51job.com | 51job Investor Relations

FOR IMMEDIATE RELEASE
	P r i n t

Contact:

Linda Chien
Investor Relations
51job, Inc.
+86-21-6879-6250
ir@51job.com

51job, Inc. Reports Fourth Quarter and Fiscal Year 2016 Financial Results

SHANGHAI, February 22, 2017 – 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 fourth quarter and fiscal year of 2016 ended December 31, 2016.

Fourth Quarter 2016 Financial Highlights:

Total revenues increased 13.6% over Q4 2015 to RMB694.2 million (US$100.0 million), within the Company’s guidance range
Online recruitment services revenues increased 15.0% over Q4 2015 to RMB423.8 million (US$61.0 million)
Other human resource related revenues increased 11.8% over Q4 2015 to RMB270.4 million (US$38.9 million), which reflected the impact of a value-added tax (“VAT”) policy change effective May 1, 2016
Gross margin of 70.8% compared with 71.6% in Q4 2015
Income from operations increased 12.2% over Q4 2015 to RMB209.7 million (US$30.2 million)
Fully diluted earnings per share were RMB3.45 (US$0.50)
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 RMB3.61 (US$0.52), exceeding the Company’s guidance range

Fiscal Year 2016 Financial Highlights:

Total revenues increased 12.9% over 2015 to RMB2,372.7 million (US$341.7 million)
Gross margin of 71.6% compared with 72.3% in 2015
Income from operations increased 7.8% over 2015 to RMB611.8 million (US$88.1 million)
Fully diluted earnings per share were RMB9.68 (US$1.39)
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 RMB12.13 (US$1.75)
Cash and short-term investments increased to RMB6,080.4 million (US$875.8 million) as of December 31, 2016

Commenting on the results, Rick Yan, President and Chief Executive Officer of 51job, said, “While we delivered solid financial results in 2016, the year was even more noteworthy in our minds for the progress we made on product development and the diversification of our engagement points with both employers and job seekers. Our online service offerings are more innovative and comprehensive than ever following a refresh of the flagship 51job.com portal, the enhancement of our search engine methodology, and the introduction of employee referral and candidate background check services. We believe our strengthened value proposition to users will not only elevate recruitment compatibility and effectiveness, but also provide additional fuel to drive online customer spending and sales productivity over time. In 2017, we will continue to maintain our long-standing discipline in balancing investments and returns, incubate and pilot new products and platforms, and further establish 51job as the most complete HR services provider in China.”

Fourth Quarter 2016 Unaudited Financial Results
Total revenues for the fourth quarter ended December 31, 2016 were RMB694.2 million (US$100.0 million), an increase of 13.6% from RMB610.8 million for the same quarter in 2015.

Online recruitment services revenues for the fourth quarter of 2016 were RMB423.8 million (US$61.0 million), representing a 15.0% increase from RMB368.6 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, which was partially offset by lower revenue per unique employer. The number of unique employers increased 17.3% to 337,104 in the fourth quarter of 2016 compared with 287,419 in the same quarter of the prior year due to strong customer acquisition. Although the pricing of like-for-like services was generally unchanged over the past year, average revenue per unique employer decreased 2.0% in the fourth quarter of 2016 as compared with the same quarter in 2015. This was primarily due to robust new customer growth which outpaced and offset the effect of greater spending by existing customers, as well as a higher level of average revenue per unique employer in the fourth quarter of the prior year that benefitted from the acquisition of Yingjiesheng.com in 2015.

Other human resource related revenues for the fourth quarter of 2016 increased 11.8% to RMB270.4 million (US$38.9 million) from RMB241.8 million in the same quarter of 2015. The increase was primarily due to greater usage and growth of seasonal campus recruitment, business process outsourcing and training 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 fourth quarter of 2016 increased 13.6% to RMB486.6 million (US$70.1 million) from RMB428.4 million for the same quarter of the prior year. Gross margin, which is gross profit as a percentage of net revenues, was 70.8% in the fourth quarter of 2016 compared with 71.6% in the same quarter in 2015.

Operating expenses for the fourth quarter of 2016 increased 14.7% to RMB276.8 million (US$39.9 million) from RMB241.4 million for the same quarter of 2015. Sales and marketing expenses for the fourth quarter of 2016 increased 18.2% to RMB203.3 million (US$29.3 million) from RMB172.0 million for the same quarter of the prior year primarily due to higher employee compensation expenses and headcount additions. General and administrative expenses for the fourth quarter of 2016 increased 6.0% to RMB73.6 million (US$10.6 million) from RMB69.4 million for the same quarter of the prior year primarily due to higher employee compensation and office expenses.

Income from operations for the fourth quarter of 2016 increased 12.2% to RMB209.7 million (US$30.2 million) from RMB187.0 million for the fourth quarter of 2015. Operating margin, which is income from operations as a percentage of net revenues, was 30.5% in the fourth quarter of 2016 compared with 31.3% in the same quarter of 2015. Excluding share-based compensation expense, operating margin would have been 33.5% in the fourth quarter of 2016 compared with 34.7% in the same quarter of 2015.

