December 13, 2018
VIA EDGAR
Donna Di Silvio, Staff Accountant
Scott Stringer, Staff Accountant
Office of Consumer Products
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Secoo Holding Limited (the “Company”)
Form 20-F for the Fiscal Year Ended December 31, 2017 (the “2017 Form 20-F”) Filed on April 26, 2018
Form 6-K Submitted March 23, 2018 (the “Form 6-K”)
File No. 001-38201
Dear Mr. Stringer and Ms. Di Silvio:
This letter sets forth the Company’s response to the comment contained in the letter dated December 4, 2018 from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) regarding the Company’s 2017 Form 20-F and Forms 6-K. The Staff’s comment is repeated below and is followed by the Company’s response thereto. All capitalized terms used but not defined in this letter shall have the meanings ascribed to such terms in the 2017 Form 20-F or Forms 6-K.
Form 6-K submitted March 23, 2018
Reconciliations of GAAP and Non-GAAP Results, page Exh.99.1
1. We note you have calculated adjusted net income (loss) per weighted average shares based on net income/(loss) which adjusts for the losses attributable to non-controlling interest, accretion to preferred shares and the related impact on the number of shares outstanding. Further, the calculation is anti-dilutive. Your presentation appears to substitute individually tailored measurement methods for those of GAAP. See ASC 260-10-45. Please also refer to the Division’s Compliance & Disclosure Interpretations, Non-GAAP Financial Measures updated April 4, 2018, Question 100.04. Please revise your presentation to comply with Item 100(a) of Regulation G. This comment also applies to Forms 6-K submitted on June 20, 2018 and September 6, 2018.
The Company respectfully advises the Staff that the Company utilize net income/loss for Non-GAAP net income/(loss) per weighted average shares considering: (i) loss attributable to non-controlling interest and accretion to redeemable non-controlling interest is immaterial for all the periods presented; (ii) all the Company’s preferred shares were automatically converted into ordinary shares upon the completion of Company’s initial public offering on September 22, 2017 and there was no preferred shares nor accretion to preferred shares since September 22, 2017; and (iii) the Company is in the view that the Non-GAAP net income/(loss) per weighted average shares, without adjustment of the losses attributable to non-controlling interest and accretion to preferred shares, would better reflect the actual business results and changes when comparing the current and prior periods.
The Company further advises the Staff that the differences of Non-GAAP net income (loss) and Non-GAAP net income (loss) attributed to ordinary shareholders per weighted average shares for the quarters ended December 31, 2017, March 31, 2018, June 30, 2018 and September 30, 2018, are as below:
|
| For the three months ended |
| ||
|
| December 31, 2017 |
| December 31, 2017 |
|
|
| (In RMB ‘000) |
| (In RMB ‘000) |
|
|
|
|
|
|
|
Net income |
| 46,961 |
|
|
|
Net income attributable to ordinary shareholders of Secoo Holding Limited |
|
|
| 46,978 |
|
Add: Share-based compensation expenses |
| 40,528 |
| 40,528 |
|
Adjust net income |
| 87,489 |
| 87,506 |
|
|
|
|
|
|
|
Adjusted net income per weighted average shares: |
|
|
|
|
|
Basic |
| 3.42 |
| 3.42 |
|
Diluted |
| 3.28 |
| 3.28 |
|
|
|
|
|
|
|
Adjusted net income per American Depositary Share: |
|
|
|
|
|
Basic |
| 1.71 |
| 1.71 |
|
Diluted |
| 1.64 |
| 1.64 |
|
|
|
|
|
|
|
Weighted average number of shares outstanding used in computing the adjusted net income per share |
