NOAH HOLDINGS LIMITED ANNOUNCES UNAUDITED FINANCIAL RESULTS FOR THE SECOND QUARTER OF 2023

SHANGHAI, Aug. 28, 2023 /PRNewswire/ -- Noah Holdings Limited ("Noah" or the "Company") (NYSE: NOAH and HKEX: 6686), a leading and pioneer wealth management service provider in China offering comprehensive one-stop advisory services on global investment and asset allocation primarily for high net worth investors, today announced its unaudited financial results for the second quarter of 2023.

SECOND QUARTER 2023 FINANCIAL HIGHLIGHTS

• Net revenues for the second quarter of 2023 were RMB941.8 million (US$129.9 million), a 27.6% increase from the corresponding period in 2022, and a 17.2% increase from the first quarter of 2023, mainly due to an increase in distribution of insurance products.

• Income from operations for the second quarter of 2023 was RMB349.4 million (US$48.2 million), an 8.1% increase from the corresponding period in 2022, mainly due to a 27.6% increase in net revenue and partially offset by a 42.7% increase in total operating cost and expenses as less expenses incurred in last second quarter due to various pandemic restrictions. Income from operations increased by 25.3% compared with the first quarter of 2023, mainly due to a 17.2% increase in net revenues and various cost control measures implemented in the second quarter of 2023.

• Net income attributable to Noah shareholders for the second quarter of 2023 was RMB315.4 million (US$43.5 million), a 9.6% decrease from the corresponding period in 2022, mainly due to a 97.7% decrease in income from equity in affiliates as we recorded a gain of RMB69.2 million from the second quarter of 2022, resulting from net book value increases in certain offshore private equity funds managed by Gopher. Net income attributable to Noah shareholders increased by 29.2% compared with the first quarter of 2023, mainly due to a 25.3% increase in income from operations and a 69.7% increase in other income.
• Non-GAAP^[1]net income attributable to Noah shareholders for the second quarter of 2023 was RMB313.1 million (US$43.2 million), an 11.8% decrease from the corresponding period in 2022, and a 30.7% increase from the first quarter of 2023.

SECOND QUARTER 2023 OPERATIONAL UPDATES

Wealth Management Business

We offer investment products and provide value-added services to high net worth investors in China and overseas for our wealth management business. We primarily distribute private equity, private secondary, mutual funds and other products denominated in RMB and other currencies.

• Total number of registered clients as of June 30, 2023 was 446,557, a 6.7% increase from June 30, 2022, and a 1.3% increase from March 31, 2023.
• Total number of active clients^[2] who transacted with us during the second quarter of 2023 was 11,548, a 10.2% decrease from the second quarter of 2022, and a 2.8% increase from the first quarter of 2023.
• Aggregate value of investment products distributed during the second quarter of 2023 was RMB18.4 billion (US$2.5 billion), a 4.7% decrease from the second quarter of 2022, mainly due to an 84.2% decrease in distribution of private equity products, as we maintain a cautious approach to fundraising and investment allocation for our domestic private equity investments, and partially offset by a 79.3% increase in distribution of private secondary products. The aggregate value of investment products distributed increased by 9.6% from the first quarter of 2023, mainly due to increases in the distribution of mutual fund products.

• Coverage network in mainland China covered 63 cities as of June 30, 2023, compared with 79 cities as of June 30, 2022 and 68 cities as of March 31, 2023, as we continue to streamline our domestic coverages.
• Number of relationship managers was 1,375 as of June 30, 2023, a 9.6% increase from June 30, 2022, and a 3.6% increase from March 31, 2023. Among which, we had 56 overseas relationship managers as of June 30, 2023, a 100.0% increase from March 31, 2023.

Asset Management Business

Our asset management business is conducted through Gopher Asset Management Co., Ltd. ("Gopher Asset Management"), a leading multi-asset manager in China with overseas offices in Hong Kong and the United States. Gopher Asset Management develops and manages assets ranging from private equity, public securities, real estate, multi-strategy and other investments denominated in RMB and other currencies.

Total assets under management as of June 30, 2023 were RMB156.9 billion (US$21.6 billion), a 0.5% decrease from March 31, 2023 and a 0.9% increase from June 30, 2022.

