that have been and will continue to be incurred in the future and are not reflected in the presentation of the non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to results prepared in accordance with U.S. GAAP, and should not be considered a substitute for or superior to U.S. GAAP results. In addition, these non-GAAP financial measures may not be comparable to similarly titled measures utilized by other companies since such other companies may not calculate such measures in the same manner as Secoo does.Reconciliation of these non-GAAP financial measures to the most directly comparable U.S. GAAP financial measure is set forth at the end of this release.Exchange Rate InformationThis press release contains translation of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars were made at the exchange rate of RMB6.9618 to US$1.0, the noon buying rate in New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York in effect as of December 31, 2019.Safe Harbor StatementThis press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include but are not limited to Secoo management quotes and the Company’s financial outlook. These forward-looking statements can be identified by terminology such as “will,” “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “intend,” “potential,” “plan,” “goal” and similar statements. Secoo Holding Limited may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These forward-looking statements include, but are not limited to, statements about: the Company’s goals and strategies; its future business development, financial condition and results of operations; its ability to attract and retain new customers and to increase revenues generated from repeat customers; its expectations regarding demand for and market acceptance of its products and services; trends and competition in China’s e-commerce market; changes in its revenues and certain cost or expense items; the expected growth of the Chinese e-commerce market; Chinese governmental policies relating to the Company’s industry and general economic conditions in China. For additional information on these and other important factors that could adversely affect the Company’s business, financial condition, results of operations and prospects, please see its filings with the U.S. Securities and Exchange Commission.For investor and media inquiries, please contact:In China:
Secoo Holding Limited
Jingbo Ma
Tel: +86 (10) 6588-0135
E-mail: ir@secoo.comThe Piacente Group, Inc.
Jenny Cai
Tel: +86 (10) 6508-0677
E-mail: Secoo@tpg-ir.comIn the United States:
The Piacente Group, Inc.
Brandi Piacente
Tel: +1-212-481-2050
E-mail: Secoo@tpg-ir.com