omniture

51job, Inc. Reports Second Quarter 2010 Financial Results

2010-08-06 01:36 1176
    SHANGHAI, Aug. 6 /PRNewswire-Asia-FirstCall/ -- 51job, Inc.
(Nasdaq: JOBS), a leading provider of integrated human resource services in China, announced today unaudited financial results for the second quarter of 2010 ended June 30, 2010.

    Second Quarter 2010 Financial Highlights:
    -- Total revenues increased 35.7% over Q2 2009 to RMB262.4 million
       (US$38.7 million), exceeding the Company's guidance range of RMB250
       million to RMB260 million
    -- Online recruitment services revenues increased 74.0% over Q2 2009 to
       RMB134.6 million (US$19.9 million)
    -- Gross margin expanded to 68.0% compared with 59.8% in Q2 2009
    -- Operating income increased to RMB64.5 million (US$9.5 million) compared
       with RMB26.8 million in Q2 2009
    -- Fully diluted earnings per common share were RMB0.97 (US$0.29 per ADS)
    -- Excluding share-based compensation expense and foreign currency
       translation loss as well as their related tax impact, non-GAAP adjusted
       fully diluted earnings per common share were RMB1.11 (US$0.33 per ADS),
       exceeding the Company's guidance range of RMB0.95 to RMB1.05
    -- Cash and short-term investments increased to RMB1,409.7 million
       (US$207.9 million) as of June 30, 2010


    Commenting on the results, Rick Yan, President and Chief Executive Officer of 51job, Inc., said, "We continued to observe a recovery trend in the Chinese recruitment market during the second quarter.  Our online business achieved record revenues as we successfully grew our client base, adding employers from existing cities and new geographies.  Although we increased sales and customer service headcount as well as marketing activities in light of improved market conditions, we reached new highs in gross margin and operating margin in the second quarter by leveraging the powerful scale economies and operating efficiency of our business model.  We remain focused on executing our strategic plan, delivering tangible results to our clients and increasing value for our shareholders."

    Second Quarter 2010 Unaudited Financial Results

    Total revenues for the second quarter ended June 30, 2010 were RMB262.4 million (US$38.7 million), an increase of 35.7% from RMB193.3 million for the same quarter in 2009.

    Print advertising revenues for the second quarter of 2010 increased 6.8% to RMB71.7 million (US$10.6 million) compared with RMB67.2 million for the same quarter in 2009.  The increase was primarily due to improved market demand and higher average revenue per page which was partially offset by a decrease in the number of print advertising pages.  Although print advertising prices in each city were largely unchanged, overall average revenue per page increased 18.1% over the second quarter of 2009 as a result of an increase in page volume contribution from higher priced cities as compared to the same quarter of the prior year.  However, mainly due to the decrease in the number of cities where 51job Weekly is published, from 22 cities as of June 30, 2009 to 17 cities as of June 30, 2010, the estimated number of print advertising pages generated in the second quarter of 2010 decreased 9.5% to 2,587 compared with 2,860 pages in the same quarter in 2009.

    Online recruitment services revenues for the second quarter of 2010 were RMB134.6 million (US$19.9 million), representing a 74.0% increase from RMB77.4 million for the same quarter of the prior year.  The increase primarily resulted from a greater number of unique employers using the Company's online recruitment services.  Unique employers increased 73.2% to 137,111 in the second quarter of 2010 compared with 79,151 in the same quarter of the prior year driven by greater customer acceptance and usage of online recruitment services.

    Other human resource related revenues for the second quarter of 2010 increased 14.9% to RMB56.0 million (US$8.3 million) from RMB48.7 million in the same quarter of 2009 primarily due to greater market demand for our business process outsourcing, executive search and training services.

    Gross profit for the second quarter of 2010 increased 54.3% to RMB169.0 million (US$24.9 million) from RMB109.6 million for the same quarter of the prior year.  Gross margin, which is gross profit as a percentage of net revenues, expanded to 68.0% in the second quarter of 2010 compared with 59.8% in the same quarter in 2009 primarily due to greater economies of scale, improved efficiency and a decrease in printing-related expenses.

