51job, Inc. Reports Third Quarter 2016 Financial Results

SHANGHAI, Nov. 10, 2016 /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 third quarter of 2016 ended September 30, 2016.

Third Quarter 2016 Highlights:

• Total revenues increased 13.3% over Q3 2015 to RMB595.0 million (US$89.2 million), at the top of the Company's guidance range
• Online recruitment services revenues increased 16.5% over Q3 2015 to RMB398.5 million (US$59.8 million)
• Other human resource related revenues increased 8.2% over Q3 2015 to RMB196.6 million (US$29.5 million), which reflected the impact of a value-added tax ("VAT") policy change effective May 1, 2016
• Gross margin of 71.5% compared with 71.2% in Q3 2015
• Income from operations increased 8.9% over Q3 2015 to RMB146.8 million (US$22.0 million)
• Fully diluted earnings per share were RMB1.84 (US$0.28)
• Excluding share-based compensation expense, 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 fully diluted earnings per share were RMB2.89 (US$0.43), exceeding the Company's guidance range

Commenting on the results, Rick Yan, President and Chief Executive Officer of 51job, said, "Strategic initiatives we began last year to dedicate efforts and resources to increasing online customer engagement and spending continue to make solid progress. In addition to average revenue per unique employer realizing its sixth consecutive period of year-over-year improvement, we also saw a faster pace of customer count growth in the third quarter. The cross-selling of our other value-added HR services, especially our HR outsourcing services, maintained good momentum, although revenue recognition, and thus comparisons to prior periods, have been and will continue to be impacted by the VAT transition until mid-2017. Looking forward, we stay focused on strengthening our value proposition to both job seekers and employers with a wider range of services, and further cementing our market leadership in the HR industry in China."

Third Quarter 2016 Unaudited Financial Results

Total revenues for the third quarter ended September 30, 2016 were RMB595.0 million (US$89.2 million), an increase of 13.3% from RMB525.0 million for the same quarter in 2015.

Online recruitment services revenues for the third quarter of 2016 were RMB398.5 million (US$59.8 million), representing a 16.5% increase from RMB342.0 million for the same quarter of the prior year.  The growth was driven by an increase in the number of unique employers utilizing the Company's online services as well as the realization of higher revenue per unique employer. The number of unique employers increased 13.1% to 334,401 in the third quarter of 2016 compared with 295,683 in the same quarter of the prior year due to new customer additions. Although the pricing of like-for-like services was generally unchanged over the past year, average revenue per unique employer increased 3.0% in the third quarter of 2016 as compared with the same quarter in 2015 primarily due to improved up-selling efforts that resulted in the purchase of multiple and/or higher value online services by customers.

Print advertising revenues for the third quarter of 2016 was nil. As of December 31, 2015, the Company had ceased all print advertising services.

Other human resource related revenues for the third quarter of 2016 increased 8.2% to RMB196.6 million (US$29.5 million) from RMB181.6 million in the same quarter of 2015.  The increase was primarily due to greater usage of business process outsourcing services.  However, this growth was partially offset by the impact from the implementation of a VAT policy change effective May 1, 2016 that resulted in a reduction in the amount of revenues recorded.

Gross profit for the third quarter of 2016 increased 15.3% to RMB421.5 million (US$63.2 million) from RMB365.4 million for the same quarter of the prior year. Gross margin, which is gross profit as a percentage of net revenues, was 71.5% in the third quarter of 2016 compared with 71.2% in the same quarter in 2015.

Operating expenses for the third quarter of 2016 increased 19.1% to RMB274.6 million (US$41.2 million) from RMB230.6 million for the same quarter of 2015.  Sales and marketing expenses for the third quarter of 2016 increased 23.8% to RMB204.5 million (US$30.7 million) from RMB165.2 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 third quarter of 2016 increased 7.3% to RMB70.1 million (US$10.5 million) from RMB65.4 million for the same quarter of the prior year primarily due to higher employee compensation and office expenses.

Income from operations for the third quarter of 2016 increased 8.9% to RMB146.8 million (US$22.0 million) from RMB134.9 million for the third quarter of 2015. Operating margin, which is income from operations as a percentage of net revenues, was 24.9% in the third quarter of 2016 compared with 26.3% in the same quarter of 2015. Excluding share-based compensation expense, operating margin was 28.5% in the third quarter of 2016 compared with 30.2% in the same quarter of 2015.

The Company recognized a loss from foreign currency translation of RMB0.02 million (US$0.003 million) in the third quarter of 2016 compared with RMB35.2 million in the third quarter of 2015 primarily due to the impact of the change in exchange rate between the Renminbi and the US dollar on the Company's US dollar cash deposits and US dollar-denominated convertible senior notes issued in 2014.

