58.com Reports Fourth Quarter and Fiscal Year 2018 Unaudited Financial Results

BEIJING, Feb. 28, 2019 /PRNewswire/ -- 58.com Inc. (NYSE: WUBA) ("58.com" or the "Company"), China's largest online market place for classifieds, today reported its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2018.

Fourth Quarter 2018 Financial Highlights

    --  Total revenues were RMB3,609.3 million (US$525.9 million([1])), a 30.6%
        increase from RMB2,764.7 million in the same quarter of 2017, exceeding
        the high end of the Company's guidance of RMB3,600 million.
    --  Gross margin was 87.3% compared with 90.5% in the same quarter of 2017.
    --  Income from operations was RMB706.4 million (US$102.9 million), a 15.1%
        increase from RMB613.7 million in the same quarter of 2017.
    --  Non-GAAP income from operations([2]) was RMB894.6 million (US$130.3
        million), a 17.3% increase from RMB762.5 million in the same quarter of
        2017.
    --  Net income attributable to 58.com Inc. ordinary shareholders was
        RMB410.9 million (US$59.9 million), a 0.8% decrease from RMB414.1
        million in the same quarter of 2017.
    --  Non-GAAP net income attributable to 58.com Inc. ordinary
        shareholders([3]) was RMB756.3 million (US$110.2 million), a 37.8%
        increase from RMB549.0 million in the same quarter of 2017.
    --  Basic and diluted earnings per ADS attributable to ordinary shareholders
        were RMB2.78 (US$0.41) and RMB2.75 (US$0.40), respectively, representing
        1.4% and 1.0% decreases from RMB2.82 and RMB2.78, respectively, in the
        same quarter of 2017. One ADS represents two Class A ordinary shares.
    --  Non-GAAP basic and diluted earnings per ADS([4]) attributable to
        ordinary shareholders were RMB5.12 (US$0.75) and RMB5.06 (US$0.74),
        respectively, representing 36.7% and 37.3% increases from RMB3.74 and
        RMB3.69, respectively, in the same quarter of 2017.

Fiscal Year 2018 Financial Highlights

    --  Total revenues were RMB13,137.8 million (US$1,914.2 million), a 30.5%
        increase from RMB10,068.8 million in fiscal year 2017.
    --  Gross margin was 89.1% compared with 90.8% in fiscal year 2017.
    --  Income from operations was RMB2,386.7 million (US$347.7 million), a
        32.9% increase from RMB1,796.5 million in fiscal year 2017.
    --  Non-GAAP income from operations was RMB3,051.3 million (US$444.6
        million), a 29.3% increase from RMB2,359.2 million in fiscal year 2017.
    --  Net income attributable to 58.com Inc. ordinary shareholders was
        RMB1,997.0 million (US$291.0 million), a 55.4% increase from RMB1,285.1
        million in fiscal year 2017.
    --  Non-GAAP net income attributable to 58.com Inc. ordinary shareholders
        was RMB2,723.1 million (US$396.8 million), a 51.7% increase from
        RMB1,795.0 million in fiscal year 2017.
    --  Basic and diluted earnings per ADS attributable to ordinary shareholders
        were RMB13.54 (US$1.97) and RMB13.33 (US$1.94), respectively,
        representing 53.6% and 53.2% increases from RMB8.82 and RMB8.70,
        respectively in 2017.
    --  Non-GAAP basic and diluted earnings per ADS attributable to ordinary
        shareholders were RMB18.47 (US$2.69) and RMB18.17 (US$2.65),
        respectively, representing 49.9% and 49.4% increases from RMB12.32 and
        RMB12.16, respectively in 2017.

Management Comments

"We are pleased to close 2018 with a strong fourth quarter," commented Mr. Michael Yao, Chairman and Chief Executive Officer of 58.com. "Throughout 2018, our portfolio of apps including mainly 58.com, Anjuke, and Zhuan Zhuan generated strong growth and now cover over 500 million users as traffic continues to grow in a healthy and sustainable manner. Revenues for fiscal year 2018 also grew 30.5% when compared to last year despite a softening macroeconomic environment in China."

"Our core housing and jobs businesses continue to lead the market while newer businesses like Zhuan Zhuan and 58 Town have expanded our addressable market, particularly in lower tier cities. While these newer businesses generated larger losses when compared with a year ago, our operating profit continued its rapid growth and operating margins for fiscal year 2018 were roughly the same when compared to last year due to improved operational efficiency in our core business."

"I'm pleased with the progress we have made throughout the year. As a horizontal multi-category platform, we have demonstrated our ability to acquire users at relatively low cost and retain them through innovation and improvement of the user experience. We will continue to invest in our platform to better serve our growing number of users while working to increase operational efficiency."

Fourth Quarter 2018 Financial Results

Revenues

Total revenues were RMB3,609.3 million (US$525.9 million), representing an increase of 30.6% from RMB2,764.7 million in the same quarter of 2017.

Membership revenues were RMB1,122.2 million (US$163.5 million), an increase of 8.0% from RMB1,038.8 million in the same quarter of 2017.

