omniture

Zhaopin Limited Reports First Quarter of Fiscal Year 2017 Financial Results

2016-11-24 06:00 3678

BEIJING, Nov 24, 2016 /PRNewswire/ -- Zhaopin Limited (NYSE: ZPIN) ("Zhaopin" or the "Company"), a leading career platform[1] in China focused on connecting users with relevant job opportunities through their career lifecycle, today announced its unaudited financial results for the first quarter of fiscal year 2017 ended September 30, 2016.

Throughout the release, one American depositary share ("ADS") represents two Class A ordinary shares. Fiscal year refers to the 12 months ended June 30.

First Quarter of Fiscal Year 2017 Financial Highlights

Percentage growth metrics refer to the first quarter of fiscal year 2017 ("Q1 FY17") compared to the first quarter of fiscal year 2016 ("Q1 FY16")

  • Total revenue increased by 21.9% to RMB426.2 million (US$63.9 million).
  • Online recruitment services revenue increased by 21.6% to RMB380.3 million (US$57.0 million).
  • Gross margin was 91.2%, compared with 93.5% in Q1 FY16.
  • Net income increased by 14.7% to RMB81.1 million (US$12.2 million).
  • Excluding share-based compensation expenses, non-GAAP[2] net income increased by 10.1% to RMB83.3 million (US$12.5 million).
  • Basic and diluted net income per ADS was RMB1.46 (US$0.22) and RMB1.42 (US$0.22), respectively.
  • Non-GAAP basic and diluted net income per ADS was RMB1.50 (US$0.22) and RMB1.46 (US$0.22), respectively.

"I am pleased to announce that Zhaopin delivered another strong quarter of growth in its financial and operating results. These results are ongoing validation of Zhaopin's strategy and operational capabilities. Key highlights include total revenue increasing by 21.9% year over year ("yoy") as online recruitment services revenue increased by 21.6%, number of unique customers[3] grew by 21.8% yoy, to 391,782 unique customers. Online revenue growth was due to a strong performance by our sales force and our strategic focus on lower-tier cities and small and medium-sized enterprises ("SME") employers. Non-GAAP net income was RMB83.3 million, an increase of 10.1% from the previous year as we continued to re-invest in product innovation, and geographic and market segment expansion." commented Mr. Evan Guo, Chief Executive Officer and Director of Zhaopin.

"Zhaopin has exciting and large growth prospects across a jobseeker's career lifecycle. Sustained re-investment is critical to our ability to deliver more value to candidates and employers which will lead to further differentiation versus our competitors. We have been pleased with Zhaopin's results from its current re-investment phase. I expect that Zhaopin will continue to prudently re-invest to strengthen sales and marketing and product innovation to expand geographically and further improve our recruiting results. As the largest and leading career development platform in China, we will also leverage our scalable platform to penetrate deeper into the human resources value chain to grasp new business opportunities," concluded Mr. Evan Guo.

[1] Zhaopin's website is the most popular career platform in China as measured by average daily unique visitors in each of the 12 months ended September 30, 2016, the number of registered users as of September 30, 2016 and the number of unique customers for the three months ended September 30, 2016.

[2] Non-GAAP results exclude share-based compensation. Explanation of the Company's non-GAAP financial measures and related reconciliations to GAAP financial measures are included in the accompanying "Non-GAAP Financial Measures" and "Reconciliation of GAAP and Non-GAAP Results".

[3] A "unique customer" refers to a customer that purchases the Company's online recruitment services during a specified period. Zhaopin makes adjustments for multiple purchases by the same customer to avoid double counting. Each customer is assigned a unique identification number in the Company's information management system. Affiliates and branches of a given customer may, under certain circumstances, be counted as separate unique customers.

First Quarter of Fiscal Year 2017 Unaudited Financial Results

Revenue

Total revenue was RMB426.2 million (US$63.9 million) in Q1 FY17, representing an increase of 21.9% from RMB349.5 million in Q1 FY16.

