51job : Reports Third Quarter 2021 Financial Results - Form 6-K

51job, Inc. Reports Third Quarter 2021 Financial Results

SHANGHAI, December 15, 2021 - 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 share1 was RMB1.97 (US$0.31)

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.

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.

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51job, Inc. Reports Third Quarter 2021 Financial Results

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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.

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51job, Inc. Reports Third Quarter 2021 Financial Results

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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.

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51job, Inc. Reports Third Quarter 2021 Financial Results

December 15, 2021

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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: [phone]

Email: [e-mail]

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51job, Inc. Reports Third Quarter 2021 Financial Results

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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.

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51job, Inc. Reports Third Quarter 2021 Financial Results

December 15, 2021

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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.

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51job, Inc. Reports Third Quarter 2021 Financial Results

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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.

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51job, Inc. Reports Third Quarter 2021 Financial Results

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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.

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51job, Inc. Reports Third Quarter 2021 Financial Results

December 15, 2021

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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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