51job, Inc. Reports Third Quarter 2021 Financial Results

Rhea-AI Summary

51job, a premier human resource service provider in China, reported strong financial results for Q3 2021, with net revenues rising 19.3% year-over-year to RMB1,081.4 million (US$167.8 million). Online recruitment service revenues saw a 17.8% increase, driven by heightened hiring demand. Despite a gross profit increase of 16.6% to RMB681.5 million (US$105.8 million), the operating margin dropped to 12.0%. Fully diluted EPS was RMB0.68 (US$0.11), down from RMB2.55 in Q3 2020. The company continues to face challenges from COVID-19 and global economic uncertainties.

Positive

• Net revenues increased 19.3% to RMB1,081.4 million (US$167.8 million).
• Online recruitment services revenues rose 17.8% to RMB642.6 million (US$99.7 million).
• Gross profit increased 16.6% to RMB681.5 million (US$105.8 million).
• Interest and investment income improved to RMB64.6 million (US$10.0 million).

Negative

• Operating margin decreased from 19.3% in Q3 2020 to 12.0% in Q3 2021.
• Net income dropped significantly to RMB46.6 million (US$7.2 million) from RMB173.3 million in Q3 2020.
• Fully diluted EPS decreased to RMB0.68 (US$0.11) from RMB2.55 in Q3 2020.
• Operating expenses rose 34.8% to RMB551.8 million (US$85.6 million).

SHANGHAI, Dec. 15, 2021 /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 2021 ended September 30, 2021.

Third Quarter 2021 Financial Highlights:

• Net revenues increased 19.3% over Q3 2020 to RMB1,081.4 million (US$167.8 million)
• Online recruitment services revenues increased 17.8%
• Other human resource related revenues increased 21.7%
• Income from operations was RMB129.7 million (US$20.1 million)
• Fully diluted earnings per share was RMB0.68 (US$0.11)
• Non-GAAP adjusted fully diluted earnings per share^[1] was RMB1.97 (US$0.31)

 

[1] Adjusted fully diluted earnings per share is a non-GAAP financial measure, which excludes share-based compensation expense, gain/loss from foreign currency translation, and change in fair value of listed equity securities investment, as well as the related tax effect of these items. Please refer to the "Use of Non-GAAP Financial Measures" section and "Reconciliation of GAAP and Non-GAAP Results" tables contained in this press release.

Third Quarter 2021 Unaudited Financial Results

Net revenues for the third quarter ended September 30, 2021 were RMB1,081.4 million (US$167.8 million), an increase of 19.3% from RMB906.1 million for the same quarter in 2020.

Online recruitment services revenues for the third quarter of 2021 increased 17.8% to RMB642.6 million (US$99.7 million) compared with RMB545.5 million for the same quarter in 2020 primarily due to the improvement in hiring demand and activity from employers this year. The Company believes current operating conditions for its recruitment business remain positive, but developments surrounding the COVID-19 pandemic, occasional restrictions instituted by authorities to contain outbreaks in China, and global economic uncertainty may affect employer hiring plans and behaviors.

Other human resource related revenues for the third quarter of 2021 increased 21.7% to RMB438.8 million (US$68.1 million) from RMB360.6 million for the same quarter in 2020. The growth was primarily driven by solid customer demand for training, placement and business process outsourcing services this year.

Cost of services for the third quarter of 2021 increased 24.3% to RMB399.9 million (US$62.1 million) from RMB321.7 million for the same quarter in 2020 primarily due to higher employee compensation expenses and staff additions this year. Gross profit for the third quarter of 2021 increased 16.6% to RMB681.5 million (US$105.8 million) from RMB584.4 million for the same quarter of the prior year. Gross margin, which is gross profit as a percentage of net revenues, was 63.0% in the third quarter of 2021 compared with 64.5% for the same quarter in 2020.

