SHANGHAI, May 3, 2018 /PRNewswire/ -- 51job, Inc. (Nasdaq: JOBS) ("51job" or the "Company"), a leading provider of integrated human resource services in China, announced today its unaudited financial results for the first quarter ended March 31, 2018.
First Quarter 2018 Financial Highlights:
- Total revenues increased 33.5% over Q1 2017 to RMB811.3 million (US$129.3 million), exceeding the Company's guidance range
- Online recruitment services revenues increased 30.5% over Q1 2017 to RMB548.3 million (US$87.4 million)
- Other human resource related revenues increased 40.2% over Q1 2017 to RMB263.0 million (US$41.9 million)
- Gross margin increased to 74.4% compared with 73.5% in Q1 2017
- Income from operations increased 43.5% over Q1 2017 to RMB236.0 million (US$37.6 million)
- Due to the significant impact of the change in fair value of convertible senior notes, basic and fully diluted loss per share was RMB(5.46) (US$(0.87))
- Excluding share-based compensation expense, gain from foreign currency translation and change in fair value of convertible senior notes, as well as the related tax effect of these items, non-GAAP adjusted fully diluted earnings per share were RMB3.76 (US$0.60), exceeding the Company's guidance range
Commenting on the results, Rick Yan, President and Chief Executive Officer of 51job, said, "We carried solid momentum in sales execution and operating efficiency into 2018 throughout the organization. Consistent with our high-quality growth strategy, our online business saw further uplift in revenue per customer as we pursued up-selling to existing customers and increased prices on certain entry-level online packages this year. In the other HR services area, customer demand and adoption was extremely robust for these value-added services that can enhance recruitment effectiveness, improve employee productivity and alleviate day-to-day HR administrative burden. 51job continues to be a pioneer and leader on the forefront of the HR industry in China, focused on delivering proven solutions, tangible results and dedicated long-term commitment to our employers, job seekers, partners and shareholders."
First Quarter 2018 Unaudited Financial Results
Total revenues for the first quarter ended March 31, 2018 were RMB811.3 million (US$129.3 million), an increase of 33.5% from RMB607.7 million for the same quarter in 2017.
Online recruitment services revenues for the first quarter of 2018 were RMB548.3 million (US$87.4 million), representing a 30.5% increase from RMB420.1 million for the same quarter of the prior year. The growth was driven primarily by higher revenue per unique employer as well as a modest increase in the number of unique employers utilizing the Company's online services. Average revenue per unique employer increased 25.8% in the first quarter of 2018 due to successful up-selling efforts that resulted in the purchase of multiple and/or higher value online products and services by customers, as well as price increases for select like-for-like products when compared with the same quarter in 2017. The estimated number of unique employers increased 3.8% to 375,290 in the first quarter of 2018 compared with 361,644 in the same quarter of the prior year due to new customer acquisition. The estimated number of unique employers in the first quarter of 2018 reflects those employers currently assigned a unique identification number in the Company's management information systems and does not include employers utilizing Lagou.com.
Other human resource related revenues for the first quarter of 2018 increased 40.2% to RMB263.0 million (US$41.9 million) from RMB187.6 million in the same quarter in 2017. The increase was primarily due to greater usage and growth of business process outsourcing, training, assessment and placement services.
Gross profit for the first quarter of 2018 increased 35.2% to RMB596.4 million (US$95.1 million) from RMB441.0 million for the same quarter of the prior year. Gross margin, which is gross profit as a percentage of net revenues, was 74.4% in the first quarter of 2018 compared with 73.5% for the same quarter in 2017.
Operating expenses for the first quarter of 2018 increased 30.3% to RMB360.3 million (US$57.4 million) from RMB276.5 million for the same quarter in 2017. Sales and marketing expenses for the first quarter of 2018 increased 34.1% to RMB274.8 million (US$43.8 million) from RMB204.9 million for the same quarter of the prior year primarily due to higher employee compensation expenses, headcount additions and greater advertising expenses. General and administrative expenses for the first quarter of 2018 increased 19.4% to RMB85.5 million (US$13.6 million) from RMB71.7 million for the same quarter of the prior year primarily due to higher employee compensation and office expenses.