The increase in membership revenues was primarily driven by an increase in the number of subscription-based paying membership accounts. The total number of subscription-based paying membership accounts on the Company's platforms, which include 58.com, Anjuke.com, and Ganji.com, was approximately 2,770,000 during the fourth quarter of 2018, a 4.4% increase from approximately 2,654,000 in the same quarter of 2017. The Company defines subscription-based paying membership accounts as registered accounts through which users have purchased the Company's subscription-based membership services and whose membership subscriptions are active at any point during a given period. Some paying merchant members purchase membership services from more than one Company platform which contributes separately to the revenues of each platform.

Online marketing services revenues were RMB2,275.0 million (US$331.5 million), an increase of 38.3% from RMB1,644.5 million in the same quarter of 2017.

The increase was primarily driven by the increasing adoption and effectiveness of the Company's various online marketing services such as real-time bidding, priority listing and various other online marketing services.

Cost of Revenues

Cost of revenues was RMB457.7 million (US$66.7 million), an increase of 74.1% from RMB262.9 million in the same quarter of 2017. The year-over-year increase was primarily driven by increases in the costs of goods and services sold on Zhuan Zhuan, Anjuke, and ChinaHR platforms as well as traffic acquisition costs paid to 58.com's advertising union partners, and salaries and benefits primarily for information quality control teams.

Gross Profit and Gross Margin

Gross profit was RMB3,151.6 million (US$459.2 million), an increase of 26.0% from RMB2,501.8 million during the same quarter of 2017.

Gross margin was 87.3%, compared with 90.5% during the same quarter of 2017.

Operating Expenses

Operating expenses were RMB2,445.2 million (US$356.3 million), an increase of 29.5% from RMB1,888.1 million in the same quarter of 2017.

Sales and marketing expenses in the fourth quarter of 2018 were RMB1,719.9 million (US$250.6 million), an increase of 28.5% from RMB1,338.6 million in the same quarter in 2017.

Within sales and marketing expenses, advertising expenses in the fourth quarter of 2018 were RMB796.5 million (US$116.1 million), an increase of 55.6% from RMB511.9 million in the fourth quarter of 2017.

The increase was primarily due to an increase in mobile traffic acquisition expenses, particularly for mobile applications such as 58.com, Anjuke, and Zhuan Zhuan. Advertising expenses associated with the Company's core businesses including 58.com and Anjuke accounted for the majority of the increase. The Company scaled back advertising expenses associated with Zhuan Zhuan following the conclusion of a major brand campaign during the second and third quarters of 2018.

Non-advertising sales and marketing expenses in the fourth quarter of 2018 were RMB923.4 million (US$134.5 million), an increase of 11.7% from RMB826.7 million in the same quarter in 2017.

Non-advertising sales and marketing expenses include salaries, benefits, commissions and share-based compensation expenses for the Company's sales, sales support, customer service, and marketing dealer management personnel, online and offline promotional expenses, and other operating expenses that are associated with sales and marketing activities.

The increase in non-advertising sales and marketing expenses was mainly related to an increase in field sales teams and customer services personnel commissions and salaries and marketing and promotional expenses for 58.com and newer platforms such as 58 Town and Zhuan Zhuan. The average number of employees in the Company's field sales, customer service and other sales and marketing nature teams were roughly the same during the quarter when compared to same period in 2017.

Research and development expenses in the fourth quarter of 2018 were RMB493.5 million (US$71.9 million), an increase of 37.9% from RMB357.9 million in the same quarter of 2017. The increase was primarily due to increases in salaries and benefits and share-based compensation expenses for the Company's research and development personnel for the development of new features and services.

General and administrative expenses in the fourth quarter of 2018 were RMB231.8 million (US$33.8 million), an increase of 21.0% from RMB191.6 million in the same quarter of 2017. The increase was primarily due to the increase in salaries, benefits and share-based compensation expenses related to administrative personnel.

Income from Operations

Income from operations was RMB706.4 million (US$102.9 million) in the fourth quarter of 2018, an increase of 15.1% from RMB613.7 million in the same quarter of 2017.

Operating margin, defined as income from operations divided by total revenues, was 19.6% in the fourth quarter of 2018, compared with 22.2% in the same quarter of 2017.

Non-GAAP income from operations was RMB894.6 million (US$130.3 million) in the fourth quarter of 2018, an increase of 17.3% from RMB762.5 million in the same quarter of 2017.

Non-GAAP operating margin, defined as non-GAAP income from operations divided by total revenues, was 24.8% in the fourth quarter of 2018, compared with 27.6% in the same quarter of 2017.

Other Expenses, net

Other expenses in the fourth quarter of 2018 were RMB164.5 million (US$24.0 million), compared with other expenses of RMB123.8 million in the same quarter of 2017.

Net investment loss was RMB190.9 million. Within the net investment loss was a loss in change in fair value of long-term investments of RMB206.7 million, which was primarily due to a decrease in share price of a publicly traded company in which the Group holds a minority stake.

Share of results of equity investees was a loss of RMB15.8 million which was primarily related to equity pick-up from 58 Home, 58.com's non-consolidated affiliate.

