51job, Inc. Reports Third Quarter 2020 Financial Results
SHANGHAI, Nov. 19, 2020 /PRNewswire/ -- 51job, Inc. (Nasdaq: JOBS) ("51job" or the "Company"), a leading provider of integrated human resource services in China, announced today its unaudited financial results for the third quarter of 2020 ended September 30, 2020.
Third Quarter 2020 Financial Highlights:
-- Net revenues decreased 8.4% from Q3 2019 to RMB906.1 million (US$133.5
million)
-- Online recruitment services revenues decreased 13.9%
-- Other human resource related revenues increased 1.4%
-- Income from operations was RMB175.0 million (US$25.8 million)
-- Fully diluted earnings per share was RMB2.55 (US$0.37)
-- Excluding share-based compensation expense, loss from foreign currency
translation, and changes in fair value of listed equity securities and
long-term investments, as well as the related tax effect of these items,
non-GAAP adjusted fully diluted earnings per share was RMB3.57 (US$0.53)
Third Quarter 2020 Unaudited Financial Results
Net revenues for the third quarter ended September 30, 2020 were RMB906.1 million (US$133.5 million), a decrease of 8.4% from RMB989.0 million for the same quarter in 2019.
Online recruitment services revenues for the third quarter of 2020 were RMB545.5 million (US$80.3 million), representing a 13.9% decrease from RMB633.4 million for the same quarter in 2019. The year-over-year decline was due to the ongoing impact of the COVID-19 pandemic and global economic uncertainty on the business operations of companies in China, which has negatively affected their recruitment demand and spending on the Company's online recruitment platforms in 2020. However, when compared to the second quarter of 2020, third quarter online recruitment services revenues grew 8.4% sequentially as recruitment activity improved and the Company's contract signings with employers increased.
Other human resource related revenues for the third quarter of 2020 increased 1.4% to RMB360.6 million (US$53.1 million) from RMB355.6 million for the same quarter in 2019. When compared to the second quarter of 2020, other human resource related revenues increased 10.8% sequentially due to a strong rebound in the Company's training business. More clients authorized or resumed in-person learning and interaction, and a greater number of training events, including some rescheduled from the first half of the year, were conducted in the third quarter of 2020.
Gross profit for the third quarter of 2020 was RMB584.4 million (US$86.1 million) compared with RMB682.3 million for the same quarter of the prior year. The decline was primarily due to the lower level of revenues and the increase in cost of services as the Company stepped up investment in new technology and product development in the third quarter of 2020. Sequentially, when compared to the second quarter of 2020, the Company also added seasonal staff in preparation for the upcoming campus recruitment peak period in the fall, which resulted in higher employee compensation expenses in the third quarter. Gross margin, which is gross profit as a percentage of net revenues, was 64.5% in the third quarter of 2020 compared with 69.0% for the same quarter in 2019.
Operating expenses for the third quarter of 2020 decreased 3.8% to RMB409.3 million (US$60.3 million) from RMB425.5 million for the same quarter in 2019. Sales and marketing expenses for the third quarter of 2020 decreased 3.9% to RMB313.2 million (US$46.1 million) from RMB325.8 million for the same quarter of the prior year primarily due to a reduction in contributions to social welfare funds and a decrease in performance-based bonuses, which was partially offset by greater spending on advertising and promotion activities. General and administrative expenses for the third quarter of 2020 decreased 3.6% to RMB96.2 million (US$14.2 million) from RMB99.7 million for the same quarter of the prior year primarily due to a reduction in contributions to social welfare funds and a smaller provision for doubtful accounts.
Income from operations for the third quarter of 2020 was RMB175.0 million (US$25.8 million) compared with RMB256.7 million for the third quarter of 2019. Operating margin, which is income from operations as a percentage of net revenues, was 19.3% in the third quarter of 2020 compared with 26.0% for the same quarter in 2019. Excluding share-based compensation expense, operating margin would have been 23.0% in the third quarter of 2020 compared with 29.5% for the same quarter in 2019.
The Company recognized a loss from foreign currency translation of RMB29.2 million (US$4.3 million) in the third quarter of 2020 compared with a gain of RMB31.4 million in the third quarter of 2019 primarily due to the impact of the change in exchange rate between the Renminbi and the U.S. dollar on the Company's U.S. dollar cash deposits.