Operating expenses for the third quarter of 2021 increased 34.8% to RMB551.8 million (US$85.6 million) from RMB409.3 million for the same quarter in 2020. Sales and marketing expenses for the third quarter of 2021 increased 46.0% to RMB457.4 million (US$71.0 million) from RMB313.2 million for the same quarter of the prior year, primarily due to greater spending on brand advertising, headcount additions and higher employee compensation expenses. Advertising and promotion expenses increased 123.2% to RMB130.8 million (US$20.3 million) for the third quarter of 2021 from RMB58.6 million for the same quarter of the prior year. The Company intends to maintain significant sales and marketing investments to strengthen its brands and promote its wide range of service offerings to employers and job seekers.

General and administrative expenses for the third quarter of 2021 decreased 1.8% to RMB94.4 million (US$14.7 million) from RMB96.2 million for the same quarter of the prior year, primarily due to a smaller provision for credit losses and less share-based compensation expense, which was partially offset by an increase in staff salaries and social insurance payments.

Income from operations for the third quarter of 2021 was RMB129.7 million (US$20.1 million) compared with RMB175.0 million for the third quarter of 2020. Operating margin, which is income from operations as a percentage of net revenues, was 12.0% for the third quarter of 2021 compared with 19.3% for the same quarter in 2020. Excluding share-based compensation expense, operating margin would have been 14.9% for the third quarter of 2021 compared with 23.0% for the same quarter in 2020.

The Company recognized a gain from foreign currency translation of RMB2.3 million (US$0.4 million) in the third quarter of 2021 compared with a loss of RMB29.2 million in the third quarter of 2020, 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.

Interest and investment income for the third quarter of 2021 was RMB64.6 million (US$10.0 million) compared with RMB58.3 million for the third quarter of 2020, primarily due to a larger amount of cash allocated to higher interest-bearing bank deposit products.

The Company recognized a mark-to-market, non-cash loss of RMB59.2 million (US$9.2 million) in the third quarter of 2021 compared with RMB46.5 million in the third quarter of 2020 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 RMB80.4 million (US$12.5 million) in professional services fees and administrative expenses related to the proposed going-private transaction in the third quarter of 2021.

Other income in the third quarter of 2021 included local government financial subsidies of RMB4.6 million (US$0.7 million) compared with RMB5.6 million in the third quarter of 2020.

Net income attributable to 51job for the third quarter of 2021 was RMB46.6 million (US$7.2 million) compared with RMB173.3 million for the same quarter in 2020. Fully diluted earnings per share for the third quarter of 2021 was RMB0.68 (US$0.11) compared with RMB2.55 for the same quarter in 2020.

In the third quarter of 2021, total share-based compensation expense was RMB31.4 million (US$4.9 million) compared with RMB33.5 million in the third quarter of 2020.

Excluding share-based compensation expense, gain/loss from foreign currency translation, and change in fair value of listed equity securities investment, as well as the related tax effect of these items, non-GAAP adjusted net income attributable to 51job for the third quarter of 2021 was RMB134.9 million (US$20.9 million) compared with RMB243.0 million for the third quarter of 2020. Non-GAAP adjusted fully diluted earnings per share was RMB1.97 (US$0.31) in the third quarter of 2021 compared with RMB3.57 in the third quarter of 2020.

As of September 30, 2021, cash and short-term investments totaled RMB10,169.4 million (US$1,578.3 million) compared with RMB10,761.9 million as of December 31, 2020.

Purchase of New Headquarters Office Building

In July 2021, the Company entered into an agreement to purchase an office building in the Qiantan area of Pudong District, Shanghai. The total purchase price is expected to be RMB2,051.5 million (US$318.4 million), of which RMB1,026.9 million (US$159.4 million) has been paid as of September 30, 2021. The Company will fund the purchase with existing cash resources and a long-term bank loan in the amount of RMB1,050.0 million (US$163.0 million).

Currency Convenience Translation

For the convenience of readers, certain Renminbi amounts have been translated into U.S. dollar amounts at the rate of RMB6.4434 to US$1.00, the noon buying rate on September 30, 2021 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 change in fair value of listed equity securities investment, 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 change in fair value of listed equity securities investment, 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 change in fair value of listed equity securities investment, 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

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, 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.

