Jupai Holdings Limited (NYSE:JP) Q1 2019 Earnings Conference Call Transcript

Jun 10, 2019 • 08:00 am ET

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Jupai Holdings Limited (NYSE:JP) Q1 2019 Earnings Conference Call Transcript

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Presentation
Executive
Jianda Ni

project counterparties.

Thirdly, we target to achieve incremental growth from our overseas business, including development of overseas insurance products and the collaboration with leading international financial institutions to meet the rising demand for global asset allocation from our customers. With these strategies in place, we are confident that Jupai will be well-positioned to seize opportunities as the market recovers.

I will now turn the call over to Mr. Harry He, our Investor Relations Director to go through the financial in more details. Thank you.

Executive
Harry He

Thank you, Jianda. In light of the challenging environment, Jupai has implemented various cost control measures, including downsizing our workforce, adjusting our incentive systems, optimizing our coverage network and streamlining our business SOP to improve our operating efficiency and profitability. As we foresee an increase in operating expenses over the near-term related to personnel optimization, we expect to realize more positive effects from our cost control measures towards end of this year.

Now maybe walk you through our financial highlights for the first quarter of 2019. Net revenue for the first quarter of 2019 were RMB281 million, a 35.1% decrease from the corresponding period in 2018, primarily due to decreases in both one-time commissions and other service fees. Net revenues from one-time commissions for the first quarter of 2019 was RMB58.6 million, a 78.8% decrease from the corresponding period in 2018, primarily as a result of decrease in aggregate value of wealth management products distributed by the company.

Net revenues from recurring management fees for the first quarter of 2019 were RMB192.2 million, a 56.4% increase from the corresponding period in 2018, primarily due to an increase of carried interest recognized in this period. RMB127.4 million and RMB20.7 million carried interest were recognized as part of Jupai's recurring management fees in the first quarter of 2019 and 2018, respectively.

Net revenues from recurring service fees for the first quarter of 2019 were RMB16.3 million, an 8.2% increase from the corresponding period in 2018, primarily because the company provided ongoing services to more product suppliers. The company recognized no variable performance fees in the first quarter of both 2019 and 2018. Net revenues from other service fees for the first quarter of 2019 were RMB13.9 million, a 26.1% decrease from corresponding period in 2018, primarily due to a decrease in sub-advisory fees collected from other companies.

Operating costs and expenses for the first quarter of 2019 were RMB292.9 million, a 4.3% increase from the corresponding period in 2018. While we saw decreases in selling expenses, G&A expenses for the first quarter, there was an increase in our cost of revenue, largely due to increased compensation to wealth management advisors and client managers.

Operating margin for the first quarter of 2019 was minus 4.2% compared to 35.2% for the corresponding period in 2018. Net loss attributable to ordinary shareholders for the first quarter of 2019 was RMB25.6 million compared to a net income attributable to ordinary shareholders of RMB115.9 million for the corresponding period in 2018. Net margin