58.com Reports First Quarter 2020 Unaudited Financial Results
58.com (WUBA) reported its first quarter 2020 results, revealing total revenues of RMB2,560.3 million (US$361.4 million), a 15.5% year-over-year decline. The number of paying business users fell by 20.7% to approximately 2.7 million. Gross margin decreased to 87.9% from 90.2%. The company experienced an operating loss of RMB55.8 million (US$7.9 million), a significant drop from a profit of RMB281.3 million in Q1 2019. However, net income attributable to ordinary shareholders surged 134.7% to RMB1,638.6 million (US$231.3 million), largely due to a one-time gain from 58 Home.
- Net income attributable to ordinary shareholders increased by 134.7% to RMB1,638.6 million (US$231.3 million).
- Non-GAAP net income attributable to ordinary shareholders rose by 414.7% to RMB2,243.6 million (US$316.7 million).
- Basic and diluted earnings per ADS increased by 132.6% to RMB10.95 (US$1.54).
- Total revenues decreased by 15.5% from RMB3,028.3 million in Q1 2019.
- The number of paying business users fell by 20.7% compared to the same quarter last year.
- Operating expenses totaled RMB2,306.8 million (US$325.6 million), leading to an operating loss of RMB55.8 million (US$7.9 million).
- Gross profit declined by 17.6% to RMB2,251.0 million (US$317.7 million).
BEIJING, June 26, 2020 /PRNewswire/ -- 58.com Inc. (NYSE: WUBA) ("58.com" or the "Company"), China's largest online classifieds marketplace, today reported its unaudited financial results for the first quarter ended March 31, 2020.
First Quarter 2020 Highlights
- Total revenues were RMB2,560.3 million (US
$361.4 million [1]), a15.5% decrease from RMB3,028.3 million in the same quarter of 2019. - Total number of paying business users[2] was approximately 2.7 million in the first quarter of 2020, a
20.7% decrease from the same quarter of 2019. - Gross margin was
87.9% compared with90.2% in the same quarter of 2019. - Loss from operations was RMB55.8 million (US
$7.9 million ), compared with income from operations of RMB281.3 million in the same quarter of 2019. - Non-GAAP income from operations[3] was RMB144.0 million (US
$20.3 million ), a69.0% decrease from RMB465.1 million in the same quarter of 2019. - Net income attributable to 58.com Inc. ordinary shareholders was RMB1,638.6 million (US
$231.3 million ), a134.7% increase from RMB698.2 million in the same quarter of 2019. This includes a net gain picked up from 58 Home of RMB2,683.2 million. - Non-GAAP net income attributable to 58.com Inc. ordinary shareholders [4] was RMB2,243.6 million (US
$316.7 million ), a414.7% increase from RMB435.9 million in the same quarter of 2019. This includes a net gain picked up from 58 Home of RMB2,683.2 million. - Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB10.95 (US
$1.54) and RMB10.82 (US$1.53) , respectively, representing132.6% and132.6% increases from RMB4.71 and RMB4.65, respectively, in the same quarter of 2019. One ADS represents two Class A ordinary shares. - Non-GAAP basic and diluted earnings per ADS[5] attributable to ordinary shareholders were RMB14.99 (US
$2.12) and RMB14.81 (US$2.09) , respectively, representing410.0% and410.1% increases from RMB2.94 and RMB2.90, respectively, in the same quarter of 2019.
First Quarter 2020 Financial Results
Revenues
Total revenues were RMB2,560.3 million (US
Membership revenues were RMB815.6 million (US
Online marketing services revenues were RMB1,595.4 million (US
The decreases were mainly due to the adverse impact from the outbreak of COVID-19. To control the spread of COVID-19, the PRC government implemented a series of strict measures, including travel restrictions, quarantines, and a temporary shutdown of businesses which resulted in a decrease in activity level among paying business users. In particular, paying business users that require in-person meetings to conduct their business, including those in the secondary housing and rental real estate sector, used auto dealers, local service providers, and recruiters, have been adversely and materially affected by these interruptions and delayed business resumption. The Company's revenues are generated primarily from these paying business users, most of whom are small and medium-sized local businesses, and the outbreak of COVID-19 and subsequent prevention and control measures have adversely affected their business operations and financial conditions in the first quarter of 2020. As a result, the Company's revenues during the first quarter of 2020 declined significantly when compared with the same period in 2019.