 

 

51job, Inc.
Consolidated Statements of Operations and Comprehensive Income
	For the Three Months Ended
	September 30, 2020		September 30, 2021		September 30, 2021
(In thousands, except share and per share data)	(unaudited)		(unaudited)		(unaudited)
	RMB		RMB		US$ (Note 1)
Revenues:
Online recruitment services	545,501		642,550		99,722
Other human resource related revenues	360,604		438,801		68,101
Net revenues	906,105		1,081,351		167,823
Cost of services (Note 2)	(321,748)		(399,888)		(62,062)
Gross profit	584,357		681,463		105,761
Operating expenses:
Sales and marketing (Note 3)	(313,170)		(457,365)		(70,982)
General and administrative (Note 4)	(96,165)		(94,435)		(14,656)
Total operating expenses	(409,335)		(551,800)		(85,638)
Income from operations	175,022		129,663		20,123
Gain (Loss) from foreign currency translation	(29,215)		2,302		357
Interest and investment income, net	58,284		64,593		10,025
Change in fair value of listed equity securities investment	(46,533)		(59,168)		(9,183)
Fees and expenses related to proposed going-private      transaction (Note 5)	—		(80,365)		(12,472)
Change in fair value of long-term investment	39,614		—		—
Other income, net	6,692		4,154		645
Income before income tax expense	203,864		61,179		9,495
Income tax expense	(39,330)		(20,347)		(3,158)
Net income	164,534		40,832		6,337
Net loss attributable to non-controlling interests	8,788		5,795		899
Net income attributable to 51job, Inc.	173,322		46,627		7,236
Net income	164,534		40,832		6,337
Other comprehensive income (loss)	(597)		17		3
Total comprehensive income	163,937		40,849		6,340
Earnings per share:
Basic	2.58		0.69		0.11
Diluted	2.55		0.68		0.11
Weighted average number of common shares outstanding:
Basic	67,185,235		67,437,209		67,437,209
Diluted	68,089,693		68,397,787		68,397,787
Notes:
(1) The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.4434
to US$1.00 on September 30, 2021 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 RMB5,345 and RMB5,009 (US$777) for the three months ended
September 30, 2020 and 2021, respectively.
(3) Includes share-based compensation expense of RMB4,595 and RMB4,305 (US$668) for the three months ended
September 30, 2020 and 2021, respectively.
(4) Includes share-based compensation expense of RMB23,603 and RMB22,104 (US$3,431) for the three months ended
September 30, 2020 and 2021, respectively.
(5) Includes fees and expenses of RMB12,722 (US$1,974) incurred in the three months ended June 30, 2021.

 

 

51job, Inc.
Consolidated Statements of Operations and Comprehensive Income
	For the Nine Months Ended
	September 30, 2020		September 30, 2021		September 30, 2021
(In thousands, except share and per share data)	(unaudited)		(unaudited)		(unaudited)
	RMB		RMB		US$ (Note 1)
Revenues:
Online recruitment services	1,595,772		1,778,506		276,020
Other human resource related revenues	930,072		1,296,739		201,251
Net revenues	2,525,844		3,075,245		477,271
Cost of services (Note 2)	(847,227)		(1,141,538)		(177,164)
Gross profit	1,678,617		1,933,707		300,107
Operating expenses:
Sales and marketing (Note 3)	(882,094)		(1,386,931)		(215,248)
General and administrative (Note 4)	(285,999)		(300,041)		(46,566)
Total operating expenses	(1,168,093)		(1,686,972)		(261,814)
Income from operations	510,524		246,735		38,293
Loss from foreign currency translation	(19,591)		(4,876)		(757)
Interest and investment income, net	169,018		156,548		24,296
Change in fair value of listed equity securities investment	20,164		(77,581)		(12,040)
Fees and expenses related to proposed going-private      transaction (Note 5)	—		(84,187)		(13,066)
Change in fair value of long-term investment	39,614		—		—
Other income, net	155,617		93,898		14,573
Income before income tax expense	875,346		330,537		51,299
Income tax expense	(135,722)		(72,511)		(11,254)
Net income	739,624		258,026		40,045
Net loss attributable to non-controlling interests	15,604		27,502		4,268
Net income attributable to 51job, Inc.	755,228		285,528		44,313
Net income	739,624		258,026		40,045
Other comprehensive loss	(294)		(146)		(23)
Total comprehensive income	739,330		257,880		40,022
Earnings per share:
Basic	11.27		4.23		0.66
Diluted	11.11		4.18		0.65
Weighted average number of common shares outstanding:
Basic	67,000,172		67,426,629		67,426,629
Diluted	67,992,639		68,267,453		68,267,453
Notes:
(1) The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.4434
to US$1.00 on September 30, 2021 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 RMB17,341 and RMB19,086 (US$2,962) for the nine months ended
September 30, 2020 and 2021, respectively.
(3) Includes share-based compensation expense of RMB14,907 and RMB16,407 (US$2,546) for the nine months ended
September 30, 2020 and 2021, respectively.
(4) Includes share-based compensation expense of RMB76,549 and RMB84,172 (US$13,064) for the nine months ended
September 30, 2020 and 2021, respectively.
(5) Includes fees of RMB3,822 (US$593), which were previously reflected in general and administrative expenses for the
three months ended June 30, 2021.

