FOR IMMEDIATE RELEASE

Contact:

Rebecca Liu
Investor Relations
51job, Inc.
+(86-21) 6879-6250
ir@51job.com

 

51job, Inc. Reports Third Quarter 2012 Financial Results

 

SHANGHAI, China, November 7, 2012 – 51job, Inc. (Nasdaq: JOBS), a leading provider of integrated human resource services in China, announced today its unaudited financial results for the third quarter of 2012 ended September 30, 2012.

 

Third Quarter 2012 Financial Highlights:

  • Total revenues increased 8.9% over Q3 2011 to RMB373.7 million (US$59.5 million), exceeding the Company’s guidance
  • Online recruitment services revenues increased 13.1% over Q3 2011 to RMB240.6 million (US$38.3 million)
  • Gross margin was 72.5% compared with 72.4% in Q3 2011
  • Income from operations increased 4.3% over Q3 2011 to RMB117.0 million (US$18.6 million)
  • Fully diluted earnings per common share were RMB1.91 (US$0.61 per ADS)
  • Excluding share-based compensation expense and gain from foreign currency translation as well as their related tax impact, non-GAAP adjusted fully diluted earnings per common share were RMB2.13 (US$0.68 per ADS), exceeding the Company’s guidance
  • Cash and short-term investments increased to RMB2,341.0 million (US$372.5 million) as of September 30, 2012

Commenting on the results, Rick Yan, President and Chief Executive Officer of 51job, Inc., said, “Through solid sales execution, we successfully increased the corporate customer count in our online business while maintaining a relatively unchanged level of average revenue per customer in the third quarter.  Although employers remain cautious, we have observed a fairly stable and normalized pattern of hiring activity over the past several months.  During this period as we all await more clarity in the direction and development of the Chinese economy, we continue to balance strategic investments and operational efficiency measures that we believe will position us for strong growth and profitability when market conditions improve.”

 

Third Quarter 2012 Unaudited Financial Results

Total revenues for the third quarter ended September 30, 2012 were RMB373.7 million (US$59.5 million), an increase of 8.9% from RMB343.3 million for the same quarter in 2011.

Online recruitment services revenues for the third quarter of 2012 were RMB240.6 million (US$38.3 million), representing a 13.1% increase from RMB212.7 million for the same quarter of the prior year.  The growth was principally due to an increase in the number of unique employers using the Company’s online recruitment services.  Unique employers increased 13.6% to 188,073 in the third quarter of 2012 compared with 165,572 in the same quarter of the prior year driven by new customer acquisition and growing adoption of online recruitment services by employers.  Average revenue per unique employer was relatively unchanged in the third quarter of 2012 as compared to the same quarter in 2011.

Print advertising revenues for the third quarter of 2012 decreased 47.0% to RMB22.7 million (US$3.6 million) compared with RMB42.9 million for the same quarter in 2011 primarily due to the ongoing shift in demand away from print advertising services.  The estimated number of print advertising pages generated in the third quarter of 2012 declined 58.7% to 546 from 1,322 pages in the same quarter in 2011.  In addition, the number of cities where 51job Weekly is publisheddecreased to nine as of September 30, 2012 from 15 cities as of September 30, 2011.

Other human resource related revenues for the third quarter of 2012 increased 25.9% to RMB110.3 million (US$17.6 million) from RMB87.6 million in the same quarter of 2011 primarily due to greater market demand for our business process outsourcing and training services.

Gross profit for the third quarter of 2012 increased 9.8% to RMB259.2 million (US$41.2 million) from RMB236.2 million for the same quarter of the prior year.  Gross margin, which is gross profit as a percentage of net revenues, was 72.5% in the third quarter of 2012 compared with 72.4% in the same quarter in 2011.