Cost of Revenues
Cost of revenues was RMB309.3 million (US
The year-over-year increase was primarily driven by increases in the costs associated with "Premium Home Services" (到家精选), enhanced services that focus on partnering with high quality providers to further standardize their service quality and integrate service protection plans while establishing closed-loop transactions through the Company's platforms, and an increase in the costs of goods sold and services provided on the Zhuan Zhuan platform which were partially offset by a decrease in traffic acquisition cost paid to advertising union partners.
Gross Profit and Gross Margin
Gross profit was RMB2,251.0 million (US
Gross margin was
Operating Expenses
Operating expenses were RMB2,306.8 million (US
Sales and marketing expenses in the first quarter of 2020 were RMB1,577.5 million (US
Within sales and marketing expenses, advertising expenses in the first quarter of 2020 were RMB712.2 million (US
Non-advertising sales and marketing expenses in the first quarter of 2020 were RMB865.3 million (US
Non-advertising sales and marketing expenses include salaries and benefits, commissions and share-based compensation expenses for the Company's sales, sales support, customer service, marketing dealer management personnel, online and offline promotional expenses, and other operating expenses that are associated with sales and marketing activities.
Research and development expenses in the first quarter of 2020 were RMB497.0 million (US
General and administrative expenses in the first quarter of 2020 were RMB232.4 million (US
Income/(Loss) from Operations
Loss from operations was RMB55.8 million (US
Operating margin, defined as income/(loss) from operations divided by total revenues, was negative
Non-GAAP income from operations was RMB144.0 million (US
Non-GAAP operating margin, defined as non-GAAP income from operations divided by total revenues, was
Other Income/(Expenses), net
Net other income in the first quarter of 2020 was RMB1,680.7 million (US
Net other income in the first quarter of 2020 was primarily comprised of a RMB2,654.8 million gain in share of results of equity investees and RMB30.9 million in tax refunds and other government subsidies, offset by RMB1,054.3 million in a net investment loss.
Share of results of equity investees in the first quarter of 2020 was mainly attributed to RMB2,683.2 million net gain pick-up from 58 Home, which was mainly due to the Company's proportionate share of one-time non-cash gain recognized by 58 Home for its deconsolidation of 58 Daojia Limited, a majority owned subsidiary of 58 Home, which was partially offset by the Company's proportionate share of net loss attributable to 58 Home's ordinary shareholders. 58 Home lost its control over 58 Daojia Limited and started to deconsolidate its financial statements when 58 Daojia Limited completed its Series B round of equity financing in February 2020, as certain Series B investors have substantive participating rights in the operational decision making of 58 Daojia Limited.
Net investment loss mainly included RMB683.3 million in impairment losses in long-term investments and RMB446.1 million losses in change in fair value of long-term investments and investments in convertible notes as the market value of certain fair value measured investments suffered downward adjustments in the first quarter of 2020.
There would have been net other expenses of RMB1,002.5 million (US
Net Income Attributable to 58.com Inc. Ordinary Shareholders
Net income attributable to 58.com Inc. ordinary shareholders was RMB1,638.6 million (US
Net margin, defined as net income attributable to 58.com Inc. ordinary shareholders divided by total revenues, was
Non-GAAP net income attributable to 58.com Inc. ordinary shareholders was RMB2,243.6 million (US
Non-GAAP net margin, defined as non-GAAP net income attributable to 58.com Inc. ordinary shareholders divided by total revenues, was
Basic and Diluted Earnings per ADS
Basic and diluted earnings per ADS attributable to ordinary shareholders in the first quarter of 2020 were RMB10.95 (US
Non-GAAP basic and diluted earnings per ADS attributable to ordinary shareholders in the first quarter of 2020 were RMB14.99 (US
Cash Flow
Net cash used in operating activities was RMB379.4 million (US
Cash and Cash Equivalents, Term Deposits, Restricted Cash and Short-term Investments
As of March 31, 2020, the Company had cash and cash equivalents, term deposits, restricted cash and short-term investments of RMB12,547.3 million (US
Shares Outstanding
As of March 31, 2020, the Company had a total of 299,728,769 ordinary shares (including 254,496,649 Class A and 45,232,120 Class B ordinary shares) issued and outstanding.