In the third quarter of 2020, the Company recognized a mark-to-market, non-cash loss of RMB46.5 million (US$6.9 million) associated with a change in fair value of listed equity securities investment in Huali University Group Limited, which is traded on the Hong Kong Stock Exchange. The Company also recognized a non-cash gain of RMB39.6 million (US$5.8 million) related to a change in fair value of long-term investment in a human resource consulting and executive search services company in China in the third quarter of 2020.
Other income in the third quarter of 2020 included local government financial subsidies of RMB5.6 million (US$0.8 million) compared with RMB9.3 million in the third quarter of 2019.
Net income attributable to 51job for the third quarter of 2020 was RMB173.3 million (US$25.5 million) compared with RMB300.2 million for the same quarter in 2019. Fully diluted earnings per share for the third quarter of 2020 was RMB2.55 (US$0.37) compared with RMB4.44 for the same quarter in 2019.
In the third quarter of 2020, total share-based compensation expense was RMB33.5 million (US$4.9 million) compared with RMB34.8 million in the third quarter of 2019.
Excluding share-based compensation expense, gain/loss from foreign currency translation, and changes in fair value of listed equity securities and long-term investments, as well as the related tax effect of these items, non-GAAP adjusted net income attributable to 51job for the third quarter of 2020 was RMB243.0 million (US$35.8 million) compared with RMB303.7 million for the third quarter of 2019. Non-GAAP adjusted fully diluted earnings per share was RMB3.57 (US$0.53) in the third quarter of 2020 compared with RMB4.49 in the third quarter of 2019.
As of September 30, 2020, cash and short-term investments totaled RMB10,137.6 million (US$1,493.1 million) compared with RMB9,940.6 million as of December 31, 2019.
Currency Convenience Translation
For the convenience of readers, certain Renminbi amounts have been translated into U.S. dollar amounts at the rate of RMB6.7896 to US$1.00, the noon buying rate on September 30, 2020 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board.
Use of Non-GAAP Financial Measures
To supplement the consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), 51job uses non-GAAP financial measures of income before income tax expense, income tax expense, adjusted net income, adjusted net income attributable to 51job and adjusted earnings per share, which are adjusted from results based on GAAP to exclude share-based compensation expense, gain/loss from foreign currency translation, and changes in fair value of listed equity securities investment, long-term investment and convertible senior notes, as well as the related tax effect of these items. The Company believes excluding share-based compensation expense and its related tax effect from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company's core operating results as such expense is not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. The Company believes excluding gain/loss from foreign currency translation, and changes in fair value of listed equity securities investment, long-term investment and convertible senior notes, as well as the related tax effect, from its non-GAAP financial measures is useful for its management and investors as such translation, mark-to-market 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 financial measures excluding share-based compensation expense, gain/loss from foreign currency translation, and changes in fair value of listed equity securities investment, long-term investment and convertible senior notes, as well as the related tax effect of these items, are important in helping investors to understand the Company's current financial performance and future prospects and to compare business trends among different reporting periods on a consistent basis. The presentation of these additional measures should not be considered a substitute for or superior to GAAP results or as being comparable to results reported or forecasted by other companies. The non-GAAP measures have been reconciled to GAAP measures in the attached financial statements.