|
|
|
|
|
Basic |
| 25,565,681 |
| 25,565,681 |
|
Diluted |
| 26,696,230 |
| 26,696,230 |
|
|
| For the three months ended |
| ||
|
| March 31, 2018 |
| March 31, 2018 |
|
|
| (In RMB ‘000) |
| (In RMB ‘000) |
|
|
|
|
|
|
|
Net income |
| 25,909 |
|
|
|
Net income attributable to ordinary shareholders of Secoo Holding Limited |
|
|
| 25,670 |
|
Add: Share-based compensation expenses |
| 8,553 |
| 8,553 |
|
Adjust net income |
| 34,462 |
| 34,223 |
|
|
|
|
|
|
|
Adjusted net income per weighted average shares: |
|
|
|
|
|
Basic |
| 1.36 |
| 1.35 |
|
Diluted |
| 1.31 |
| 1.30 |
|
|
|
|
|
|
|
Adjusted net income per American Depositary Share: |
|
|
|
|
|
Basic |
| 0.68 |
| 0.68 |
|
Diluted |
| 0.65 |
| 0.65 |
|
|
|
|
|
|
|
Weighted average number of shares outstanding used in computing the adjusted net income per share |
|
|
|
|
|
Basic |
| 25,280,058 |
| 25,280,058 |
|
Diluted |
| 26,372,402 |
| 26,372,402 |
|
|
| For the three months ended |
| ||
|
| June 30, 2018 |
| June 30, 2018 |
|
|
| (In RMB ‘000) |
| (In RMB ‘000) |
|
|
|
|
|
|
|
Net income |
| 36,372 |
|
|
|
Net income attributable to ordinary shareholders of Secoo Holding Limited |
|
|
| 35,810 |
|
Add: Share-based compensation expenses |
| 4,676 |
| 4,676 |
|
Adjust net income |
| 41,048 |
| 40,486 |
|
|
|
|
|
|
|
Adjusted net income per weighted average shares: |
|
|
|
|
|
Basic |
| 1.62 |
| 1.60 |
|
Diluted |
| 1.56 |
| 1.53 |
|
|
|
|
|
|
|
Adjusted net income per American Depositary Share: |
|
|
|
|
|
Basic |
| 0.81 |
| 0.80 |
|
Diluted |
| 0.78 |
| 0.77 |
|
|
|
|
|
|
|
Weighted average number of shares outstanding used in computing the adjusted net income per share |
|
|
|
|
|
Basic |
| 25,280,058 |
| 25,280,058 |
|
Diluted |
| 26,387,317 |
| 26,387,317 |
|
|
| For the three months ended |
| ||
|
| September 30, 2018 |
| September 30, 2018 |
|
|
| (In RMB ‘000) |
| (In RMB ‘000) |
|
|
|
|
|
|
|
Net income |
| 44,944 |
|
|
|
Net income attributable to ordinary shareholders of Secoo Holding Limited |
|
|
| 43,879 |
|
Add: Share-based compensation expenses |
| 4,010 |
| 4,010 |
|
Adjust net income |
| 48,954 |
| 47,889 |
|
|
|
|
|
|
|
Adjusted net income per weighted average shares: |
|
|
|
|
|
Basic |
| 1.94 |
| 1.90 |
|
Diluted |
| 1.87 |
| 1.83 |
|
|
|
|
|
|
|
Adjusted net income per American Depositary Share: |
|
|
|
|
|
Basic |
| 0.97 |
| 0.95 |
|
Diluted |
| 0.94 |
| 0.92 |
|
|
|
|
|
|
|
Weighted average number of shares outstanding used in computing the adjusted net income per share |
|
|
|
|
|
Basic |
| 25,260,757 |
| 25,260,757 |
|
Diluted |
| 26,236,702 |
| 26,236,702 |
|
In response to the Staff’s comment, the Company will revise the disclosure to utilize the net income attributable to ordinary shareholders for the calculation of the Non-GAAP earnings per share in future Form 6-K submitted to the SEC.
* * *
If you have any additional questions or comments regarding the 2017 Form 20-F or Form 6-K, please contact the undersigned at (8610) 6588-0135 or the Company’s U.S. counsel, Z. Julie Gao of Skadden, Arps, Slate, Meagher & Flom LLP, at (852) 3740-4863, respectively. Thank you very much.
| Very truly yours, |
|
|
| /s/ Shaojun Chen |
| Shaojun Chen |
| Chief Financial Officer |
| Secoo Holding Limited |
cc: Richard Rixue Li, Chairman and Chief Executive Officer, Secoo Holding Limited
Shaojun Chen, Chief Financial Officer, Secoo Holding Limited
Z. Julie Gao, Esq., Partner, Skadden, Arps, Slate, Meagher & Flom LLP
Haiping Li, Esq., Partner, Skadden, Arps, Slate, Meagher & Flom LLP
Allen Lu, Partner, KPMG Huazhen LLP