Non-GAAP Financial Measures
To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States, or GAAP, this press release presents non-GAAP income/(loss) from operations, non-GAAP operating margin, non-GAAP net income/(loss) attributable to 58.com Inc. ordinary shareholders, non-GAAP net margin and non-GAAP basic and diluted earnings/(loss) per share and per ADS by excluding share-based compensation expenses, amortization of intangible assets resulting from business acquisitions, change in fair value of long-term investments and investments in convertible notes, share-based compensation expenses included in share of results of equity investees, income tax effects of above GAAP to non-GAAP reconciling items. The Company believes these non-GAAP financial measures are important to help investors understand the Company's operating and financial performance, compare business trends among different reporting periods on a consistent basis and assess the Company's core operating results, as they exclude certain expenses/gains that are not expected to result in cash payments/receipts. The use of the above non-GAAP financial measures has certain limitations. Share-based compensation expenses, amortization of intangible assets resulting from business acquisitions, non-cash gain or loss and income tax effects resulting from GAAP to non-GAAP reconciling items have been and will continue to be incurred in the future and are not reflected in the presentation of the non-GAAP financial measures, but should be considered in the overall evaluation of the Company's results. The Company compensates for these limitations by providing the relevant disclosure of its share-based compensation expenses, amortization of intangible assets resulting from business acquisitions, change in fair value of long-term investments and investments in convertible notes, share-based compensation expenses included in share of results of equity investees, income tax effects of above GAAP to non-GAAP reconciling items, all of which should be considered when evaluating the Company's performance. These non-GAAP financial measures should be considered in addition to financial measures prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP. Reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure is set forth at the end of this release.
[1] This press release contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) solely for the convenience of the readers. Unless otherwise specified, all translations of Renminbi amounts into US$ amounts in this press release are made at RMB7.0851 to US |
[2] Paying business users refer to users who are identified as business users with unique identity information such as business licenses or personal identification information and who used the Company's subscription-based membership services or purchased at least one type of online marketing services in a given period. One paying business user can open up several paying user accounts on one or multiple online platforms. The number and the percentage calculation does not include paying business users on Ganji as the Company stopped selling stand-alone Ganji subscription-based membership services in 2018 or earlier in all of its content categories. |
[3] Non-GAAP income from operations is defined as income from operations excluding share-based compensation expenses and amortization of intangible assets resulting from business acquisitions. See "Reconciliation of GAAP and Non-GAAP Results" at the end of this press release. |
[4] Non-GAAP net income attributable to 58.com Inc. ordinary shareholders is defined as net income attributable to 58.com Inc. ordinary shareholders excluding share-based compensation expenses, amortization of intangible assets resulting from business acquisitions, change in fair value of long-term investments and investments in convertible notes, share-based compensation expenses included in share of results of equity investees, and income tax effects of GAAP to non-GAAP reconciling items. See "Reconciliation of GAAP and Non-GAAP Results" at the end of this press release. |
[5] Non-GAAP basic and diluted earnings per ADS is defined as non-GAAP net income attributable to 58.com Inc. ordinary shareholders divided by weighted average number of basic and diluted ADSs. |
About 58.com Inc.
58.com Inc. (NYSE: WUBA) operates China's largest online classifieds marketplace, as measured by monthly unique visitors on both its www.58.com website and mobile applications. The Company's online marketplace enables local business users and consumer users to connect, share information and conduct business. 58.com's broad, in-depth and high quality local information, combined with its easy-to-use website and mobile applications, has made it a trusted marketplace for consumers. 58.com's strong brand recognition, large and growing user base, merchant network and massive database of local information create a powerful network effect. For more information on 58.com, please visit http://www.58.com.
Safe Harbor Statements
This press release contains forward-looking statements 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," "confident" and similar statements. 58.com may also make written or oral forward-looking statements in its reports filed with or furnished 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. Any statements that are not historical facts, including statements about 58.com's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: 58.com's goals and strategies; its future business development, financial condition and results of operations; its ability to retain and grow its user base and network of local merchants for its online marketplace; the growth of, and trends in, the markets for its services in China; the outbreak of COVID-19 or other health epidemics in China or globally; the demand for and market acceptance of its brand and services; competition in its industry in China; its ability to maintain the network infrastructure necessary to operate its website and mobile applications; relevant government policies and regulations relating to the corporate structure, business and industry; and its ability to protect its users' information and adequately address privacy concerns. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release, and 58.com does not undertake any obligation to update such information, except as required under applicable law.