About 51job
Founded in 1998, 51job is a leading provider of integrated human resource services in China. With a comprehensive suite of HR solutions, 51job meets the needs of enterprises and job seekers through the entire talent management cycle, from initial recruitment to employee retention and career development. The Company's main online recruitment platforms (http://www.51job.com, http://www.yingjiesheng.com, http://www.51jingying.com, http://www.lagou.com, and http://www.51mdd.com), as well as mobile applications, connect millions of people with employment opportunities every day. 51job also provides a number of other value-added HR services, including business process outsourcing, training, professional assessment, campus recruitment, executive search and compensation analysis. 51job has a call center in Wuhan and a nationwide network of sales and service locations spanning more than 30 cities across China.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are 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," "targets, "confident" and similar statements. Among other things, statements that are not historical facts, including statements about 51job's beliefs and expectations, as well as 51job's strategic and operational plans, are or contain forward-looking statements. 51job may also make written or oral forward-looking statements in its periodic reports 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. All forward-looking statements are based upon management's expectations at the time of the statements and involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: execution of 51job's strategies and business plans; growth and trends of the human resource services industry in China; market acceptance of 51job's products and services; competition in the industry; 51job's ability to control costs and expenses; 51job's ability to retain key personnel and attract new talent; relevant government policies and regulations relating to 51job's industry, corporate structure and business operations; seasonality in the business; fluctuations in the value of the Renminbi against the U.S. dollar and other currencies; risks related to acquisitions or investments 51job has made or will make in the future; accounting adjustments that may occur during the quarterly or annual close or auditing process; and fluctuations in general economic and business conditions in China and globally, including the impact of the coronavirus or other pandemic. Further information regarding these and other risks are included in 51job's filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release and based on assumptions that 51job believes to be reasonable as of this date, and 51job undertakes no obligation to update any forward-looking statement, except as required under applicable law.
Contact
Investor Relations, 51job, Inc.
Tel: +86-21-6879-6250
Email: ir@51job.com
51job, Inc.
Consolidated Statements of Operations and Comprehensive Income
For the Three Months Ended
September 30, September 30, September 30,
2019 2020 2020
(In thousands, except
share and per share
data)
(unaudited)
(unaudited)
(unaudited)
---
RMB
RMB US$ (Note 1)
Revenues:
Online recruitment
services 633,393 545,501 80,344
Other human resource
related revenues 355,560 360,604 53,111
Net revenues 988,953 906,105 133,455
Cost of services (Note
2) (306,690) (321,748) (47,388)
Gross profit 682,263 584,357 86,067
Operating expenses:
Sales and marketing
(Note 3) (325,779) (313,170) (46,125)
General and
administrative (Note
4) (99,738) (96,165) (14,164)
Total operating
expenses (425,517) (409,335) (60,289)
Income from operations 256,746 175,022 25,778
Gain (Loss) from
foreign currency
translation 31,366 (29,215) (4,303)
Interest and
investment income,
net 48,390 58,284 8,584
Change in fair value
of listed equity
securities investment - (46,533) (6,854)
Change in fair value
of long-term
investment - 39,614 5,835
Other income, net 12,729 6,692 986
Income before income
tax expense 349,231 203,864 30,026
Income tax expense (50,784) (39,330) (5,793)
Net income 298,447 164,534 24,233
Net loss attributable
to non-controlling
interests 1,714 8,788 1,294
Net income
attributable to
51job, Inc. 300,161 173,322 25,527
Net income 298,447 164,534 24,233
Other comprehensive
income (loss) 386 (597) (88)
Total comprehensive
income 298,833 163,937 24,145
Earnings per share:
Basic 4.52 2.58 0.38
Diluted 4.44 2.55 0.37
Weighted average number of common shares outstanding:
Basic 66,369,912 67,185,235 67,185,235
Diluted 67,622,677 68,089,693 68,089,693
Notes:
(1) The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.7896
to US$1.00 on September 30, 2020 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical
release of the Federal Reserve Board.
(2) Includes share-based compensation expense of RMB5,558 and RMB5,345 (US$787) for the three months ended
September 30, 2019 and 2020, respectively.
(3) Includes share-based compensation expense of RMB4,778 and RMB4,595 (US$677) for the three months ended
September 30, 2019 and 2020, respectively.
(4) Includes share-based compensation expense of RMB24,498 and RMB23,603 (US$3,476) for the three months ended
September 30, 2019 and 2020, respectively.
51job, Inc.