Income from operations for the first quarter of 2018 increased 43.5% to RMB236.0 million (US$37.6 million) from RMB164.4 million for the first quarter of 2017. Operating margin, which is income from operations as a percentage of net revenues, was 29.5% in the first quarter of 2018 compared with 27.4% for the same quarter in 2017. Excluding share-based compensation expense, operating margin would have been 32.3% in the first quarter of 2018 compared with 31.1% for the same quarter in 2017.
The Company recognized a gain from foreign currency translation of RMB36.3 million (US$5.8 million) in the first quarter of 2018 compared with a loss of RMB0.04 million in the first quarter of 2017 primarily due to the impact of the change in exchange rate between the Renminbi and the U.S. dollar on the Company's U.S. dollar cash deposits and U.S. dollar-denominated convertible senior notes issued in 2014.
In the first quarter of 2018, the Company recognized a mark-to-market, non-cash loss of RMB589.1 million (US$93.9 million) associated with a change in fair value of convertible senior notes compared with RMB25.1 million in the first quarter of 2017. The large non-cash loss was a result of the significant increase in the price of the Company's American Depositary Shares traded on the Nasdaq Global Select Market during the first quarter of 2018 and its corresponding effect on the fair value of the convertible senior notes.
Other income in the first quarter of 2018 included local government financial subsidies of RMB0.6 million (US$0.1 million) compared with RMB50.0 million in the first quarter of 2017.
Net loss attributable to 51job for the first quarter of 2018 was RMB(332.8) million (US$(53.1) million) compared with net income of RMB162.9 million for the same quarter in 2017. Fully diluted loss per share for the first quarter of 2018 were RMB(5.46) (US$(0.87)) compared with earnings per share of RMB2.74 for the same quarter in 2017.
In the first quarter of 2018, total share-based compensation expense was RMB22.8 million (US$3.6 million) compared with RMB22.0 million in the first quarter of 2017.
Excluding share-based compensation expense, gain/loss from foreign currency translation and change in fair value of convertible senior notes, as well as the related tax effect of these items, non-GAAP adjusted net income attributable to 51job for the first quarter of 2018 increased 15.5% to RMB242.7 million (US$38.7 million) compared with RMB210.1 million for the first quarter of 2017. Non-GAAP adjusted fully diluted earnings per share were RMB3.76 (US$0.60) in the first quarter of 2018 compared with RMB3.46 in the first quarter of 2017.
As of March 31, 2018, cash and short-term investments totaled RMB7,331.8 million (US$1,168.9 million) compared with RMB7,132.0 million as of December 31, 2017.
Based on current market and operating conditions, the Company's total revenues target for the second quarter of 2018 is in the estimated range of RMB855 million to RMB885 million (US$136.3 million to US$141.1 million). Guidance for earnings per share is provided on a non-GAAP basis due to the inherent difficulty in forecasting the future impact of certain items, such as gain/loss from foreign currency translation and change in fair value of convertible senior notes. The Company is not able to provide a reconciliation of these non-GAAP items to expected reported GAAP earnings per share, without unreasonable efforts, due to the unknown effect and potential significance of such future impact and changes. Excluding share-based compensation expense, any gain or loss from foreign currency translation, and any mark-to-market gain or loss associated with a change in fair value of convertible senior notes, as well as the related tax effect of these items, the Company's non-GAAP fully diluted earnings target for the second quarter of 2018 is in the estimated range of RMB3.70 to RMB4.00 (US$0.59 to US$0.64) per share. The Company expects total share-based compensation expense in the second quarter of 2018 to be in the estimated range of RMB22 million to RMB23 million (US$3.5 million to US$3.7 million).