Net Income Attributable to 58.com Inc. Ordinary Shareholders

Net income attributable to 58.com Inc. ordinary shareholders was RMB410.9 million (US$59.9 million) in the fourth quarter of 2018, a decrease of 0.8% from RMB414.1 million in the same quarter of 2017.

Net margin, defined as net income attributable to 58.com Inc. ordinary shareholders divided by total revenues, was 11.4% in the fourth quarter of 2018, compared with 15.0% in the same quarter of 2017.

Non-GAAP net income attributable to 58.com Inc. ordinary shareholders was RMB756.3 million (US$110.2 million) in the fourth quarter of 2018, an increase of 37.8% from RMB549.0 million in the same quarter of 2017.

Non-GAAP net margin, defined as non-GAAP net income attributable to 58.com Inc. ordinary shareholders divided by total revenues, was 21.0% in the fourth quarter of 2018, compared with 19.9% in the same quarter of 2017.

Basic and Diluted Earnings per ADS

Basic and diluted earnings per ADS attributable to ordinary shareholders in the fourth quarter of 2018 were RMB2.78 (US$0.41) and RMB2.75 (US$0.40), respectively, representing 1.4% and 1.0% decreases from RMB2.82 and RMB2.78, respectively, in the same quarter of 2017.

Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders in the fourth quarter of 2018 were RMB5.12 (US$0.75) and RMB5.06 (US$0.74), respectively, representing 36.7% and 37.3% increases from RMB3.74 and RMB3.69, respectively, in the same quarter of 2017.

Cash Flow

Net cash provided by operating activities was RMB966.1 million (US$140.8 million) in the fourth quarter of 2018, an increase of 2.1% from RMB946.3 million in the same quarter of 2017.

Fiscal Year 2018 Financial Results

Revenues

Total revenues were RMB13,137.8 million (US$1,914.2 million) in 2018, representing an increase of 30.5% from RMB10,068.8 million during fiscal year 2017.

Membership revenues were RMB4,399.1 million (US$641.0 million) in 2018, an increase of 16.1% from RMB3,789.5 million during fiscal year 2017.

The increase in membership revenues was primarily driven by an increase in the number of subscription-based paying membership accounts. The total number of average quarterly subscription-based paying membership accounts on the Company's platforms, which include 58.com, Anjuke.com and Ganji.com, was approximately 2,834,000 during 2018, a 14.0% increase from approximately 2,485,000 during 2017.

Online marketing services revenues were RMB8,282.6 million (US$1,206.8 million) in 2018, an increase of 38.5% from RMB5,978.5 million during fiscal year 2017.

The increase was primarily driven by the increasing adoption and effectiveness of the Company's various online marketing services such as real time bidding and priority listings.

Cost of Revenues

Cost of revenues was RMB1,437.8 million (US$209.5 million) in 2018, an increase of 55.4% from RMB925.5 million during fiscal year 2017.

The year-over-year increase was primarily driven by increases in the costs of goods and services sold on Zhuan Zhuan, Anjuke, and ChinaHR platforms, traffic acquisition costs paid to 58.com's advertising union partners, and salaries and benefits primarily for information quality control teams.

Gross Profit and Gross Margin

Gross profit was RMB11,700.0 million (US$1,704.7 million) in 2018, an increase of 28.0% from RMB9,143.3 million during fiscal year 2017.

Gross margin was 89.1%, compared with 90.8% during fiscal year 2017.

Operating Expenses

Operating expenses were RMB9,313.4 million (US$1,357.0 million), representing an increase of 26.8% from RMB7,346.8 million during fiscal year 2017.

Sales and marketing expenses in 2018 were RMB6,861.8 million (US$999.8 million), an increase of 31.6% from RMB5,212.4 million during fiscal year 2017.

Within sales and marketing expenses, advertising expenses in 2018 were RMB3,309.6 million (US$482.2 million), an increase of 58.6% from RMB2,087.1 million during fiscal year 2017.

The increase was primarily due to mobile traffic acquisition expenses, particularly for mobile applications such as 58.com, Anjuke and Zhuan Zhuan. Advertising expenses associated with the Company's core businesses including 58.com and Anjuke accounted for the majority of the increase, while advertising expenses for Zhuan Zhuan grew at a faster rate from a smaller base in 2017.

Non-advertising sales and marketing expenses in 2018 were RMB3,552.3 million (US$517.6 million), an increase of 13.7% from RMB3,125.3 million during fiscal year 2017.

Non-advertising sales and marketing expenses include salaries, benefits, commissions and share-based compensation expenses for the Company's sales, sales support, customer service, and marketing dealer management personnel, online and offline promotional expenses, and other operating expenses that are associated with sales and marketing activities.

The increase in non-advertising sales and marketing expenses was mainly related to the increase in field sales and customer service personnel commissions and salaries, marketing and promotional expenses for 58.com, and relatively new platforms such as 58 Town and Zhuan Zhuan.

Research and development expenses in 2018 were RMB1,702.7 million (US$248.1 million), an increase of 24.4% from RMB1,368.4 million during fiscal year 2017.

The increase was primarily due to increases in salaries and benefits and share-based compensation expenses for the Company's research and development personnel for the development of new features and services.