Consolidated Statements of Operations and Comprehensive Income
For the Nine Months Ended
September 30, September 30, September 30,
2019 2020 2020
(In thousands, except
share and per share
data) (unaudited) (unaudited) (unaudited)
---
RMB
RMB US$ (Note 1)
Revenues:
Online recruitment
services 1,857,794 1,595,772 235,032
Other human resource
related revenues 1,006,612 930,072 136,985
Net revenues 2,864,406 2,525,844 372,017
Cost of services (Note
2) (843,787) (847,227) (124,783)
Gross profit 2,020,619 1,678,617 247,234
Operating expenses:
Sales and marketing
(Note 3) (928,194) (882,094) (129,918)
General and
administrative (Note
4) (281,937) (285,999) (42,123)
Total operating
expenses (1,210,131) (1,168,093) (172,041)
Income from operations 810,488 510,524 75,193
Gain (Loss) from
foreign currency
translation 73,717 (19,591) (2,885)
Interest and
investment income,
net 126,370 169,018 24,894
Change in fair value
of listed equity
securities investment - 20,164 2,969
Change in fair value
of long-term
investment - 39,614 5,835
Change in fair value
of convertible senior
notes (Note 5) (752,073) -
Other income, net 198,116 155,617 22,920
Income before income
tax expense 456,618 875,346 128,926
Income tax expense (178,260) (135,722) (19,990)
Net income 278,358 739,624 108,936
Net loss attributable
to non-controlling
interests 4,411 15,604 2,298
Net income
attributable to
51job, Inc. 282,769 755,228 111,234
Net income 278,358 739,624 108,936
Other comprehensive
income (loss) 446 (294) (43)
Total comprehensive
income 278,804 739,330 108,893
Earnings per share:
Basic 4.38 11.27 1.66
Diluted 4.27 11.11 1.64
Weighted average number of common shares outstanding:
Basic 64,561,839 67,000,172 67,000,172
Diluted 66,245,961 67,992,639 67,992,639
Notes:
(1) The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.7896
to US$1.00 on September 30, 2020 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical
statistical release of the Federal Reserve Board.
(2) Includes share-based compensation expense of RMB14,678 and RMB17,341 (US$2,554) for the nine months ended
September 30, 2019 and 2020, respectively.
(3) Includes share-based compensation expense of RMB12,618 and RMB14,907 (U$2,196) for the nine months ended
September 30, 2019 and 2020, respectively.
(4) Includes share-based compensation expense of RMB64,800 and RMB76,549 (US$11,274) for the nine months ended
September 30, 2019 and 2020, respectively.
(5) On April 15, 2019, the convertible senior notes matured, and the note holders requested the conversion of the senior
notes into 4,035,664 shares.
51job, Inc.
Reconciliation of GAAP and Non-GAAP Results
For the Three Months Ended
September 30, September 30, September 30,
2019 2020 2020
(In thousands,
except share and
per share data) (unaudited) (unaudited) (unaudited)
---
RMB
RMB US$ (Note 1)
GAAP income before
income tax expense 349,231 203,864 30,026
Add: Share-based
compensation 34,834 33,543 4,940
Add (Less): (Gain)
Loss from foreign
currency
translation (31,366) 29,215 4,303
Add: Change in fair
value of listed
equity securities
investment - 46,533 6,854
Less: Change in fair
value of long-term
investment - (39,614) (5,835)
---
Non-GAAP income
before income tax
expense 352,699 273,541 40,288
GAAP income tax
expense (50,784) (39,330) (5,793)
Tax effect of non-
GAAP line items 76 (32) (5)
Non-GAAP income tax
expense (50,708) (39,362) (5,798)
Non-GAAP adjusted
net income 301,991 234,179 34,490
Non-GAAP adjusted
net income
attributable to
51job, Inc. 303,705 242,967 35,784
Non-GAAP adjusted earnings per share:
Basic 4.58 3.62 0.53
Diluted 4.49 3.57 0.53
Weighted average number of common shares
outstanding:
Basic 66,369,912 67,185,235 67,185,235
Diluted 67,622,677 68,089,693 68,089,693
For the Nine Months Ended
September 30, September 30, September 30,
2019 2020 2020
(In thousands,
except share and
per share data) (unaudited) (unaudited) (unaudited)
---
RMB
RMB US$ (Note 1)
GAAP income before
income tax expense 456,618 875,346 128,926
Add: Share-based
compensation 92,096 108,797 16,024
Add (Less): (Gain)
Loss from foreign
currency
translation (73,717) 19,591 2,885
Less: Change in fair
value of listed
equity securities
investment - (20,164) (2,969)
Less: Change in fair
value of long-term
investment - (39,614) (5,835)
Add: Change in fair
value of
convertible senior
notes (Note 2) 752,073 -
Non-GAAP income
before income tax
expense 1,227,070 943,956 139,031
GAAP income tax
expense (178,260) (135,722) (19,990)
Tax effect of non-
GAAP line items 20 (71) (10)
Non-GAAP income tax
expense (178,240) (135,793) (20,000)
Non-GAAP adjusted
net income 1,048,830 808,163 119,031
Non-GAAP adjusted
net income
attributable to
51job, Inc. 1,053,241 823,767 121,329
Non-GAAP adjusted earnings per share:
Basic 16.31 12.29 1.81
Diluted 15.90 12.12 1.78
Weighted average number of common shares
outstanding:
Basic 64,561,839 67,000,172 67,000,172
Diluted 66,245,961 67,992,639 67,992,639
Notes:
(1) The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.7896
to US$1.00 on September 30, 2020 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical
release of the Federal Reserve Board.