Operating expenses for the third quarter of 2012 increased 14.7% to RMB142.3 million (US$22.6 million) from RMB124.0 million for the same quarter of 2011.  Operating expenses as a percentage of net revenues was 39.8% for the third quarter of 2012 compared with 38.0% for the third quarter of 2011.  Sales and marketing expenses for the third quarter of 2012 increased 14.0% to RMB93.7 million (US$14.9 million) from RMB82.2 million for the same quarter of the prior year primarily due to higher employee compensation expenses as well as greater advertising and promotion expenses.  General and administrative expenses for the third quarter of 2012 increased 16.2% to RMB48.5 million (US$7.7 million) from RMB41.8 million in the third quarter of 2011 primarily due to higher employee compensation, rental and office expenses.
Income from operations for the third quarter of 2012 increased 4.3% to RMB117.0 million (US$18.6 million) from RMB112.2 million for the same quarter of the prior year.  Operating margin, which is income from operations as a percentage of net revenues, was 32.7% in the third quarter of 2012 compared with 34.4% in the same quarter of 2011.  Excluding share-based compensation expense, operating margin would be 36.6% in the third quarter of 2012 compared with 37.8% in the same quarter of 2011.

Net income for the third quarter of 2012 increased 15.8% to RMB112.9 million (US$18.0 million) from RMB97.5 million for the same quarter in 2011.  Fully diluted earnings per common share for the third quarter of 2012 were RMB1.91 (US$0.30) compared with RMB1.65 for the same quarter in 2011.  Fully diluted earnings per ADS for the third quarter of 2012 were RMB3.82 (US$0.61) compared with RMB3.30 in the third quarter of 2011.

In the third quarter of 2012, the Company recognized total share-based compensation expense of RMB13.9 million (US$2.2 million) compared with RMB11.2 million in the third quarter of 2011.  The Company also recognized a gain from foreign currency translation of RMB0.6 million (US$0.1 million) in the third quarter of 2012 compared with a loss of RMB2.9 million in the third quarter of 2011.

Excluding share-based compensation expense and gain/loss from foreign currency translation as well as their related tax impact, non-GAAP adjusted net income for the third quarter of 2012 increased 13.2% to RMB126.3 million (US$20.1 million) compared with RMB111.6 million for the third quarter of 2011.  Non-GAAP adjusted fully diluted earnings per common share were RMB2.13 (US$0.34) in the third quarter of 2012 compared with RMB1.89 in the third quarter of 2011.  Non-GAAP adjusted fully diluted earnings per ADS in the third quarter of 2012 were RMB4.27 (US$0.68) compared with RMB3.77 in the third quarter of 2011.

 

Nine Months 2012 Unaudited Financial Results

Total revenues for the nine months ended September 30, 2012 were RMB1,114.9 million (US$177.4 million), an increase of 11.5% from RMB1,000.3 million for the same period in 2011.  Income from operations for the nine months ended September 30, 2012 increased 11.3% to RMB366.2 million (US$58.3 million) from RMB329.1 million for the same period in 2011.

Net income for the nine months ended September 30, 2012 increased 27.7% to RMB348.0 million (US$55.4 million) from RMB272.6 million for the same period in 2011.  Fully diluted earnings per common share for the nine months ended September 30, 2012 increased to RMB5.87 (US$0.93) from RMB4.61 for the same period in 2011.  Fully diluted earnings per ADS for the nine months ended September 30, 2012 were RMB11.74 (US$1.87) compared with RMB9.22 for the same period in 2011.

Excluding share-based compensation expense, gain/loss from foreign currency translation and loss from impairment of long-term investments as well as their related tax impact, non-GAAP adjusted net income for the nine months ended September 30, 2012 increased 18.7% to RMB383.4 million (US$61.0 million) from RMB323.1 million for the nine months ended September 30, 2011.  Non-GAAP adjusted fully diluted earnings per common share were RMB6.47 (US$1.03) for the nine months ended September 30, 2012 compared with RMB5.46 in the same period in 2011.  Non-GAAP adjusted fully diluted earnings per ADS for the nine months ended September 30, 2012 were RMB12.94 (US$2.06) compared with RMB10.93 in the same period in 2011.