General and administrative expenses in 2018 were RMB748.8 million (US$109.1 million), which was generally stable compared with RMB766.0 million during fiscal year 2017.

Income from Operations

Income from operations was RMB2,386.7 million (US$347.7 million) in 2018, an increase of 32.9% from RMB1,796.5 million during fiscal year 2017.

Operating margin was 18.2% in 2018, compared with 17.8% during fiscal year 2017.

Non-GAAP income from operations was RMB3,051.3 million (US$444.6 million) in 2018, an increase of 29.3% from RMB2,359.2 million during fiscal year 2017.

Non-GAAP operating margin was 23.2% in 2018, compared with 23.4% during fiscal year 2017.

Other Income/(Expenses), net

Other income in 2018 were RMB42.1 million (US$6.1 million), compared with other expenses of RMB260.5 million during fiscal year 2017.

Net investment income was RMB35.4 million. Within the net investment income was income of RMB194.1 million from commercial bank short-term investment products the Company purchased with its surplus cash, partially offset by loss in change in fair value of long-term investments of RMB139.3 million, which was primarily due to a decrease in share price of a publicly traded company in which the Group holds a minority stake.

Share of results of equity investees was a loss of RMB91.5 million which was primarily related to equity pick-up from 58 Home, 58.com's non-consolidated affiliate.

Net Income Attributable to 58.com Inc. Ordinary Shareholders

Net income attributable to 58.com Inc. ordinary shareholders was RMB1,997.0 million (US$291.0 million) in 2018, an increase of 55.4% from RMB1,285.1 million during fiscal year 2017.

Net margin was 15.2% in 2018, compared with 12.8% during fiscal year 2017.

Non-GAAP net income attributable to 58.com Inc. ordinary shareholders was RMB2,723.1 million (US$396.8 million) in 2018, an increase of 51.7% from RMB1,795.0 million during fiscal year 2017.

Non-GAAP net margin was 20.7% in 2018, compared with 17.9% during fiscal year 2017.

Basic and Diluted Earnings per ADS

Basic and diluted earnings per ADS attributable to ordinary shareholders in 2018 were RMB13.54 (US$1.97) and RMB13.33 (US$1.94), respectively, representing 53.6% and 53.2% from basic and diluted earnings per ADS attributable to ordinary shareholders of RMB8.82 and RMB8.70, respectively, during fiscal year 2017.

Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders in 2018 were RMB18.47 (US$2.69) and RMB18.17 (US$2.65), respectively, representing 49.9% and 49.4% increases from non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders of RMB12.32 and RMB12.16, respectively, during fiscal year 2017.

Cash Flow

Net cash provided by operating activities was RMB3,799.6 million (US$553.6 million) in 2018, an increase of 36.7% from net cash provided by operating activities of RMB2,779.9 million during fiscal year 2017.

Cash and Cash Equivalents, Restricted Cash and Short-term Investments

As of December 31, 2018, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB7,787.1 million (US$1,134.6 million).

Shares Outstanding

As of December 31, 2018, the Company had a total of 296,444,579 ordinary shares (including 250,858,415 Class A and 45,586,164 Class B ordinary shares) issued and outstanding. One ADS represents two Class A ordinary shares.

Recent Developments

On February 28, 2019, the Company entered into a definitive agreement to sell certain percentage of its equity stake in Che Hao Duo group ("Che Hao Duo", previously known as Guazi), an unconsolidated minority investment, to a third-party investor for a total purchase price of US$713.6 million. The completion of the transaction is subject to certain closing conditions. Following the closing of the transaction, the Company will continue to hold a minority equity interest in Che Hao Duo.

Business Outlook

Based on the Company's current operations, total revenues for the first quarter of 2019 are expected to be between RMB2.86 billion and RMB2.96 billion. This represents a year-over-year increase of 16% to 20% in Renminbi amounts. These estimates reflect the Company's current and preliminary view, which is subject to change.

Non-GAAP Financial Measures

To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States, or GAAP, this press release presents non-GAAP income/(loss) from operations, non-GAAP operating margin, non-GAAP net income/(loss) attributable to 58.com Inc. ordinary shareholders, non-GAAP net margin and non-GAAP basic and diluted earnings/(loss) per share and per ADS by excluding share-based compensation expenses, amortization of intangible assets resulting from business acquisitions, change in fair value of long-term investments, share-based compensation expenses included in share of results of equity investees, income tax effects of above GAAP to non-GAAP reconciling items. The Company believes these non-GAAP financial measures are important to help investors understand the Company's operating and financial performance, compare business trends among different reporting periods on a consistent basis and assess the Company's core operating results, as they exclude certain expenses that are not expected to result in cash payments. The use of the above non-GAAP financial measures has certain limitations. Share-based compensation expenses, amortization of intangible assets resulting from business acquisitions, non-cash gain or loss and income tax effects resulting from GAAP to non-GAAP reconciling items have been and will continue to be incurred in the future and are not reflected in the presentation of the non-GAAP financial measures, but should be considered in the overall evaluation of the Company's results. The Company compensates for these limitations by providing the relevant disclosure of its share-based compensation expenses, amortization of intangible assets resulting from business acquisitions, change in fair value of long-term investments, share-based compensation expenses included in share of results of equity investees, income tax effects of above GAAP to non-GAAP reconciling items, all of which should be considered when evaluating the Company's performance. These non-GAAP financial measures should be considered in addition to financial measures prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP. Reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure is set forth at the end of this release.