Online recruitment services revenue for Q1 FY17 was RMB380.3 million (US$57.0 million), representing a 21.6% increase from RMB312.7 million for Q1 FY16. The increase was primarily driven by the growth in the number of unique customers using the Company's online recruitment services. The Company served 391,782 unique customers during Q1 FY17, representing a 21.8% increase compared with 321,654 unique customers served during Q1 FY16. We believe our strategic focus on continued geographic expansion and improvement in customer services contributed to the growth in the number of unique customers. Average revenue per unique customer ("ARPU") decreased slightly by 0.1% during Q1 FY17 compared with Q1 FY16. The slight decrease in ARPU was primarily due to the addition of new customers, who generally purchased introductory and lower-priced services initially. The decline in ARPU from new customers was, however, largely offset by the introduction of new products, and cross-selling and up-selling of value-added services to existing customers. Zhaopin's ARPU may vary quarter to quarter depending on new customer acquisition and new products and services launched.

Other services revenue for Q1 FY17 was RMB45.8 million (US$6.9 million), representing an increase of 24.6% from RMB36.8 million during Q1 FY16. The increase was primarily due to campus recruitment services, assessment services and other human resource related services which delivered strong growth despite strong competition.

Other services revenue refers to revenue from campus recruitment services, assessment services, and other human resource related services. These services complement the Company's core online employment services by catering to the different needs in a job seeker's career life cycle, from college to graduation, first- time job seeking and through changing jobs. Strategically, these services play an important role in establishing and deepening Zhaopin's relationship with job seekers and employers.

Gross Profit and Gross Margin

Gross profit for Q1 FY17 was RMB384.9 million (US$57.7 million), representing an increase of 19.4% from RMB322.3 million for Q1 FY16.

Gross margin for Q1 FY17, as measured by gross profit as a percentage of net revenue, was 91.2%, compared to 93.5% for Q1 FY16. The slight decrease in gross margin was mainly due to lower gross margin of other services.

Operating Expenses

Operating expenses for Q1 FY17 was RMB300.4 million (US$45.1 million), representing an increase of 22.2% from RMB245.8 million for Q1 FY16.

  • Sales and marketing expenses for Q1 FY17 were RMB206.9 million (US$31.0 million), representing an increase of 20.8% from RMB171.3 million for Q1 FY16. The increase was primarily due to increases in compensation paid to the sales team as a result of growth in headcount and salaries, and increases in online advertising activities. As a percentage of net revenue, sales and marketing expenses decreased from 49.7% for Q1 FY16 to 49.0% for Q1 FY17. The decrease in sales and marketing expenditure as a percentage of revenue was primarily due to measured spending in offline marketing expenses and strong growth in online revenue.
  • General and administrative expenses for Q1 FY17 were RMB93.5 million (US$14.0 million), representing a 25.6% increase from RMB74.5 million for Q1 FY16. The increase was primarily driven by increases in employee compensation costs, professional services fees and employment security funds for the disabled paid to the government. The increase was partially offset by the decrease in share-based compensation expenses from RMB5.0 million for Q1 FY16 to RMB2.2 million (US$0.3 million) for Q1 FY17. The decrease was mainly due to the Company's graded vesting schedule used to recognize its share-based compensation expenses as well as no options granted in Q1 FY17. As a percentage of net revenue, general and administrative expenses increased from 21.6% for Q1 FY16 to 22.2% for Q1 FY17.

Income from Operations

Income from operations for Q1 FY17 was RMB84.5 million (US$12.7 million), representing a 10.4% increase from RMB76.5 million for Q1 FY16. Operating margin, as measured by income from operations as a percentage of net revenue, was 20.0% in Q1 FY17, compared with 22.2% in Q1 FY16. In Q1 FY17, the Company recognized total share-based compensation expenses of RMB2.2 million (US$0.3 million), compared with RMB5.0 million in Q1 FY16. Excluding share-based compensation expenses, non-GAAP income from operations for Q1 FY17 was RMB86.7 million (US$13.0 million), as compared with RMB81.5 million during Q1 FY16. Excluding share-based compensation expenses, operating margin would be 20.5% in Q1 FY17, compared with 23.6% in Q1 FY16.

Investment and Interest Income, net

Net investment and interest income for Q1 FY17 was RMB9.4 million (US$1.4 million), representing a 34.7% increase from RMB7.0 million for Q1 FY16. The growth in net investment and interest income resulted from increased interest and investment income from larger bank deposits generated from business operations and investments in time deposits and principal-protected wealth management products as well as lower interest expenses due to the repayment of bank loans.

Other Income, net

Net other income for Q1 FY17 was RMB4.3 million (US$0.6 million), representing a 22.4% increase compared with RMB3.5 million for Q1 FY16. Other income for Q1 FY17 included a RMB4.5 million (US$0.7 million) government subsidy, compared with RMB3.5 million for Q1 FY16.