    Operating expenses for the second quarter of 2010 were RMB104.6 million (US$15.4 million) compared with RMB82.8 million for the same quarter of 2009.  Sales and marketing expenses for the second quarter of 2010 increased 41.3% to RMB68.5 million (US$10.1 million) from RMB48.5 million for the same quarter of the prior year primarily due to an increase in salaries and commissions resulting from higher sales and headcount additions as well as greater advertising and promotion expenses.  General and administrative expenses for the second quarter of 2010 increased 5.1% to RMB36.1 million (US$5.3 million) from RMB34.3 million in the second quarter of 2009 primarily due to higher employee compensation expenses.

    Income from operations for the second quarter of 2010 increased to RMB64.5 million (US$9.5 million) from RMB26.8 million for the same quarter of the prior year.  Operating margin, which is income from operations as a percentage of net revenues, increased to 25.9% in the second quarter of 2010 compared with 14.6% in the same quarter of 2009.  The reduction in the effective tax rate to 23.0% in the second quarter of 2010 from 32.7% in the second quarter of 2009 was primarily due to the qualification of an operating entity as a High and New Technology Enterprise in December 2009, which is subject to a preferential tax rate of 15%.

    Net income for the second quarter of 2010 increased to RMB54.3 million (US$8.0 million) from RMB20.8 million for the same quarter in 2009.  Fully diluted earnings per common share for the second quarter of 2010 were RMB0.97 (US$0.14) compared with RMB0.37 for the same quarter in 2009.  Fully diluted earnings per ADS for the second quarter of 2010 were RMB1.95 (US$0.29) compared with RMB0.74 in the second quarter of 2009.

    In the second quarter of 2010, the Company recognized total share-based compensation expense of RMB6.5 million (US$1.0 million) compared with RMB6.8 million in the second quarter of 2009.  The Company also recognized a foreign currency translation loss of RMB1.0 million (US$0.2 million) in the second quarter of 2010 compared with RMB0.1 million in the second quarter of 2009 due to an appreciation of the Renminbi against the U.S. dollar.

    Excluding share-based compensation expense and foreign currency translation loss as well as their related tax impact, non-GAAP adjusted net income for the second quarter of 2010 increased to RMB61.9 million (US$9.1 million) compared with RMB27.7 million for the second quarter of 2009.  Non-GAAP adjusted fully diluted earnings per common share were RMB1.11 (US$0.16) in the second quarter of 2010 compared with RMB0.50 in the second quarter of 2009.  Non-GAAP adjusted fully diluted earnings per ADS in the second quarter of 2010 were RMB2.22 (US$0.33) compared with RMB0.99 in the second quarter of 2009.

    Six Months 2010 Unaudited Financial Results

    Total revenues for the six months ended June 30, 2010 were RMB516.6 million (US$76.2 million), an increase of 39.0% from RMB371.6 million in the comparable period in 2009.  Income from operations for the six months ended June 30, 2010 increased to RMB125.5 million (US$18.5 million) from RMB38.5 million for the same period last year.

    Net income for the first half of 2010 increased to RMB104.8 million (US$15.4 million) from RMB30.2 million for the same period in 2009.  Fully diluted earnings per common share for the first half of 2010 increased to RMB1.88 (US$0.28) from RMB0.54 in the comparable period in 2009.  Fully diluted earnings per ADS for the first half of 2010 were RMB3.76 (US$0.55) compared with RMB1.08 in the same period in 2009.

    Excluding share-based compensation and foreign currency translation loss as well as their related tax impact, non-GAAP adjusted net income for the six months ended June 30, 2010 increased to RMB118.8 million (US$17.5 million) from RMB44.7 million for the six months ended June 30, 2009.  Non-GAAP adjusted fully diluted earnings per common share were RMB2.13 (US$0.31) in first half of 2010 compared with RMB0.80 in the same period in 2009.  Non-GAAP adjusted fully diluted earnings per ADS in the first half of 2010 were RMB4.27 (US$0.63) compared with RMB1.59 in the same period in 2009.

    As of June 30, 2010, the Company had cash and short-term investments totaling RMB1,409.7 million (US$207.9 million) compared with RMB1,214.7 million at December 31, 2009.  Short-term investments consist of certificates of deposit with original maturities from three months to one year.