Conference Call

58.com's management will host an earnings conference call on March 1, 2019 at 8:00 a.m. U.S. Eastern Time (9:00 p.m. Beijing / Hong Kong time on the same day).

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



            International:              
            +1-412-317-6061



            U.S. Toll Free:             
            +1-888-317-6003



            Hong Kong Toll Free:        
            800-963976



            Hong Kong                   
            852-58081995



            China Toll Free:            
            4001-206115



            Passcode:                                       7221929

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 a.m. U.S. Eastern Time, March 8, 2019. The dial-in details for the replay are as follows:



              International:            
              +1-412-317-0088



              U.S. Toll Free:           
              +1-877-344-7529



              Passcode:                                    10129144

Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of 58.com's website at http://ir.58.com.

About 58.com Inc.

58.com Inc. (NYSE: WUBA) operates China's largest online market place for classifieds, as measured by monthly unique visitors on both its www.58.com website and mobile applications. The Company's online marketplace enables local business users and consumer users to connect, share information and conduct business. 58.com's broad, in-depth and high quality local information, combined with its easy-to-use website and mobile applications, has made it a trusted marketplace for consumers. 58.com's strong brand recognition, large and growing user base, merchant network and massive database of local information create a powerful network effect. For more information on 58.com, please visit http://www.58.com.

Safe Harbor Statements

This press release contains forward-looking statements 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," "confident" and similar statements. 58.com 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 58.com'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: 58.com's goals and strategies; its future business development, financial condition and results of operations; its ability to retain and grow its user base and network of local merchants for its online marketplace; 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 58.com does not undertake any obligation to update such information, except as required under applicable law.

For more information, please contact:

58.com Inc.
ir@58.com

Christensen

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

In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com


                                                                     
              
                58.com Inc.


                                                   
              
                UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                                      
              
                 (in thousands, except share and per share data, unless otherwise noted)


                                                               
              
                As of



                                                      
              
                December 31,             
              
                December 31,  
       
       December 31,


                                                                                      2017                                              2018                   2018



                                                           
              
                RMB                      
              
                RMB        
       
          US$



     
                ASSETS



     
                Current assets:


      Cash and cash equivalents                                                  1,524,982                                         2,387,478                347,867


      Restricted cash-current                                                       93,350                                           812,000                118,312


      Short-term investments                                                     3,437,707                                         4,587,610                668,436


      Accounts receivable, net                                                     667,750                                           917,443                133,676


      Prepayments and other current
       assets                                                                      657,272                                           813,403                118,517



                   Total current assets                                          6,381,061                                         9,517,934              1,386,808




     
                Non-current assets:


      Restricted cash-non-current                                                  792,000                                                                       -


      Property and equipment, net                                                1,351,681                                         1,329,752                193,751


      Intangible assets, net                                                     1,309,566                                         1,099,945                160,267



     Land use rights, net                                                           3,688                                             3,610                    526



     Goodwill                                                                  15,864,655                                        15,874,220              2,312,947


      Long-term investments                                                      1,808,601                                         3,365,906                490,429


      Long-term prepayments and
       other non-current assets                                                    755,260                                           639,478                 93,174



                   Total non-current assets                                     21,885,451                                        22,312,911              3,251,094



                   Total assets                                                 28,266,512                                        31,830,845              4,637,902



                   LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY



     
                Current liabilities:



     Short-term loans                                                              75,000                                           812,794                118,428



     Accounts payable                                                             624,300                                           887,558                129,321



     Deferred revenues                                                          2,123,755                                         2,348,333                342,163



     Customer advances                                                          1,365,437                                         1,465,169                213,482



     Taxes payable                                                                186,491                                           250,231                 36,460


      Salary and welfare payable                                                   536,831                                           642,445                 93,607


      Accrued expenses and other
       current liabilities                                                         689,134                                           878,368                127,982



                   Total current liabilities                                     5,600,948                                         7,284,898              1,061,443




     
                Non-current liabilities:



     Long-term loans                                                              777,427                                                                       -


      Deferred tax liabilities                                                     319,219                                           283,112                 41,251


      Other non-current liabilities                                                 17,376                                             1,675                    244



                   Total non-current liabilities                                 1,114,022                                           284,787                 41,495



                   Total liabilities                                             6,714,970                                         7,569,685              1,102,938




     
                Mezzanine equity:


      Mezzanine classified
       noncontrolling interests                                                  1,736,405                                         1,944,397                283,308



                   Total mezzanine equity                                        1,736,405                                         1,944,397                283,308




     
                Shareholders' equity:



     
                58.com Inc. shareholders' equity:


      Ordinary shares (US$0.00001 par
       value, 4,800,000,000 Class A                               respectively)
       and 200,000,000 Class B shares
       authorized, 245,924,871 Class
       A and 48,040,260 Class B
       shares issued and outstanding
       as of December 31, 2017 and
       250,858,415 Class A and
       45,586,164 Class B shares
       issued and outstanding as of
       December 31, 2018,                                                               18                                                19                      3