 

 

51job, Inc.
Reconciliation of GAAP and Non-GAAP Results
	For the Three Months Ended
	September 30, 2020		September 30, 2021		September 30, 2021
(In thousands, except share and per share data)	(unaudited)		(unaudited)		(unaudited)
	RMB		RMB		US$ (Note 1)
GAAP income before income tax expense	203,864		61,179		9,495
Add: Share-based compensation	33,543		31,418		4,876
Add (Less): (Gain) Loss from foreign currency translation	29,215		(2,302)		(357)
Add: Change in fair value of listed equity securities investment	46,533		59,168		9,183
Less: Change in fair value of long-term investment	(39,614)		—		—
Non-GAAP income before income tax expense	273,541		149,463		23,197
GAAP income tax expense	(39,330)		(20,347)		(3,158)
Tax effect of non-GAAP line items	(32)		2		0
Non-GAAP income tax expense	(39,362)		(20,345)		(3,158)
Non-GAAP adjusted net income	234,179		129,118		20,039
Non-GAAP adjusted net income attributable to 51job, Inc.	242,967		134,913		20,938
Non-GAAP adjusted earnings per share:
Basic	3.62		2.00		0.31
Diluted	3.57		1.97		0.31
Weighted average number of common shares outstanding:
Basic	67,185,235		67,437,209		67,437,209
Diluted	68,089,693		68,397,787		68,397,787
	For the Nine Months Ended
	September 30, 2020		September 30, 2021		September 30, 2021
(In thousands, except share and per share data)	(unaudited)		(unaudited)		(unaudited)
	RMB		RMB		US$ (Note 1)
GAAP income before income tax expense	875,346		330,537		51,299
Add: Share-based compensation	108,797		119,665		18,572
Add: Loss from foreign currency translation	19,591		4,876		757
Add (Less): Change in fair value of listed equity securities      investment	(20,164)		77,581		12,040
Less: Change in fair value of long-term investment	(39,614)		—		—
Non-GAAP income before income tax expense	943,956		532,659		82,668
GAAP income tax expense	(135,722)		(72,511)		(11,254)
Tax effect of non-GAAP line items	(71)		86		13
Non-GAAP income tax expense	(135,793)		(72,425)		(11,241)
Non-GAAP adjusted net income	808,163		460,234		71,427
Non-GAAP adjusted net income attributable to 51job, Inc.	823,767		487,736		75,695
Non-GAAP adjusted earnings per share:
Basic	12.29		7.23		1.12
Diluted	12.12		7.14		1.11
Weighted average number of common shares outstanding:
Basic	67,000,172		67,426,629		67,426,629
Diluted	67,992,639		68,267,453		68,267,453
Note (1): The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.4434
to US$1.00 on September 30, 2021 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical
release of the Federal Reserve Board.

