Fangdd Network's 1H 2025 Performance: A Glimpse into Recovery or a Fleeting Upswing?

Fangdd Network Group’s first-half 2025 financial results present a paradox: robust revenue growth amid a net loss, raising critical questions about the sustainability of its recovery. While the company reported a 45.3% year-over-year revenue increase to RMB203.4 million ($28.4 million) and a 27.3% rise in total closed-loop GMV to RMB8.0 billion, it swung to a net loss of RMB39.2 million ($5.5 million), a stark reversal from a net income of RMB16.4 million in 1H 2024 [1]. This divergence underscores the fragility of its growth narrative, particularly in the context of China’s structural real estate crisis and corporate governance challenges.

Revenue Growth vs. Margin Compression

Fangdd’s revenue surge was driven by government stimulus and improved real estate market conditions, but this came at the cost of margin erosion. Gross profit margins contracted to 9.1% from 12.5% year-over-year, attributed to declining contributions from high-margin value-added services [1]. Operating expenses rose 4.8% to RMB90.2 million, reflecting aggressive cost expansion to capture market share [1]. Despite a cash balance of RMB188.1 million, the company’s free cash flow remains negative, with operating cash outflows of $12.84 million over the last 12 months [4]. This suggests that while Fangdd can fund operations for now, its ability to reinvest in growth or withstand prolonged market stress is questionable.

Structural Headwinds in China’s Real Estate Sector

The broader market environment remains dire. Over 90% of Chinese cities have seen month-to-month price declines since late 2023, with home prices falling nearly 10% since early 2024 [2]. New home sales are projected to drop 15% in 2025 due to oversupply and demographic shifts [3]. Fangdd’s business model, reliant on real estate transaction facilitation, is inherently exposed to these trends. Even as the company highlights partnerships with “reputable developers” as a growth driver [1], the sector-wide collapse in buyer confidence and developer solvency could undermine its long-term revenue streams.

Governance Concerns and Market Compliance

Corporate governance issues further cloud Fangdd’s outlook. The company’s non-compliance with Nasdaq’s minimum bid price requirement—requiring a $1 bid for 10 consecutive days by June 23, 2025—has raised alarms about its financial stability [3]. While recent board changes, including the appointment of Jun Luo to key committees, aim to strengthen oversight [1], the lack of transparency around the May 2025 extraordinary shareholder meeting agenda suggests unresolved internal challenges. These governance risks could deter institutional investors and exacerbate liquidity pressures.

Assessing Sustainability

Fangdd’s 1H 2025 performance appears to reflect a temporary rebound rather than a sustainable recovery. The revenue growth is impressive but comes with margin compression and a net loss, indicating that the company is trading short-term volume for profitability. Meanwhile, the real estate sector’s structural downturn—rooted in policy-driven debt constraints and demographic headwinds—poses a fundamental threat to its core business. Unless Fangdd can diversify into higher-margin services or secure cost efficiencies, its growth may remain vulnerable to market cycles.

Governance concerns add another layer of risk. While leadership changes signal a commitment to corporate governance, the Nasdaq compliance issue highlights operational fragility. For investors, the key question is whether Fangdd can balance aggressive expansion with financial discipline while navigating an industry in crisis.

In conclusion, Fangdd’s 1H 2025 results offer a glimpse of recovery but lack the durability to justify long-term optimism. The company’s ability to sustain growth will depend on its capacity to adapt to a shrinking real estate market, stabilize its margins, and address governance shortcomings—a tall order in an environment defined by structural decline.

Source:
[1] FangDD Reports First Half 2025 Unaudited Financial Results [https://www.globenewswire.com/news-release/2025/08/29/3141474/0/en/FangDD-Reports-First-Half-2025-Unaudited-Financial-Results.html]
[2] Visualizing China's Real Estate Market Downturn [https://www.visualcapitalist.com/visualizing-chinas-real-estate-market-downturn/]
[3] China's property crisis and its impact on the APAC region [https://www.redpincompany.com/insights/china-property-crisis-distort-real-estate-market-apac]
[4] Fangdd Network Group (DUO) Statistics & Valuation [https://stockanalysis.com/stocks/duo/statistics/]