SHANGHAI, May 8, 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 first quarter of 2020 ended March 31, 2020.

First Quarter 2020 Financial Highlights:

• Net revenues decreased 13.2% over Q1 2019 to RMB791.1 million (US$111.7 million)
• Online recruitment services revenues decreased 10.8%
• Other human resource related revenues decreased 18.2%
• Income from operations was RMB170.0 million (US$24.0 million)
• Fully diluted earnings per share was RMB3.02 (US$0.43)
• Excluding share-based compensation expense, gain from foreign currency translation and change in fair value of equity securities investment, as well as the related tax effect of these items, non-GAAP adjusted fully diluted earnings per share was RMB3.27 (US$0.46), which exceeded the Company’s expectations
• Cash and short-term investments balance increased to RMB11,231.1 million (US$1,586.1 million) as of March 31, 2020

Commenting on the results, Rick Yan, President and Chief Executive Officer of 51job, said, “Despite a decline in revenues and profitability in the first quarter that reflected the significant impact of the COVID-19 pandemic on economic activity and recruitment market demand in China, I’m very proud of how quickly our 51job team has rallied together to adapt to these unprecedented circumstances.  Tapping into our large HR services ecosystem of innovative solutions and strategic partners, we are assisting and supporting employers, workers and job seekers in every possible way, including contactless services such as online job fairs, AI assessment and video interviewing.  Although companies have resumed operations and employees have returned to work, the current market sentiment is still cautious and uncertain due to the ongoing pandemic and its unpredictable consequences on China and globally.  But we have confidence in our proven business model, and with our ample financial resources, we remain committed to leading with high quality services, improving the user experience and driving operational excellence, all of which will position and strengthen 51job to capture more opportunities in the future.”

First Quarter 2020 Unaudited Financial Results

Net revenues for the first quarter ended March 31, 2020 were RMB791.1 million (US$111.7 million), a decrease of 13.2% from RMB911.9 million for the same quarter in 2019.

Online recruitment services revenues for the first quarter of 2020 were RMB547.0 million (US$77.3 million), representing a 10.8% decrease from RMB613.4 million for the same quarter of the prior year.  The decline was due to the disruptive social and economic impact of the COVID-19 pandemic on companies in China, including temporary office and facility closures, travel restrictions and quarantines, which hindered business operations, reduced recruitment demand and curtailed employer spending on the Company’s online recruitment platforms in the first quarter of 2020.

Other human resource related revenues for the first quarter of 2020 decreased 18.2% to RMB244.1 million (US$34.5 million) from RMB298.5 million for the same quarter in 2019.  The decrease was primarily due to fewer in-person training seminars and recruitment events conducted in the first quarter of 2020 as a result of the COVID-19 pandemic and the restrictions instituted on public gatherings.

Gross profit for the first quarter of 2020 was RMB536.8 million (US$75.8 million) compared with RMB662.5 million for the same quarter of the prior year.  Gross margin, which is gross profit as a percentage of net revenues, was 67.9% in the first quarter of 2020 compared with 72.7% for the same quarter in 2019.  The decrease in gross margin was primarily due to a lower level of revenues in the first quarter of 2020 while cost of services increased 2.0% from the year-ago quarter, mainly as a result of greater employee compensation expenses which were largely offset by less direct costs related to training and recruitment events.

Operating expenses for the first quarter of 2020 decreased 3.2% to RMB366.8 million (US$51.8 million) from RMB379.0 million for the same quarter in 2019.  Sales and marketing expenses for the first quarter of 2020 decreased 4.3% to RMB276.2 million (US$39.0 million) from RMB288.7 million for the same quarter of the prior year primarily due to a decrease in performance-based bonuses and selling expenses, which was partially offset by greater spending on advertising and promotion activities.  General and administrative expenses for the first quarter of 2020 were RMB90.6 million (US$12.8 million), slightly higher than RMB90.2 million for the same quarter of the prior year.

Income from operations for the first quarter of 2020 was RMB170.0 million (US$24.0 million) compared with RMB283.5 million for the first quarter of 2019.  Operating margin, which is income from operations as a percentage of net revenues, was 21.5% in the first quarter of 2020 compared with 31.1% for the same quarter in 2019.  Excluding share-based compensation expense, operating margin would have been 26.2% in the first quarter of 2020 compared with 34.3% for the same quarter in 2019.