Other Company News
In March 2018, the Company completed the acquisition of approximately 1,615 square meters of office space in Shanghai to accommodate its growing business operations. The total purchase price was RMB57.3 million (US$9.1 million), which was funded from the Company's existing cash resources.
Currency Convenience Translation
For the convenience of readers, certain Renminbi amounts have been translated into U.S. dollars at the rate of RMB6.2726 to US$1.00, the noon buying rate on March 30, 2018 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board.
Conference Call Information
The Company's management will hold a conference call at 9:00 p.m. Eastern Time on May 3, 2018 (9:00 a.m. Beijing / Hong Kong time zone on May 4, 2018) to discuss its first quarter 2018 financial results, operating performance and business outlook. To dial in to the call, please use the following telephone numbers:
Hong Kong: 800-905945
Conference ID: 51job
The call will also be available live and on replay through 51job's investor relations website, http://ir.51job.com .
Use of Non-GAAP Financial Measures
To supplement the consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), 51job uses non-GAAP financial measures of income before income tax expense, income tax expense, adjusted net income, adjusted net income attributable to 51job and adjusted earnings per share, which are adjusted from results based on GAAP to exclude share-based compensation expense, gain/loss from foreign currency translation and change in fair value of convertible senior notes, as well as the related tax effect of these items. The Company believes excluding share-based compensation expense and its related tax effect from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company's core operating results as such expense is not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. The Company believes excluding gain/loss from foreign currency translation and change in fair value of convertible senior notes, as well as the related tax effect, from its non-GAAP financial measures is useful for its management and investors as such translation or mark-to-market loss is not indicative of the Company's core business operations and will not result in cash settlement nor impact the Company's cash earnings. 51job also believes these non-GAAP financial measures excluding share-based compensation expense, gain/loss from foreign currency translation and change in fair value of convertible senior notes, as well as the related tax effect of these items, are important in helping investors to understand the Company's current financial performance and future prospects and to compare business trends among different reporting periods on a consistent basis. The presentation of these additional measures should not be considered a substitute for or superior to GAAP results or as being comparable to results reported or forecasted by other companies. The non-GAAP measures have been reconciled to GAAP measures in the attached financial statements.
Founded in 1998, 51job is a leading provider of integrated human resource services in China. With a comprehensive suite of HR solutions, 51job meets the needs of enterprises and job seekers through the entire talent management cycle, from initial recruitment to employee retention and career development. The Company's main online recruitment platforms (http://www.51job.com , http://www.yingjiesheng.com , http://www.51jingying.com , and http://www.lagou.com ), as well as mobile applications, connect millions of people with employment opportunities every day. 51job also provides a number of other value-added HR services, including business process outsourcing, training, professional assessment, placement, executive search and compensation analysis. 51job has a call center in Wuhan and a nationwide sales office network spanning 25 cities across China.
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," "targets, "confident" and similar statements. Among other things, statements that are not historical facts, including statements about 51job's beliefs and expectations, the business outlook and quotations from management in this announcement, as well as 51job's strategic and operational plans, are or contain forward-looking statements. 51job 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. All forward-looking statements are based upon management's expectations at the time of the statements and involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: execution of 51job's strategies and business plans; behavioral and operational changes of enterprises in meeting their human resource needs as they respond to evolving social, political, regulatory and financial conditions in China; introduction by competitors of new or enhanced products or services; price competition in the market for the various human resource services that 51job provides in China; acceptance of new products and services developed or introduced by 51job outside of the human resources industry; risks related to acquisitions or investments 51job has made or will make in the future; accounting adjustments that may occur during the quarterly or annual close or auditing process; fluctuations in the value of the Renminbi against the U.S. dollar and other currencies; and fluctuations in general economic and business conditions in China. Further information regarding these and other risks are included in 51job's filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release and based on assumptions that 51job believes to be reasonable as of this date, and 51job undertakes no obligation to update any forward-looking statement, except as required under applicable law.
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SOURCE 51job, Inc.