This is a summary of the fourth quarter fiscal 2008 earnings call conducted by 51job, Inc. (JOBS) on March 3, 2009.
Management:
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Director, IR: Linda Chien
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CEO, President and Co-founder: Rick Yan
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CFO, SVP and Co-founder: Kathleen Chien
Key Investor Issues:
- Total revenues for the quarter came in at RMB196 million or approximately $29 million, which was above the guidance range of RMB185 million to RMB195 million.
- Non-GAAP fully diluted earnings per common share for the fourth quarter were RMB0.24, in line with the prior forecast of RMB0.20 to RMB0.30.
- For the first quarter of 2009 the Company''s revenue target is in the estimated range of RMB175 million to RMB185 million (US$25.7 million to US$27.1 million).
Fourth Quarter Highlights:
The fourth quarter was further impacted by worsening global economic conditions, which negatively affected recruitment activities and corporate spending. Marketing materially weakened during the quarter, as employers scale back their high efforts. The effect was widespread across industries as well as geographies. As a result, the company saw a decrease in print advertising volumes and unique employers utilizing its online services in the fourth quarter as well as lower spend per customer.
While the recruitment businesses faced an uphill challenge in the fourth quarter, the company was pleased with the performance of its non-recruitment related services.
Revenue increased more than 60% for the other HR services area in the fourth quarter, driven primarily by increased customer adoption for the outsourcing services. For the full year, revenues from other HR services grew more than 50% and maintained high growth rates throughout 2008 despite deteriorating economic conditions.
Revenues for the fourth quarter totaled RMB196 million, an 8% decrease from the same quarter in 2007.
Print advertising revenues decreased 37% year-over-year due to a slowdown in market demand, which resulted in less page volumes as well as lower average revenue per page. The number of print advertising pages in the fourth quarter decreased 13% to 3,452 pages compared with 3,962 pages in the same quarter in 2007.
The continued growth in revenue contribution from the lower price cities decreased the overall average revenue per page. Overall average revenue per page decreased approximately 28% compared to the fourth quarter of 2007.
Online revenues decreased 5% year-over-year to RMB73 million in the fourth quarter due to reduced market demand and corporate spending for online services.
Unique employers using online recruitment services in the fourth quarter were 57,071 compared with 57,565 in the same quarter of 2007. While online pricing was relatively unchanged from the year-ago quarter, the company saw a decrease in the average revenue per unique employers due to the customers choosing smaller and/or lower priced online packages.
Revenues for other HR services increased 64% year-over-year to approximately RMB61 million in the fourth quarter.
This growth was primarily driven by the greater customer demand for the HR outsourcing services and also included about RMB6 million in service fees that the company receives from certain newspaper contractors.
Gross margin was 51% compared with approximately 56% in the fourth quarter of 2007.
The decrease was due to higher staff cost, technology cost and office expenses, which were particularly offset by lower print related expenses. Included in cost of services was share-based compensation expense of RMB1.2 million.
Sales and marketing expenses increased to RMB58 million from RMB55 million in the fourth quarter of 2007.
The increase was primarily the result of higher labor cost from staff additions and higher wage levels compared to the year-ago quarter. Included in sales and marketing expenses was share-based compensation expense of approximately RMB1 million in the fourth quarter.
G&A expense for the fourth quarter was RMB30 million compared with RMB38 million in the fourth quarter of 2007.
