This is a summary of the third quarter fiscal 2007 earnings conference call conducted by 51job, Inc. (JOBS) on November 12, 2007.
Management:
CEOfficer and President, Co-founder: Rick Yan
CFOfficer and Senior VP, Co-founder: Kathleen Chien
Investor Relations: Linda Chien
Key Investor Issues:
- Net income rose to $3.6 million, or 13 cents per ADS, on revenue of $29.4 million. Excluding items, earnings were 18 cents per ADS.
- Print advertising revenue increased 15.9% from a year ago to $15.2 million.
- Online recruitment services revenue rose 26.8% to $9.7 million.
- For the fourth quarter, the company forecast earnings, excluding items, of 13 cents to 15 cents per ADS on revenue of $27.4 million to $28.7 million.
Third Quarter Highlights:
The third quarter revenues and profitability topped the company’s expectations.
Driven by higher growth in the print business and continuous strength of the online operations, third quarter revenues reached RMB 220 million, above the company’s forecast of RMB 205 million to RMB 215 million. The revenue upside also benefited the non-GAAP EPS, which came in at RMB 0.68 compared with the guidance range of RMB 0.55 to RMB 0.65.
A highlight of the third quarter was the growth reacceleration of the company’s print business.
Third quarter print revenues grew 16% year over year and this was the fastest growing quarter for print in the past two years.
The company has been closely monitoring customer behavior, particularly in the larger cities where it has observed some transition of budget allocation and preferences from offline to online products. With the pick-up in print growth in each quarter this year, the management believes the steepest part of the transition phase may be behind 51job.
Solid growth continues for the company’s online business, as unique employers reached almost 60,000 in the third quarter.
Innovation remains a key initiative for this business and the company successfully completed a facelift of its website in September. The new site provides greater advertising space on the homepage and city channel pages, as well as increased functionalities.
The performance of the other HR services segment, particularly the corporate training and outsourcing services, continues to be a bright spot this year.
Third quarter revenue for this segment grew 48% year over year and revenue contribution is now more than 13%.
Revenues for the third quarter totaled RMB 220 million, which is a 22% increase over the same quarter in 2006.
- Print advertising revenues increased 16% year over year, due primarily to the higher page volumes, which were partially offset by a lower average revenue per page.
- The number of print advertising pages in the quarter increased 37% to approximately 4,400 pages, compared with about 3,200 pages in the same quarter last year.
The average revenue per page decreased approximately 16% from a year ago, driven by the higher print revenue contribution from the lower priced cities.
The company has generally maintained similar pricing levels with each city over the past year and as a result, the management expects that to continue growing contribution from the lower priced cities while continue to reduce the overall average revenue per page.
Online revenues grew 27% year over year to RMB 73 million, driven by a greater number of unique employers using the company’s online recruitment services.