      Additional paid-in capital                                                21,338,787                                        21,621,665              3,150,377


      Retained earnings/(accumulated
       deficit)                                                                (1,689,683)                                          439,514                 64,039


      Accumulated other comprehensive
       loss                                                                       (55,671)                                         (40,622)               (5,919)



                   Total 58.com Inc. shareholders'
                    equity                                                      19,593,451                                        22,020,576              3,208,500



                   Noncontrolling interests                                        221,686                                           296,187                 43,156



                   Total shareholders' equity                                   19,815,137                                        22,316,763              3,251,656



                   Total liabilities, mezzanine
                    equity and shareholders'
                    equity                                                      28,266,512                                        31,830,845              4,637,902


                                                                                                                                                          
              
                58.com Inc.


                                                                                                                                      
           
                UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                                                           
              
             (in thousands, except share, per share and per ADS data, unless otherwise noted)




                                                                           
              
                For the Three Months Ended                                       
              
                For the Fiscal Year Ended

                                                                                                                                                                                                             ---

                                                                           
              
                December 31,                
            
               December 31,                
              
                December 31,             
       
       December 31,    
       
       December 31,     
       
       December 31,


                                                                                                           2017                                              2018                                                 2018                              2017                     2018                      2018



                                                                                
              
                RMB                         
           
                RMB                         
              
                US$                   
       
          RMB          
       
          RMB           
       
          US$



     
                Revenues:



     Membership                                                                                      1,038,812                                         1,122,208                                              163,511                         3,789,524                4,399,058                   640,963



     Online marketing services                                                                       1,644,486                                         2,275,034                                              331,483                         5,978,491                8,282,593                 1,206,812



     E-commerce services                                                                                17,450                                            25,954                                                3,782                            73,941                   72,596                    10,578



     Other services                                                                                     63,934                                           186,115                                               27,118                           226,824                  383,568                    55,888




     
                Total revenues                                                                     2,764,682                                         3,609,311                                              525,894                        10,068,780               13,137,815                 1,914,241



     
                Cost of revenues(1)                                                                (262,853)                                        (457,691)                                            (66,688)                        (925,497)             (1,437,795)                (209,493)




     
                Gross profit                                                                       2,501,829                                         3,151,620                                              459,206                         9,143,283               11,700,020                 1,704,748




     
                Operating expenses(1):



     Sales and marketing expenses(2)                                                               (1,338,587)                                      (1,719,902)                                           (250,598)                      (5,212,360)             (6,861,845)                (999,803)



     Research and development expenses                                                               (357,898)                                        (493,524)                                            (71,909)                      (1,368,441)             (1,702,748)                (248,098)



     General and administrative expenses                                                             (191,631)                                        (231,819)                                            (33,777)                        (766,017)               (748,766)                (109,099)




     
                Total operating expenses                                                         (1,888,116)                                      (2,445,245)                                           (356,284)                      (7,346,818)             (9,313,359)              (1,357,000)




     
                Income from operations                                                               613,713                                           706,375                                              102,922                         1,796,465                2,386,661                   347,748




     
                Other income/(expenses):



     Interest income/(expense), net                                                                      7,515                                            11,895                                                1,733                           (1,623)                  15,529                     2,263



     Investment income/(loss), net                                                                      27,538                                         (190,866)                                            (27,810)                          342,241                   35,360                     5,152



     Share of results of equity investees                                                            (198,333)                                         (15,802)                                             (2,302)                        (687,400)                (91,497)                 (13,332)



     Foreign currency exchange gain, net                                                                   296                                               701                                                  102                               793                      597                        87



     Others, net                                                                                        39,157                                            29,554                                                4,306                            85,455                   82,113                    11,964




     
                Income before tax                                                                    489,886                                           541,857                                               78,951                         1,535,931                2,428,763                   353,882



     Income tax expenses                                                                              (42,144)                                         (93,439)                                            (13,614)                        (146,689)               (299,705)                 (43,668)




     
                Net income                                                                           447,742                                           448,418                                               65,337                         1,389,242                2,129,058                   310,214



      Net loss/(income) attributable to noncontrolling
       interests                                                                                          (763)                                          (2,931)                                               (427)                          (4,667)                     139                        20


      Deemed dividend to mezzanine classified
       noncontrolling  interests                                                                       (32,922)                                         (34,551)                                             (5,034)                         (99,507)               (132,202)                 (19,262)



                   Net income attributable to 58.com Inc. ordinary
                    shareholders                                                                        414,057                                           410,936                                               59,876                         1,285,068                1,996,995                   290,972





                                                                           
              
                For the Three Months Ended                                       
              
                For the Fiscal Year Ended

                                                                                                                                                                                                             ---

                                                                           
              
                December 31,                
            
               December 31,                
              
                December 31,             
       
       December 31,    
       
       December 31,     
       
       December 31,


                                                                                                           2017                                              2018                                                 2018                              2017                     2018                      2018



                                                                                
              