    Business Outlook

    For the third quarter of 2010, based on current market and operating conditions, the Company's revenue target is in the estimated range of RMB255 million to RMB265 million (US$37.6 million to US$39.1 million).  Excluding share-based compensation expense and any foreign currency translation loss or gain as well as their related tax impact, the Company's non-GAAP fully diluted earnings target for the third quarter of 2010 is in the estimated range of RMB0.95 to RMB1.05 per common share (US$0.28 to US$0.31 per ADS).  The Company expects aggregate share-based compensation expense in the third quarter of 2010 to be in the estimated range of RMB6 million to RMB7 million (US$0.9 million to US$1.0 million).

    Other Company News

    In September 2008, the Company announced that its shareholders had approved a share repurchase program authorizing the repurchase of up to US$25 million worth of outstanding ADSs.  In the second quarter of 2010, the Company repurchased 83,796 ADSs, representing 167,592 common shares, in the open market for an aggregate consideration of US$1.6 million, including transaction fees.  Since the inception of this share repurchase program, the Company has repurchased a total of 1,007,599 ADSs, representing 2,015,198 common shares, for an aggregate consideration of US$10.8 million.

    In June 2010, the Company discontinued print advertising services in Qingdao but continues to maintain a sales office in the city.  The Company currently operates 17 local editions of 51job Weekly.

    Currency Convenience Translation

    For the convenience of readers, certain Renminbi amounts have been translated into U.S. dollars at the rate of RMB6.7815 to US$1.00, the noon buying rate on June 30, 2010 in New York for cable transfers of Renminbi per U.S. dollar 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 9:00 p.m. Eastern Time on August 5, 2010 (9:00 a.m. Shanghai / Hong Kong time zone on August 6, 2010) to discuss its second quarter 2010 results, operating performance and business outlook.

    To dial in to the call, please use conference ID 4338605 and the following telephone numbers:

    US: +1-877-941-2928
    Hong Kong: +852-3009-5027
    International: +1-480-629-9692


    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 common share and adjusted earnings per ADS, which are adjusted from results based on GAAP to exclude share-based compensation expense and foreign currency translation gain or loss 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 foreign currency translation gain or loss and its related tax impact from its non-GAAP financial measures is useful for its management and investors as such translation gain or 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 measures excluding share-based compensation expense and foreign currency translation gain or loss and 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 print advertisements in 51job Weekly and online recruitment services at http://www.51job.com, 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 third quarter of 2010, 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 third quarter of 2010; 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 third quarter of 2010 or as a result of new information, future events or otherwise.

    For more information, please contact:

     Linda Chien
     Investor Relations
     51job, Inc.
     Tel:   +86-21-6879-6250
     Email: investor.relations@51job.com


- Financial tables follow -



51job, Inc.
Consolidated Statements of Operations

                                                 For the Three Months Ended
                                              June 30,   June 30,   June 30,
                                                2009       2010       2010
   (In thousands, except number of shares    (unaudited)(unaudited)(unaudited)
    and per share data)                          RMB        RMB    USD (Note 1)

    Revenues:
        Print advertising                      67,169     71,740      10,579
        Online recruitment services            77,386    134,634      19,853
        Other human resource related
         revenues                              48,749     56,002       8,258
    Total revenues                            193,304    262,376      38,690

    Less: Business and related tax            (10,102)   (13,773)     (2,031)
    Net revenues                              183,202    248,603      36,659

    Cost of services (Note 2)                 (73,644)   (79,586)    (11,736)

    Gross profit                              109,558    169,017      24,923

    Operating expenses:
        Sales and marketing (Note 3)          (48,491)   (68,500)    (10,101)
        General and administrative (Note 4)   (34,301)   (36,061)     (5,318)
    Total operating expenses                  (82,792)  (104,561)    (15,419)

    Income from operations                     26,766     64,456       9,504
    Loss from foreign currency translation       (142)    (1,045)       (154)
    Interest and investment income              3,581      4,661         687
    Other income                                  649      2,456         363

    Income before income tax expense           30,854     70,528      10,400
    Income tax expense                        (10,085)   (16,200)     (2,389)

    Net income                                 20,769     54,328       8,011

    Earnings per share:
        Basic                                    0.37       0.99        0.15
        Diluted                                  0.37       0.97        0.14

    Earnings per ADS (Note 5):
        Basic                                    0.74       1.97        0.29
        Diluted                                  0.74       1.95        0.29

    Weighted average number of common
     shares outstanding:
        Basic                              55,800,083 55,055,771  55,055,771
        Diluted                            55,857,437 55,758,113  55,758,113