The Company recognized a gain from foreign currency translation of RMB1.6 million (US$0.2 million) in the fourth quarter of 2016 compared with a loss of RMB21.1 million in the fourth quarter of 2015 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 fourth quarter of 2016, the Company recognized a mark-to-market, non-cash gain of RMB4.1 million (US$0.6 million) associated with a change in fair value of convertible senior notes compared with a loss of RMB18.2 million in the fourth quarter of 2015.

The effective tax rate in the fourth quarter of 2016 decreased to 14.6% compared with 21.1% in the fourth quarter of 2015 as a result of non-tax deductible items, primarily the change in fair value of convertible senior notes, which comprised a smaller portion of the income before income tax base in the fourth quarter of 2016 than in the comparable year-ago period, as well as adjustments to income tax expense for the full year 2016 to reflect actual income tax due. The effective tax rate on non-GAAP results in the fourth quarter of 2016 was 13.7% compared with 15.8% in the fourth quarter of 2015.

Net income attributable to 51job for the fourth quarter of 2016 was RMB203.4 million (US$29.3 million) compared with RMB141.8 million for the same quarter in 2015. Fully diluted earnings per share for the fourth quarter of 2016 were RMB3.45 (US$0.50) compared with RMB2.45 for the same quarter in 2015.

In the fourth quarter of 2016, total share-based compensation expense was RMB20.1 million (US$2.9 million) compared with RMB20.8 million in the fourth quarter of 2015.

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 fourth quarter of 2016 increased 7.9% to RMB217.9 million (US$31.4 million) compared with RMB201.9 million for the fourth quarter of 2015. Non-GAAP adjusted fully diluted earnings per share were RMB3.61 (US$0.52) in the fourth quarter of 2016 compared with RMB3.40 in the fourth quarter of 2015.

Fiscal Year 2016 Unaudited Financial Results
Total revenues in 2016 were RMB2,372.7 million (US$341.7 million), an increase of 12.9% from RMB2,101.9 million in 2015.

Online recruitment services revenues in 2016 were RMB1,547.1 million (US$222.8 million), representing a 14.1% increase from RMB1,356.4 million in 2015. Unique employers using the Company’s online recruitment services grew 13.3% to 460,811 in 2016 from 406,880 in 2015.

An employer who purchases online services multiple times or in multiple quarters throughout the fiscal year is counted as one unique employer for the annual total. Average revenue per unique employer increased 0.7% in 2016 compared with 2015.

Print advertising revenues in 2016 was nil. As of December 31, 2015, the Company ceased all print advertising services.

Other human resource related revenues in 2016 grew 11.5% to RMB825.6 million (US$118.9 million) from RMB740.1 million in 2015. The increase was partially offset by the VAT policy change that went into effect in May 2016.

Income from operations in 2016 increased 7.8% to RMB611.8 million (US$88.1 million) from RMB567.7 million in 2015.

Net income attributable to 51job in 2016 was RMB566.0 million (US$81.5 million) compared with RMB618.1 million in 2015. Fully diluted earnings per share in 2016 were RMB9.68 (US$1.39) compared with RMB10.41 in 2015.

As of December 31, 2016, cash and short-term investments totaled RMB6,080.4 million (US$875.8 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 as well as seasonality related to the Chinese New Year holiday, the Company’s total revenues target for the first quarter of 2017 is in the estimated range of RMB595 million to RMB615 million (US$85.7 million to US$88.6 million). 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 first quarter of 2017 is in the estimated range of RMB2.55 to RMB2.75 (US$0.37 to US$0.40) per share. The Company expects total share-based compensation expense in the first quarter of 2017 to be in the estimated range of RMB22 million to RMB23 million (US$3.2 million to US$3.3 million).

Recent Transactions
The Company has recently completed three transactions for a total consideration of RMB248.9 million (US$36.8 million), which were funded from the Company’s existing cash resources. The Company continues to actively pursue several investment opportunities.

VAT Policy Change
Effective May 1, 2016, in accordance with regulations announced 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, these 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’s other human resource related revenues have been negatively affected due to this policy change, which impacts 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 RMB6.9430 to US$1.00, the noon buying rate on December 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
The Company’s management will hold a conference call at 8:00 p.m. Eastern Time on February 22, 2017 (9:00 a.m. Beijing / Hong Kong time zone on February 23, 2017) to discuss its fourth quarter and fiscal year 2016 financial results, operating performance and business outlook. To dial in to the call, please use the following telephone numbers:

US: +1-888-346-8982
International: +1-412-902-4272
Hong Kong: 800-905945
China: 4001-201203
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 gain/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.

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
Statements in this release regarding targets for the first quarter of 2016, 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 first quarter of 2016; 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, regulatory 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; any risks related to acquisitions or investments the Company has made or will make in the future; 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 first quarter of 2016 or as a result of new information, future events or otherwise.