For more information, please contact:
58.com Inc.
ir@58.com
Christensen
In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: carnell@christensenir.com
In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com
58.com Inc. | |||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(in thousands, except share and per share data, unless otherwise) | |||||
As of | |||||
December 31, 2019 | March 31, 2020 | March 31, 2020 | |||
RMB | RMB | US$ | |||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents..................................................................................................................................................... | 5,293,206 | 4,876,057 | 688,213 | ||
Restricted cash-current.......................................................................................................................................................... | 477,099 | 538,724 | 76,036 | ||
Term deposits........................................................................................................................................................................ | 70,000 | 70,000 | 9,880 | ||
Short-term investments.......................................................................................................................................................... | 8,414,348 | 7,062,554 | 996,818 | ||
Accounts receivable, net........................................................................................................................................................ | 1,209,251 | 1,105,326 | 156,007 | ||
Prepayments and other current assets.................................................................................................................................... | 2,326,920 | 2,830,994 | 399,570 | ||
Total current assets............................................................................................................................................................. | 17,790,824 | 16,483,655 | 2,326,524 | ||
Non-current assets: | |||||
Property and equipment, net.................................................................................................................................................. | 1,305,793 | 1,285,024 | 181,369 | ||
Intangible assets, net.............................................................................................................................................................. | 886,565 | 840,901 | 118,686 | ||
Right-of-use assets, net......................................................................................................................................................... | 275,459 | 253,408 | 35,766 | ||
Land use rights, net............................................................................................................................................................... | 3,532 | 3,512 | 496 | ||
Goodwill............................................................................................................................................................................... | 15,874,220 | 15,874,220 | 2,240,508 | ||
Long-term investments.......................................................................................................................................................... | 6,086,511 | 8,249,490 | 1,164,343 | ||
Investments in convertible notes............................................................................................................................................ | 669,715 | 817,270 | 115,351 | ||
Long-term prepayments and other non-current assets........................................................................................................... | 469,592 | 803,450 | 113,400 | ||
Total non-current assets..................................................................................................................................................... | 25,571,387 | 28,127,275 | 3,969,919 | ||
Total assets.......................................................................................................................................................................... | 43,362,211 | 44,610,930 | 6,296,443 | ||
LIABILITIES, MEZZANINE EQUITY AND | |||||
Current liabilities: | |||||
Accounts payable.................................................................................................................................................................. | 1,042,697 | 1,387,244 | 195,797 | ||
Deferred revenues................................................................................................................................................................. | 2,154,920 | 1,691,080 | 238,681 | ||
Customer advances................................................................................................................................................................ | 1,986,108 | 1,970,655 | 278,141 | ||
Taxes payable........................................................................................................................................................................ | 698,104 | 362,025 | 51,097 | ||
Salary and welfare payable.................................................................................................................................................... | 753,267 | 560,843 | 79,158 | ||
Operating lease liabilities, current.......................................................................................................................................... | 137,310 | 114,304 | 16,133 | ||
Accrued expenses and other current liabilities....................................................................................................................... | 1,053,007 | 1,082,811 | 152,829 | ||
Total current liabilities........................................................................................................................................................ | 7,825,413 | 7,168,962 | 1,011,836 | ||
Non-current liabilities: | |||||
Deferred tax liabilities............................................................................................................................................................ | 389,719 | 324,514 | 45,802 | ||
Operating lease liabilities, non-current................................................................................................................................... | 138,554 | 157,195 | 22,187 | ||
Total non-current liabilities................................................................................................................................................ | 528,273 | 481,709 | 67,989 | ||
Total liabilities..................................................................................................................................................................... | 8,353,686 | 7,650,671 | 1,079,825 | ||
Mezzanine equity: | |||||
Mezzanine classified noncontrolling interests.................................................................. | 3,668,876 | 3,815,512 | 538,526 | ||
Total mezzanine equity....................................................................................................................................................... | 3,668,876 | 3,815,512 | 538,526 | ||
Shareholders' equity: | |||||
58.com Inc. shareholders' equity: | |||||
Ordinary shares (US |
19 |
19 |
3 | ||
Additional paid-in capital....................................................................................................................................................... | 21,942,829 | 22,026,581 | 3,108,860 | ||
Retained earnings.................................................................................................................................................................. | 8,892,773 | 10,529,706 | 1,486,176 | ||
Accumulated other comprehensive income............................................................................................................................ | 95,903 | 178,710 | 25,223 | ||
Total 58.com Inc. shareholders' equity............................................................................................................................. | 30,931,524 | 32,735,016 | 4,620,262 | ||
Noncontrolling interests..................................................................................................................................................... | 408,125 | 409,731 | 57,830 | ||
Total shareholders' equity................................................................................................................................................. | 31,339,649 | 33,144,747 |
FAQ
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