As of September 30, 2012, the Company had cash and short-term investments totaling RMB2,341.0 million (US$372.5 million) compared with RMB2,054.0 million as of December 31, 2011.  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 an estimated year-over-year decrease in print advertising revenues as the Company transitions away from this business, the Company’s revenue target for the fourth quarter of 2012 is in the estimated range of RMB380 million to RMB395 million (US$60.5 million to US$62.9 million).  Excluding share-based compensation expense and any loss or gain from foreign currency translation as well as their related tax impact, the Company’s non-GAAP fully diluted earnings target for the fourth quarter of 2012 is in the estimated range of RMB2.05 to RMB2.20 per common share (US$0.65 to US$0.70 per ADS).  The Company expects total share-based compensation expense in the fourth quarter of 2012 to be approximately RMB13 million to RMB14 million (US$2.1 million to US$2.2 million).

 

Other Company News

In August 2012, the Company discontinued the publication of 51job Weekly in Hangzhou but continues to maintain a sales office in the city.

In September 2012, the Company entered into a contract to acquire approximately 5,400 square meters of office space in a commercial building in Guangzhou.  Prior to this transaction, the Company’s local sales office occupied some of these premises as a tenant.  The total purchase price of RMB92.7 million (US$14.7 million) was paid as a deposit to the seller in the third quarter of 2012.  The Company expects to receive title of the property upon the completion of the contract terms by both parties.

 

Currency Convenience Translation

For the convenience of readers, certain Renminbi amounts have been translated into U.S. dollars at the rate of RMB6.2848 to US$1.00, the noon buying rate on September 28, 2012 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 7:00 p.m. Eastern Time on November 7, 2012 (8:00 a.m. Shanghai / Hong Kong time zone on November 8, 2012) to discuss its third quarter 2012 financial results, operating performance and business outlook.  To dial in to the call, please use conference ID 4572651 and the following telephone numbers:

US: +1-877-941-0843
Hong Kong: +852-3009-5027
International: +1-480-629-9722

The call will also be available live and on replay through 51job’s investor relations website, 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 measures of income before income tax expense, income tax expense, adjusted net income, adjusted earnings per share and adjusted earnings per ADS, which are adjusted from results based on GAAP to exclude share-based compensation expense, gain/loss from foreign currency translation and loss from impairment of long-term investments as well as their related tax impact.  The Company believes excluding share-based compensation expense and its related tax impact 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 its related tax impact from its non-GAAP financial measures is useful for its management and investors as such translation 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.  The Company believes excluding the loss from impairment of long-term investments and its related tax impact from its non-GAAP financial measures is useful for its management and investors as such loss is unrelated to the Company’s core business operations.  51job also believes these non-GAAP measures excluding share-based compensation expense, gain/loss from foreign currency translation and loss from impairment of long-term investments, as well as their related tax impact, 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

51job, Inc. (Nasdaq: JOBS) is a leading provider of integrated human resource services in China with a strong focus on recruitment related services.  Through online recruitment services at www.51job.com and print advertisements in 51job Weekly, 51job enables enterprises to attract, identify and recruit employees and connects millions of job seekers with employment opportunities.  51job also provides a number of other value-added human resource services, including business process outsourcing, training, executive search and compensation and benefits analysis.  51job has a call center in Wuhan and a nationwide sales office network spanning 25 cities across China.

 

Safe Harbor Statement

Statements in this release regarding targets for the fourth quarter of 2012, future business and operating results constitute “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995.  These statements are based upon management’s current expectations, and actual results could differ materially.  Among the factors that could cause actual results to differ are the number of recruitment advertisements placed, sales orders received and customer contracts executed during the remaining weeks of the fourth quarter of 2012; any accounting adjustments that may occur during the quarterly close; fluctuations in the value of the Renminbi against the U.S. dollar and other currencies; behavioral and operational changes of customers in meeting their human resource needs as they respond to evolving social, economic and political changes in China as well as stock market volatilities; introduction by its competitors of new or enhanced products or services; price competition in the market for the various human resource services that the Company provides in China; acceptance of new products and services developed or introduced by the Company outside of the human resources industry and fluctuations in general economic conditions.  For additional information on these and other factors that may affect the Company’s financial results, please refer to the Company’s filings with the Securities and Exchange Commission.  51job undertakes no obligation to update these targets prior to announcing final results for the fourth quarter of 2012 or as a result of new information, future events or otherwise.