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51job, Inc. Reports Third Quarter 2020 Financial Results

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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,
2019


September 30,
2020


September 30,
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,
2019


September 30,
2020


September 30,
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,
2019


September 30,
2020


September 30,
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,
2019


September 30,
2020


September 30,
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,
2019


September 30,
2020


September 30,
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.

Cision
Cision

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SOURCE 51job, Inc.