Other Businesses

Our other businesses mainly aim to provide more comprehensive services and investment products to our clients.

Ms. Jingbo Wang, co-founder and CEO of Noah, said, "For the first half of 2023, I am happy to see a 13.8% period-to-period increase in net revenues, driven by a 104.1% growth in revenues generated from our overseas business, accounting for 41.0% of the group's net revenues compared to 22.8% in the first half of 2022, as we continue to successfully execute our globalization strategy. During the second quarter, we were glad to launch the grand opening of our new headquarter, Noah Wealth Centre, which provides a client-centric private banking experience for Noah's global clients. Since 2019, we winded down all of our domestic non-standardized single counterparty private credit products, including domestic residential real estate funds, which was proven to have effectively safeguarded our clients' wealth amidst the recent challenges faced by this asset class. Our continued devotion in strengthening investment research capabilities and shield our clients' hard-earned capital through optimized asset allocation advice is what distinguish us as a trusted advisor for our clients."

SECOND QUARTER 2023 FINANCIAL RESULTS

Net Revenues

Net revenues for the second quarter of 2023 were RMB941.8 million (US$129.9 million), a 27.6% increase from the corresponding period in 2022, primarily due to an increase in distribution of insurance products.

• Wealth Management Business
  
  • Net revenues from one-time commissions for the second quarter of 2023 were RMB403.9 million (US$55.7 million), a 127.2% increase from the corresponding period in 2022, primarily due to an increase in distribution of insurance products.
  • Net revenues from recurring service fees for the second quarter of 2023 were RMB269.3 million (US$37.1 million), a 7.3% decrease from the corresponding period in 2022, as less recurring service fees generated from private secondary products.
    
    
  • Net revenues from performance-based income for the second quarter of 2023 were RMB21.4 million (US$2.9 million), a 61.4% increase from the corresponding period of 2022, primarily due to more performance-based income from offshore private equity products.
    
    
  • Net revenues from other service fees for the second quarter of 2023 were RMB50.7 million (US$7.0 million), an 86.3% increase from the corresponding period in 2022, primarily due to more value-added services we offered to our high net worth clients.
    
    
• Asset Management Business
  
  
  • Net revenues from recurring service fees for the second quarter of 2023 were RMB176.8 million (US$24.4 million), a 4.9% increase from the corresponding period in 2022 due to increase in assets under management.
    
    
  • Net revenues from performance-based income for the second quarter of 2023 were RMB6.5 million (US$0.9 million), compared with RMB12.6 million in the corresponding period of 2022. The decrease was primarily due to less performance-based income realized from private equity product.
    
    
• Other Businesses
  
  
  • Net revenues for the second quarter of 2023 were RMB13.1 million (US$1.8 million), compared with RMB19.2 million for the corresponding period in 2022.

Operating Costs and Expenses

Operating costs and expenses for the second quarter of 2023 were RMB592.3 million (US$81.7 million), a 42.7% increase from the corresponding period in 2022. Operating costs and expenses primarily consisted of compensation and benefits of RMB385.1 million (US$53.1 million), selling expenses of RMB112.0 million (US$15.4 million), general and administrative expenses of RMB64.0 million (US$8.8 million), provision of credit losses of RMB0.2 million and other operating expenses of RMB37.1 million (US$5.1 million).

• Operating costs and expenses for the wealth management business for the second quarter of 2023 were RMB445.1 million (US$61.4 million), a 41.4% increase from the corresponding period in 2022, primarily due to an increase in compensation and benefits, selling expenses and general and administrative expenses, as less expenses incurred in last second quarter due to various pandemic restrictions.
• Operating costs and expenses for the asset management business for the second quarter of 2023 were RMB102.5 million (US$14.1 million), a 51.2% increase from the corresponding period in 2022, primarily due to decreased selling and general and administrative expenses due to various pandemic restrictions for the corresponding period in 2022.
  
  
• Operating costs and expenses for other businesses for the second quarter of 2023 were RMB44.8 million (US$6.2 million), compared with RMB32.4 million from the corresponding period in 2022, mainly due to increased depreciation expenses as we moved into our new headquarter premises in Shanghai in May.