In the third quarter of 2016, the Company recognized a mark-to-market, non-cash loss of RMB42.5 million (US$6.4 million) associated with a change in the fair value of convertible senior notes compared with a gain of RMB54.5 million in the third quarter of 2015.

Other income in the third quarter of 2016 included local government financial subsidies of RMB23.0 million (US$3.4 million) compared with RMB16.0 million in the third quarter of 2015.

Net income attributable to 51job for the third quarter of 2016 was RMB108.0 million (US$16.2 million) compared with RMB165.9 million for the same quarter in 2015.  Fully diluted earnings per share for the third quarter of 2016 were RMB1.84 (US$0.28) compared with RMB2.62 for the same quarter in 2015.

In the third quarter of 2016, total share-based compensation expense was RMB21.4 million (US$3.2 million) compared with RMB20.1 million in the third quarter of 2015.

Excluding share-based compensation expense, 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 third quarter of 2016 was RMB171.9 million (US$25.8 million) compared with RMB166.8 million for the third quarter of 2015.  Non-GAAP adjusted fully diluted earnings per share were RMB2.89 (US$0.43) in the third quarter of 2016 compared with RMB2.82 in the third quarter of 2015.

Nine Months 2016 Unaudited Financial Results

Total revenues for the nine months ended September 30, 2016 were RMB1,678.5 million (US$251.7 million), an increase of 12.6% from RMB1,491.1 million for the same period in 2015. Income from operations for the nine months ended September 30, 2016 increased 5.6% to RMB402.1 million (US$60.3 million) from RMB380.7 million for the same period in 2015.

Net income attributable to 51job for the nine months ended September 30, 2016 was RMB362.5 million (US$54.4 million) compared with RMB476.2 million for the same period in 2015. Fully diluted earnings per share for the nine months ended September 30, 2016 was RMB6.22 (US$0.93) compared with RMB7.33 for the same period in 2015.

Excluding share-based compensation expense, 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 nine months ended September 30, 2016 was RMB503.3 million (US$75.5 million) compared with RMB490.8 million for the nine months ended September 30, 2015. Non-GAAP adjusted fully diluted earnings per share were RMB8.51 (US$1.28) for the nine months ended September 30, 2016 compared with RMB8.25 in the same period in 2015.

As of September 30, 2016, cash and short-term investments totaled RMB5,635.3 million (US$845.1 million) compared with RMB4,950.9 million as of December 31, 2015. Short-term investments consist of certificates of deposit with original maturities from three months to one year.

Business Outlook

Based on current market conditions and factoring in the VAT policy change, the Company's total revenues target for the fourth quarter of 2016 is in the estimated range of RMB680 million to RMB700 million (US$102.0 million to US$105.0 million). Excluding share-based compensation expense, any gain or 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's non-GAAP fully diluted earnings target for the fourth quarter of 2016 is in the estimated range of RMB3.05 to RMB3.25 (US$0.46 to US$0.49) per share. The Company expects total share-based compensation expense in the fourth quarter of 2016 to be in the estimated range of RMB22 million to RMB23 million (US$3.3 million to US$3.4 million).

VAT Policy Change

Effective May 1, 2016, in accordance with recently announced regulations by the PRC Ministry of Finance and State Administration of Taxation, VAT replaced business tax in all industries in China. Because the business tax-to-VAT transition for the Company's online recruitment services revenues was completed in 2015, the recently announced regulations primarily affected the Company's other human resource related revenues. The Company ceased paying business tax on total revenues and instead started paying VAT on May 1, 2016. The Company expects its other human resource related revenues will be negatively affected due to this policy change, which will impact the direct comparability between future and previously reported total revenue and net revenue figures.

Currency Convenience Translation

For the convenience of readers, certain Renminbi amounts have been translated into U.S. dollars at the rate of RMB6.6685 to US$1.00, the noon buying rate on September 30, 2016 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

Management will hold a conference call at 8:00 p.m. Eastern Time on November 10, 2016 (9:00 a.m. Beijing / Hong Kong time zone on November 11, 2016) to discuss its third quarter 2016 financial results, operating performance and business outlook. To dial in to the call, please use conference ID 3103905 and the following telephone numbers:

The call will also be available live and on replay through 51job's investor relations website, http://ir.51job.com. Please go to the website at least fifteen minutes early to register or install any necessary audio software.

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, 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 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, 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.

About 51job

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, and http://www.51jingying.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, 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.

Contact:
Linda Chien
Investor Relations
51job, Inc.
+86-21-6879-6250
[email protected]

SOURCE 51job, Inc.

Related Links

http://www.51job.com