 

 

51job, Inc.
Consolidated Balance Sheets
		As of
		December 31, 2020		September 30, 2021		September 30, 2021
(In thousands, except share and per share data)		(unaudited)		(unaudited)		(unaudited)
		RMB		RMB		US$ (Note 1)
ASSETS
Current assets:
	Cash	3,292,698		9,984,321		1,549,542
	Restricted cash	2,258		—		—
	Short-term investments	7,469,213		185,030		28,716
	Accounts receivable (net of allowance of RMB26,798 and
	RMB26,513 as of December 31, 2020 and  September 30, 2021,
	respectively)	290,480		357,342		55,459
	Prepayments and other current assets	492,980		642,786		99,759
Total current assets		11,547,629		11,169,479		1,733,476
Non-current assets:
	Time deposits	719,189		738,831		114,665
	Long-term investments	1,576,250		1,497,133		232,351
	Property and equipment, net	273,157		270,573		41,992
	Goodwill	1,036,124		1,036,124		160,804
	Intangible assets, net	163,503		136,280		21,150
	Right-of-use assets	307,869		308,682		47,907
	Other long-term assets	13,946		1,056,312		163,937
	Deferred tax assets	38,013		48,022		7,453
Total non-current assets		4,128,051		5,091,957		790,259
Total assets		15,675,680		16,261,436		2,523,735
LIABILITIES, MEZZANINE EQUITY AND EQUITY
Current liabilities:
	Current portion of long-term bank loan	—		2,500		388
	Accounts payable	83,087		123,073		19,101
	Salary and employee related accrual	182,565		187,699		29,130
	Taxes payable	172,254		148,388		23,029
	Advances from customers	1,158,604		1,290,050		200,213
	Lease liabilities, current	34,952		42,821		6,646
	Other payables and accruals	1,178,955		1,192,137		185,016
Total current liabilities		2,810,417		2,986,668		463,523
Non-current liabilities:
	Long-term bank loan	—		47,500		7,372
	Lease liabilities, non-current	44,949		42,476		6,592
	Deferred tax liabilities	232,087		212,366		32,959
Total non-current liabilities		277,036		302,342		46,923
Total liabilities		3,087,453		3,289,010		510,446
Mezzanine equity:
	Redeemable non-controlling interests	189,811		161,318		25,036
Shareholders' equity:
	Common shares (US$0.0001 par value: 500,000,000 shares
	authorized, 67,406,657 and 67,437,209 shares issued and
	outstanding as of December 31, 2020 and September 30, 2021,
	respectively)	54		54		8
	Additional paid-in capital	5,206,154		5,333,135		827,690
	Statutory reserves	18,474		18,474		2,867
	Accumulated other comprehensive income	276,975		276,829		42,963
	Retained earnings	6,871,090		7,156,618		1,110,690
Total 51job, Inc. shareholders' equity		12,372,747		12,785,110		1,984,218
Non-controlling interests		25,669		25,998		4,035
Total equity		12,398,416		12,811,108		1,988,253
Total liabilities, mezzanine equity and equity		15,675,680		16,261,436		2,523,735
Note (1): The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.4434 to US$1.00
on September 30, 2021 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

FAQ

What were the key financial highlights for 51job (JOBS) in Q3 2021?

51job reported a 19.3% increase in net revenues to RMB1,081.4 million (US$167.8 million) in Q3 2021, with a gross profit of RMB681.5 million (US$105.8 million) and fully diluted EPS of RMB0.68 (US$0.11).

How did 51job's online recruitment services perform in Q3 2021?

Online recruitment services revenues increased by 17.8% to RMB642.6 million (US$99.7 million) in Q3 2021, reflecting improved employer hiring activity.

What was the operating margin for 51job in Q3 2021 and how does it compare to the previous year?

The operating margin for 51job in Q3 2021 decreased to 12.0% from 19.3% in Q3 2020.

What challenges did 51job face in Q3 2021?

51job faced challenges due to the COVID-19 pandemic and global economic uncertainties impacting employer hiring plans.