(2) On April 15, 2019, the convertible senior notes matured, and the note holders requested the conversion of the senior
notes into 4,035,664 shares.
51job, Inc.
Consolidated Balance Sheets
As of
December 31, September 30, September 30,
2019 2020 2020
(In thousands, except share
and per share data) (unaudited) (unaudited) (unaudited)
RMB
RMB US$ (Note 1)
ASSETS
Current assets:
Cash 2,294,904 1,962,219 289,004
Restricted cash 66,169 24,732 3,643
Short-term investments 7,645,686 8,175,367 1,204,101
Accounts receivable (net of allowance
of RMB21,952 and
RMB18,956 as of December 31, 2019 and
September 30, 2020,
respectively) 266,437 250,702 36,924
Prepayments and other current assets 669,208 578,798 85,248
Total current assets 10,942,404 10,991,818 1,618,920
---
Non-current assets:
Long-term investments 1,482,544 1,541,153 226,987
Time deposits 712,570 104,950
Property and equipment, net 271,932 268,103 39,487
Goodwill 1,036,124 1,036,124 152,605
Intangible assets, net 203,162 173,206 25,510
Right-of-use assets 320,809 310,284 45,700
Other long-term assets 10,420 13,819 2,035
Deferred tax assets 22,147 33,312 4,906
Total non-current assets 3,347,138 4,088,571 602,180
---
Total assets 14,289,542 15,080,389 2,221,100
===
LIABILITIES, MEZZANINE EQUITY AND EQUITY
Current liabilities:
Accounts payable 48,114 66,038 9,726
Salary and employee related accrual 162,775 215,186 31,693
Taxes payable 267,596 166,164 24,473
Advance from customers 1,108,518 1,081,332 159,263
Lease liabilities, current 34,817 36,046 5,309
Other payables and accruals 1,211,642 1,050,562 154,731
Total current liabilities 2,833,462 2,615,328 385,195
---
Non-current liabilities:
Lease liabilities, non-current 50,763 45,168 6,653
Deferred tax liabilities 214,307 222,546 32,777
Total non-current liabilities 265,070 267,714 39,430
---
Total liabilities 3,098,532 2,883,042 424,625
---
Mezzanine equity:
Redeemable non-controlling interests 216,974 200,565 29,540
Shareholders' equity:
Common shares (US$0.0001 par value:
500,000,000 shares
authorized, 66,784,688 and 67,400,537
shares issued and
outstanding as of December 31, 2019
and September 30, 2020,
respectively) 53 54 8
Additional paid-in capital 4,901,466 5,169,509 761,386
Statutory reserves 17,930 17,930 2,641
Accumulated other comprehensive
income 254,524 254,230 37,444
Retained earnings 5,774,358 6,529,586 961,704
Total 51job, Inc.
shareholders' equity 10,948,331 11,971,309 1,763,183
Non-controlling interests 25,705 25,473 3,752
---
Total equity 10,974,036 11,996,782 1,766,935
---
Total liabilities, mezzanine
equity and equity 14,289,542 15,080,389 2,221,100
===
Note (1): The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.7896 to US$1.00
on September 30, 2020 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal
Reserve Board.
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SOURCE 51job, Inc.