                RMB                         
           
                RMB                         
              
                US$                   
       
          RMB          
       
          RMB           
       
          US$


      Net earnings per ordinary share attributable to
       ordinary shareholders ? basic                                                                       1.41                                              1.39                                                 0.20                              4.41                     6.77                      0.99


      Net earnings per ordinary share attributable to
       ordinary shareholders ? diluted                                                                     1.39                                              1.38                                                 0.20                              4.35                     6.66                      0.97


      Net earnings per ADS attributable to ordinary
       shareholders - basic (1 ADS represents 2 Class A
       ordinary shares)                                                                                    2.82                                              2.78                                                 0.41                              8.82                    13.54                      1.97


      Net earnings per ADS attributable to ordinary
       shareholders - diluted (1 ADS represents 2 Class A
       ordinary shares)                                                                                    2.78                                              2.75                                                 0.40                              8.70                    13.33                      1.94


      Weighted average number of ordinary shares used in
       computing basic earnings per share                                                           293,323,477                                                                                                                            291,475,725


                                                                                                                                                   295,558,994                                          295,558,994                                               294,902,518               294,902,518


      Weighted average number of ordinary shares used in
       computing diluted earnings per share                                                         297,680,844                                                                                                                            295,304,995


                                                                                                                                                   298,705,512                                          298,705,512                                               299,711,258               299,711,258





     Note:



     (1)     Share?based compensation expenses were allocated in cost of revenues and operating expenses as follows:





     Cost of revenues                                                                                    1,139                                             2,041                                                  297                             3,278                    6,354                       926



     Sales and marketing expenses                                                                       17,940                                            27,158                                                3,957                            69,926                   90,919                    13,247



     Research and development expenses                                                                  34,856                                            55,909                                                8,146                           126,116                  182,410                    26,578



     General and administrative expenses                                                                44,808                                            52,695                                                7,678                           151,249                  183,191                    26,692





             Amortization of intangible assets resulting from business acquisitions were allocated in operating expenses as follows:





     Sales and marketing expenses                                                                       43,671                                            43,410                                                6,325                           176,157                  174,333                    25,401



     Research and development expenses                                                                  11,677                                            11,997                                                1,748                            46,708                   47,028                     6,852





     (2)    Breakdown of sales and marketing expenses was as follows:



     Advertising expenses                                                                              511,931                                           796,505                                              116,054                         2,087,066                3,309,560                   482,218


      Non-advertising sales and marketing expenses                                                      826,656                                           923,397                                              134,544                         3,125,294                3,552,285                   517,585










                                                                                                                                                        
              
                58.com Inc.


                                                                                                                                         
             
                Reconciliation of GAAP and Non-GAAP Results


                                                                                                                      
              
             (in thousands, except share, ADS, per share and per ADS data, unless otherwise noted)




                                                                           
              
                For the Three Months Ended                                       
              
                For the Fiscal Year Ended

                                                                                                                                                                                                             ---

                                                                           
              
                December 31,                
            
               December 31,                
              
                December 31,             
       
       December 31,    
       
       December 31,     
       
       December 31,


                                                                                                           2017                                              2018                                                 2018                              2017                     2018                      2018



                                                                                
              
                RMB                         
           
                RMB                         
              
                US$                   
       
          RMB          
       
          RMB           
       
          US$





     
                GAAP income from operations                                                          613,713                                           706,375                                              102,922                         1,796,465                2,386,661                   347,748



     Share-based compensation expenses[5]                                                               93,463                                           132,777                                               19,346                           339,837                  443,312                    64,592


      Amortization of intangible assets resulting from
       business acquisitions                                                                             55,348                                            55,407                                                8,073                           222,865                  221,361                    32,253



                   Non-GAAP income from operations                                                      762,524                                           894,559                                              130,341                         2,359,167                3,051,334                   444,593





                   GAAP net income attributable to 58.com Inc. ordinary
                    shareholders                                                                        414,057                                           410,936                                               59,876                         1,285,068                1,996,995                   290,972



     Share-based compensation expenses                                                                  93,463                                           132,777                                               19,346                           339,837                  443,312                    64,592


      Amortization of intangible assets resulting from
       business acquisitions                                                                             55,348                                            55,407                                                8,073                           222,865                  221,361                    32,253


      Change in fair value of long-term investments                                                           -                                          206,700                                               30,117                                                   139,250                    20,289


      Share-based compensation expenses included in share
       of results of equity investees                                                                     (292)                                               14                                                    2                             2,094                       15                         2


      Income tax effects of GAAP to non-GAAP reconciling
       items[6]                                                                                        (13,555)                                         (49,519)                                             (7,216)                         (54,872)                (77,849)                 (11,343)



                   Non-GAAP net income attributable to 58.com Inc.
                    ordinary shareholders                                                               549,021                                           756,315                                              110,198                         1,794,992                2,723,084                   396,765





                                                                           
              
                For the Three Months Ended                                       
              
                For the Fiscal Year Ended

                                                                                                                                                                                                             ---

                                                                           
              
                December 31,                
            
               December 31,                
              
                December 31,             
       
       December 31,    
       
       December 31,     
       
       December 31,


                                                                                                           2017                                              2018                                                 2018                              2017                     2018                      2018



                                                                                
              