Operating Margin

Operating margin for the second quarter of 2023 was 37.1%, decreased from 43.8% for the corresponding period in 2022.

• Operating margin for the wealth management business for the second quarter of 2023 was 40.3%, compared with 38.1%% for the corresponding period in 2022.
• Operating margin for the asset management business for the second quarter of 2023 was 44.1%, compared with 67.8% for the corresponding period in 2022.
  
  
• Loss from operation for other businesses for the second quarter of 2023 was RMB31.7 million (US$4.4 million), compared with an operating loss of RMB13.3 million for the corresponding period in 2022.

Investment Income/loss

Investment loss for the second quarter of 2023 was RMB4.0 million (US$0.5 million), compared with investment income RMB5.2 million for the corresponding period in 2022.

Income Tax Expenses

Income tax expenses for the second quarter of 2023 were RMB90.2 million (US$12.4 million), a 15.4% increase from the corresponding period in 2022, primarily due to more taxable income compared with the second quarter of 2022.

Income from Equity in Affiliates

Income from equity in affiliates for the second quarter of 2023 was RMB1.6 million (US$0.2 million), a 97.7% decrease from the corresponding period in 2022, as we recorded a gain of RMB69.2 million from the second quarter of 2022, resulting from net book value increases in certain offshore private equity funds managed by Gopher.

Net Income

• Net Income
  
  
  • Net income for the second quarter of 2023 was RMB312.3 million (US$43.1 million), a 10.5% decrease from the corresponding period in 2022.
  • Net margin for the second quarter of 2023 was 33.2%, down from 47.3% for the corresponding period in 2022.
    
    
  • Net income attributable to Noah shareholders for the second quarter of 2023 was RMB315.4 million (US$43.5 million), a 9.6% decrease from the corresponding period in 2022.
    
    
  • Net margin attributable to Noah shareholders for the second quarter of 2023 was 33.5%, down from 47.3% for the corresponding period in 2022.
    
    
  • Net income attributable to Noah shareholders per basic and diluted ADS for the second quarter of 2023 was RMB4.54 (US$0.63) and RMB4.54 (US$0.63), respectively, down from RMB5.19 and RMB5.18 respectively, for the corresponding period in 2022.
    
    
• Non-GAAP Net Income Attributable to Noah Shareholders
  
  
  • Non-GAAP net income attributable to Noah shareholders for the second quarter of 2023 was RMB313.1 million (US$43.2 million), an 11.8% decrease from the corresponding period in 2022.
  • Non-GAAP net margin attributable to Noah shareholders for the second quarter of 2023 was 33.2%, compared with 48.1% for the corresponding period in 2022.
    
    
  • Non-GAAP net income attributable to Noah shareholders per diluted ADS for the second quarter of 2023 was RMB4.51 (US$0.62), down from RMB5.28 for the corresponding period in 2022.

Balance Sheet and Cash Flow

As of June 30, 2023, the Company had RMB4,740.4 million (US$653.7 million) in cash and cash equivalents, compared with RMB 4,713.2 million as of March 31, 2023 and RMB3,608.0 million as of June 30, 2022.

Net cash inflow from the Company's operating activities during the second quarter of 2023 was RMB176.4 million (US$24.3 million), primarily due to net income earned for the second quarter of 2023.

Net cash outflow from the Company's investing activities during the second quarter of 2023 was RMB329.2 million (US$45.4 million), primarily due to several investments made.

Net cash inflow from the Company's financing activities was RMB87.0 million (US$12.0 million) in the second quarter of 2023, primarily due to consolidation of one investment fund that Gopher manages and accounts for those limited partners' capital contributions as financing activity.

CONFERENCE CALL

Following the announcement of the Q2 and Interim Results, the Company's senior management will host a combined English and Chinese language earnings conference call to discuss its Q2 and Interim Results and recent business activities. The conference call may be accessed with the following details:

A telephone replay will be available starting approximately one hour after the end of the conference call until September 4, 2023 at +1-877-344-7529 (US Toll Free) or +1-412-317-0088 (International Toll) with the access code 9237815.