Net Income

Net income for Q1 FY17 was RMB81.1 million (US$12.2 million), representing a 14.7% increase compared with RMB70.7 million for Q1 FY16. The Company's effective tax rate decreased from 18.7% for Q1 FY16 to 17.4% for Q1 FY17, primarily due to the increase in tax deductions relating to research and development expenditures.

Non-GAAP net income for Q1 FY17 was RMB83.3 million (US$12.5 million), representing an increase of 10.1% from RMB75.7 million in Q1 FY16.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS for Q1 FY17 were RMB1.46 (US$0.22) and RMB1.42 (US$0.22), respectively, compared with basic and diluted net income per ADS of RMB1.30 and RMB1.24, respectively, for Q1 FY16.

Non-GAAP basic and diluted net income per ADS for Q1 FY17 were RMB1.50 (US$0.22) and RMB1.46 (US$0.22), respectively, compared with non-GAAP basic and diluted net income per ADS of RMB1.40 and RMB1.32, respectively, for Q1 FY16.

Cash and Cash Equivalents, Restricted Cash and Time Deposits

As of September 30, 2016, the Company had cash and cash equivalents, restricted cash and time deposits of RMB2,348.7 million (US$352.2 million), representing a 2.6% increase from RMB2,289.2 million as of June 30, 2016. The increase in the Company's cash and cash equivalents, restricted cash and time deposits was mainly attributable to strong net cash flows generated from operating activities and issuance of ordinary shares upon exercise of employees' stock options.

Net cash flow generated from operating activities in Q1 FY17 amounted to RMB61.8 million (US$9.3 million), representing an increase of 35.8% from RMB45.5 million in Q1 FY16. Operating cash flow increased primarily due to increased cash collection driven by revenue growth.

Status of Preliminary Non-Binding Proposal

On January 19, 2016, the Company announced that its board of directors (the "Board") had received a preliminary non-binding proposal letter, dated January 19, 2016, from CDH V Management Company Limited and Shanghai Goliath Investment Management L.P. , proposing to acquire all outstanding ordinary shares in Zhaopin not owned by Zhaopin's controlling shareholder, SEEK International Investments Pty Ltd, for US$17.50 in cash per ADS, or US$8.75 per ordinary share of the Company, in a going-private transaction.

On February 1, 2016, the Board formed a special committee (the "Special Committee") consisting of two independent and disinterested directors, Mr. Alex Chit Ho and Mr. Peter Andrew Schloss, to consider the January 19 going-private proposal.

On March 2, 2016, the Company announced that the Special Committee had retained Duff & Phelps, LLC as its independent financial advisor and Fenwick & West LLP as its U.S. legal counsel to assist it in this process.

On May 5, 2016, the Company announced that the Board had received a preliminary non-binding proposal letter, dated May 5, 2016, from Mr. Evan Sheng Guo, director and chief executive officer of the Company, Mr. Ge Wang, vice president of the Company, Mr. Weigang Wang, vice president of the Company, Mr. Luyang Tang, vice president of the Company, Mr. Tianruo Pu, chief financial officer of the Company, and Sequoia China Investment Management LLP (together, the "Management Buyer Group"), proposing to acquire all outstanding ordinary shares in Zhaopin not owned by the Management Buyer Group for US$17.75 in cash per ADS, or US$8.875 per ordinary share of the Company, in a going-private transaction. The Special Committee will also consider this going-private proposal in due course.

Due to the potential pending transaction, Zhaopin will not be providing an outlook statement.

Exchange Rate

This announcement contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars were made at the exchange rate of RMB6.6685 to US$1.00, as set forth in the H.10 statistical release of the Federal Reserve Board on September 30, 2016.

Use of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles (GAAP), Zhaopin uses non-GAAP measures of adjusted income from operations, adjusted net income, adjusted net income per share and adjusted net income per ADS, which are adjusted from results based on GAAP to exclude share-based compensation expenses. The Company believes that excluding share-based compensation expenses 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 expenses are not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. Zhaopin also believes these non-GAAP measures excluding share-based compensation expenses, 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.

Conference Call

Zhaopin's management will host an earnings conference call on Wednesday, Nov 23, 2016 at 8:00 p.m. U.S. Eastern Time (9:00 a.m. Beijing/ Hong Kong Time on Nov 24, 2016).