                RMB                         
           
                RMB                         
              
                US$                   
       
          RMB          
       
          RMB           
       
          US$



     
                GAAP operating margin                                                                  22.2%                                            19.6%                                               19.6%                            17.8%                   18.2%                    18.2%



     Share-based compensation expenses                                                                    3.4%                                             3.7%                                                3.7%                             3.4%                    3.4%                     3.4%


      Amortization of intangible assets resulting from
       business acquisitions                                                                               2.0%                                             1.5%                                                1.5%                             2.2%                    1.6%                     1.6%




     
                Non-GAAP operating margin                                                              27.6%                                            24.8%                                               24.8%                            23.4%                   23.2%                    23.2%






     
                GAAP net margin                                                                        15.0%                                            11.4%                                               11.4%                            12.8%                   15.2%                    15.2%



     Share-based compensation expenses                                                                    3.4%                                             3.7%                                                3.7%                             3.4%                    3.4%                     3.4%


      Amortization of intangible assets resulting from
       business acquisitions                                                                               2.0%                                             1.5%                                                1.5%                             2.2%                    1.6%                     1.6%


      Change in fair value of long-term investments                                                           -                                             5.7%                                                5.7%                                                     1.0%                     1.0%


      Share-based compensation expenses included in share
       of results of equity investees                                                                      0.0%                                             0.0%                                                0.0%                             0.0%                    0.0%                     0.0%


      Income tax effects of GAAP to non-GAAP reconciling
       items                                                                                             (0.5)%                                           (1.3)%                                              (1.3)%                           (0.5)%                  (0.5)%                   (0.5)%




     
                Non-GAAP net margin                                                                    19.9%                                            21.0%                                               21.0%                            17.9%                   20.7%                    20.7%





      Weighted average number of ordinary shares used in
       computing non-GAAP basic earnings per share                                                  293,323,477                                       295,558,994                                          295,558,994                       291,475,725              294,902,518               294,902,518


      Weighted average number of ordinary shares used in
       computing non-GAAP diluted earnings per share                                                297,680,844                                       298,705,512                                          298,705,512                       295,304,995              299,711,258               299,711,258


      Weighted average number of ADS used in computing non-
       GAAP basic earnings per ADS                                                                  146,661,739                                       147,779,497                                          147,779,497                       145,737,863              147,451,259               147,451,259


      Weighted average number of ADS used in computing non-
       GAAP diluted earnings per ADS                                                                148,840,422                                       149,352,756                                          149,352,756                       147,652,498              149,855,629               149,855,629




      Non-GAAP net earnings per ordinary share
       attributable to ordinary shareholders ? basic                                                       1.87                                              2.56                                                 0.37                              6.16                     9.23                      1.35


      Non-GAAP net earnings per ordinary share
       attributable to ordinary shareholders ? diluted                                                     1.84                                              2.53                                                 0.37                              6.08                     9.09                      1.32


      Non-GAAP net earnings per ADS attributable to
       ordinary shareholders ? basic                                                                       3.74                                              5.12                                                 0.75                             12.32                    18.47                      2.69


      Non-GAAP net earnings per ADS attributable to
       ordinary shareholders ? diluted                                                                     3.69                                              5.06                                                 0.74                             12.16                    18.17                      2.65

<hr/>

[1] This press release contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) solely for the convenience of the readers. Unless otherwise specified, all translations of Renminbi amounts into US$ amounts in this press release are made at RMB6.8632 to US$1.00, which was the U.S. dollars middle rate announced by the PRC State Administration of Foreign Exchange on December 28, 2018. The percentages stated in this press release are calculated based on the Renminbi amounts. On February 28, 2019, such exchange rate was RMB6.6901 to US$1.00.

[2] Non-GAAP income from operations is defined as income from operations excluding share-based compensation expenses and amortization of intangible assets resulting from business acquisitions. See "Reconciliation of GAAP and Non-GAAP Results" at the end of this press release.

[3] Non-GAAP net income attributable to 58.com Inc. ordinary shareholders is defined as net income attributable to 58.com Inc. ordinary shareholders excluding share-based compensation expenses, amortization of intangible assets resulting from business acquisitions, change in fair value of long-term investments, share-based compensation expenses included in share of results of equity investees, and income tax effects of GAAP to non-GAAP reconciling items. See "Reconciliation of GAAP and Non-GAAP Results" at the end of this press release.

[4] Non-GAAP basic and diluted earnings per ADS is defined as non-GAAP net income attributable to 58.com Inc. ordinary shareholders divided by weighted average number of basic and diluted ADSs.

[5] Since the third quarter of 2017, certain share-based awards with redemption features granted to the Company's employees were expected to be settled in cash and were classified as liabilities. The share-based compensation expenses recognized for this type of awards amounted to RMB5.0 million and RMB19.6 million for the three months and the year ended December 31, 2018, respectively, and were excluded from the GAAP to non-GAAP reconciliation accordingly.

[6] This is to exclude the income tax benefits related to amortization of intangible assets resulting from business acquisitions and change in fair value of long-term investments . Other GAAP to non-GAAP reconciling items have no income tax effect.

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SOURCE 58.com Inc