A live and archived webcast of the conference call will be available at the Company's investor relations website under the "Financial Reports" section at http://ir.noahgroup.com.

DISCUSSION OF NON-GAAP MEASURES

In addition to disclosing financial results prepared in accordance with U.S. GAAP, the Company's earnings release contains non-GAAP financial measures excluding the effects of all forms of share-based compensation and net of tax impact, if any. See "Reconciliation of GAAP to Non-GAAP Results" at the end of this press release.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for financial measures prepared in accordance with U.S. GAAP. The financial results reported in accordance with U.S. GAAP and reconciliation of GAAP to non-GAAP results should be carefully evaluated. The non-GAAP financial measures used by the Company may be prepared differently from and, therefore, may not be comparable to similarly titled measures used by other companies.

When evaluating the Company's operating performance in the periods presented, management reviewed the foregoing non-GAAP net income attributable to Noah shareholders and per diluted ADS and non-GAAP net margin attributable to Noah shareholders to supplement U.S. GAAP financial data. As such, the Company's management believes that the presentation of the non-GAAP financial measures provides important supplemental information to investors regarding financial and business trends relating to its results of operations in a manner consistent with that used by management.

ABOUT NOAH HOLDINGS LIMITED

Noah Holdings Limited (NYSE: NOAH and HKEX:6686) is a leading and pioneer wealth management service provider in China offering comprehensive one-stop advisory services on global investment and asset allocation primarily for high net worth investors. Noah is a Cayman Islands holding company and carries on business in Hong Kong as Noah Holdings Private Wealth and Asset Management Limited. In the first half of 2023, Noah distributed RMB35.2 billion (US$4.9 billion) of investment products. Through Gopher Asset Management, Noah had assets under management of RMB156.9 billion (US$21.6 billion) as of June 30, 2023.

Noah's wealth management business primarily distributes private equity, private secondary, mutual fund and other products denominated in RMB and other currencies. Noah delivers customized financial solutions to clients through a network of 1,375 relationship managers across 63 cities in mainland China, and serves the international investment needs of its clients through offices in Hong Kong (China), Taiwan (China), New York, Silicon Valley and Singapore. The Company's wealth management business had 446,557 registered clients as of June 30, 2023. Through Gopher Asset Management, Noah manages private equity, public securities, real estate, multi-strategy and other investments denominated in RMB and other currencies. Noah also provides other businesses.

For more information, please visit Noah at ir.noahgroup.com.

FOREIGN CURRENCY TRANSLATION

In this announcement, the unaudited financial results for the second quarter of 2023 ended June 30, 2023 are stated in RMB. This announcement contains currency conversions of certain RMB amounts into US$ at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB7.2513 to US$1.00, the effective noon buying rate for June 30, 2023 as set forth in the H.10 statistical release of the Federal Reserve Board.

SAFE HARBOR STATEMENT

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Noah 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 announcements, circulars or other publications made on the website of The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange"), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Noah's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. These statements include, but are not limited to, estimates regarding the sufficiency of Noah's cash and cash equivalents and liquidity risk. A number of factors could cause Noah's actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: its goals and strategies; its future business development, financial condition and results of operations; the expected growth of the wealth management and asset management market in China and internationally; its expectations regarding demand for and market acceptance of the products it distributes; investment risks associated with investment products distributed to Noah's investors, including the risk of default by counterparties or loss of value due to market or business conditions or misconduct by counterparties; its expectations regarding keeping and strengthening its relationships with key clients; relevant government policies and regulations relating to its industries; its ability to attract and retain qualified employees; its ability to stay abreast of market trends and technological advances; its plans to invest in research and development to enhance its product choices and service offerings; competition in its industries in China and internationally; general economic and business conditions in China; and its ability to effectively protect its intellectual property rights and not to infringe on the intellectual property rights of others. Further information regarding these and other risks is included in Noah's filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. All information provided in this press release and in the attachments is as of the date of this press release, and Noah does not undertake any obligation to update any such information, including forward-looking statements, as a result of new information, future events or otherwise, except as required under the applicable law.

-- FINANCIAL AND OPERATIONAL TABLES FOLLOW --