    Notes:
    1. The conversion of RMB amounts into USD amounts is based on the noon
       buying rate of USD1.00=RMB6.7815 on June 30, 2010 in New York for cable
       transfers of RMB as set forth in the H.10 weekly statistical release of
       the Federal Reserve Board.
    2. Includes share-based compensation expense of RMB1,086 and RMB1,043
       (US$154) for the three months ended June 30, 2009 and 2010,
       respectively.
    3. Includes share-based compensation expense of RMB934 and RMB897 (US$132)
       for the three months ended June 30, 2009 and 2010, respectively.
    4. Includes share-based compensation expense of RMB4,759 and RMB4,572
       (US$674) for the three months ended June 30, 2009 and 2010,
       respectively.
    5. Each ADS represents two common shares.



51job, Inc.
Consolidated Statements of Operations

                                                  For the Six Months Ended
                                              June 30,   June 30,    June 30,
                                                2009       2010        2010
    (In thousands, except number of shares   (unaudited)(unaudited) (unaudited)
     and per share data)                        RMB        RMB     USD (Note 1)

    Revenues:
        Print advertising                     137,733    164,109      24,200
        Online recruitment services           145,633    244,343      36,031
        Other human resource related
         revenues                              88,201    108,195      15,954
    Total revenues                            371,567    516,647      76,185

    Less: Business and related tax            (19,568)   (27,536)     (4,060)
    Net revenues                              351,999    489,111      72,125

    Cost of services (Note 2)                (147,736)  (165,541)    (24,411)

    Gross profit                              204,263    323,570      47,714

    Operating expenses:
        Sales and marketing (Note 3)          (98,129)  (124,654)    (18,381)
        General and administrative (Note 4)   (67,629)   (73,383)    (10,821)
    Total operating expenses                 (165,758)  (198,037)    (29,202)

    Income from operations                     38,505    125,533      18,512
    Loss from foreign currency translation       (111)    (1,113)       (164)
    Interest and investment income              7,214      8,750       1,290
    Other income                                  873      2,696         397

    Income before provision for income tax     46,481    135,866      20,035
    Income tax expense                        (16,264)   (31,096)     (4,585)

    Net income                                 30,217    104,770      15,450

    Earnings per share:
        Basic                                    0.54       1.90        0.28
        Diluted                                  0.54       1.88        0.28

    Earnings per ADS (Note 5):
        Basic                                    1.08       3.80        0.56
        Diluted                                  1.08       3.76        0.55

    Weighted average number of common
     shares outstanding:
        Basic                              55,966,297 55,084,868  55,084,868
        Diluted                            56,034,144 55,685,041  55,685,041

    Notes:
    1. The conversion of RMB amounts into USD amounts is based on the noon
       buying rate of USD1.00=RMB6.7815 on June 30, 2010 in New York for cable
       transfers of RMB as set forth in the H.10 weekly statistical release of
       the Federal Reserve Board.
    2. Includes share-based compensation expense of RMB2,297 and RMB2,063
       (US$304) for the six months ended June 30, 2009 and 2010, respectively.
    3. Includes share-based compensation expense of RMB1,975 and RMB1,774
       (US$262) for the six months ended June 30, 2009 and 2010, respectively.
    4. Includes share-based compensation expense of RMB10,065 and RMB9,042
       (US$1,333) for the six months ended June 30, 2009 and 2010,
       respectively.
    5. Each ADS represents two common shares.



51job, Inc.
Reconciliation of GAAP and Non-GAAP Results

                                               For the Three Months Ended
                                              June 30,   June 30,    June 30,
                                                2009       2010        2010
    (In thousands, except number of shares   (unaudited)(unaudited) (unaudited)
     and per share data)                         RMB        RMB    USD (Note 1)

    GAAP income before income tax expense      30,854     70,528      10,400
    Add back: Share-based compensation
     expense                                    6,779      6,512         960
    Add back: Loss from foreign currency
     translation                                  142      1,045         154
    Non-GAAP income before income tax
     expense                                   37,775     78,085      11,514
    Non-GAAP income tax expense               (10,085)   (16,203)     (2,389)
    Non-GAAP adjusted net income               27,690     61,882       9,125

    Non-GAAP adjusted earnings per share:
        Basic                                    0.50       1.12        0.17
        Diluted                                  0.50       1.11        0.16

    Non-GAAP adjusted earnings per ADS
     (Note 2):
        Basic                                    0.99       2.25        0.33
        Diluted                                  0.99       2.22        0.33