Dial-in details for the earnings conference call are as follows:

International:

+1-412-902-4272


U.S. Toll Free:

+1-888-346-8982


Hong Kong Toll Free:

800-905945


Mainland China Toll Free:

4001-201203


Passcode:

ZPIN


Please dial in 15 minutes before the call is scheduled to begin and provide the passcode to join the call.

A telephone replay of the call will be available after the conclusion of the conference call through 8:00 p.m. U.S. Eastern Time, Nov 30, 2016. The dial-in details for the replay are as follows:

International:

+1-412-317-0088


U.S. Toll Free:

+1-877-344-7529


Passcode:

10096124


Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of Zhaopin's website at http://www.zhaopin.com.

About Zhaopin Limited

Zhaopin is a leading career platform in China, focusing on connecting users with relevant job opportunities throughout their career lifecycle. The Company's zhaopin.com website is the most popular career platform in China as measured by average daily unique visitors in each of the 12 months ended September 30, 2016, number of registered users as of September 30, 2016 and number of unique customers for the three months ended September 30, 2016. The Company's over 125.2 million registered users include diverse and educated job seekers who are at various stages of their careers and are in demand by employers as a result of the general shortage of skilled and educated workers in China. In the fiscal year ended June 30, 2016, approximately 36.9 million job postings[4] were placed on Zhaopin's platform by 509,813 unique customers including multinational corporations, small and medium-sized enterprises and state-owned entities. The quality and quantity of Zhaopin's users and the resumes in the Company's database attract an increasing number of customers. This in turn leads to more users turning to Zhaopin as their primary recruitment and career- related services provider, creating strong network effects and significant entry barriers for potential competitors. For more information, please visit http://www.zhaopin.com.

[4] Zhaopin calculates the number of job postings by counting the number of newly placed job postings during each respective period. Job postings that were placed prior to a specified period - even if available during such period - are not counted as job postings for such period. Any particular job posting placed on the Company's website may include more than one job opening or position.

Safe Harbor Statements

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and 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," "confident" and similar statements. Zhaopin may also make written or oral forward-looking statements in its reports filed with or furnished 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. Any statements that are not historical facts, including statements about Zhaopin's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: Zhaopin's goals and strategies; its future business development, financial condition and results of operations; its ability to retain and grow its user and customer base for its online career platform; the growth of, and trends in, the markets for its services in China; the demand for and market acceptance of its brand and services; competition in its industry in China; its ability to maintain the network infrastructure necessary to operate its website and mobile applications; relevant government policies and regulations relating to the corporate structure, business and industry; and its ability to protect its users' information and adequately address privacy concerns. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release, and Zhaopin does not undertake any obligation to update such information, except as required under applicable law.


ZHAOPIN LIMITED

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME


(Amounts in thousands, except for number of shares and ADS and per
share and per ADS data)

For the Three Months Ended

September 30, 2015

September 30, 2016

September 30, 2016


RMB

RMB

US$


(Unaudited)

(Unaudited)

(Unaudited)

Revenue




Online recruitment services

312,699

380,347

57,037

Other services revenue

36,779

45,816

6,871

Total Revenue

349,478

426,163

63,908

Less: Business tax and surcharges

(4,749)

(3,955)

(593)

Net Revenue

344,729

422,208

63,315

Cost of services

(22,403)

(37,283)

(5,591)

Gross profit

322,326

384,925

57,724

Operating expenses:




Sales and marketing expenses

(171,297)

(206,920)

(31,029)

General and administrative expenses

(74,483)

(93,523)

(14,025)

Total operating expenses

(245,780)

(300,443)

(45,054)

Income from operations

76,546

84,482

12,670

Other income:




Foreign currency exchange gain

35

8

1

Investment and interest income, net

6,950

9,359

1,403

Other income, net

3,510

4,297

644

Income before income tax expenses

87,041

98,146

14,718

Income tax expenses

(16,306)

(17,029)

(2,554)

Net income

70,735

81,117

12,164

Less: Net (income)/ loss attributable to the non-controlling interest

(106)

143

21

Net income attributable to Zhaopin Limited's shareholders

70,629

81,260

12,185





Net income per share:




-Basic

0.65

0.73

0.11

-Diluted

0.62

0.71

0.11

Net income per ADS:




-Basic

1.30

1.46

0.22

-Diluted

1.24

1.42

0.22

Weighted average number of shares used in computing net income per
share:




-Basic

108,649,742

110,981,166

110,981,166

-Diluted

113,754,523

114,694,124

114,694,124





Comprehensive income:




Net income

70,735

81,117

12,164

Foreign currency translation adjustment, net of tax

9,465

1,848

277

Total comprehensive income

80,200

82,965

12,441

CONSOLIDATED BALANCE SHEETS


(Amounts in thousands, except for number of shares)

As of June 30

As of September 30

2016

2016

2016



RMB

RMB

US$




(Unaudited)

(Unaudited)

ASSETS




Current assets:





Cash and cash equivalents

1,725,464

1,681,654

252,179


Time deposits and restricted time deposits

563,741

533,061

79,937


Accounts receivable, net

21,949

24,673

3,700


Amounts due from a related party

437

177

27


Prepayments and other current assets

117,369

132,232

19,829


Deferred tax assets

27,055

23,874

3,580

Total current assets

2,456,015

2,395,671

359,252

Non-current assets:





Restricted time deposits

-

134,032

20,099


Property and equipment, net

50,839

50,110

7,514


Intangible assets, net

19,865

20,100

3,014


Goodwill

64,827

64,827

9,721


Other non-current assets

4,127

4,124

618


Deferred tax assets

2,917

2,950

442

Total non-current assets

142,575

276,143

41,408

TOTAL ASSETS

2,598,590

2,671,814

400,660

LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:





Current portion of long-term bank loans

172,411

53,422

8,011


Accounts payable

8,460

12,426

1,863


Deferred revenue

708,359

712,500

106,846


Salaries and welfare payable

124,031

91,702

13,752


Taxes payable

70,563

65,881

9,879


Accrued expenses and other current liabilities

100,110

110,133

16,515

Total current liabilities

1,183,934

1,046,064

156,866

Non-current liabilities:





Deferred revenue

4,293

4,577

686


Long-term bank loans

-

118,542

17,776


Deferred tax liabilities

19,511

21,587

3,237

Total liabilities

1,207,738

1,190,770

178,565

Shareholders' equity:





Ordinary shares

7,485

7,498

1,124


Additional paid-in capital

1,546,833

1,554,047

233,043


Statutory reserves

10,769

10,769

1,615


Accumulated other comprehensive income

16,565

18,413

2,761


Accumulated deficit

(202,718)

(121,458)

(18,214)


Non-controlling interests

11,918

11,775

1,766

Total shareholders' equity

1,390,852

1,481,044

222,095

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

2,598,590

2,671,814

400,660

Reconciliations of GAAP and Non-GAAP results


(Amounts in thousands, except for number of shares
and ADS and per share and per ADS data)

For the Three Months Ended

September 30, 2015

September 30, 2016

September 30, 2016


RMB

RMB

US$

GAAP income before income tax expenses

87,041

98,146

14,718

Add back: share-based compensation expenses

4,969

2,206

331

Non-GAAP income before income tax expenses

92,010

100,352

15,049

GAAP income tax expenses

(16,306)

(17,029)

(2,554)

Tax impact of share-based compensation expenses

-

-

-

Non-GAAP income tax expenses

(16,306)

(17,029)

(2,554)

Non-GAAP net income

75,704

83,323

12,495

Less: Net (income)/ loss attributable to the non-
controlling interest shareholders

(106)

143

21

Non-GAAP net income attributable to Zhaopin
Limited's shareholders

75,598

83,466

12,516

Net income per share:




-Basic

0.65

0.73

0.11

-Diluted

0.62

0.71

0.11

Add: Non-GAAP adjustments to net income per share




-Basic

0.05

0.02

-

-Diluted

0.04

0.02

-

Non-GAAP net income per share




-Basic

0.70

0.75

0.11

-Diluted

0.66

0.73

0.11

Non-GAAP net income per ADS




-Basic

1.40

1.50

0.22

-Diluted

1.32

1.46

0.22

Weighted average number of shares used in computing
non-GAAP net income per share:




-Basic

108,649,742

110,981,166

110,981,166

-Diluted

113,754,523

114,694,124

114,694,124





For more information, please contact:

Zhaopin Limited
Ms. Daisy Wang
Investor Relations
ir@zhaopin.com.cn

Christensen
In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: carnell@christensenir.com

In U.S.
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@christensenir.com


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Source: Zhaopin Limited
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