The Company recognized a gain from foreign currency translation of RMB10.2 million (US$1.4 million) in the first quarter of 2020 compared with RMB13.8 million in the first 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 first quarter of 2020, the Company recognized a mark-to-market, non-cash gain of RMB9.9 million (US$1.4 million) associated with a change in fair value of equity securities investment in Huali University Group Limited, which is traded on the Hong Kong Stock Exchange.

Other income in the first quarter of 2020 included local government financial subsidies of RMB4.5 million (US$0.6 million) compared with RMB62.5 million in the first quarter of 2019.

Net income attributable to 51job for the first quarter of 2020 was RMB205.2 million (US$29.0 million) compared with net loss of RMB(84.8) million for the same quarter in 2019.  Fully diluted earnings per share for the first quarter of 2020 was RMB3.02 (US$0.43) compared with loss per share of RMB(1.38) for the same quarter in 2019.

In the first quarter of 2020, total share-based compensation expense was RMB37.1 million (US$5.2 million) compared with RMB29.3 million in the first quarter of 2019.

Excluding share-based compensation expense, gain from foreign currency translation, and changes in fair value of equity securities investment and convertible senior notes, as well as the related tax effect of these items, non-GAAP adjusted net income attributable to 51job for the first quarter of 2020 was RMB222.3 million (US$31.4 million) compared with RMB349.5 million for the first quarter of 2019.  Non-GAAP adjusted fully diluted earnings per share was RMB3.27 (US$0.46) in the first quarter of 2020 compared with RMB5.33 in the first quarter of 2019.

As of March 31, 2020, cash and short-term investments totaled RMB11,231.1 million (US$1,586.1 million) compared with RMB9,940.6 million as of December 31, 2019.

Business Outlook

Based on current market and operating conditions, the Company’s net revenues target for the second quarter of 2020 is in the estimated range of RMB775 million to RMB825 million (US$109.5 million to US$116.5 million). Excluding share-based compensation expense, any gain or loss from foreign currency translation and any change in fair value of equity securities investment, as well as the related tax effect of these items, the Company’s non-GAAP fully diluted earnings target for the second quarter of 2020 is in the estimated range of RMB4.35 to RMB4.85 (US$0.61 to US$0.68) per share, which factors in the receipt of local government financial subsidies of approximately RMB120 million (US$17.4 million) in the second quarter of 2020. The Company expects total share-based compensation expense in the second quarter of 2020 to be in the estimated range of RMB37 million to RMB39 million (US$5.2 million to US$5.5 million). The above forecast reflects 51job’s current and preliminary view, which is subject to change and substantial uncertainty.

Guidance for earnings per share is provided on a non-GAAP basis due to the inherent difficulty in forecasting the future impact of certain items, such as gain/loss from foreign currency translation and change in fair value of equity securities investment. The Company is not able to provide a reconciliation of these non-GAAP items to expected reported GAAP earnings per share, without unreasonable efforts, due to the unknown effect and potential significance of such future impact.

Currency Convenience Translation

For the convenience of readers, certain Renminbi amounts have been translated into U.S. dollar amounts at the rate of RMB7.0808 to US$1.00, the noon buying rate on March 31, 2020 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board.

Conference Call Information

The Company’s management will hold a conference call at 9:00 p.m. Eastern Time on May 7, 2020 (9:00 a.m. Beijing / Hong Kong time zone on May 8, 2020) to discuss its first quarter 2020 financial results, operating performance and business outlook.  To dial in to the call, please use the following telephone numbers:

US: +1-888-346-8982
International: +1-412-902-4272
Hong Kong: +852-3018-4992
Conference ID: 51job

The call will also be available live and on replay through 51job’s investor relations website, http://ir.51job.com.

Use of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles (“GAAP”), 51job uses non-GAAP financial measures of income before income tax expense, income tax expense, adjusted net income, adjusted net income attributable to 51job and adjusted earnings per share, which are adjusted from results based on GAAP to exclude share-based compensation expense, gain from foreign currency translation, and changes in fair value of equity securities 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 from foreign currency translation, and changes in fair value of equity securities 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 from foreign currency translation, and changes in fair value of equity securities 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.

Contact

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

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, the business outlook and quotations from management in this announcement, 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.

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