    Weighted average number of common
     shares outstanding:
        Basic                              55,800,083 55,055,771  55,055,771
        Diluted                            55,857,437 55,758,113  55,758,113


                                                 For the Six Months Ended
                                             June 30,   June 30,    June 30,
                                               2009       2010        2010
    (In thousands, except number of shares  (unaudited)(unaudited) (unaudited)
     and per share data)                        RMB        RMB     USD (Note 1)

    GAAP income before provision for
     income tax                                46,481    135,866      20,035
    Add back: Share-based compensation
     expense                                   14,337     12,879       1,899
    Add back: Loss from foreign currency
     translation                                  111      1,113         164
    Non-GAAP income before provision for
     income tax                                60,929    149,858      22,098
    Non-GAAP income tax expense               (16,267)   (31,099)     (4,586)
    Non-GAAP adjusted net income               44,662    118,759      17,512

    Non-GAAP adjusted earnings per share:
        Basic                                    0.80       2.16        0.32
        Diluted                                  0.80       2.13        0.31

    Non-GAAP adjusted earnings per ADS
     (Note 2):
        Basic                                    1.60       4.31        0.64
        Diluted                                  1.59       4.27        0.63

    Weighted average number of common
     shares outstanding:
        Basic                              55,966,297 55,084,868  55,084,868
        Diluted                            56,034,144 55,685,041  55,685,041

   Notes:
    1. The conversion of RMB amounts into USD amounts is based on the noon
       buying rate of USD1.00=RMB6.7815 on June 30, 2010 in New York for cable
       transfers of RMB as set forth in the H.10 weekly statistical release of
       the Federal Reserve Board.
    2. Each ADS represents two common shares.



51job, Inc.
Consolidated Balance Sheets

                                                          As of
                                           December 31,  June 30,   June 30,
                                              2009        2010       2010
    (In thousands, except number of shares  (audited)  (unaudited)(unaudited)
     and per share data)                       RMB         RMB    USD (Note 1)

    ASSETS

    Current assets:
        Cash                                  957,407   1,072,397    158,136
        Short-term investments                257,310     337,334     49,743
        Accounts receivable (net of
         allowance of RMB2,620 and
         RMB2,587 as of December 31, 2009
         and June 30, 2010, respectively)      17,946      19,945      2,941
        Prepayments and other current
         assets                                39,899      39,798      5,868
        Deferred tax assets, current            4,982       3,704        546

    Total current assets                    1,277,544   1,473,178    217,234

    Long-term investments                      15,912      15,825      2,333
    Property and equipment, net               181,943     203,748     30,045
    Intangible assets, net                      5,301       5,272        777
    Other long-term assets                     31,531       6,982      1,030
    Deferred tax assets, non-current              285         386         57

    Total non-current assets                  234,972     232,213     34,242

    Total assets                            1,512,516   1,705,391    251,476

    LIABILITIES

    Current liabilities:
        Accounts payable                        9,896      10,695      1,577
        Salary and employee related accrual    28,095      24,337      3,589
        Taxes payable                          15,696      24,932      3,676
        Advance from customers                118,277     159,283     23,488
        Other payables and accruals            15,402      39,262      5,789

    Total current liabilities                 187,366     258,509     38,119

    Deferred tax liabilities, non-current       1,011       1,389        205

    Total liabilities                         188,377     259,898     38,324

    Shareholders' equity:
        Common shares (US$0.0001 par value;
         500,000,000 shares authorized,
         55,126,859 and 55,252,899 shares
         issued and outstanding as of
         December 31, 2009 and
         June 30, 2010, respectively)              46          46          7
        Additional paid-in capital            902,124     918,640    135,463
        Statutory reserves                      7,368       7,368      1,086
        Other comprehensive income              1,067       1,135        167
        Retained earnings                     413,534     518,304     76,429

    Total shareholders' equity              1,324,139   1,445,493    213,152

    Total liabilities and shareholders'
     equity                                 1,512,516   1,705,391    251,476

    Note 1: The conversion of RMB amounts into USD amounts is based on the
            noon buying rate of USD1.00=RMB6.7815 on June 30, 2010 in New York
            for cable transfers of RMB as set forth in the H.10 weekly
            statistical release of the Federal Reserve Board.

Source: 51job, Inc.
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